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5 YEAR FINANCIAL SUMMARY
Year ended 31 December
OPERATING RESULTS
REVENUE
EBITDA
Depreciation and amortisation
Impairment charge
EBIT
Finance Costs
PROFIT BEFORE TAX
Income tax expense
Non-controlling interest in subsidiary
ATTRIBUTABLE PROFIT AFTER TAX
OPERATING STATISTICS
Basic earnings per share – cents
Dividends per share – cents
Dividend franking – %
As at 31 December
FUNDS EMPLOYED
Contributed equity
Reserves
Retained earnings
Non-controlling interest in subsidiary
Total equity
Non-current liabilities
Current liabilities
Total liabilities
TOTAL FUNDS EMPLOYED
REPRESENTED BY
Property plant and equipment
Intangibles
Available-for-sale investments
Other non-current assets
Property assets held for resale
Other current assets
TOTAL ASSETS
OTHER STATISTICS
Net tangible asset backing per share- $
Shares on issue – '000
Number of shareholders
Total Debt
Net debt (total debt less bailment finance
2015
$'000
2014
$'000
2013
$'000
2012
$'000
2011
$'000
3,246,376
2,858,113
2,672,813
2,642,535
2,398,695
163,077
(13,216)
(7,610)
142,251
(21,293)
120,958
(33,943)
(798)
86,217
47.6
32.0
100
2015
$'000
296,060
105,375
293,435
8,139
703,009
228,479
557,922
786,401
138,081
(12,583)
(578)
124,920
(22,080)
102,840
(26,150)
(460)
76,230
43.0
27.0
100
2014
$'000
242,070
99,020
242,480
7,486
591,056
241,875
525,067
766,942
122,252
(12,354)
-
114,819
(11,595)
323
109,898
103,547
(23,188)
86,710
(22,748)
(353)
63,609
(24,812)
78,735
(23,184)
(181)
55,370
36.4
23.0
100
2013
$'000
231,205
108,612
198,369
939
539,125
246,082
431,658
677,740
34.0
20.0
100
2012
$'000
206,277
90,636
171,113
510
468,536
238,192
471,350
709,542
1,489,410
1,357,998
1,216,865
1,178,078
291,298
160,762
281,817
35,440
-
292,485
165,733
234,391
30,233
27,781
344,956
125,259
195,195
5,764
21,612
350,862
117,521
162,590
3,926
23,963
720,093
607,375
524,079
519,216
1,489,410
1,357,998
1,216,865
1,178,078
2.95
2.38
184,074
178,519
5,062
4,517
614,280
579,799
2.34
176,548
4,636
514,889
2.06
170,687
4,300
513,332
98,272
(11,161)
(3,228)
83,883
(25,730)
58,153
(17,864)
(95)
40,194
25.5
16.0
100
2011
$'000
162,047
74,329
143,795
444
380,615
186,949
364,196
551,145
931,760
336,544
118,011
2,345
4,245
20,622
449,993
931,760
1.67
156,805
3,941
416,497
less cash) – $'000
172,611
198,467
199,001
200,674
150,847
Gearing ratio (debt/debt plus equity) – %
46.6
49.5
48.8
52.3
52.2
Gearing ratio (net debt/net debt plus
total equity) – %
19.7
25.1
27.0
30.0
28.3
Bailment Finance
Bailment finance is a form of financing peculiar to the motor industry, which is provided by financiers on a vehicle by vehicle basis. It is short-term in nature, is
generally secured by the vehicle being financed and is principally represented on the borrower’s balance sheet as vehicle inventory with the liability reflected under
current liabilities. Because of its short-term nature, it is excluded from net debt and the corresponding gearing ratio.
CONTENTS
AP Eagers Foundation – Adtrans
Annual Charity Golf Day
Gender Diversity – Moving Forward
Company Profile
Board of Directors
Executive Management
Directors’ Report
Auditor’s Declaration of Independence
Financial Statements
Notes to and Forming Part of
the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
2
4
6
7
7
8
23
25
31
92
93
95
97
ANNUAL
GENERAL
MEETING
Our Annual General Meeting will be held at
our registered office, 80 McLachlan Street,
Fortitude Valley, Queensland, on Wednesday
25 May 2016 at 9.00am.
FINANCIAL
CALENDAR
2015 financial year end
31 December 2015
Full year results announcement
24 February 2016
Final dividend announcement
24 February 2016
Final dividend record date
29 March 2016
Final dividend payment date
Annual General Meeting
Half year end
15 April 2016
25 May 2016
30 June 2016
Half year results announcement* Late August 2016
Interim dividend announcement* Late August 2016
Interim dividend record date* Mid-September 2016
Interim dividend payment date* Early October 2016
2016 financial year end
31 December 2016
*estimate only, subject to changes notified to the ASX.
A.P. Eagers ANNUAL REPORT 2015
1
ADTRANS ANNUAL
CHARITY GOLF DAY
$1.6 MILLION RAISED TO DATE FOR THOSE IN NEED
PIC 1:General Manager SA Cars, Shaun Swift.
PIC 2: The wonderful staff and volunteers of
Riding for the Disabled, teaming up with Rebel
Ford on the 18th tee.
PIC 3: L to R Stephen Aboud (LHC Capital),
Shaun Swift (General Manager SA Cars), Martin
Ward (CEO AP Eagers) and Darren Lehmann
(Australia Cricket Coach).
PIC 4: Shelley Blackwell (Financial General
Manager SA Cars) and Jo Brokenshire (Group
Service Manager Eblen Subaru) with 2 of the
stars of the day - Umber and Ula from The Royal
Society of the Blind - Autism Assistance Dogs on
the 9th Tee.
Adtrans joined the A.P. Eagers group in 2010. Adtrans is South
Australia’s premier car retailing group and the operator of truck and
bus dealerships in New South Wales, Victoria and South Australia.
HISTORY
As with A.P. Eagers’ other dealerships, Adtrans has a long history of supporting its
community, including charities and local sporting bodies.
Commencing in 1986, Adtrans has been holding its Annual Golf Day where the
company, together with its business partners, raise significant funds for local
charities. To date, the Adtrans Charity Golf Day has raised more than $1.6 million.
2015…
A RECORD BREAKING YEAR
2015 saw the total money raised over the Charity Golf Day event reached almost
$200,000 of which 100% of costs are paid by the Adtrans Group and 100% of all
donations go to the Kids in Need charities.
BENEFICIARIES
Riding For The Disabled
Youth Opportunities
Riding for the Disabled (RDA) is a
worldwide movement represented
internationally by the Federation of
Horses in Education and Therapy
International (HETI), nationally by
Riding for the Disabled Association
of Australia Ltd (RDAA) and within
Australia by State bodies.
Youth Opportunities works with
over 1,000 disadvantaged and
disengaged young people each year
across South Australia to ensure
that no matter what a young person’s
circumstances, they are given the
chance to create a better future.
Royal Society for the Blind
– Autism Assistance Dog
An Assistance Dog is one that has been
trained and matched with a child who
has autism and their family/carers.
The RSB Assistance Dog School is
accredited by the governing body
for these highly specialised dogs,
Assistance Dogs International (ADI).
As such, recognised Assistance Dogs
have legal rights similar to those of
a Guide or Hearing Dog in that they
are allowed to enter public places.
RSB Assistance Dogs provide
benefits in terms of calming roles,
independence, play and social
interactions as well as a range of
client specific tasks tailored to the
child and their family’s needs.
2
A.P. Eagers ANNUAL REPORT 2015
ADTRANS ANNUAL
CHARITY GOLF DAY
MAIN: Australia’s cricket coach, Darren
Lehmann, and team mentor and locker room
motivator, Barry ‘Nugget’ Rees, captivated
200 guests at the 2015 Adtrans Charity
Golf Day that raised almost $200,000 for
children’s charities.
Living Without
Limits Foundation
Living Without Limits seeks to help
all children to overcome challenges,
be participatory, set and achieve their
goals and maximise their potential.
It works to break down barriers and
restrictions and provide opportunities.
A.P. Eagers ANNUAL REPORT 2015
3
GENDER DIVERSITY
- MOVING FORWARD
As a leader within an historically male dominated industry, A.P. Eagers is committed to gender equity and is implementing a
range of measures to ensure this is a business priority. One such example is the creation of our in-house Accelerate Program,
which identifies high potential female employees and provides development and leadership pathways through training and
personal mentoring.
As an organisation, A.P. Eagers understands that continued investment in gender diversity is not only the right thing to do but
will enable A.P. Eagers to attract, develop and retain the best talent – and will assist in achieving optimum long-term results.
A.P. Eagers is proud to introduce you to a few of our high calibre female senior employees.
Amanda Ellison
Corporate Counsel
Antoinette Yerbury
Dee-Ann Leighton
General Manager Marketing & Sales
Payroll Manager
Amanda specialises in commercial
law and has been with AP Eagers
for five years. In her role as
corporate counsel she provides
critical guidance on all legislative
compliance within the organisation.
When not running over the fine print
on commercial contracts, it’s the love
for her family that keeps her busy.
Having led an impressive career
in marketing, HR and operations,
Antoinette is utilising her extensive
knowledge to drive innovative
projects within AP Eagers.
Antoinette enjoys the professional
environment at AP Eagers and is
excited to be part of a company
that is continually evolving.
Dee-Ann has been in the industry
for 20 years, gaining experience
in a range of roles before her
appointment as Payroll Manager.
Her passion for cars especially
the 1950’s Jowett Jupiter means
Dee-Ann has the perfect job.
Jo Brokenshire
Karen Visser
Lyn White
Group Service Manager Eblen Subaru
Jo oversees service departments at
Glenelg, Kingswood and Reynella,
managing the service requirements of
approximately 1500 cars each month.
Jo is proud to be a successful woman in
an industry predominately associated
with men, and she attributes the
positive culture within AP Eagers as
a factor in her career achievements.
Finance / Business Manager
Metro Ford
Guiding people through the details of
finance and insurance is Karen’s key role
as Business Manager at AP Eagers.
Karen believes the opportunities
for professional growth are
unlimited at AP Eagers; everyone is
encouraged to strive for the top.
Outside of work Karen’s
passion is breeding and riding
Australian Stock Horses.
Dealer Principal Eblen Subaru
Lyn is responsible for all aspects of
the business, including liaising with
manufacturers, staff and clients.
A recipient of the Northern Territory
Business Woman of the Year award,
Lyn enjoys working with professional
teams across all departments, and is
excited that the skills and knowledge
base in the company seems limitless.
4
A.P. Eagers ANNUAL REPORT 2015 AP EAGERS
ACCELERATE
PROGRAM
AP Eagers Accelerate
Program identifies high
potential female employees
and provides development
& leadership pathways
though training and
personal mentoring.
The program assists us
to identify and remove
barriers to the creation of a
more diverse workforce.
Shelley Blackwell
Sophie Moore
Financial General Manager SA Cars
Chief Financial Officer
Shelley’s focus is to optimise profits
and implement best practice.
CPA qualified, Shelley has a wealth
of knowledge acquired from
two decades in the industry.
Shelley loves to spend time with
her family, who also volunteer for
the Royal Society for the Blind, by
caring for guide dogs in training.
Sophie was appointed Chief Financial
Officer at AP Eagers in 2015 after
executive roles at PwC and Flight Centre.
AP Eagers’ strong record and
innovative nature is what inspired
her to join the company.
Sophie also enjoys entering some of the
world’s toughest marathons, having
competed in New York, Berlin and Paris.
Tamara Ryan
Tegan Blockey
Teri-Louise Comerford
Group Internal Audit Manager
Sales Manager Bridge Toyota
National Sales Manager Car Care
As Group Internal Audit Manager
Tamara’s primary function is to provide
an independent view to the board and
management of the organisation to
ensure sound corporate governance.
As Sales Manager at Bridge Toyota,
Tegan loves sales and everything
about her role. She thrives on
new challenges and variety,
with no two days the same.
When not working, Tamara loves
spending time with her family
and two German Shepherds.
Tegan and her team have received
Toyota’s prestigious National Gold
Sales Award, an honour bestowed
on only one dealership each year.
Teri-Louise is responsible for Car Care
in dealerships, which includes training,
supporting and assisting all Car Care
management teams and consultants.
She says AP Eagers supports
innovative ways of thinking and is open
to any ideas that benefit the business.
Her weekends are spent relaxing
with family by the water.
5
A.P. Eagers ANNUAL REPORT 2015 COMPANY PROFILE
ABOUT A.P. EAGERS
A.P. Eagers Limited is a pure
automotive retail group with our
main operations in southern and
central Queensland, Adelaide,
Darwin, Melbourne, Sydney, the
Newcastle/Hunter Valley region of
New South Wales and Tasmania.
We represent a diversified portfolio
of automotive brands, including
all 12 of the top 12 selling car
brands in Australia and 10 of the
top 11 selling luxury car brands. In
total, we represent 27 car brands
and 12 truck and bus brands.
Our core business consists of the
ownership and operation of motor
vehicle dealerships. We provide full
facilities including the sale of new
and used vehicles, service, parts and
the facilitation of allied consumer
finance. To complement our vehicle
dealerships, we also operate a
substantial motor vehicle auction
business, Brisbane Motor Auctions.
Our operations are generally provided
through strategically clustered
dealerships, the majority of which
are situated on properties owned
by us, with the balance leased.
We own $276 million of prime real
estate positioned in high profile, main
road locations in Brisbane, Sydney,
Melbourne, Adelaide and Newcastle.
With 4,200 employees and 5,160
shareholders, our sales revenue is
running at over $3.2 billion per annum.
DIVIDENDS AND EPS GROWTH
We have paid a dividend to shareholders
every year since listing in 1957, and
a record dividend in 14 of the past 15
years. A.P. Eagers also has a track
record of delivering Earnings Per
Share (EPS) growth from acquisitions.
ORIGINS
Our origins trace back to 1913 when
Edward Eager and his son, Frederic,
founded their family automotive
business, E.G. Eager & Son Ltd, which
continues today as a wholly-owned
subsidiary of A.P. Eagers Limited.
6
After establishing the first motor
vehicle assembly plant in Queensland
in 1922, the business secured the
distributorship of General Motors’
products in Queensland and northern
New South Wales in 1930 and listed
as a public company in 1957 under
the name Eagers Holdings Limited.
A merger in 1992 with the listed A.P.
Group Limited saw the addition of a
number of new franchises and our
name change to A.P. Eagers Limited.
Further new franchises and geographic
diversification have since followed.
GROWTH
Since 2000, our sales revenue
has increased from $500 million
to more than $3.2 billion, profit
after tax has increased from $4.3
million to $87.0 million in 2015
and the number of employees has
increased from 600 to 4,200.
Our operations expanded into
the Northern Territory with the
acquisition of Bridge Toyota in 2005.
In 2007, we established ourselves on
the Gold Coast with the acquisition
of Surfers City Holden.
The addition of Kloster Motor
Group in the Newcastle/Hunter
Valley region in 2007 heralded our
advance into New South Wales. Our
operations in that state grew with
the acquisition of Bill Buckle Auto
Group in Sydney’s northern beaches
region including Brookvale in 2008.
In 2010, we acquired the publicly listed
Adtrans Group Limited, being South
Australia’s premier car retailer and the
operator of truck and bus dealerships
in New South Wales, Victoria and
South Australia. This acquisition
represented our direct entry into the
South Australian, Victorian and truck
markets. We also acquired Caloundra
City Autos Group in Queensland’s
growing Sunshine Coast region in 2010.
Further expansion of our truck and
bus operations occurred in late
2010 with the addition of six new
franchises in New South Wales,
Victoria and South Australia.
In 2012, we established Carzoos
to provide used car customers
with a 48 hour money-back
guarantee and other benefits.
Daimler Trucks Adelaide and
Eblen Motors were acquired in
2011 and Main North Nissan and
Renault and Unley Nissan and
Renault, Adelaide, were acquired in
2013, to complement our existing
operations in South Australia.
A strategic holding in listed
Automotive Group Holdings Limited
(AHG) was acquired in 2012, providing
A.P. Eagers with exposure to the West
Australian market. This investment
represented 19.9% of AHG, valued
at $275 million, at the end of 2015.
Northern Beaches Land Rover and
Jaguar were added to our Bill Buckle
operations at Brookvale during 2013.
A new business, Precision Automotive
Technology, was established in 2013
to source and distribute our own
range of car care products (paint
protection, interior protection,
electronic rust protection and
window tint products) under the
brand names, Perfexion and 365+.
In 2014, our Queensland operations
expanded through the acquisition of
Ian Boettcher Motors representing
Mazda, Nissan, Volkswagen, Suzuki
and Proton in Ipswich, and the
Craig Black Group representing
Toyota, Hyundai, Volkswagen,
Mitsubishi and Great Wall at multiple
locations in south-west and central
Queensland. Volvo Sunshine Coast
and Reynella Subaru were also
added to the Group during 2014.
2016 has seen further growth with
the acquisition of the car and truck
retail businesses operating as Motors
Group Tasmania, including state-
wide representation for Holden,
HSV, Hyundai, Citroen, Isuzu Trucks,
Volvo Trucks, Mack Trucks and UD
Trucks, together with the Victorian
businesses Silver Star Motors
(Mercedes-Benz) in Doncaster and
Burwood, Mercedes–Benz Ringwood
and Waverley Toyota in Glen Waverley.
These businesses represent a
total of 12 car and truck brands.
Our organic growth plans for
Carzoos are progressing well
with a repositioning launch
expected during 2016.
FURTHER INFORMATION
Please visit www.apeagers.
com.au for further information
about A.P. Eagers Limited.
A.P. Eagers ANNUAL REPORT 2015 BOARD OF DIRECTORS
Timothy Boyd Crommelin
BCom, FSIA, FSLE
Peter William Henley
FAIM, MAICD
Chairman, Member of Audit, Risk &
Remuneration Committee
Director, Member of Audit, Risk &
Remuneration Committee
Independent, non-executive Director
since February 2011. Executive
Chairman of Morgans Financial Ltd.
Director of Senex Energy Ltd (appointed
October 2010) and Australian Cancer
Research Foundation. Member of
the University of Queensland Senate.
Former Alternate Director of Ausenco
Ltd (appointed February 2013, retired
May 2013). Mr Crommelin has broad
knowledge of corporate finance,
risk management and acquisitions
and over 40 years’ experience in the
stockbroking and property industry.
Martin Andrew Ward
BSc (Hons), FAICD
Managing Director, Chief Executive Officer
Joined the Company in July 2005.
Appointed Chief Executive Officer in
January 2006. Appointed Managing
Director in March 2006. Motor
vehicle dealer. Director of Australian
Automotive Dealer Association Limited
(appointed January 2014). Mr Ward
was formerly the Chief Executive
Officer of Ford Motor Company’s
Sydney Retail Joint Venture.
Nicholas George Politis
BCom
Director
Non-executive Director since May
2000. Motor vehicle dealer. Executive
Chairman of WFM Motors Pty Ltd, A.P.
Eagers Limited’s largest shareholder.
Mr Politis is Director of a substantial
number of other proprietary limited
companies and has vast automotive
retail industry experience.
Independent, non–executive Director
since December 2006. Director of
Thorn Group Ltd (appointed May
2007). Former Deputy Chairman of
MTQ Insurance Services Ltd. Former
Chairman and Chief Executive Officer
of GE Money Motor Solutions. Mr
Henley has over 30 years’ local
and international experience in
the financial services industry.
Daniel Thomas Ryan
BEc, MBus, FAICD
Director
Non-executive Director since January
2010. Director and Chief Executive
Officer of WFM Motors Pty Ltd, A.P.
Eagers Limited’s largest shareholder,
and Director of a substantial number of
other proprietary limited companies.
Mr Ryan has significant management
experience in automotive, transport,
manufacturing and retail industries.
David Arthur Cowper
BCom, FCA
Director, Chairman of Audit, Risk &
Remuneration Committee
Independent, non-executive Director
since July 2012. Chartered accountant,
with more than 35 years in the
profession. Former partner of Horwath
Chartered Accountants and Deloitte
Touche Tohmatsu. Former Chairman of
Horwath’s motor industry specialisation
unit for six years. Mr Cowper’s area
of professional specialisation while
at Horwath and Deloitte was in
providing audit, financial and taxation
services to public and large private
companies in the motor industry.
EXECUTIVE
MANAGEMENT
Keith Thomas Thornton
BEc
General Manager Queensland &
Northern Territory
Licensed motor dealer. Responsible
for all operational issues in
Queensland and Northern Territory
since June 2007, having overseen
the Group’s new and used vehicle
operations since December 2005
and held dealership General
Manager roles since joining the
Group in 2002. Retail and wholesale
operations experience in volume,
niche and prestige industry
sectors. Prior industry experience
with various manufacturers.
Stephen Graham Best
BBus, Grad Dip Mgt, FIPA, GAICD
Chief Financial Officer
(ceased 3 August 2015)
Chief Financial Officer from October
2007 to August 2015. Appointed
Chief Commercial Officer in August
2015 to provide increased focus on
strategic growth objectives. Previous
senior finance and commercial
roles in the resources industry with
MIM Holdings Limited, Xstrata PLC
and Consolidated Rutile Limited.
Denis Gerard Stark
LLB, BEc
General Counsel & Company Secretary
Commenced in January 2008.
Responsible for overseeing the
company secretarial, legal, work
health & safety, insurance and investor
relations functions and property
portfolio. Admitted as a solicitor in
Queensland in 1994 and Victoria in
1997. Affiliate of Governance Institute
of Australia. Previous company
secretarial and senior executive
experience with public companies.
Sophie Alexandra Moore
B.Bus, CA, F Fin
Chief Financial Officer
(appointed 3 August 2015)
Commenced in August 2015.
Responsible for the Group’s
accounting, taxation, internal audit
and treasury functions. Admitted
as a chartered accountant in 1997.
Previous senior finance roles with
PricewaterhouseCoopers and Flight
Centre Travel Group Limited.
7
A.P. Eagers ANNUAL REPORT 2015 DIRECTORS’
REPORT
The Directors present their report together with the consolidated financial report of the Group being A.P. Eagers Limited
ABN 87 009 680 013 (“the Company”) and its controlled entities, for the year ended 31 December 2015 and the auditor’s
report thereon.
DIRECTORS
The Directors of the Company at any time during or since the end of the year, and their qualifications, experience and special
responsibilities, are detailed on page 7.
DIRECTORS’ MEETINGS
The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each
Director during the year were:
T B Crommelin(1)
N G Politis
M A Ward
P W Henley(1)
D T Ryan
D A Cowper (1)
Board Meetings
Audit, Risk & Remuneration
Committee Meetings
Held
Attended
Held
Attended
9
9
9
9
9
9
8
9
9
9
9
9
4
-
-
4
-
4
4
-
-
4
-
4
(1) Audit, Risk & Remuneration Committee members.
COMPANY SECRETARY
The Company Secretary and his qualifications and experience are detailed on page 7.
PRINCIPAL ACTIVITIES
The Group’s principal activities during the year consisted of the selling of new and used motor vehicles, distribution and sale
of parts, accessories and car care products, repair and servicing of vehicles, provision of extended warranties, facilitation of
finance and leasing in respect of motor vehicles, and the ownership of property and investments. The products and services
supplied by the Group were associated with, and integral to, the Group’s motor vehicle dealership operations. There were no
significant changes in the nature of the Group’s activities during the year.
8
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
FINANCIAL & OPERATIONAL REVIEW
The Directors of the Company are pleased to report a record 2015 statutory Net Profit Before Tax of $121.0 million. This
compares to a Net Profit Before Tax of $102.8 million in 2014, an increase of 17.6% on the previous corresponding period (pcp).
Net Profit After Tax was $87.0 million in 2015 compared to $76.7 million in 2014, an increase of 13.5% on the pcp. Earnings per
share (basic) for 2015 were 47.6 cents compared to 43.0 cents on the pcp.
Strong trading performances in Queensland included full year contributions from businesses acquired in the second half of
2014 and New South Wales dealership operations. These more than offset weaker market conditions in the South Australia,
South West Queensland and national heavy truck markets. The increases in profitability were also due to increased dividend
income from our strategic investment in Automotive Holdings Group Ltd (AHG) and gains on sale of investments and property.
Profit Comparison
Statutory EPS (basic) cents
Statutory profit after tax
Statutory profit before tax
Impairment adjustments (1)
Freehold Property adjustments (reversal)
Goodwill impairment
Business acquisition costs(2)
GST refunds(3)
Underlying profit before tax
Underlying profit after tax(4)
Underlying EPS (basic) cents
Full Year to
December 2015
Full Year to
December 2014
$ Million
$ Million
% Change
47.6
87.0
121.0
2.1
5.5
0.2
(2.3)
126.4
91.7
50.7
43.0
76.7
102.8
0.6
-
2.8
-
106.2
79.0
44.3
11%
13%
18%
-
-
-
-
19%
16%
14%
(1)
Represents the aggregate value of freehold property fair value adjustments (positive and negative) to the Statement of Profit and Loss and non-cash
impairment of the goodwill associated with the National Truck Division.
(2) Business acquisition costs include taxes, legal and other costs associated with business acquisitions.
(3) Benefit from tax refunds associated with previous years’ GST payments.
(4) Underlying profit after tax includes the adjustments per Note (1) above, and the related tax impact at 30% equating to $1.6 million in 2015 (2014: $1.0 million).
9
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
External Environment
Business Initiatives
According to Federal Chamber
of Automotive Industry statistics,
Australia’s new motor vehicle sales
increased by 3.8% in 2015 to 1,155,408
units compared to a 2.0% decline in
2014. This represents an all-time
record year of sales exceeding the
previous 2013 record of 1,136,227 units.
In response to further contraction in
the resources sector, new vehicle sales
in Western Australia and Northern
Territory decreased on the previous
year by 7.9% and 4.3%, respectively.
Strong growth was experienced in
New South Wales, Queensland, ACT
and Victoria, with increases of 6.9%,
5.4%, 4.4% and 4.2%, respectively.
Government sales decreased by
1.4% in 2015, whilst private and
business sales recorded stronger
growth than prior years at 3.7% and
4.9% growth. Luxury brands such as
Audi, BMW, Mercedes-Benz, Land
Rover, Volvo, Jaguar, Mini, Lexus and
Porsche all recorded record annual
sales due mainly to their respective
lower priced product entry models
generating increased market share.
Australian manufactured
vehicles represented only 8.4%
(2014: 9.0%) of new cars sold in
the national market in 2015.
Whilst the Company’s operational
performance benefitted from activity
generated by the November 2014
hail event in Brisbane and the initial
take-up of the Federal Government’s
$20,000 tax incentive, the Group’s
continued focus on and increasing
return from business improvement
initiatives has delivered a strong
second half performance.
Our Queensland/NT and NSW Car
Divisions capitalised on the strong
growth in vehicle sales in calendar
year 2015 resulting in both Divisions
contributing record financial results
for the full year to December 2015.
This included a full year’s contribution
from the Boettcher Group and the
Black Group businesses acquired in
the second half of 2014 which were
boosted further by better than expected
performances from the Boettcher
Group and Central Highlands Toyota.
Continued focus and improvement to
our used car operations yielded another
record result from this segment of the
business. As previously highlighted,
the strategy of expanding our footprint
in this segment, taking advantage of
the associated finance, insurance and
car care income opportunities and
consolidating market share nationally
continue to produce accretive income
and act to insulate overall trading
results against fluctuations in the new
car market and individual franchise
performance. The 2016 calendar
year will see the launch of an all-new
Carzoos business model aimed at
delivering a completely new way for
customers to buy and sell used cars.
The relocation and consolidation of
the Eagers Parts Distribution Centre
from Newstead to Eagle Farm,
Queensland, in conjunction with a
significant investment in state of
the art warehousing and logistics
systems, supported a full year record
parts result. Improved market share,
revenue growth and cost savings,
while delivering a better service to
our Dealer and Trade customers,
should be further enhanced with the
planned move of our Metro Ford Parts
Distribution Centre into the Eagle Farm
facility by early 2017. This warehouse
facility will support the majority of
franchises represented in South East
Queensland in the single, largest and
most efficient parts distribution centre
for OEM vehicle parts in Queensland.
The previously announced sale of our 80
McLachlan Street, Fortitude Valley site,
for $22.2 million is due for completion
in March 2016. A gain on the sale of
$3.2 million was recognised in
2015. The luxury brands currently
located on this site will continue
operations until they relocate to new
facilities on Company-owned land
in Newstead which are expected
to be completed in late 2016.
The strategic 19.9% shareholding
in AHG as at 31 December was
valued at $275.3 million based
on their closing share price of
$4.52. Whilst not included in the
Company’s Statutory Profit after
Tax, a before tax unrealised gain of
$43.2 million has been recognised
in the Statement of Comprehensive
Income for the 2015 year.
10
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
Financial Performance
Total revenue increased by 13.6%
to $3.2 billion in 2015 (2014: $2.9
billion), with declines in truck
vehicle sales and subdued trading
in South Australia being more
than offset by strong trading in our
Queensland and NSW car divisions,
including full year contributions from
businesses we acquired in 2014.
Other revenue includes increased
full year dividends from AHG and
Smartgroup Corporation Limited
(SIQ) of $13.8 million, compared to
$12.1 million in 2014, profit on the sale
of SIQ shares of $3.5 million, offset
by lower insurance claim proceeds
of $7.0 million compared with $19.5
million related to the 27 November
2014 Brisbane hail storm event.
EBITDA (excluding asset impairment
charges) increased by 18.1% to $163.1
million (2014: $138.1 million) and
profit margins continued to trend
upwards, with EBITDA/Revenue of
5.0% for 2015 compared to 4.8% in 2014
and NPBT/Sales improving to 3.7%
for 2015 from 3.6% in 2014. Further
improvements in new car trading,
finance and insurance commission
based earnings, used car trading and
gains on the sale of investments and
properties were the main contributors
to the improved margin performance
offset by impairment. On an underlying
basis NPBT/Sales for 2015 was 3.9%.
A before tax profit of $3.0 million
(net) was realised on the sale of
properties in Newstead and Fortitude
Valley in 2015, as compared to
a $3.9 million gain in 2014.
Borrowing costs declined by 3.6% to
$21.3 million (2014: $22.1 million),
in line with lower average debt
and interest rates. The increase in
depreciation and amortisation costs by
5% to $13.2 million (2014: $12.6 million)
reflects the additional depreciation on
businesses acquired in 2014 and higher
development and refurbishment capital
expenditure in 2015 which increased to
$18.9 million from $8.7 million in 2014.
Business acquisition costs of $0.2
million were expensed in the financial
year, compared to $2.8 million
in 2014 relating to the Boettcher
and Black Group acquisitions in
the second half of that year.
The Company’s net cash provided by
operating activities was $84.6 million
in 2015 (2014: $99.2 million), with
increases due to improved profitability
being offset by lower insurance claim
proceeds, minimal dividends from MTQ
Insurance together with higher tax
payments due primarily to capital gains
tax paid on the properties sold in 2014.
Results Summary
Consolidated results
Year Ended 31 December
2015
$’000
2014
$’000
Increase/(Decrease)
Revenue from operations
3,201,755
2,808,607
Other revenue
Total revenue
44,621
49,506
3,246,376
2,858,113
Earnings before interest, tax, depreciation and
amortisation and impairment (EBITDA)
Depreciation and amortisation
Impairment charge/net reversal
163,077
138,081
(13,216)
(7,610)
(12,583)
(578)
Earnings before interest and tax (EBIT)
142,251
124,920
Borrowing costs
Profit before tax
Income tax expense
Profit after tax
Non-controlling interest in subsidiaries
Attributable profit after tax
(21,293)
(22,080)
120,958
102,840
(33,943)
87,015
(798)
86,217
(26,150)
76,690
(460)
76,230
Earnings per share - basic
47.6 cents
43.0 cents
14%
(10)%
14%
18%
5%
-
14%
(4)%
18%
30%
13%
-
13%
11%
11
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
Segments (1)
Financial Position
The profit contribution from the
Company’s Car Retail segment was
42.4% higher at $98.0 million compared
to $68.8 million in 2014. Revenue
increased by 16.8%, with the increase
primarily attributable to the record
results in Queensland and NSW. The
strong trading was also reflected in
the parts and service business with
improvements across all businesses,
particularly Queensland and NSW.
The National Truck Division (Truck
Retail segment) recorded a poor
result providing a loss contribution
of $3.2 million including the goodwill
impairment write down of $5.5 million
in 2015 compared to $3.5 million profit
in 2014. Challenging new and used
heavy truck trading conditions resulted
in a decrease in revenue of 7.8%.
The value of the property portfolio
decreased to $249 million as at 31
December 2015 compared to $278
million as at 31 December 2014
due primarily to the previously
announced disposals of properties
in Fortitude Valley and Newstead.
Property segment profit contribution
of $16.3 million was higher than the
previous year of $14.8 million, due
to a $3 million net realised gain on
properties sold. The overall fair value
adjustments did not impact segment
results as the $2.2 million gain on
Woolloongabba property was offset
by property valuation decrease of $2.1
million for the Milperra truck site.
The Investment segment registered
a pre-tax contribution of $61.1 million
for 2015 as compared to a $10.6
million for the pcp, due primarily to an
unrealised revaluation gain on the AHG
and SIQ investments of $46.2 million.
(1)
Note: changes in fair value of property and
investments are recognised as profit and loss
adjustments for segment reporting purposes
but are not recorded in the Group’s Statutory
Net Profit After Tax.
12
The Company’s financial position
strengthened further during the 2015
year. EBITDA Interest Cover increased
to 7.6 times as at 31 December
2015 compared to 6.2 times as at 31
December 2014, due to lower average
interest rates and improved profit levels.
Corporate debt (Term and Capital Loan
Facility) net of cash on hand as at 31
December 2015 was lower at $171.5
million (2014: $190.2 million) and total
debt including vehicle bailment and
finance leases net of cash on hand was
higher at $576.7 million as compared to
$556.0 million at 31 December 2014. The
increase was primarily due to additional
bailment finance related to increased
new car inventory held at year end.
Total gearing (Debt /Debt + Equity),
including bailment inventory financing
and finance leases, was 46.6% as at 31
December 2015, as compared to 49.5%
as at 31 December 2014. Bailment
finance is cost effective short-term
finance secured against vehicle
inventory on a vehicle by vehicle basis.
Gearing excluding bailment, finance
leases and including cash on hand,
was 19.6% as at 31 December 2015
compared to 24.3% at the end of 2014.
Total inventory levels increased
to $530.2 million at 31 December
2015 from $469.2 million at 31
December 2014 due to higher new car
inventory held by strong performing
dealerships in Queensland and NSW.
Net tangible assets increased to $2.95
per share as at 31 December 2015,
compared to $2.38 per share as at 31
December 2014, due to higher asset
balances including cash and available for
sale investments including AHG shares.
Outlook and Strategy Update
The national new vehicle market
continues to grow with low interest
rates supporting customer affordability
and exceptional product offerings
driving customer demand.
Strategically, the Company remains
focussed on automotive retail and a
two pronged approach of driving value
from existing business through process
improvement, operating synergies,
portfolio management and organic
growth, whilst taking advantage of
value adding acquisition opportunities
as they present themselves.
The Company has already announced
the $114 million acquisition of the Birrell
Motors Group (ASX announcement
06/11/2015) which is expected to be
completed on 31 March 2016. This
business employs 600 staff with an
annual revenue of approximately
$410 million and includes the car and
truck retail businesses operating as
Motors Group Tasmania, Silver Star
Motors (Mercedes-Benz) in Doncaster
and Burwood, Victoria, the recently
opened Mercedes-Benz Ringwood
dealership in Victoria, and Waverley
Toyota in Glen Waverley, Victoria.
The Company has also announced
the $30 million acquisition of the
Crampton Automotive Group (ASX
announcement 19 February 2016)
which is expected to be completed on
1 July 2016. This business employs 170
staff with an annual revenue of $130
million and includes West Star Motors
and Toowoomba Holden operating
in Toowoomba and representing the
Mercedes-Benz, Hyundai, Peugeot,
Citroen, Performax, HSV and Holden
brands along with Port City Autos
representing the Holden, Subaru,
Chrysler Jeep Dodge, and Isuzu
Trucks brands in Maryborough/
Hervey Bay, Queensland.
Key focus areas in 2016 are:
• Earnings accretive dealership and
ancillary market acquisitions;
• The ongoing development and
optimisation of our existing
used car model while launching
the all-new Carzoos model;
• Continued redevelopment and
reorganisation of inner city
(Newstead, Woolloongabba
and Windsor) facilities to
provide improved long-term
solutions for all stakeholders;
• Further rationalisation of our
Parts business to reduce the
cost base, improve efficiency
and eliminate sub-economic
business trading terms; and
• A turnaround in the performance
of our truck business.
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
Dividends
Dividends paid to members during the financial year were as follows:
Year ended 31 December
Final ordinary dividend for the year ended 31 December 2014 of 18.0 cents (2013: 15.0 cents)
per share paid on 17 April 2015
Interim ordinary dividend of 12.0 cents (2014: 9.0 cents) per share paid on 7 October 2015
2015
$’000
2014
$’000
32,239
26,516
22,089
54,328
15,954
42,470
A fully franked final dividend of 20 cents per share (2014: 18.0 cents) has been approved for payment on 15 April 2016 to
shareholders who are registered on 29 March 2016 (Record Date). When combined with the interim dividend of 12.0 cents per
share paid in October 2015, the total dividend based on 2015 earnings is 32 cents per share, fully franked (2014: 27 cents). The
Company’s dividend reinvestment plan (DRP) will not operate in relation to the final dividend.
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
In the Directors’ opinion there was no
significant change in the state of affairs
of the Group during the financial year
that is not disclosed in this report or
the consolidated financial report.
MATTERS SUBSEQUENT TO THE END
OF THE FINANCIAL YEAR
The Directors are not aware of any
matter or circumstance not dealt
with in this report or the consolidated
financial report that has arisen since
the end of the year under review
and has significantly affected or
may significantly affect the Group’s
operations, the results of those
operations or the state of affairs of
the Group in future financial years.
ENVIRONMENTAL REGULATION
The Group’s property development
and service centre operations are
subject to various environmental
regulations. Environmental licences
are held for particular underground
petroleum storage tanks.
Planning approvals are required for
property developments undertaken by
the Group in relevant circumstances.
Authorities are provided with
appropriate details and to the
Directors’ knowledge developments
during the year were undertaken
in compliance with planning
requirements in all material respects.
Management works with regulatory
authorities, where appropriate, to
assist compliance with regulatory
requirements. There were no material
adverse environmental issues during
the year to the Directors’ knowledge.
REMUNERATION REPORT
1.
Principles Used to Determine
Remuneration
The board as a whole is responsible
for recommending and reviewing
the remuneration arrangements of
non-executive Directors, whilst the
board (excluding the Chief Executive
Officer) reviews the performance
of the Chief Executive Officer on
a continual basis and ensures the
reward framework is appropriate.
To assist the board, the Audit, Risk &
Remuneration Committee reviews and
makes recommendations regarding
these remuneration arrangements.
The Chief Executive Officer in
consultation with the Chairman
reviews the performance of the Group’s
senior executives on an ongoing basis
and ensures the appropriateness
of their reward framework.
Remuneration packages are intended to
properly reflect the individual’s duties
and responsibilities, be competitive
in attracting, retaining and motivating
staff of the highest quality and be
aligned to shareholder interests.
The remuneration framework for
executives has been developed to
provide, where appropriate, a high
proportion of “at risk” remuneration.
This is designed to reflect competitive
reward for contribution to growth in
group profits and shareholder wealth.
In considering the impact of the
Group’s performance on shareholder
wealth, the Directors have regard
to various factors including the
metrics in the below table.
Statutory NPAT ($’000)
Statutory Earnings per share - basic (c)
Dividend per share (c)
Share Price at year end ($)
2015
87,015
47.6
32
12.70
2014
76,690
43.0
27
5.98
2013
63,962
36.4
23
4.96
2012
55,551
34.0
20
4.38
2011
40,289
25.5
16
2.36
13
A.P. Eagers ANNUAL REPORT 2015
A performance right is a right to
be given a fully paid ordinary share
in the Company at a nil exercise
price upon the achievement
of performance hurdles.
An option is a right to be given a
fully paid ordinary share upon
payment of an exercise price and
achievement of performance hurdles.
The exercise price is the market
share price at or about the grant
date or when the executive agreed in
principle to participate in the plan.
The performance rights and options
are divided into separate tranches
for each annual performance period.
Each tranche of options may be
further divided into sub-tranches. The
tranches and sub-tranches are tested
against the performance hurdles for
the relevant performance period.
(i) Performance Hurdles
Pre-determined performance
hurdles for the relevant performance
period must be achieved for
performance rights and options to
vest. Performance hurdles include:
•
•
•
the Company must meet the
applicable Earnings Per Share
(EPS) hurdle (as described below).
the Company must meet any
prescribed interest cover ratio,
being at least 2.5 times.
the executive must remain
permanently employed
by the Group.
All performance hurdles for a
performance period must be met
for the relevant rights and options
to vest. The board does, however,
retain discretion to waive hurdles
in exceptional circumstances
where it is believed to be in the
Company’s best interests to do so.
DIRECTORS’
REPORT
(CONTINUED)
2.
Non-executive Directors’
Remuneration Framework
Non-executive Directors are
remunerated for their services by
way of fees (and where applicable,
superannuation) from the maximum
amount approved by shareholders
in general meeting for that purpose,
currently $750,000 per annum,
which was fixed at the annual
general meeting in 2015.
For the year under review,
non-executive Director fees
were $85,000 per annum plus
superannuation benefits, and the
Chairman’s fee was $100,000 per
annum plus superannuation.
The board, with the assistance of
the Audit, Risk & Remuneration
Committee, annually reviews non-
executive Director fees, taking into
account relevant market conditions.
Non-executive Directors do not
participate in schemes designed for
the remuneration of executives, equity
schemes or retirement allowance
programmes, nor do they receive
performance-based bonuses.
3.
Executives’ Remuneration
Framework
a) Base Pay
Each executive is offered a competitive
base pay to reflect the market for a
comparable role. Base pay is reviewed
annually and on promotion to ensure it
remains competitive with the market.
It may be delivered as a combination
of cash and superannuation that the
executive elects to salary sacrifice.
b) Benefits
Executives receive benefits including
the provision of fully maintained motor
vehicles, personal health and fitness
programs and, in the case of the Chief
Executive Officer, personal insurance.
Retirement benefits are delivered
under superannuation funds providing
accumulation benefits. No lump
sum defined benefits are provided.
14
c) Short-term Performance Incentives
(i)
Incentive Pool / Bonus
A short-term incentive pool was
allocated to the Chief Financial
Officer, Company Secretary and
General Manager Queensland and
Northern Territory, up to a fixed
percentage of their base salaries
for the year under review. These
allocations were determined on a
discretionary basis during annual
review by the Chief Executive Officer in
consultation with the Chairman after
considering individual and Company
achievements and performances.
The short-term incentive pool is
not available to the Chief Executive
Officer. In future years it will only
be available to non-commission
based key management personnel
(excluding the Chief Executive Officer)
in accordance with their contractual
arrangements, typically between
10% and 30% of base salary.
(ii) Commission Structure
A commission structure is included
in the remuneration for the General
Manager Queensland and Northern
Territory. The commission is set at
a percentage of net profit before
tax of relevant business units and
is therefore based on measurable
business performance and designed
to improve shareholder value.
d) Executive Incentive Plan (EIP)
The EIP was approved by shareholders
at the annual general meeting in
2013. It is intended as both a long-
term and short-term incentive for key
management personnel, focussing
on corporate performance and the
creation of shareholder value over
multi-year periods. The EIP is not
available to non-executive Directors.
Through the EIP, executives are
driven to improve the Company’s
performance and shareholder return.
This is accomplished through the grant
of performance rights and options
which reward the achievement of
pre-determined group performance
hurdles and allow executives to
share in the Company’s growth.
The performance hurdles are
explained in further detail below.
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
(ii) EPS Hurdles
(iii) CEO’s Participation in EIP
•
A separate EPS performance hurdle
applies for each tranche or sub-tranche
of performance rights and options.
These EPS hurdles are pre-determined
using a base-line EPS when the
participant agreed to join the plan.
In general, the Company must achieve
a minimum of 7% annual compound
growth in diluted EPS above the base-
line before any performance rights or
options will vest for the performance
period, with 10% annual compound
growth required for all performance
rights and options to vest for the period.
As these “at risk” earnings are
demonstrably linked to the creation of
shareholder value, it is considered that
if an EPS hurdle is not achieved at the
end of a 12 month performance period,
re-testing would be appropriate to allow
for market reaction to the Company’s
longer term strategic initiatives.
If the EPS hurdle is not achieved at the
end of the initial 12 month performance
period, re-testing would take place
12 months later. If the EPS hurdle is
not achieved on the re-test, it may be
re-tested a second time a further 12
months later. However, there cannot be
more than two re-tests. Performance
rights and options immediately lapse if
they do not vest on the second re-test.
At the Company’s annual general
meeting in 2014, shareholders
approved the Chief Executive Officer,
Mr Ward, participating in the EIP
for the five years from 2015 to 2019.
With 96.6% of proxy votes in favour
or at the Chairman’s discretion,
shareholders approved the following:
• Mr Ward’s performance hurdles
are measured over the five
year period 2015 to 2019.
• Before any of Mr Ward’s
performance rights or options
will vest for an individual year, the
Company must achieve at least
7% annual compound growth in
diluted EPS above the base-line
EPS. The base-line was set at
the diluted EPS for 2013. This
base-line was used in order to
give shareholders visibility of the
base-line before they approved Mr
Ward’s rights and options at the
annual general meeting in 2014.
• For 100% of Mr Ward’s performance
rights and options to vest for the five
years, the Company must achieve at
least 10% annual compound growth
in diluted EPS above the base-line.
The cost to the Company of Mr Ward’s
participation in the EIP is determined
as follows:
• There has been no increase
to the average annual cost to
the Company of Mr Ward’s
participation in the EIP since 2010.
If 100% of the performance rights
and options are to vest over the
five year period 2015 to 2019
(requiring at least 10% annual
compound growth in diluted EPS
for five years), the recognised
cost of the plan will average
$850,000 per annum being the
fair value at grant date. However,
accounting standards require
that the cost be recognised based
on the progressive recognition
of each share option grant over
its expected vesting period,
as shown in the remuneration
table on page 19, which results
in a higher overall cost of the
EIP in the earlier years and a
lower cost in later years. On the
assumption that all performance
hurdles will be achieved over the
five year period, the total cost
recognised in each year will be as
shown in the following graphs.
•
If no performance hurdles at
all were to be achieved over
the five year period, then no
performance rights or options
would vest and the plan would
cost the Company zero dollars.
• By way of comparison, if only 50% of
the performance rights and options
by value were to vest each year
over the five year period (requiring
7% annual compound growth in
diluted EPS for five years), the cost
of the plan would be on average
$425,000 per annum for 5 years.
s
’
0
0
0
$
1500
1200
900
600
300
0
Accounting accrual
Average annual cost
1500
1200
s
’
0
0
0
$
900
600
6
3
2
2
2
1
,
1
8
4
9
4
0
9
4
8
8
5
5
1
0
5
8
0
5
8
0
5
8
0
5
8
0
5
8
300
0
0
2014
2015
2016
2017
2018
2019
2014
2015
2016
2017
2018
2019
Accounting accrual cost of CEO’s participation in
EIP – progressive recognition based, assuming
all performance hurdles are achieved.
Average annual cost of CEO’s participation in EIP,
assuming all performance hurdles are achieved.
15
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
(iv) Grants to Key Management Personnel
The following tables show details of current grants of performance rights and options over unissued ordinary shares,
which were granted to key management personnel in or before the year under review. No rights or options were granted to,
lapsed or were exercised by, key management personnel during the year under review, except as shown in these tables.
Chief Executive Officer
Performance Rights
Options
Tranche
No.
Grant Date
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
End of 1st
performance
period
1
2
3
4
5
6
7
8
9
10
28 May 2010
36,890
28 May 2010
82,440
28 May 2010
89,000
28 May 2010
94,890
28 May 2010
105,140
4 July 2014
4 July 2014
4 July 2014
4 July 2014
4 July 2014
83,661
87,268
91,006
94,866
99,067
-
-
-
-
-
-
-
-
-
-
36,890
$2.40
416,665
82,440
$2.286
815,215
89,000
$2.176
810,810
94,890
$2.072
815,215
105,140
$1.972
797,870
83,661
-
-
-
-
$5.08
$4.87
$4.67
$4.48
$4.29
467,032
452,127
447,368
420,792
416,666
-
-
-
-
-
-
-
-
-
-
416,665
$0.808
31 Dec 2010
815,215
$0.812
31 Dec 2011
810,810
$0.810
31 Dec 2012
815,215
$0.802
31 Dec 2013
797,870
$0.806
31 Dec 2014
-
-
-
-
-
$0.91
$0.94
$0.95
$1.01
$1.02
31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
Status
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Unvested
Unvested
Unvested
Unvested
(1)
Performance rights are automatically exercised upon vesting. During the year under review the Chief Executive Officer exercised all options that had vested
for the five years 2010 to 2014. Options and rights that were exercised during the year were valued at $29,916,811 on the day of exercise.
General Manager Queensland and Northern Territory
Performance Rights
Options
Tranche
No.
Grant Date
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
End of 1st
performance
period
1
2
3
4
5
6
7
8
9
10
29 Oct 2009
22,590
29 Oct 2009
48,015
29 Oct 2009
50,950
29 Oct 2009
54,115
29 Oct 2009
57,515
4 July 2014
4 July 2014
4 July 2014
4 July 2014
4 July 2014
19,685
20,533
21,413
22,321
23,310
-
-
-
-
-
-
-
-
-
-
22,590
$1.66
104,165
48,015
$1.562
203,805
50,950
$1.472
202,705
54,115
$1.386
203,805
57,515
$1.304
199,470
19,685
-
-
-
-
$5.08
$4.87
$4.67
$4.48
$4.29
109,890
106,382
105,263
99,009
98,039
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.36
31 Dec 2010
$0.368
31 Dec 2011
$0.37
31 Dec 2012
$0.368
31 Dec 2013
$0.376
31 Dec 2014
$0.91
$0.94
$0.95
$1.01
$1.02
31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
Status
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Unvested
Unvested
Unvested
Unvested
(1)
Performance rights are automatically exercised upon vesting. No options were exercised during the year under review. Rights that were exercised during
the year were valued at $388,226 on the day of exercise.
16
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
Chief Financial Officer (Mr Best)(2)
Performance Rights
Options
Tranche
No.
Grant Date
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
End of 1st
performance
period
29 Oct 2009
30,120
29 Oct 2009
32,010
29 Oct 2009
33,965
29 Oct 2009
36,075
29 Oct 2009
38,345
4 July 2014
14,763
-
-
-
-
-
-
4 July 2014
15,400
6,160(3)
4 July 2014
16,059
6,424(3)
4 July 2014
16,741
6,697(3)
4 July 2014
17,482
6,993(3)
30,120
$1.66
138,890
32,010
$1.562
135,870
33,965
$1.472
135,135
36,075
$1.386
135,870
38,345
$1.304
132,980
14,763
-
-
-
-
$5.08
$4.87
$4.67
$4.48
$4.29
82,417
79,787
31,915(3)
78,947
31,579(3)
74,257
29,703(3)
73,529
29,412(3)
-
-
-
-
-
-
138,890
$0.36
31 Dec 2010
81,110
$0.368
31 Dec 2011
$0.37
31 Dec 2012
$0.368
31 Dec 2013
$0.376
31 Dec 2014
$0.91
31 Dec 2015
Status
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
$0.94
31 Dec 2016
Unvested
$0.95
31 Dec 2017
Unvested
$1.01
31 Dec 2018
Unvested
$1.02
31 Dec 2019
Unvested
Performance rights are automatically exercised upon vesting. During the year under review the Chief Financial Officer exercised options that had vested for
2010 and 2011. Options and rights that were exercised during the year were valued at $2,112,549 on the day of exercise.
(2)
Mr Best’s role changed from Chief Financial Officer to Chief Commercial Officer and he ceased to be a member of key management personnel in August 2015.
(3) 40% of performance rights and options for future performance years lapsed when Mr Best moved from a full-time to a part-time role in August 2015.
General Counsel & Company Secretary
Performance Rights
Options
Tranche
No.
Grant Date
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
End of 1st
performance
period
1 June 2010
14,145
1 June 2010
14,875
1 June 2010
15,655
27 Mar 2013
27 Mar 2013
27 Mar 2013
27 Mar 2013
27 Mar 2013
4 July 2014
4 July 2014
4 July 2014
4 July 2014
4 July 2014
-
-
-
-
-
2,460
2,566
2,676
2,790
2,913
-
-
-
-
-
-
-
-
-
-
-
-
-
14,145
$2.280
64,760
14,875
$2.168
62,260
15,655
$2.060
60,850
-
-
-
-
-
-
-
-
-
-
2,460
-
-
-
-
$5.08
$4.87
$4.67
$4.48
$4.29
26,880
26,880
26,040
25,510
25,250
13,736
13,297
13,157
12,376
12,254
-
-
-
-
-
-
-
-
-
-
-
-
-
64,760
$0.498
31 Dec 2010
9,620
$0.518
31 Dec 2011
$0.53
31 Dec 2012
$0.93
31 Dec 2013
$0.93
31 Dec 2014
$0.96
31 Dec 2015
Status
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
Vested without
re-testing
$0.98
31 Dec 2016
Unvested
$0.99
31 Dec 2017
Unvested
$0.91
31 Dec 2015
Vested without
re-testing
$0.94
31 Dec 2016
Unvested
$0.95
31 Dec 2017
Unvested
$1.01
31 Dec 2018
Unvested
$1.02
31 Dec 2019
Unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2
3
4
5
6
7
8
9
10
(1)
1
2
3
4
5
6
7
8
9
10
11
12
13
(1)
Performance rights are automatically exercised upon vesting. No rights were exercised during the year under review. During the year the General Counsel
& Company Secretary exercised options that had vested for 2010 and 2011. Options that were exercised during the year were valued at $563,800 on the day
of exercise.
17
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
Chief Financial Officer (Ms Moore)(2)
Performance Rights
Options
Tranche
No.
Grant Date
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
No.
granted
No.
lapsed
No.
exercised(1) Fair value
End of 1st
performance
period
1
2
3
4
5
12 Jun 2015
12 Jun 2015
12 Jun 2015
12 Jun 2015
12 Jun 2015
2,227
4,624
4,796
4,975
5,167
-
-
-
-
-
2,227
-
-
-
-
$8.98
$8.65
$8.34
$8.04
$7.74
14,084
27,027
26,143
25,316
25,000
-
-
-
-
-
-
-
-
-
-
$1.42
$1.48
$1.53
$1.58
$1.60
31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
Status
Vested without
re-testing
Unvested
Unvested
Unvested
Unvested
(1) Performance rights are automatically exercised upon vesting. No options or rights were exercised during the year under review.
(2) Ms Moore commenced as Chief Financial Officer in August 2015.
Further details of the performance rights and options granted under the EIP are specified in notes 34 and 35 to the consolidated
financial report.
4. Hedging
The board has adopted a policy which prohibits any Director or employee who participates in an equity plan from using
derivatives, hedging or similar arrangements to reduce or eliminate the risk associated with the plan in relation to unvested
securities or securities that are subject to trading restrictions, without the Chairman’s approval. Any breach will result in
forfeiture or lapsing of the unvested securities or additional performance hurdles or trading restrictions being imposed, at the
board’s discretion.
5. Executive Employment Agreements
Executives who are key management personnel are employed under common employment agreements. The agreements do
not have a finite term, can be terminated by either employer or employee giving notice within a range of four to twelve weeks
and do not contain any termination payment arrangements. The board has discretion to extend the termination notice period
that may be given to an executive and to make payments upon termination, as appropriate.
The Chief Executive Officer’s employment agreement differs from that of other executives as follows:
a)
The Company may terminate the Chief Executive Officer’s employment if he is unable to satisfactorily perform his duties
due to illness, injury or accident for a period of six months or for cause. Termination for any other reason may entitle the
Chief Executive Officer to a termination benefit equivalent to two times annual remuneration at the time of termination,
subject to any limit imposed by law.
b)
The Chief Executive Officer may terminate his employment agreement on six months’ notice unless otherwise agreed with
the Company.
18
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
6. Details of Remuneration
Key management personnel include Directors and executives who have authority and responsibility for planning, directing and
controlling the activities of the Group. Remuneration details of key management personnel are set out in the following tables.
2015
Directors
T B Crommelin
Chairman
M A Ward
Managing Director
N G Politis
Non-executive Director
P W Henley
Non-executive Director
D T Ryan
Non-executive Director
D A Cowper
Non-executive Director
Executives
K T Thornton
General Manager Qld & NT
S G Best
Chief Financial Officer (4)
D G Stark
General Counsel &
Company Secretary
S A Moore
Chief Financial Officer (4)
Short-term benefits
Post-employment
benefits
Share-based
payments
Salary & fees
Bonus &
commissions(5)
Non-
monetary
& other
benefits(1)
Superannuation
benefits
Performance
Rights &
Options(2) (3)
$
$
$
$
$
Performance-
related
percentage
%
Total
$
100,000
1,200,000
85,000
85,000
85,000
85,000
1,640,000
-
-
-
-
-
-
-
742
9,500
-
110,242
177,416
35,000
1,122,362
2,534,778
742
8,075
742
8,075
742
8,075
742
8,075
-
-
-
-
93,817
93,817
93,817
93,817
181,128
76,800
1,122,362
3,020,290
200,000
931,645
131,025
19,307
264,085
1,546,062
192,500
52,500
68,794
18,288
105,790
437,872
265,000
97,000
73,386
25,175
75,438
535,999
125,000
25,000
16,858
6,923
66,664
240,445
782,500
1,106,145
290,063
69,693
511,977
2,760,378
-
44
-
-
-
-
77
36
32
38
(1) Includes benefits such as the provision of motor vehicles, insurance policy costs and the movement in the provision for the individual’s employee
entitlements. This includes $67,300 as a provision for long service leave for Mr Ward, $81,019 for Mr Thornton, $37,731 for Mr Best and $46,213 for Mr Stark.
(2) Performance rights and options granted under the EIP are valued using a binomial tree methodology. A pre-determined value of the portion of the rights
and options attributable to the year under review has been expensed in the income statement in conformity with AASB 2 and reflected in each recipient’s
remuneration. In each year, performance rights and options vested under the EIP for the previous year. Vesting is subject to the achievement of performance
hurdles as previously detailed in this Remuneration Report.
(3) The share-based payment is based on progressive recognition of each award grant over its expected vesting period, which results in an increased cost in
the earlier years of the EIP and a reduced cost in later years on the assumption that all performance hurdles will be achieved over the five year period. For
further details, refer to commentary on page 15 under the heading “CEO’s Participation in EIP” of which the treatment of share plan expense is applicable to
all key management personnel.
(4) With the appointment of Ms Moore as Chief Financial Officer on 3 August 2015, Mr Best ceased in his capacity as Chief Financial Officer and a member of key
management personnel. This table therefore includes Mr Best’s remuneration for the period ending 3 August 2015.
(5) For Mr Thornton, this includes a commission of $846,645, which is set at a percentage of net profit before tax of relevant business units and is therefore based
on measurable business performance and designed to improve shareholder value. No commission is included for any other key management personnel.
19
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
2014
Directors
T B Crommelin
Chairman
M A Ward
Managing Director
N G Politis
Non-executive Director
P W Henley
Non-executive Director
D T Ryan
Non-executive Director
D A Cowper
Non-executive Director
Executives
K T Thornton
General Manager Qld & NT
S G Best
Chief Financial Officer
D G Stark
General Counsel &
Company Secretary
Short-term benefits
Post-employment
benefits
Share-based
payments
Salary & fees
Bonus &
commissions
Non-
monetary
& other
benefits(1)
Superannuation
benefits
Performance
Rights &
Options(2) (3)
$
$
$
$
$
Performance-
related
percentage
%
Total
$
95,000
-
742
8,906
-
104,648
925,000 (4)
110,000
105,853
25,000
421,657
1,587,510
75,000
75,000
75,000
75,000
-
-
-
-
742
7,031
742
7,031
742
7,031
742
7,031
62,030
-
-
-
-
82,773
82,773
82,773
82,773
421,657
2,023,251
1,320,000
110,000
109,564
200,000
616,930
68,693
18,783
83,681
988,087
325,303
99,000
76,395
30,503
60,417
591,618
263,338
788,641
79,500
36,888
795,430
181,976
24,690
73,976
31,944
436,360
176,042
2,016,065
-
33
-
-
-
-
71
27
26
(1) Includes benefits such as the provision of motor vehicles, insurance policy costs and the movement in the provision for the individual’s employee
entitlements. This includes $13,509 as a provision for long service leave for Mr Ward, $15,218 for Mr Thornton and $50,976 for Mr Best.
(2) Performance rights and options granted under the EIP are valued using a binomial tree methodology. A pre-determined value of the portion of the rights
and options attributable to the year under review has been expensed in the income statement in conformity with AASB 2 and reflected in each recipient’s
remuneration. In each year, performance rights and options vested under the EIP for the previous year. Vesting is subject to the achievement of performance
hurdles as previously detailed in this Remuneration Report.
(3) The share-based payment is based on progressive recognition of each award grant over its expected vesting period, which results in an increased cost in
the earlier years of the EIP and a reduced cost in later years on the assumption that all performance hurdles will be achieved over the five year period. For
further details, refer to commentary on page 15 under the heading “CEO’s Participation in EIP” of which the treatment of share plan expense is applicable to
all key management personnel.
(4)
As announced in December 2014, Mr Ward’s annual base salary increased to $1,200,000 on 1 January 2015. It had not been reviewed since late 2010. Since
then the Company has grown significantly, with market capitalisation increasing from less than $400 million to over $1 billion, and earnings per share and
dividends per share having doubled. The increased salary reflects a 14% increase above Mr Ward’s average total remuneration during the four years from
2010 to 2013. No further increase to his base salary is intended for the next five years.
20
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
7. Relevant Interest in the Company’s Shares Held by Key Management Personnel
2015
Directors
M A Ward
N G Politis
P W Henley
D T Ryan
T B Crommelin
D A Cowper
Executives
K T Thornton
S G Best
D G Stark
S A Moore
2014
Directors
M A Ward
N G Politis
P W Henley
D T Ryan
T B Crommelin
D A Cowper
Executives
K T Thornton
S G Best
D G Stark
At
01-Jan-15
Dividend
Reinvest-
ment Plan
Executive
Incentive
Plan
Purchases
Sales
At
31-Dec-15
2,854,170
66,085,596
107,215
-
339,229
8,248
390,620
174,785
71,244
-
-
-
-
-
-
-
-
-
-
-
3,760,915
-
-
-
-
-
-
1,993,495
4,610
-
18,000
-
2,500,000
-
-
-
-
-
4,115,085
68,079,091
111,825
-
357,229
8,248
57,515
258,345
74,380
-
-
-
-
-
-
-
-
-
448,135
433,130
145,624
-
70,031,107
-
4,151,155
2,016,105
- 73,698,367
At
01-Jan-14
Dividend
Reinvest-
ment Plan
Executive
Incentive
Plan
Purchases
Sales
2,759,280
65,157,552
104,215
-
332,242
8,248
336,505
138,710
71,244
-
-
-
-
-
-
-
-
-
94,890
-
-
-
-
-
54,115
36,075
-
-
928,044
3,000
-
6,987
-
-
-
-
-
-
-
-
-
-
-
-
-
At
31-Dec-14
2,854,170
66,085,596
107,215
-
339,229
8,248
390,620
174,785
71,244
68,907,996
-
185,080
938,031
-
70,031,107
21
A.P. Eagers ANNUAL REPORT 2015
DIRECTORS’
REPORT
(CONTINUED)
DIRECTORS’ INTERESTS
The relevant interest of each Director in the shares, rights and options issued by the Company as at the date of this report are
as follows:
T B Crommelin
N G Politis
M A Ward
P W Henley
D T Ryan
D A Cowper
Ordinary Shares (fully paid)
357,229
68,099,091
4,115,085
111,825
-
8,248
Share Options
Performance Rights
-
-
-
-
2,203,985(1)
455,868(1)
-
-
-
-
-
-
(1)
Share options and performance rights vest only if performance hurdles are met in accordance with the Executive Incentive Plan, as described in the
Remuneration Report.
SHARES UNDER OPTION
1,104,823 options and 157,726
performance rights were granted
by the Company over unissued fully
paid ordinary shares during the
year under review. No options or
performance rights have been granted
since the end of the year. 5,512,935
shares were issued as a result of
the exercise of options and 261,825
shares were issued on the vesting of
performance rights during or since
the year under review. At the date
of this report, there are 11,355,719
unissued shares under option and
882,276 unvested performance rights.
INDEMNIFICATION AND INSURANCE
The Company’s constitution provides
that, to the extent permitted by law,
the Company must indemnify each
person who is or has been a Director
or Secretary against liability incurred
in or arising out of the discharge of
duties as an officer of the Company or
out of the conduct of the business of
the Company and specified legal costs.
The indemnity is enforceable without
the person having to incur any expense
or make any payment, is a continuing
obligation and is enforceable even
though the person may have ceased
to be an officer of the Company.
At the start of the financial year
under review and at the start of the
following financial year, the Company
paid insurance premiums in respect
of Directors and Officers liability
insurance contracts. The contracts
insure each person who is or has been
a Director or executive officer of the
Company against certain liabilities
arising in the course of their duties to
the Company and its controlled entities.
The Directors have not disclosed details
of the nature of the liabilities covered
or the amount of the premiums paid
in respect of the insurance contracts
as such disclosure is prohibited
under the terms of the contracts.
AUDITOR
Deloitte Touche Tohmatsu continues
in office as auditor of the Group
in accordance with section 327
of the Corporations Act 2001.
NON-AUDIT SERVICES
A copy of the auditor’s Independence
Declaration as required under section
307C of the Corporations Act 2001 is
attached and forms part of this report.
The Company may decide to employ
its auditor on assignments additional
to their statutory audit duties where
the auditor’s expertise or experience
with the Group is important.
Details of the amounts paid or payable
to the auditor for audit and non-audit
services provided to the Group during
the year are set out in Note 32 of
the consolidated financial report.
In accordance with advice received
from the Audit, Risk & Remuneration
Committee, the Directors are satisfied
that the provision of the non-audit
services was compatible with the
general standard of independence for
auditors imposed by the Corporations
Act 2001 and did not compromise the
auditor independence requirements of
the Act because all non-audit services
were reviewed by the Committee
to ensure they did not impact the
partiality and objectivity of the auditor.
ROUNDING OF AMOUNTS TO NEAREST
THOUSAND DOLLARS
The Company is of a kind referred
to in Class Order 98/100 issued
by the Australian Securities &
Investments Commission, relating to
the “rounding off” of amounts in the
Directors’ report and financial report.
Amounts in the Directors’ report and
financial report have been rounded
off to the nearest thousand dollars in
accordance with that Class Order.
This report is made in accordance
with a resolution of the Directors.
Martin Ward
Director
Brisbane, 24 February 2016
22
A.P. Eagers ANNUAL REPORT 2015
AUDITOR’S DECLARATION
OF INDEPENDENCE
23
A.P. Eagers ANNUAL REPORT 2015 24
A.P. Eagers ANNUAL REPORT 2015 FINANCIAL
STATEMENTS A.P. EAGERS LIMITED ABN 87 009 680 013
Statement of Profit or Loss
Statement of Profit or Loss and
Other Comprehensive Income
Statement Of Financial Position
Statement Of Changes In Equity
Statement Of Cash Flows
Notes to and Forming Part of
the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
26
27
28
29
30
31
92
93
95
97
25
A.P. Eagers ANNUAL REPORT 2015 STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2015
Revenue
Other gains and losses excluding impairment
CONSOLIDATED
2015
$’000
2014
$’000
3,246,376
2,858,113
6,426
3,892
Note
3
4
Share of net profits of associate
40(d)
164
4,939
Changes in inventories of finished goods and work in progress
60,957
59,463
Raw materials and consumables purchased
(2,700,387)
(2,385,160)
Employee benefits expense
(278,922)
(244,776)
Finance costs - net
5(a)
(21,293)
(22,080)
Depreciation and amortisation expense
5(a)
(13,216)
(12,583)
Impairment of non-current assets
5(b)
(7,610)
(578)
Other expenses
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Owners of A.P. Eagers Limited
Non-controlling interests
Earnings per share:
Basic earnings per share
Diluted earnings per share
(171,537)
(158,390)
120,958
102,840
6
(33,943)
(26,150)
87,015
76,690
27(b)
29(c)
86,217
798
87,015
76,230
460
76,690
Cents
Cents
37
37
47.6
46.1
43.0
41.6
The above Statement of Profit or Loss is to be read in conjunction with the accompanying notes.
26
A.P. Eagers ANNUAL REPORT 2015
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Profit for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Gain/(loss) on revaluation of property
Income tax (expense)/benefit relating to items that will not be reclassified subsequently
Items that may be reclassified subsequently to profit or loss
Gain on revaluation of available for sale investment
Income tax expense
Reclassification adjustments relating to available-for-sale financial
assets disposed of in the year
Fair value gain arising from cash flow hedges during the year
Income tax expense
CONSOLIDATED
2015
$’000
2014
$’000
Note
87,015
76,690
27(a)
27(a)
27(a)
27(a)
27(a)
27(a)
2,187
(656)
1,531
(1,692)
508
(1,184)
49,689
(14,907)
(2,443)
32,339
300
(89)
211
1,296
(389)
-
907
77
(24)
53
Total other comprehensive income for the year
34,081
(224)
Total comprehensive income for the year
121,096
76,466
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
120,298
798
121,096
76,006
460
76,466
The above Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction
with the accompanying notes.
27
A.P. Eagers ANNUAL REPORT 2015
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2015
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Assets classified as held for sale
Property sale receivable
Total current assets
Non-current assets
Property sale receivable
Other loans receivable
Available-for-sale financial assets
Investment in associate
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Borrowings - bailment and finance lease payable
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Note
8
9
10
11
11
11
12(a)
12(b)
13
14
15
16
17
18
19(a)
20
21
22(a)
18
23
24
26
27(a)
27(b)
29(c)
CONSOLIDATED
2015
$’000
2014
$’000
37,535
109,116
530,163
8,256
3,010
32,013
720,093
23,503
10,317
281,817
1,620
291,298
160,762
769,317
23,777
105,792
469,205
1,884
27,781
6,717
635,156
18,826
9,787
234,391
1,620
292,485
165,733
722,842
1,489,410
1,357,998
133,563
227
404,488
124
19,520
557,922
209,792
595
7,718
10,374
228,479
128,038
188
363,153
12,979
20,709
525,067
216,646
934
17,350
6,945
241,875
786,401
766,942
703,009
591,056
296,060
105,375
293,435
694,870
8,139
703,009
242,070
99,020
242,480
583,570
7,486
591,056
The above Statement of Financial Position is to be read in conjunction with the accompanying notes.
28
A.P. Eagers ANNUAL REPORT 2015
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
CONSOLIDATED ENTITY
Asset
revaluation
reserve
Hedging
reserve
Share-
based
payments
reserve
Investment
revaluation
reserve
Retained
earnings
Attributable
to owners
of the
parent
Non
Controlling
Interests
$'000
$'000
$'000
$’000
$'000
$'000
$'000
Issued
capital
$'000
Total
$’000
Balance at 1 January 2015
242,070
61,668
(786)
5,941
32,197 242,480 583,570
7,486 591,056
-
1,531
-
211
1,531
211
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Transfer to retained earnings
Share based payments
Payment of dividend
-
-
-
-
-
-
Issue of shares to staff
53,990
Payments received from
employees for exercised
shares
Current tax on share plan
Income tax on items taken to
or transferred directly from
equity
-
-
-
(18,007)
-
-
-
-
-
-
53,990
(18,007)
-
-
-
-
3,019
-
(53,990)
10,740
12,352
18,160
(9,719)
-
86,217
86,217
798
87,015
32,339
-
34,081
-
34,081
32,339
86,217 120,298
798 121,096
-
-
-
-
-
-
-
-
18,007
-
-
3,019
-
-
-
3,019
(54,328)
(54,328)
(145)
(54,473)
-
-
-
-
10,740
12,352
1,059
19,219
-
-
-
-
-
10,740
12,352
19,219
(35,262)
(8,998)
(145)
(9,143)
-
-
-
-
-
-
-
-
Balance at 31 December 2015
296,060
45,192
(575)
(3,778)
64,536 293,435 694,870
8,139 703,009
CONSOLIDATED ENTITY
Asset
revaluation
reserve
Hedging
reserve
Share-
based
payments
reserve
Investment
revaluation
reserve
Retained
earnings
Attributable
to owners
of the
parent
Non
Controlling
Interests
$'000
$'000
$'000
$’000
$'000
$'000
$'000
Issued
capital
$'000
Total
$’000
Balance at 1 January 2014
231,205
73,278
(839)
4,883
31,290
198,369
538,186
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Dividends provided for or paid
Share based payments
Transfer to retained earnings
Issue of shares to staff
Issue of shares to non-
controlling entity
Issue of shares - others
-
-
-
-
-
-
-
(1,184)
(1,184)
-
-
(10,426)
1,077
-
9,788
-
-
-
10,865
(10,426)
-
53
53
-
-
-
-
-
-
-
-
-
-
-
2,135
-
(1,077)
-
-
1,058
-
76,230
76,230
907
-
(224)
939
460
-
539,125
76,690
(224)
907
76,230
76,006
460
76,466
-
-
-
-
-
-
-
(42,470)
(42,470)
(842)
(43,312)
-
2,135
10,426
-
-
-
-
-
-
(75)
(75)
6,929
-
9,788
-
2,135
-
-
6,854
9,788
(32,119)
(30,622)
6,087
(24,535)
Balance at 31 December 2014
242,070
61,668
(786)
5,941
32,197
242,480
583,570
7,486
591,056
The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
29
A.P. Eagers ANNUAL REPORT 2015
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Receipts from insurance claims
Interest and other costs of finance paid
Income taxes paid
Dividends received
Interest received
Net cash provided by operating activities
Cash flows from investing activities
Payment for acquisition of businesses
Payments for property, plant and equipment
Payments for intangible assets
Proceeds from sale of businesses
Proceeds from sale of property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Payments for shares in other corporations
Net cash used in 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 members of A.P. Eagers Limited
Dividends paid to minority shareholders of a subsidiary
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
CONSOLIDATED
2015
$’000
2014
$’000
Note
3,516,726
3,089,003
(3,393,453)
(2,979,831)
7,003
(21,365)
(39,870)
13,916
1,596
84,553
19,689
(21,829)
(28,409)
19,733
866
99,222
(669)
(36,818)
(18,854)
(2,510)
441
4,255
9,636
(7,345)
(15,046)
10,740
45,000
(57,098)
(54,328)
(63)
(8,731)
-
900
37,538
-
(37,901)
(45,012)
-
58,000
(57,584)
(42,470)
(485)
(55,749)
(42,539)
13,758
23,777
11,671
12,106
38
29(a)
15
29(b)
27
7
Cash and cash equivalents at the end of the financial year
8
37,535
23,777
The above Statement of Cash Flows is to be read in conjunction with the accompanying notes.
30
A.P. Eagers ANNUAL REPORT 2015
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
31 DECEMBER 2015
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(a) General information and basis
of preparation
The financial report covers the
Group (consolidated entity) of A.P.
Eagers Limited and its subsidiaries
(consolidated financial statements).
A.P. Eagers Limited is a publicly
listed company incorporated
and domiciled in Australia.
Compliance with IFRS
These financial statements are
general purpose financial statements
which have been prepared in
accordance with the Corporations
Act 2001, Accounting Standards and
Interpretations, and comply with
other requirements of the law.
The financial statements comprise
the consolidated financial statements
of the Group. For the purposes of
preparing the consolidated financial
statements, the Company is a for-profit
entity. Accounting Standards include
Australian Accounting Standards.
Compliance with Australian Accounting
Standards ensures that the financial
statements and notes of the Company
and the Group comply with International
Financial Reporting Standards (‘IFRS’).
Historical cost convention
These financial statements
have been prepared under the
historical cost convention, as
modified by the revaluation of
financial assets, derivatives and
certain classes of property, plant
and equipment to fair value.
Fair Value is the price that would
be received to sell an asset or paid
to transfer a liability in an orderly
transaction between market
participants at the measurement
date, regardless of whether that price
is directly observable or estimated
using another valuation technique. In
estimating the fair value of an asset or
a liability, the Group takes into account
the characteristics of the asset or
liability if market participants would
take those characteristics into account
when pricing the asset or liability at
the measurement date. Fair value
for measurement and/or disclosure
purposes in these consolidated
financial statements is determined
on such a basis, except for share-
based payment transactions that are
within the scope of IFRS 2, leasing
transactions that are within the scope
of IAS 17, and measurements that have
some similarities to fair value but are
not fair value, such as net realisable
value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting
purposes, fair value measurements
are categorised into Level 1, 2 or 3
based on the degree to which the
inputs to the fair value measurements
are observable and the significance
of the inputs to the fair value
measurements in its entirety,
which are described as follows:
• Level 1 inputs are quoted prices
(unadjusted) in active markets
for identical assets or liabilities
that the entity can access at
the measurement date;
• Level 2 inputs are inputs, other
than quoted prices included
within Level 1, that are observable
for the asset or liability, either
directly or indirectly; and
• Level 3 inputs are unobservable
inputs for the asset or liability.
Functional and presentation currency
The functional and presentation
currency of the Group is
the Australian Dollar.
The financial statements were
authorised for issue by the Directors
on the 24th February 2016.
Accounting Policies
The following is a summary of
the material accounting policies
adopted in the preparation of the
financial report. The accounting
policies have been consistently
applied, unless otherwise stated.
(b) Basis of consolidation
The consolidated financial statements
incorporate the financial statements
of A.P. Eagers Limited (The Company)
and entities (including structured
entities) controlled by the Company
and its subsidiaries. Control is
achieved when the Company:
• has power over the investee;
•
is exposed, or has rights, to variable
returns from its involvement
with the investee; and
• has the ability to use its power
to affect its returns.
The Company reassesses whether or
not it controls an investee if facts and
circumstances indicate that there are
changes to one or more of the three
elements of control listed above.
When the Company has less than
a majority of the voting rights of
an investee, it has power over the
investee when the voting rights are
sufficient to give it the practical
ability to direct the relevant activities
of the investee unilaterally.
31
A.P. Eagers ANNUAL REPORT 2015
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
(i)
Changes in the Groups ownership
interests in existing subsidiaries
Changes in the Group’s ownership
interests in subsidiaries that do not
result in the Group losing control over
the subsidiaries are accounted for
as equity transactions. The carrying
amounts of the Group’s interests and
the non-controlling interests are
adjusted to reflect the changes in their
relative interests in the subsidiaries.
Any difference between the amount
by which the non-controlling interests
are adjusted and the fair value of
the consideration paid or received
is recognised directly in equity and
attributed to owners of the Company.
When the Group loses control
of a subsidiary, a gain or loss is
recognised in profit or loss and is
calculated as the difference between
(i) the aggregate of the fair value of
the consideration received and the
fair value of any retained interest
and (ii) the previous carrying amount
of the assets (including goodwill),
and liabilities of the subsidiary and
any non-controlling interests. All
amounts previously recognised in other
comprehensive income in relation to
that subsidiary are accounted for as
if the Group had directly disposed of
the related assets or liabilities of the
subsidiary (i.e. reclassified to profit
or loss or transferred to another
category of equity as specified/
permitted by applicable AASBs). The
fair value of any investment retained
in the former subsidiary at the date
when control is lost is regarded as
the fair value on initial recognition
for subsequent accounting under
AASB 9, when applicable, the cost on
initial recognition of an investment
in an associate or a joint venture.
The Company considers all relevant
facts and circumstances in assessing
whether or not the Company’s voting
rights in an investee are sufficient
to give it power, including:
•
the size of the Company’s holding
of voting rights relative to the
size and dispersion of holdings
of the other vote holders;
• potential voting rights held
by the Company, other vote
holders or other parties;
• rights arising from other
contractual arrangements; and
• any additional facts and
circumstances that indicate that
the Company has, or does not
have, the current ability to direct
the relevant activities at the time
that decisions need to be made,
including voting patterns at
previous shareholders’ meetings.
Consolidation of a subsidiary begins
when the Company obtains control
over the subsidiary and ceases when
the Company loses control of the
subsidiary. Specifically, income and
expenses of a subsidiary acquired
or disposed of during the year
are included in the consolidated
statement of profit or loss and other
comprehensive income from the
date the Company gains control
until the date when the Company
ceases to control the subsidiary.
Profit or loss and each component
of other comprehensive income
are attributed to the owners of the
Company and to the non-controlling
interests. Total comprehensive income
of subsidiaries is attributed to the
owners of the Company and to the non-
controlling interests even if this results
in the non-controlling interests having
a deficit balance. When necessary,
adjustments are made to the financial
statements of subsidiaries to bring
their accounting policies into line with
the Group’s accounting policies.
All intragroup assets and liabilities,
equity, income, expenses and cash
flows relating to transactions
between members of the Group are
eliminated in full on consolidation.
32
(ii) Investments in associates
An associate is an entity over
which the Group has significant
influence. Significant influence
is the power to participate in the
financial and operating policy
decisions of the investee but is
not control over those policies.
The results and assets and liabilities
of associates are incorporated in these
consolidated financial statements
using the equity method of accounting,
except when the investment, or a
portion thereof, is classified as held
for sale, in which case it is accounted
for in accordance with AASB 5. Under
the equity method, an investment in
an associate is initially recognised
in the consolidated statement of
financial position at cost and adjusted
thereafter to recognise the Group’s
share of the profit or loss and other
comprehensive income of the associate.
When the Group’s share of losses
of an associate exceeds the Group’s
interest in that associate (which
includes any long-term interests that,
in substance, form part of the Group’s
net investment in the associate), the
Group discontinues recognising its
share of further losses. Additional
losses are recognised only to the extent
that the Group has incurred legal
or constructive obligations or made
payments on behalf of the associate.
An investment in an associate is
accounted for using the equity method
from the date on which the investee
becomes an associate. On acquisition
of the investment in an associate, any
excess of the cost of the investment
over the Group’s share of the net fair
value of the identifiable assets and
liabilities of the investee is recognised
as goodwill, which is included within
the carrying amount of the investment.
Any excess of the Group’s share of
the net fair value of the identifiable
assets and liabilities over the cost of
the investment, after reassessment,
is recognised immediately in profit
or loss in the period in which
the investment is acquired.
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) The Group continues to use the equity
method when an investment in an
associate becomes an investment
in a joint venture or an investment
in a joint venture becomes an
investment in an associate. There is
no remeasurement to fair value upon
such changes in ownership interests.
When the Group reduces its ownership
interest in an associate but the Group
continues to use the equity method,
the Group reclassifies to profit or loss
the proportion of the gain or loss that
had previously been recognised in
other comprehensive income relating
to that reduction in ownership interest
if that gain or loss would be classified
to profit or loss on the disposal of
the related assets or liabilities.
When a Group entity transacts with
an associate of the Group, profits
and losses resulting from the
transactions with the associate are
recognised in the Group’s consolidated
financial statements only to the
extent of interests in the associate
that are not related to the Group.
(c) Operating segments
Operating segments are identified
based on internal reports that are
regularly reviewed by the entity’s
chief operating decision maker in
order to allocate resources to the
segment and assess its performance.
The Group has four operating segments
being (i) Car Retail (ii) Truck Retail (iii)
Property (iv) Investments. Currently
the segment of “Other” is not required.
(d) Revenue
(i) Sales revenue
Revenue from the sales of motor
vehicles and parts is recognised when
the buyer has accepted the risks and
rewards of ownership, generally
by taking delivery of the goods.
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
The requirements of AASB 9 are
applied to determine whether it is
necessary to recognise any impairment
loss with respect to the Group’s
investment in an associate. When
necessary, the entire carrying amount
of the investment (including goodwill)
is tested for impairment of assets
as a single asset by comparing its
recoverable amount (higher of value
in use and fair value less costs of
disposal) with its carrying amount.
Any impairment loss recognised
forms part of the carrying amount
of the investment. Any reversal of
that impairment loss is recognised in
accordance with AASB 136 to the extent
that the recoverable amount of the
investment subsequently increases.
The Group discontinues the use of
the equity method from the date
when the investment ceases to be an
associate, or when the investment
is classified as held for sale. When
the Group retains an interest in the
former associate and the retained
interest is a financial asset, the Group
measures the retained interest at fair
value at that date and the fair value
is regarded as its fair value on initial
recognition in accordance with AASB
9. The difference between the carrying
amount of the associate at the date the
equity method was discontinued, and
the fair value of any retained interest
and any proceeds from disposing of a
part interest in the associate is included
in the determination of the gain or
loss on disposal of the associate. In
addition, the Group accounts for all
amounts previously recognised in other
comprehensive income in relation to
that associate on the same basis as
would be required if that associate
had directly disposed of the related
assets or liabilities. Therefore, if a
gain or loss previously recognised
in other comprehensive income by
that associate would be reclassified
to profit or loss on the disposal of
the related assets or liabilities, the
Group reclassifies the gain or loss
from equity to profit or loss (as a
reclassification adjustment) when
the equity method is discontinued.
(ii) Service revenue
Service work on customers’ motor
vehicles is carried out under
instructions from the customer.
Service revenue is recognised based
upon the percentage completion of
the work requested. The percentage
completion is measured by reference
to labour hours incurred to date as a
percentage of estimated total labour
hours for the service to be performed.
Revenue arising from the sale of parts
fitted to customers’ vehicles during
service is recognised upon delivery
of the fitted parts to the customer
upon completion of the service.
(iii) Rental income
Rental income from operating
leases is recognised in income on a
straightline basis over the lease term.
(iv) Interest revenue
Interest revenue is recognised on a
time proportional basis, taking into
account the effective interest rates
applicable to the financial assets.
(v) Dividend revenue
Dividend revenue is recognised
when the right to receive a
dividend has been established.
Dividends received from associates
are accounted for in accordance with
the equity method of accounting in the
consolidated financial statements.
(vi) Goods and Services Tax (GST)
All revenue is stated net of the amount
of Goods and Services Tax (GST).
(e) Finance costs
Borrowing costs are recognised as
expenses in the period in which they
are incurred. Borrowing costs include:
•
•
interest on bank overdrafts, short
and long-term borrowings
interest on vehicle bailment
arrangements
•
interest on finance lease liabilities
• amortisation of ancillary costs
incurred in connection with the
arrangement of borrowings
33
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 1. SUMMARY OF SIGNIFICANT
(ii) Goods and services tax (“GST”)
(h) Business combinations
Revenues, expenses and
assets are recognised net of
the amount of GST except:
• where the GST incurred on a
purchase of goods and services is
not recoverable from the taxation
authority, in which case the GST is
recognised as part of the cost of
acquisition of the asset or is part of
the expense item as applicable; and
• receivables and payables are stated
with the amount of GST included.
The net amount of GST recoverable
from, or payable to, the taxation
authority is included as part of
receivables or payables in the
statement of financial position.
Cash flows are included in the
Statement of Cash Flows on a gross
basis and the GST component of
cash flows arising from investing
and financing activities, which is
recoverable from or payable to the
taxation authority, are classified
as operating cash flows.
Commitments and contingencies
are disclosed net of the amount of
GST recoverable from, or payable
to, the taxation authority.
(g) Leases
Leases in which a significant
portion of the risks and rewards of
ownership are retained by the lessor
are classified as operating leases.
Payments made under operating
leases (net of any incentives received
from the lessor) are charged to
profit or loss on a straightline basis
over the period of the lease.
ACCOUNTING POLICIES (continued)
(f) Taxes
(i)
Income tax
The income tax expense or revenue
for the period is the tax payable on
the current period’s taxable income
based on the notional income tax
rate for each jurisdiction, adjusted by
changes in deferred tax assets and
liabilities attributable to temporary
differences between the tax bases
of assets and liabilities and their
carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are
recognised for temporary differences
at the tax rates expected to apply when
the assets are recovered or liabilities
are settled, based on those tax rates
which are enacted or substantively
enacted for each jurisdiction. The
relevant tax rates are applied to the
cumulative amounts of deductible
and taxable temporary differences
to measure the deferred tax asset
or liability. An exception is made for
certain temporary differences arising
from the initial recognition of an asset
or a liability. No deferred tax asset
or liability is recognised in relation
to these temporary differences if
they arose in a transaction, other
than a business combination,
that at the time of the transaction
did not affect either accounting
profit or taxable profit or loss.
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.
Current and deferred tax balances
attributable to amounts recognised
directly in equity are also
recognised directly in equity.
34
The purchase method of accounting
is used for all business combinations
regardless of whether equity
instruments or other assets are
acquired. Cost is measured as the fair
value of the assets given, shares issued
or liabilities incurred or assumed at the
date of exchange. Acquisition related
costs are recognised in profit or loss
as incurred. Where equity instruments
are issued in an acquisition, the value
of the instruments is their published
market price as at the date of exchange
unless, in rare circumstances, it can
be demonstrated that the published
price at the date of exchange is an
unreliable indicator of fair value and that
other evidence and valuation methods
provide a more reliable measure of
fair value. Transaction costs arising
on the issue of equity instruments
are recognised directly in equity.
Identifiable assets acquired and
liabilities and contingent liabilities
assumed in a business combination are
measured initially at their fair values at
the acquisition date, irrespective of the
extent of any non-controlling interest.
The excess of the cost of acquisition
over the fair value of the Group’s share
of the identifiable net assets acquired
is recorded as goodwill (refer to Note
1(r)). If the cost of acquisition is less
than the fair value of the net assets of
the subsidiary acquired, the difference
is recognised directly in profit or
loss but only after are assessment of
the identification and measurement
of the net assets acquired.
Where settlement of any part of cash
consideration is deferred, the amounts
payable in the future are discounted
to their present values as at the date
of acquisition. The discount rate used
is the incremental borrowing rate,
being the rate at which a similar
borrowing could be obtained from
an independent financier under
comparable terms and conditions.
If the initial accounting for a business
acquisition is incomplete by the end
of the reporting period in which the
combination occurs, the consolidated
entity reports provisional amounts
for the items for which accounting is
incomplete. The provisional amounts are
adjusted during the measurement period
(no longer than 12 months from the initial
acquisition) on a retrospective basis by
restating the comparative information
presented in the financial statements.
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 1. SUMMARY OF SIGNIFICANT
(j) Cash and cash equivalents
(l) Inventories
New motor vehicles are stated at
the lower of cost and net realisable
value. Demonstrator vehicles are
stated at the lower of cost and net
realisable value. Costs are assigned
on the basis of specific identification.
Used motor vehicles are stated at
the lower of cost and net realisable
value on a unit by unit basis. Net
realisable value has been determined
by reference to the likely net realisable
value given the age of the vehicles
at year end. Costs are assigned on
the basis of specific identification.
Spare parts and accessories are
stated at the lower of cost and
net realisable value. Costs are
assigned to individual items on the
basis of weighted average cost.
Work in progress is stated at cost.
Cost includes labour incurred to date
and consumables utilised during
the service. Costs are assigned
to individual customers on the
basis of specific identification.
Cash and cash equivalents include
cash on hand, deposits held at call
with financial institutions, other short
term, highly liquid investments with
original maturities of three months
or less that are readily convertible to
known amounts of cash and which
are subject to an insignificant risk of
changes in value, and bank overdrafts.
Bank overdrafts are shown within
borrowings in current liabilities on
the statement of financial position.
(k) Receivables
Trade receivables
Trade receivables are recognised
initially at fair value and subsequently
measured at amortised cost,
less provision for doubtful debts.
Trade receivables are due for
settlement no more than 60 days
from the date of recognition.
In respect of trade and lease book
receivables, collectability is reviewed
on an ongoing basis. Debts which
are known to be uncollectible are
written off. A provision for doubtful
debts is raised where some doubt as
to collectability exists. The amount of
the provision is the difference between
the asset’s carrying amount and the
present value of estimated future
cash flows, discounted at the effective
interest rate. The amount of the
provision is recognised in profit or loss.
ACCOUNTING POLICIES (continued)
(i) Impairment of long lived assets
(excluding goodwill)
Assets that have an indefinite useful
life are not subject to amortisation and
are tested annually for impairment.
Assets that are subject to amortisation
are reviewed for impairment whenever
events or changes in circumstances
indicate that the carrying amount may
not be recoverable. An impairment
loss is recognised for the amount by
which the asset’s carrying amount
exceeds its recoverable amount. The
recoverable amount is the higher of an
asset’s fair value less costs of disposal
and its value in use. For the purposes
of assessing impairment, assets are
grouped at the lowest levels for which
there are separately identifiable cash
flows (cash-generating units “CGU”)
and these cash flows are discounted
using the estimated weighted average
cost of capital of the asset/CGU. An
impairment loss is recognised in
profit or loss immediately, unless the
relevant asset is carried at fair value,
in which case the impairment loss
is treated as a revaluation decrease
(refer Note 1(p)). Where an impairment
loss subsequently reverses, the
carrying amount of the asset (CGU)
is increased to the revised estimate
of its recoverable amount, but only
to the extent that the increased
carrying amount does not exceed
the carrying amount that would have
been determined had no impairment
losses been recognised for the asset
(CGU) in prior years. A reversal of
an impairment loss is recognised in
profit or loss immediately, unless
the relevant asset is carried at fair
value,in which case, the reversal of
the impairment loss is treated as a
revaluation increase (refer Note 1(p)).
35
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
The Group assesses at each balance
date whether there is objective
evidence that a financial asset or group
of financial assets is impaired. In the
case of equity securities classified
as available-for-sale, a significant or
prolonged decline in fair value of a
security below its cost is considered
in determining whether the security is
impaired. If any such evidence exists
for available-for-sale financial assets,
the cumulative loss measured as the
difference between the acquisition
cost and the current fair value, less
any impairment loss on that financial
asset previously recognised in profit
or loss is removed from equity
and recognised in profit or loss.
(ii) Loans and receivables
Loans and receivables are non
derivative financial assets with fixed
or determinable payments that are not
quoted in an active market. They arise
when the Group provides money, goods
or services directly to a debtor with no
intention of selling the receivable. They
are included in current assets, except
for those with maturities greater than
12 months after the balance date which
are classified as non-current assets.
Loans and receivables are included
in receivables in the statement of
financial position (Notes 9, 11 and 12).
Loans and receivables are measured
at amortised cost using the effective
interest method less impairment.
Interest is recognised by applying the
effective interest rate classification
of its investments at initial
recognition and re-evaluates this
designation at each reporting date.
(n) Fair value estimation
The fair value of financial assets and
financial liabilities must be estimated
for recognition and measurement
or for disclosure purposes.
The fair value of financial instruments
traded in active markets (such as
publicly traded derivatives and
available-for-sale securities) is
based on quoted market prices at
the balance date. The quoted market
price used for financial assets held by
the Group is the current bid price.
The fair value of financial instruments
that are not traded in an active
market is determined using valuation
techniques. The Group uses a variety
of methods and makes assumptions
that are based on market conditions
existing at each balance date. Quoted
market prices or dealer quotes for
similar instruments are used for
long-term debt instruments held.
Other techniques, such as estimated
discounted cash flows, are used
to determine fair value for the
remaining financial instruments.
The fair value of interest rate swaps
is determined based on market
expectations of future interest rates.
The nominal value less estimated credit
adjustments of trade receivables and
payables are assumed to approximate
their fair values. The fair value of
financial liabilities for disclosure
purposes is estimated by discounting
the future contractual cash flows
at the current market interest rate
that is available to the Group for
similar financial instruments.
(o) Derivatives
Derivatives are recognised at their
fair value at each reporting date. The
method of recognising the resulting
gain or loss depends on whether the
derivative is designated as a hedging
instrument, and if so, the nature of
the item being hedged. The Group
designates certain derivatives as
hedges of exposure to variability
in cash flows, which includes
hedges for highly probable forecast
transactions (cash flow hedges).
The Group documents at the inception
of the transaction the relationship
between hedging instruments
and hedged items, as well as its
risk management objective and
strategy for undertaking various
hedge transactions. The Group also
documents its assessments, both at
hedge inception and on an ongoing
basis, of whether the derivatives that
are used in hedging transactions have
been and will continue to be highly
effective in offsetting changes in fair
values or cash flows of hedged items.
Refer further details in Note 18.
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
(m) Investments and other
financial assets
Investments are recognised and
derecognised on settlement date where
the purchase or sale of an investment is
under a contract whose terms require
delivery of the investment within the
time-frame established by the market
concerned. They are initially measured at
fair value, net of transaction costs except
for those financial assets classified as
at fair value through profit or loss which
are initially measured at fair value.
Subsequent to initial recognition,
investments in associates are accounted
for under the equity method in the
consolidated financial statements.
The Group classifies its other financial
assets in the following categories: (i)
available-for-sale financial assets
and (ii) loans and receivables. The
classification depends on the purpose
for which the financial assets were
acquired. Management determines
the classification of its investments at
initial recognition and re-evaluates this
designation at each reporting date.
(i) Available-for-sale financial assets
Available-for-sale financial assets are
initially measured at cost at date of
acquisition, which include transaction
costs, and subsequent to initial
recognition, they are carried at fair value.
Unrealised gains and losses arising from
changes in the fair value of non-monetary
securities classified as available-
for-sale are recognised in equity in
the available-for-sale investments
revaluation reserve. When securities
classified as available-for-sale are sold
or impaired, the accumulated fair value
adjustments are included in profit or
loss as gains and losses from the sale or
impairment of investment securities.
The fair values of quoted investments are
based on current bid prices. If the market
for a financial asset is not active (and for
unlisted securities), the Group establishes
fair value by using valuation techniques.
These include reference to the fair values
of recent arm’s length transactions,
involving the same instruments or other
instruments that are substantially the
same, discounted cash flow analysis,
and pricing models to reflect the
issuer’s specific circumstances.
36
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
(i) Cash flow hedges
The change in the fair value from
remeasuring derivatives that are
designated and qualify as cash
flow hedges is deferred in equity
as a hedging reserve, to the extent
that the hedge is effective. The
ineffective portion is recognised
in profit or loss immediately.
Amounts deferred in the hedging
reserve are recycled in profit or loss
in the periods when the hedged item
is recognised in profit or loss.
However, when the forecast transaction
that is hedged results in the recognition
of a non-financial asset or non-financial
liability, the gains or losses previously
deferred in the hedging reserve are
transferred from equity and included
in the initial cost and measurement
of the cost of the asset or liability.
Hedge accounting is discontinued
when the Group revokes the hedging
relationship, the hedging instrument
expires or is sold, terminated or
exercised, or no longer qualifies for
hedge accounting. Any cumulative
gain or loss deferred in the hedging
reserve at that time remains in equity
and is recognised when the forecast
transaction is ultimately recognised
in profit or loss. When a forecast
transaction is no longer expected to
occur, the cumulative gain or loss that
was deferred in equity is recognised
immediately in profit or loss.
(p) Property, plant and equipment
Land and buildings are shown at fair
value, based on annual assessment
by the Directors supported by periodic
valuations by external independent
valuers, less subsequent depreciation
for buildings. Any accumulated
depreciation at the date of revaluation
is eliminated against the gross
carrying amount of the asset and the
net amount is restated to the revalued
amount of the asset. All other property,
plant and equipment are stated at
historical cost less accumulated
depreciation and impairment losses.
Historical cost includes expenditure
that is directly attributable to
the acquisition of the items.
Subsequent costs are included in the
asset’s carrying amount or recognised
as a separate asset, as appropriate, only
when it is probable that future economic
benefits associated with the item will
flow to the Group and the cost of the
item can be measured reliably. All other
repairs and maintenance are charged
to profit or loss during the financial
period in which they are incurred.
Increases in the carrying amounts
arising on revaluation of land and
buildings are credited to property,
plant and equipment revaluation
reserve in shareholders’ equity. To
the extent that the increase reverses
a decrease previously recognised
in profit or loss, the increase is first
recognised in profit or loss. Decreases
that reverse previous increases of the
same asset are first charged against
revaluation reserves directly in equity
to the extent of the remaining reserve
attributable to the asset, all other
decreases are charged to profit or loss.
Land is not depreciated. Depreciation
on other assets is calculated using
the straight line method to allocate
their cost or revalued amounts, net
of their residual values, over their
estimated useful lives, as follows:
40 years
Buildings
3 - 10 years
Plant & equipment
Leasehold improvements 5 - 30 years
The asset’s residual values and useful
lives are reviewed, and adjusted if
appropriate, at each balance 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 (Note 1(i)).
Gains and losses on disposals are
determined by comparing proceeds with
carrying amounts. These are included
in profit or loss. When revalued assets
are sold, it is Group policy to transfer
the amounts included in the asset
revaluation reserve in respect of
those assets to retained earnings.
The cost of improvements to or on
leasehold properties is amortised
over the unexpired period of the lease
or the estimated useful life of the
improvement, whichever is the shorter.
The make good provision is capitalised
as leasehold improvements and
amortised over the term of the lease.
(q) Trademarks / brand names
Trademarks / brand names are valued
on acquisition where management
believe there is evidence of any of the
following factors: an established brand
name with longevity, a reputation
that may positively influence a
consumers decision to purchase or
service a vehicle, and strong customer
awareness within a particular
geographic location. Trademarks
are valued using a discounted cash
flow methodology. Trademarks are
considered to have an indefinite life
as the Group expects to hold and
support such trademarks through
marketing and promotional support
for an indefinite period. They are
recorded at cost less any impairment.
(r) 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, associate or business
at the date of acquisition. Goodwill
on acquisition of subsidiaries and
businesses is included in intangible
assets. Goodwill on acquisition of
associates is included in investment
in associates. Goodwill acquired
in business combinations 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.
An impairment loss for goodwill is
recognised immediately in profit or loss
and is not reversed in a subsequent
period. 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 (refer Note 16(a)).
37
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 1. SUMMARY OF SIGNIFICANT
(v) Provisions
(x) Dividends
ACCOUNTING POLICIES (continued)
(s) Trade and other payables
These amounts represent liabilities
for goods and services provided to the
Group prior to the end of the financial
year which are unpaid. The amounts
are unsecured and are usually paid
within 30 days of recognition. They are
recognised initially at the fair value
of what is expected to be paid, and
subsequently at amortised cost, using
the effective interest rate method.
(t) Borrowings
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 profit or loss
over the period of the borrowings using
the effective interest rate method.
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 date.
(u) New motor vehicle stock and
related bailment
Motor vehicles secured under bailment
plans are provided to the Group under
bailment agreements between the
floor plan loan providers and entities
within the Group. The Group obtains
title to the vehicles immediately prior
to sale. Motor vehicles financed under
bailment plans held by the Group
are recognised as trading stock with
the corresponding liability shown
as owing to the finance provider.
Provisions are recognised when the
Group has a present obligation (legal
or constructive) as a result of a past
event, it is probable that the Group will
be required to settle the obligation,
and a reliable estimate can be made
of the amount of the obligation. The
amount recognised as a provision
is the best estimate taking into
account the risks and uncertainties
surrounding the obligation.
Provision for Warranties
Provision is made for the estimated
claims in respect of extended
warranties provided on the majority of
the Group’s retail new and used vehicle
sales. These claims are generally
expected to settle in the next financial
year but some may be extended
into the following year if claims are
made late in the warranty period.
(w) Employee benefits
A liability is recognised for benefits
accruing to employees in respect
of wages and salaries, annual
leave and long service leave, when
it is probable that settlement will
be required and they are capable
of being measured reliably.
Liabilities recognised in respect of
short-term employee benefits, are
measured at their nominal values
using the remuneration rate expected
to apply at the time of settlement.
Liabilities recognised in respect
of long-term employee benefits
are measured as the present
value of the estimated future cash
outflows to be made by the Group
in respect of services provided by
employees up to reporting date.
The Group recognises a liability
and an expense for long-term
incentive plans for selected
executives based on targets set
for diluted earning per growth.
Contributions are made by the Group
to defined contribution employee
superannuation funds and are charged
as expenses when incurred.
Provision is made for the amount
of any dividend declared on or
before the end of the year but not
distributed at balance date.
(y) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated
as net profit attributable to members
of the parent, adjusted to exclude any
costs of servicing equity (other than
dividends), divided by the weighted
average number of ordinary shares,
adjusted for any bonus element.
(ii) Diluted earnings per share
Diluted earnings per share is
calculated as net profit attributable to
members of the parent, adjusted for:
• Costs of servicing equity (other
than dividends)
• The after tax effect of dividends and
interest associated with dilutive
potential ordinary shares that have
been recognised as expenses
• Other non-discretionary changes
in revenues or expenses during the
period that would result from the
dilution of potential ordinary shares,
divided by the weighted average
number of ordinary shares and
dilutive potential ordinary shares,
adjusted for any bonus element.
(z) Non-Current assets held for sale
Non-current assets and disposal
groups are classified as held for sale if
their carrying amount will be recovered
principally through a sale transaction
rather than through continuing use.
This condition is regarded as met
only when the sale is highly probable
and the asset (or disposal group) is
available for immediate sale in its
present condition. Management must
be committed to the sale, which should
be expected to qualify for recognition
as a completed sale within one year
from the date of classification.
Non-current assets (and disposal
groups) classified as held for sale
are measured at the lower of their
previous carrying amount and
fair value less costs to sell.
38
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) (i)
Amendments to AASB 132
offsetting Financial Assets and
Financial Liabilities
The Group has applied the amendments
to AASB 132 Offsetting Financial Assets
and Financial Liabilities for the first time
in the current year. The amendments
to AASB 132A clarify the requirements
relating to the offset of financial assets
and financial liabilities. Specifically,
the amendments clarify the meaning
of ‘currently has a legal enforceable
right of set-off’ and ‘simultaneous
realisation and settlement’.
The amendments have been applied
retrospectively. As the Group does not
have any financial assets and financial
liabilities that qualify for offset, the
application of the amendments has
had no impact on the disclosures or on
the amounts recognised in the Group’s
consolidated financial statements. The
Group has assessed whether certain
of its financial assets and financial
liabilities qualify for offset based on
the criteria set out in the amendments
and concluded that the application of
the amendments has had no impact on
the amounts recognised in the Group’s
consolidated financial statements.
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
(aa) Rounding of amounts
The company is of a kind referred
to in Class Order 98/100, issued
by the Australian Securities and
Investments Commission, relating
to the “rounding off” of amounts in
the financial report. Amounts in the
financial report have been rounded off
in accordance with that Class Order
to the nearest thousand dollars, or in
certain cases, to the nearest dollar.
(ab) New or revised standards
and interpretations that are
first effective in the current
reporting period
The group has adopted all of the
new and revised Standards and
Interpretations issued by the Australian
Accounting Standards Board (the AASB)
that are relevant to their operations
and effective for the current reporting
period. The adoption of all the new and
revised Standards and Interpretations
has resulted in changes to the Group’s
accounting policies and has effect on
the amounts reported for the current
and prior periods. The new and revised
Standards and Interpretations has
not had a material impact on profit
or loss and other comprehensive
income but has resulted in changes
to the Group’s presentation of, or
disclosure in its financial statements.
(ii) Amendments to AASB 136
Recoverable Amount Disclosures for
Non-Financial Assets
The Group has applied the amendments
to AASB 136 Recoverable Amount
Disclosures for Non-Financial Assets
for the first time in the current year. The
amendments to AASB 136 remove the
requirement to disclose the recoverable
amount of a cash-generating unit (CGU)
to which goodwill or other intangible
assets with indefinite useful lives had
been allocated when there has been no
impairment or reversal of impairment
of the related CGU. Furthermore, the
amendments introduce additional
disclosure requirements applicable
to when the recoverable amount of
an asset or a CGU is measured at
fair value less costs of disposal.
These new disclosures include the fair
value hierarchy, key assumptions and
valuation techniques used which are
in line with the disclosure required by
AASB 13 Fair Value Measurements.
The application of these amendments
has had no material impact on
the disclosures in the Group’s
consolidated financial statements.
At the date of authorisation of the
financial statements, the following
Standards and Interpretations
relevant to the Group were in
issue but not yet effective.
The potential impact of the new or
revised Standards and Interpretations
has not yet been determined.
List of Standards and Interpretations in
issue not yet effective
At the date of authorisation of the
financial statements, the Standards
and Interpretations listed below
were in issue but not yet effective.
39
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Standard/Interpretation
AASB 15 ‘Revenue from Contracts with Customers’,
AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from
AASB 15’ and AASB 2015-8 ‘Amendments to Australian Accounting Standards
– Effective Date of AASB 15’
AASB 9 ‘Financial Instruments’ (December 2014),
and the relevant amending standards
Effective for
annual reporting
periods beginning
on or after
Expected to be
initially applied
in the financial
year ending
1 January 2018
31 December 2018
1 January 2018
31 December 2018
AASB 2015-1 ‘Amendments to Australian Accounting Standards
– Annual Improvements to Australian Accounting Standards 2012-2014 Cycle’
1 January 2016
31 December 2016
AASB 2015-2 ‘Amendments to Australian Accounting Standards
– Disclosure Initiative: Amendments to AASB 101’
AASB 2015-9 ‘Amendments to Australian Accounting Standards
– Scope and Application Paragraphs’
1 January 2016
31 December 2016
1 January 2016
31 December 2019
At the date of authorisation of the financial statements, there were no IASB Standards or IFRIC Interpretations on issue but
issue not yet effective, although Australian equivalent Standards and Interpretations have not yet been issued. The potential
impact on the new and revised standards and interpretations has not yet been determined.
Standard/Interpretation
IFRS 16 Leases
Recognition of Deferred Tax Assets for Unrealised Losses
(Amendments to IAS 12)
Effective for
annual reporting
periods beginning
on or after
Expected to be
initially applied
in the financial
year ending
1 January 2019
31 December 2019
1 January 2017
31 December 2017
Disclosure Initiative (Amendments to IAS 7)
1 January 2017
31 December 2017
40
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 2 CRITICAL ACCOUNTING ESTIMATES
(ii) Fair value estimation of land
AND JUDGEMENTS
and buildings
Land and buildings with a carrying
value of $249,246,000 (2014:
$250,317,000) are carried at fair
value. This fair value is determined
by the Directors and is supported
by formal independent valuations
conducted periodically but at least
every three years. Further information
on the fair value estimation of land and
buildings can be found in Note 15.
(iii) Provisions for warranties
A provision for warranties of
$4,183,000 (2014: $3,863,000) has been
recognised for extended warranties
provided for the Group’s retail new
and used vehicle sales. This provision
has been estimated based on past
experience and confirmation of
future costs by the administrators of
the warranty programmes. Further
information on the provision for
warranties can be found in Note 21.
(iv) Estimation of make good provisions
An amount of $2,122,000 (2014:
$1,787,000) has been estimated in
respect of anticipated costs of future
restoration of leased properties. A
bank guarantee has been given for
$1,970,000 recognised for one leased
property, which has approximately
13 years to run at balance date. In
terms of the lease, this amount will be
indexed and will increase in the future,
therefore it is the maximum estimate
of what would be payable. Further
information on the estimate of make
good provisions can be found in Note 24.
(a) Critical accounting estimates,
assumptions and judgements
Estimates, assumptions and
judgements are continually evaluated
and are based on historical experience
and other factors, including
expectations of future events that
may have a financial impact on the
Group and that are believed to be
reasonable under the circumstances.
The Group makes estimates,
assumptions and judgements
concerning the future. The resulting
accounting estimates will, by definition,
seldom equal the related actual
results. The estimates, assumptions
and judgements that have a significant
risk of causing a material adjustment
to the carrying amounts of assets
and liabilities are discussed below:
(i)
Estimated impairment of goodwill and
other intangibles with indefinite useful
lives
Goodwill and other intangibles
with indefinite useful lives with a
carrying value of $160,762,000 (2014:
$165,733,000) are tested annually for
impairment, based on estimates made
by directors. The recoverable amount
of the intangibles is based on the
greater of ‘Value in use’ or ‘Fair value
less costs to dispose’. Value in use is
assessed by the Directors through a
discounted cash flow analysis which
includes significant estimates and
assumptions related to growth rates,
margins, working capital requirements
and cost of capital. Fair value less
costs to dispose is assessed by the
Directors based on their knowledge
of the industry and recent market
transactions. Further information
on the intangibles impairment
test can be found in Note 16(a).
41
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) CONSOLIDATED
2015
$’000
2014
$’000
1,976,916
1,737,717
652,080
384,789
186,047
1,923
557,331
342,109
170,273
1,177
3,201,755
2,808,607
13,752
12,087
96
3,182
7,003
14,833
5,755
44,621
54
1,670
19,587
11,151
4,957
49,506
3,246,376
2,858,113
2,936
3,490
6,426
3,892
-
3,892
3 REVENUE
Sales revenue
New vehicles
Used vehicles
Parts
Service
Other
Other revenue
Dividend received
Rents
Interest
Proceeds of insurance claims
Commissions
Other
Total revenue
4 OTHER GAINS
Gains on disposal of other assets
Net gain on sale of available-for-sale financial assets
42
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 5 EXPENSES
(a) Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Leased motor vehicles
Total depreciation
Amortisation
Leasehold improvements
Brand names
Total depreciation and amortisation
Finance costs
Vehicle bailment
Other
Total finance costs
Rental expense relating to operating leases
Minimum lease payments
Contributions to super funds
Provision expenses
Inventory
Warranties
Bad debts
Share-based payments
Business acquisition costs
(b) Impairment of non-current assets
Revaluation loss of land and buildings
Impairment of intangibles
CONSOLIDATED
2015
$’000
2014
$’000
Note
3,195
6,854
1,149
3,540
5,960
744
15
11,198
10,244
1,891
127
13,216
10,493
10,800
21,293
2,201
138
12,583
10,691
11,389
22,080
27,414
21,310
24,119
21,362
3,174
5,390
307
8,871
7,977
6,167
459
14,603
3,019
2,135
201
2,761
2,083
5,527
7,610
578
-
578
43
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
6 INCOME TAX
(a) Income tax expense (benefit)
Current income tax expense
Deferred income tax benefit
Deferred income tax expense/(benefit) included in income tax expense comprises:
In respect of the current year
Deferred tax reclassified from equity to profit or loss
Closing balance
CONSOLIDATED
2015
$’000
2014
$’000
38,972
(5,029)
33,943
(5,029)
1,047
(3,982)
28,243
(2,093)
26,150
(2,093)
-
(2,093)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
120,958
102,840
Tax at the Australian tax rate of 30.0% (2014 - 30.0%)
36,287
30,852
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Goodwill impairment
Depreciation and amortisation
Non-taxable dividends
Non allowable expenses
Property revaluation
Sundry items
Income tax expense
(c) Tax expense (income) relating to items of other comprehensive income
Aggregate deferred tax arising in the reporting period and directly debited to other
comprehensive income
1,658
220
(4,175)
377
625
(1,049)
33,943
-
212
(5,827)
1,692
-
(779)
26,150
(15,652)
(95)
44
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
7 DIVIDENDS
(a) Ordinary dividends fully franked based on tax paid @ 30%
Final dividend for the year ended 31 December 2014 of 18.0 cents per share (2013 - 15.0 cents)
paid on 17 April 2015
Interim dividend of 12.0 cents (2014 - 9.0 cents) per share paid on 7 October 2015
Total dividends paid
Dividends paid in cash or satisfied by the issue of shares under the
dividend reinvestment plan during the years ended 31 December 2015
and 2014 were as follows:
CONSOLIDATED
2015
$’000
2014
$’000
32,239
22,089
54,328
26,516
15,954
42,470
Paid in cash
54,328
42,470
(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 20 cents per share, fully franked based on tax paid at 30%. The aggregate
amount of the proposed dividend expected to be paid on 19 April 2016 out of the retained profits
at 31 December 2015, but not recognised as a liability at year end, is:
36,940
32,176
(c) Franked dividends
The final dividend recommended after 31 December 2015 will be franked out of existing
franking credits or out of franking credits arising from the payment of income tax in the year
ending 31 December 2015.
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2014 - 30.0%)
159,089
148,995
The above amounts represent the balances of the franking account as at the end of the financial
year, adjusted for:
(a) franking credits that will arise from the payment of the current tax liability
(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.
Impact on franking credits of dividends not recognised
(15,831)
(13,790)
8 CURRENT ASSETS – CASH AND CASH EQUIVALENTS
Current assets
Cash at bank and on hand
Short term deposits
3,535
34,000
37,535
10,777
13,000
23,777
The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows as follows:
Balances as above
Less: Bank overdrafts
Balances per Statement of cash flows
37,535
23,777
-
-
37,535
23,777
45
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
9 CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
Trade and other receivables
Provision for doubtful receivables
CONSOLIDATED
2015
$’000
2014
$’000
111,887
108,414
(2,771)
(2,622)
109,116
105,792
(i) The ageing of lease, property and trade receivables at 31 December 2015 is detailed below:
Not past due
Past due 0-30 days
Past due 31 days plus
Total
CONSOLIDATED
2015
2014
Gross
$’000
Provision
$’000
Gross
$’000
Provision
$’000
106,082
2,006
100,857
3,511
2,294
80
685
4,339
3,218
111,887
2,771
108,414
1,778
102
742
2,622
The maximum credit period on trade sales is 60 days. No interest is charged on the trade receivables from the date of invoice
or when past due. The Group has provided fully for all receivables identified by management as being specifically doubtful,
and in addition has provided 10% for all receivables over 90 days and 2.5% of total trade receivables excluding motor vehicle
debtors. The Group’s provision policy is based on an assessment of changes in credit quality and historical experience.
Included in the Group’s trade receivables balance are debtors with a carrying amount of $5,039,000 (2014: $6,713,000) which are
past due at the reporting date. The Group has not provided for these balances as there have not been any specifically identified
factors that would indicate a deterioration of credit quality. The Group therefore still considers the amounts recoverable. The
Group does not hold any collateral over these balances. The average age of these receivables is 61 days (2014: 62 days).
(ii) Movement in provision for doubtful receivables
Opening balance
Additional provisions
Addition due to acquisitions
Amounts written off during the year
Closing balance
CONSOLIDATED
2015
$’000
2,622
307
-
(158)
2,771
2014
$’000
2,410
459
29
(276)
2,622
In determining the recoverability of a trade receivable the Group considers any deterioration in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due
to the customer base being large, diverse and unrelated. Accordingly, the Directors believe that there is no further provision
required in excess of the provision for doubtful debts.
46
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 10 CURRENT ASSETS – INVENTORIES
New motor vehicles & trucks - bailment stock - at cost
Less: Write-down to net realisable value
Used vehicles & trucks - at cost
Less: Write-down to net realisable value
Parts and other consumables - at cost
Less: Write-down to net realisable value
Total inventories
11 CURRENT ASSETS – OTHER CURRENT ASSETS
(a) Prepayments and deposits
Prepayments and deposits
(a) Assets classified as held for sale
Property held for sale
Intangible asset held for sale
CONSOLIDATED
2015
$’000
2014
$’000
400,900
343,812
(6,258)
(7,835)
394,642
335,977
87,369
(5,358)
82,011
55,344
(1,834)
53,510
89,446
(7,855)
81,591
53,618
(1,981)
51,637
530,163
469,205
8,256
1,884
-
27,781
3,010
3,010
-
27,781
The prior year assets related to property held by the Group that were sold during 2015. As at 31 December 2015 no property is
expected to be sold within 12 months.
Refer to Note 15 for information about assets and liabilities of a disposal group that were classified as held for sale at
31 December 2014.
Intangible asset held for sale is expected to be sold within 12 months of balance date.
(c) Property sale receivables
Property sale receivables
32,013
6,717
Sale of property where proceeds are expected to be received within 12 months of balance date.
47
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
12 NON-CURRENT ASSETS – RECEIVABLES
(a) Property sale receivables
Property sale receivables
(b) Loans receivables
Loans receivables
13 NON-CURRENT ASSETS – AVAILABLE-FOR-SALE INVESTMENTS CARRIED AT FAIR VALUE
Shares in a listed company - Automotive Holdings Group Limited (1)
Shares in a listed company - Smartgroup Corporation Ltd (1)
Shares in an unlisted company - One Way Traffic Pty Ltd (Carsguide) (2)
CONSOLIDATED
2015
$’000
2014
$’000
23,503
18,826
10,317
9,787
275,288
232,046
4,184
2,345
-
2,345
281,817
234,391
(1)
(2)
The Directors have assessed the fair value of the investment as at 31 December 2015 based on the market price of the
shares on the last trading day of the reporting period. This is a level 1 fair value measurement asset being derived from
inputs based on quoted prices that are observable.
The Directors have assessed the fair value of the investment as at 31 December 2015 is materially consistent with its cost
of acquisition. This is a level 3 fair value measurement asset being derived from inputs other than quoted prices that are
unobservable from the asset either directly or indirectly.
Valuation of available for sale investments
Details of the Group’s available for sale investments and information about the fair value hierarchy as at 31 December 2015
are as follows:
Class of Financial Assets
and Liabilities
Level 1 Available for
sale investments - listed
entities
Level 3 Available for sale
investments - unlisted
entities
Unobservable inputs used in determination of fair values
Carrying
Amount
31/12/15
$’000
Carrying
Amount
31/12/14
$’000
279,472
232,046
Valuation Technique
Key Input
Quoted bid prices in an
active market.
Quoted bid prices in an
active market.
2,345
2,345 Net asset assessment and
available bid prices from
equity participants
Pre tax operating
margin taking into account
managements’ experience
and knowledge of
market conditions and
financial position
Market information based
on available bid prices
There were no transfers between levels in the year.
48
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
14 NON-CURRENT ASSETS – INVESTMENT IN ASSOCIATE
Shares in associate - Norna Limited
CONSOLIDATED
2015
$’000
1,620
2014
$’000
1,620
Investment in associates is accounted for in the consolidated financial statements using the equity method of accounting
(refer Note 40).
Reconciliation of the carrying amount of investment in associate is set out in Note 40(b).
15 NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings - at fair value
Directors’ valuation
Land
Buildings
Construction in progress
Total land and buildings
Leasehold improvements
At cost
Accumulated depreciation
Total leasehold improvements
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Motor vehicles under lease
At cost
Accumulated depreciation
Total motor vehicles under lease
149,592
99,377
277
152,879
97,251
187
249,246
250,317
27,098
27,625
(12,589)
(13,179)
14,509
14,446
60,025
55,644
(33,622)
(33,842)
26,403
21,802
1,733
(593)
1,140
8,901
(2,981)
5,920
Total property, plant and equipment
291,298
292,485
Valuation of land and buildings
The basis of the Directors’ valuation of land and buildings is the assessed fair value, being the amounts for which the assets
could be exchanged between willing parties in an arm’s length transaction at balance date, based on current prices in an active
market for similar properties in the same location and condition. The assessed fair value is supported by periodic, but at least
triennial valuations, by external third party valuers. The 2015 valuations were made by the Directors based on their assessment
of prevailing market conditions and supported by fair value information received from independent expert property valuers on
certain properties and the Group’s own market activities and market knowledge.
49
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
15 NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT (continued)
Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at 31 December 2015 are
as follows:
Class of
Financial
Assets &
Liabilities
Level 3
Car – HBU
Alternate
Use
Level 3 Car
Dealership
Level 3
Develop-
ment - Car
Dealership
Level 3
Truck Deal-
ership
Unobservable inputs used in determination of fair values
Carrying
Amount
31/12/15
$’000
Carrying
Amount
31/12/14
$’000
Valuation
Technique Key Input
Input
Average/
Range
2015
Average/
Range
2014
Other key
Informa-
tion
Range
(weighted
avg)
2015
Range
(weighted
avg)
2014
42,911
44,601 Direct
Comparison
170,294
167,389 Summation
method,
income cap-
italisation
and direct
comparison
External
valuations
Specific
incomplete
transactions
External
valuations
Industry
bench-
marks
Price
/sqm Land
Average
$1,440/sqm
Average
$1,875/sqm
Land size
Average
7,199 sqm
Average
7,173 sqm
Range
$1,278 -
$2,622 /sqm
Range
$1,623 -
$2,688/sqm
Range
779 -
24,160 sqm
Range
779 -
18,160 sqm
Average
8.5%
Average
9.6%
Net Rent /
sqm Land
Average
$94 sqm
Average
$96 sqm
Range
3.7% - 23.8%
Range
3.4% - 15.9%
Range
$14 -
$297 sqm
Range
$25 -
$297 sqm
Net Rent/
Gross
Income
8% - 12%
(Non-luxury)
10% - 14%
(Luxury)
Capitalisa-
tion Rate
Average
8.0%
Average
8.2%
Net Rent /
sqm GBA
Average
$194 sqm
Average
$197 sqm
Range
2.5% - 9.7%
Range
6.7% - 9.8%
Range
$62 -
$747 sqm
Range
$100 -
$750 sqm
9,350
9,350 Direct Com-
parison
External
valuations
Price
/sqm Land
Average
$459/sqm
Average
$459/sqm
Range
$330 -
$821/sqm
Range
$330 -
$821/sqm
18,436
20,734 Direct Com-
parison
External
valuations
Price
/sqm Land
Price
/sqm GBA
Average
$330/sqm
Average
$371/sqm
Land Size
Average
18,641 sqm
Average
18,641 sqm
Range
$206 -
$440/sqm
Range
$209 -
$526 /sqm
Range
7,218 -
25,700 sqm
Range
7,218 -
25,700 sqm
Net Rent
/Land sqm
Average
$30 sqm
Average
$30 sqm
Range
$17 to $43
sqm
Range
$17 to $43
sqm
Capitalisa-
tion Rate
Average
9.2%
Average
8.2%
Range
8.2% to 9.7%
Range
8.1% to 8.4%
Level 3
Other
Logisitics
7,977
8,056
Income
capitalisa-
tion method
supported
by market
comparison
Sub Total
248,969
250,130
Construction
in progress
277
187
Total
249,245
250,317
External
valuations
Capitalisa-
tion Rate
Average
8.2%
Average
8.1%
Net Rent
/sqm GBA
Average
$90 sqm
Average
$90 sqm
Range
8.1% to 8.3%
Range
8.0% to 8.2%
Range
$79 -
$143 sqm
Range
$79 -
$143 sqm
There were no transfers between levels during the year.
50
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
15 NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT (continued)
Explanation of asset classes: Car - Higher and Best Use (HBU). Alternate Use refers to properties currently operated as car
dealerships which have a higher and best use HBU greater than that of a car dealership; Car Dealership refer to properties
operating as car dealership with a consistent HBU; Development Car Dealership refers to properties which are in progress
of, or being held for future development as a car dealership; Truck Dealership refers to properties being operated as a truck
dealership with a HBU consistent with that use; Other Logistics are industrial properties used for parts warehousing and
vehicle logistics.
Carrying amounts that would have been recognised if land and buildings were stated at cost
If freehold land was carried at historical cost, its current carrying value would be $98,791,000 (2014: $98,129,000). If freehold
buildings (including construction in progress) were carried at historical cost, its current carrying value (after depreciation)
would be $99,654,000 (2014: $97,438,000).
Non-current assets pledged as security
Refer to Note 22 for information on non-current assets pledged as security by the Group.
Reconciliations
Reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the year is
set out below:
Freehold
land
$’000
Freehold
buildings
$’000
Construction
in progress
$’000
Leasehold
improve-
ments
$’000
Motor
vehicles
under lease
$’000
Plant and
equipment
$’000
152,879
-
(3,391)
97,251
5,208
113
187
237
(147)
2,187
(2,083)
-
-
-
(3,195)
-
-
-
14,446
1,954
-
-
-
5,920
-
(3,631)
-
-
21,802
11,455
-
-
-
(1,891)
(1,149)
(6,854)
(13,089)
149,592
99,377
277
14,509
1,140
26,403
291,298
Total
$’000
292,485
18,854
(7,056)
2,187
(2,083)
193,500
112,357
-
6,549
Disposals/transfers
(23,666)
(14,223)
6,803
187
(6,803)
-
-
-
-
14,533
2,114
-
6,664
17,763
9,999
-
-
-
-
-
-
-
-
-
344,956
25,513
(44,692)
(1,692)
(578)
(2,201)
(744)
(5,960)
(12,445)
-
-
-
(18,577)
(1,692)
(578)
-
-
-
(3,540)
(14,685)
(3,892)
152,879
97,251
187
14,446
5,920
21,802
292,485
51
Consolidated 2015
Carrying amount at the
start of the year
Additions
Disposals/transfers
Revaluation loss
debited to asset
revaluation reserve
Revaluation charged to
profit and loss
Depreciation/
amortisation expense
Carrying amount at
end of year
Consolidated 2014
Carrying amount at the
start of the year
Additions
Revaluation loss
debited to asset
revaluation reserve
Revaluation charged to
profit and loss
Depreciation/
amortisation expense
Transfer to property
assets held for sale
Carrying amount at
end of year
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 16 INTANGIBLE ASSETS
Goodwill
Trademarks/brand names
Movement - Goodwill
Balance at the beginning of the financial year
Additional amounts recognised:
- from business combinations during the year
Less: Impairment during the year (Note 16(a))
Less: Disposal of businesses
Balance at the end of the financial year
Movement - Trade marks/brand names
Balance at the beginning of the financial year
Purchase of brand name during the year
Less: Amortisation of brand names
Balance at the end of the financial year
(a) Impairment tests for goodwill
CONSOLIDATED
2015
$’000
2014
$’000
153,993
158,837
6,769
6,896
160,762
165,733
158,837
119,542
1,033
(5,527)
(350)
39,295
-
-
153,993
158,837
6,896
-
(127)
6,769
5,717
1,317
(138)
6,896
For the purpose of impairment testing, goodwill is allocated to each of the consolidated entity’s cash generating units (CGU),
or groups of CGUs, that are expected to benefit from the synergies of the combinations. Each unit or groups of units to which
goodwill is allocated represents the lowest level at which assets are monitored for internal management purposes, largely on a
dealership by dealership level.
A segment-level summary of the goodwill allocation is presented below:
146,043
145,360
5,719
5,846
151,762
151,206
7,950
1,050
9,000
13,477
1,050
14,527
Automotive dealership operations:
Goodwill
Trade marks/brand names
Truck dealership operations:
Goodwill
Trade marks/brand names
52
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
16 INTANGIBLE ASSETS (continued)
The recoverable amount of a CGU or group of CGUs to which goodwill and other indefinite life intangible assets is allocated is
determined based on the greater of its value in use and its fair value less costs of disposal. Fair value is determined as being the
amount obtainable from the sale of a CGU in an arms length transaction between knowledgeable and willing parties at balance
date. This fair value assessment less costs of disposal is conducted by the Directors based on their extensive knowledge of
the automotive and truck retailing industry including the current market conditions prevailing in the industry. The value in use
assessment is conducted using a discounted cash flow (DCF) methodology requiring the Directors to estimate the future cash
flows expected to arise from the cash generating units and then applying a discount rate to calculate the present value.
The DCF model adopted by directors was based on the 2015 financial budgets approved by the Board, a 3% (2014: 3%) perpetual
growth rate and a pre-tax discount rate of 11% (2014: 11%). This growth rate does not exceed the long term average growth rate
for the industry.
For the automotive dealership operations the Directors believe that any reasonable change in the key assumptions on which the
recoverable amount is based is not expected to cause the carrying amount to exceed the recoverable amount of the CGUs.
For the truck dealership operations the Directors believe that any reasonable change in the key assumptions on which the
recoverable amount is based may cause the carrying amount to exceed the recoverable amount of the CGU and may result in
further impairment.
(b) Impairment charge
The Directors’ assessment in 2015 determined that goodwill was impaired to the extent of $5,527,000 (2014: nil). The
impairment related to the Truck Dealership Division and was the result of challenging new and used heavy truck trading
conditions consistent with a weak market environment.
17 CURRENT LIABILITIES – PAYABLES
Trade and other payables
Trade payables (i)
Other payables
CONSOLIDATED
2015
$’000
68,249
65,314
2014
$’000
73,005
55,033
133,563
128,038
(i)
The average credit period on purchases of goods is 30 days.
No interest is charged on trade payables from the date of invoice.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.
18 DERIVATIVE FINANCIAL INSTRUMENTS
Current liabilities
Interest rate swap contracts - cash flow hedges
Total current derivative financial instrument liabilities
Non-current liabilities
Interest rate swap contracts - cash flow hedges
Total non-current derivative financial instrument liabilities
227
227
595
595
188
188
934
934
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to
fluctuations in interest rates in accordance with the Group’s financial risk management policies (refer to Note 28).
Bailment finance of the Group currently bears an average variable interest rate of 4.25% (2014: 4.78%). As per Group policy
bailment finance is not hedged.
The interest rate swaps currently in place are providing a fixed rate of interest on the variable cash advances drawn down
under the term facility. The swap contracts in place cover approximately 55% (2014: 55%) of the term facility outstanding at the
year end. The contracts require settlement of net interest receivable or payable each 30 days.
The gain or loss from remeasuring the hedging instruments at fair value is deferred in equity in the hedging reserve to the
extent that the hedge is effective and re-classified into profit or loss when the hedged interest expense is recognised. The
ineffective portion is recognised in profit or loss immediately.
At balance date, a gain from remeasuring the hedging instruments at fair value of $822,000 (2014: $1,122,000) has been
recognised in equity in the hedging reserve (Note 27(a)). No portion was ineffective.
53
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
18 DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Valuation of derivative financial instruments
Details of the Group’s derivative financial instruments and information about the fair value hierarchy as at 31 December 2015
are as follows:
Unobservable inputs used in determination of fair values
Carrying
Amount
31/12/15
$’000
Carrying
Amount
31/12/14
$’000
Valuation Technique
822
1,122 Discounted cash flow.
Class of Financial
Assets and Liabilities
Level 2
Cash flow hedges –
Interest rate swaps
There were no transfers between levels in the year.
19 CURRENT LIABILITIES - BORROWINGS - BAILMENT AND FINANCE LEASE PAYABLE
(a) Bailment and finance lease payable
Bailment finance
Finance lease payable (Note 31)
Key Input
Future cash flows are
estimated based on forward
interest rates (from
observable yield curves
at the end of the reporting
period) and contract interest
rates, discounted at a rate
that reflects the credit risk of
various counterparties.
CONSOLIDATED
2015
$’000
2014
$’000
404,134
357,555
354
5,598
404,488
363,153
(i) Bailment finance
Bailment finance is provided on a vehicle by vehicle basis by various finance providers at an average interest rate of 4.25% p.a.
applicable at 31 December 2015 (2014: 4.78%). Bailment finance is repayable within a short period after the vehicle is sold to a
third party, generally within 48 hours.
(ii) Finance Lease
The finance lease liability is secured against associated leased assets and is provided by various finance providers at an
average interest rate of 6.08% p.a. applicable at 31 December 2015 (2014: 6.03%).
(iii) Interest rate risk exposures
Details of the Group’s exposure to interest rate changes on interest bearing liabilities is set out in Note 28.
(iv) Fair value disclosures
Details of the Group’s fair value of interest bearing liabilities is set out in Note 28.
(v) Security
Details of the security relating to each of the secured liabilities and further information on bank loans is set out in Note 22.
20 CURRENT LIABILITIES – CURRENT TAX LIABILITIES
Income tax
21 CURRENT LIABILITIES – PROVISIONS
Employee benefits
Warranties
54
124
12,979
15,337
4,183
19,520
16,846
3,863
20,709
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
21 CURRENT LIABILITIES – PROVISIONS (continued)
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Consolidated entity 2015
Carrying amount at the start of the year
Additional provisions recognised
Payments charged against provisions
Carrying amount at end of year
(b) Warranty Provision
Warranties
$’000
3,863
5,390
(5,070)
4,183
An estimate is made based on past experience, and confirmation of future costs by the administrator of the warranty program,
of the expected expenditure on new and used motor vehicles in terms of warranties on these vehicles.
22 NON-CURRENT LIABILITIES – BORROWINGS (SECURED)
(a) Borrowings – others
Term facility
Capital loan
Finance lease payables
SECURED LIABILITIES
Total secured liabilities (current and non-current) are:
Term facility (i)
Capital loan (ii)
Finance lease payable (iii)
Bailment finance (iv)
Total secured liabilities
CONSOLIDATED
2015
$’000
2014
$’000
154,000
55,000
792
144,000
70,000
2,646
209,792
216,646
154,000
144,000
55,000
1,146
404,134
614,280
70,000
8,244
357,555
579,799
(i)
The term facility is secured by a general security agreement which includes registered first mortgages held by a security
trustee over specific freehold land and buildings and a general charge over assets. This excludes new and used inventory
and related receivables, letter of set off given by and on account of the parent entity and its subsidiaries, and a Corporate
Guarantee and Indemnity unlimited as to amount given by the parent entity and its subsidiaries.
(ii) The capital loan is secured by registered first mortgages given by subsidiaries over specific freehold land and buildings,
letter of set off given by and on account of the parent entity and its subsidiaries, and a Corporate Guarantee and Indemnity
unlimited as to amount given by the parent entity and its subsidiaries.
(iii) The finance lease liability is secured against associated leased assets.
(iv) Vehicle bailment finance reflects a liability payable to the consolidated entity’s bailment financiers. This liability is
represented by and secured over debtors included in current assets receivables in respect of recent vehicle deliveries to
customers, and by new vehicles, demonstrator vehicles and some used vehicles all included in inventories (bailment stock).
Refer Note 10.
55
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
22 NON-CURRENT LIABILITIES – BORROWINGS (SECURED) (continued)
ASSETS PLEDGED AS SECURITY
The carrying amounts of assets pledged as security are:
Non-current assets pledged as security
Freehold land and buildings - first mortgage
Other non-current assets
Current assets pledged as security
Property assets held for sale
Inventories
Other current assets
Total assets pledged as security
FINANCING ARRANGEMENTS
The consolidated entity has access to the following lines of credit at balance date:
Note
15
CONSOLIDATED
2015
$’000
2014
$’000
247,791
520,070
248,833
472,525
-
404,134
207,023
27,781
357,555
143,968
1,379,018
1,250,662
Total facilities
Term facility (i)
Working capital facility (includes bank overdraft) (iii)
Capital loan (ii)
Bailment finance (iv)
Bank guarantees
Finance lease payables (v)
Used at balance date
Term facility
Capital loan
Bailment finance
Bank guarantees
Finance lease payables
Unused at balance date
Term facility
Working capital facility (includes bank overdraft)
Bailment finance
Bank guarantees
Finance lease payables
260,000
25,000
55,000
567,734
22,000
3,000
932,734
154,000
55,000
404,134
17,010
1,145
631,289
106,000
25,000
163,600
4,990
1,855
301,445
199,000
25,000
70,000
485,315
17,089
19,500
815,904
144,000
70,000
357,555
16,298
8,244
596,097
55,000
25,000
127,760
791
11,256
219,807
(i)
Term facility at balance date was provided on a non-amortisable (interest only) basis subject to compliance with specific
covenants for a fixed term.
(ii) Capital loan facility at balance date was provided on a non-amortisable (interest only) basis for a fixed term.
(iii)
(iv)
Working capital facility at balance date was provided on a non-amortisable (interest only) basis subject to compliance with
specific covenants and an annual review.
Bailment facilities are used to finance the acquisition of new vehicle and some used vehicle trading stock. These facilities
include a combination of fixed term and open ended arrangements and are subject to review periods ranging from quarterly
to annual. These facilities generally include short term termination notice periods and are disclosed as current liabilities in
the statement of financial position.
(v)
The finance lease liability provides direct and specific funding to a portfolio of finance leases associated with rental vehicles.
56
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
23 DEFERRED TAX LIABILITIES
Deferred tax liabilities
Note
CONSOLIDATED
2015
$’000
2014
$’000
(7,718)
(17,350)
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Book versus tax carrying value of plant and equipment
15
Inventory valuation
Prepayments
Provisions
Doubtful debts
Employee benefits
Warranties
Inventory write downs
Property receivable
Sundry items
Amounts recognised directly in equity
Revaluation of available-for-sale investment
Revaluation of property, plant and equipment
Hedge liability
Share options trust
Sub-total other
Net deferred tax liabilities
The deferred tax expense included in income tax expense in respect of the above
temporary differences resulted from the following movements:
Opening balance at 1 January
Deferred tax assets relating to business combinations
Property receivable
Deferred tax expense/(benefit) (Note 6a)
Share options trust
Adjustments recognised in the current year in relation to deferred tax on prior years
Deferred tax recognised directly in equity
Revaluation of available-for-sale investment
Revaluation of property plant and equipment
Movement in fair value of cash flow hedge
Arising on income and expenses reclassified from equity to profit & loss -
relating to available-for-sale financial assets
Closing balance at 31 December
1,900
2,628
942
1,668
1,059
330
(831)
(787)
(12,262)
(12,388)
(1,157)
(897)
(2,091)
(259)
(1,170)
(595)
(2,563)
(35)
(12,027)
(14,481)
27,659
11,551
(246)
(19,219)
19,745
7,718
17,350
(22)
-
(5,029)
(19,219)
32
14,907
656
90
(1,047)
7,718
13,799
18,369
(337)
-
31,831
17,350
27,482
(945)
(6,999)
(2,093)
-
-
389
(508)
24
-
17,350
57
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
24 NON-CURRENT LIABILITIES - PROVISIONS
Employee benefits - long service leave
Make good provision
(a) A make good clause under a long term property lease has been recognised in the financial
statements. The lessor of the property has been provided with a bank guarantee of $1,970,000
in respect of the estimated make good cost and rental costs.
(b) Movement in the provision:
Balance at start of year
Recognition of additional provision during the year
Payments against provision
Carrying amount at end of year
CONSOLIDATED
2015
$’000
8,252
2,122
10,374
2014
$’000
5,158
1,787
6,945
1,787
1,767
353
(18)
20
-
2,122
1,787
Make good provision on leasehold improvements
A provision has been made for the expected cost of restoring the premises to its original condition at the end of the lease.
58
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
25 SEGMENT INFORMATION
(b) Truck Retailing
(e) Other
Segments are identified on the basis
of internal reports about components
of the consolidated entity that are
regularly reviewed by the chief
operating decision maker, being the
board of directors, in order to allocate
resources to the segment and to assess
its performance.
The consolidated entity operates in
four operating and reporting segments
being (i) Car Retailing (ii) Truck Retailing
(iii) Property and (iv) Investments, these
being identified on the basis of being
the components of the consolidated
entity that are regularly reviewed by the
chief decision maker for the purpose
of resource allocation and assessment
of segment performance. Information
regarding the consolidated entity’s
reporting segments is presented below.
(a) Car Retailing
Within the Car Retail segment, the
consolidated entity offers a diversified
range of automotive products and
services, including new vehicles,
used vehicles, vehicle maintenance
and repair services, vehicle parts,
extended service contracts, vehicle
brokerage, vehicle protection products
and other aftermarket products.
They also facilitate financing for
vehicle purchases through third-
party sources. New vehicles, vehicle
parts, and maintenance services are
predominantly supplied in accordance
with franchise agreements with
manufacturers.
This segment also includes a motor
auction and car rental business.
Within the Truck Retail segment, the
consolidated entity offers a diversified
range of products and services,
including new trucks, used trucks,
truck maintenance and repair services,
truck parts, extended service contracts,
truck protection products and other
aftermarket products. They also
facilitate financing for truck purchases
through third-party sources. New
trucks, truck parts, and maintenance
services are predominantly supplied
in accordance with franchise
agreements with manufacturers.
(c) Property
Within the Property segment,
the consolidated entity acquires
commercial properties principally for
use as facility premises for its motor
dealership operations. The Property
segment charges the Car Retailing
segment commercial rentals for
owned properties occupied by that
segment. The Property segment
reports property assets at fair value,
based on annual assessments by
the Directors supported by periodic,
but at least triennial valuations
by external independent valuers.
Revaluation increments arising
from fair value adjustments are
reported internally and assessed by
the chief operating decision maker
as profit adjustments in assessing
the overall returns generated by this
segment to the consolidated entity.
(d) Investments
This segment includes the
investments in One Way Traffic Pty
Ltd, trading as Carsguide, Automotive
Holdings Group Limited and
Smartgroup Corporation Limited
Currently the segment
“Other” is not required.
The accounting policies of the
reportable segments are the same
as the Group’s accounting policies as
described in Note 1 with the exception
of all changes in fair value of property
and investments being recognised
as profit or loss adjustments for
segment reporting purposes. This
compares to the Group policy of
crediting increments to a property
plant and equipment and investment
reserve in equity (refer Note 1(p)).
Segment profit represents the profit
earned by each segment without
allocation of unrecouped corporate
/ head office costs and income tax.
External bailment is allocated to the
Car Retailing and Truck Retailing
segments. Bills payable funding
costs are allocated to the Car
Retailing, Truck Retailing, Property
and Investment segments based on
notional market based covenant levels.
This is the measure reported to the
chief operating decision maker for the
purposes of resource allocation and
assessment of segment performance.
For the purpose of monitoring segment
performance and allocating resources
between segments, the chief operating
decision maker monitors the tangible,
intangible, and financial assets
attributable to each segment. All assets
are allocated to reportable segments.
Geographic Information
The Group operates in one principal
geographic location, being Australia.
59
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 25 SEGMENT INFORMATION (continued)
Segment reporting 2015
Sales to external customers
Inter-segment sales
Total sales revenue
Other revenue
TOTAL REVENUE
Car
Retailing
$’000
2,857,208
-
2,857,208
27,449
2,884,657
Truck
Retailing
$’000
344,546
-
344,546
529
345,075
Property
$’000
96
25,013
25,109
2,796
27,905
Investments
$’000
-
-
-
13,752
13,752
Eliminations
$’000
-
(25,013)
(25,013)
-
(25,013)
Consolidated
$’000
3,201,850
-
3,201,850
44,526
3,246,376
SEGMENT RESULT
Operating profit before interest
External interest expense allocation
OPERATING CONTRIBUTION
Share of net profit of equity accounted
investments
Business acquisition costs
GST refunds
Investment revaluation
Property revaluation
Profit on sale of property/businesses
Goodwill impairment
106,040
(10,373)
95,667
164
(201)
2,326
-
-
-
4,638
(2,367)
2,271
-
-
-
-
-
-
(5,527)
19,503
(6,283)
13,220
-
-
-
-
104
3,010
-
13,666
(2,270)
11,396
-
-
-
46,199
-
3,490
-
-
-
-
(46,199)
(2,187)
-
-
-
-
-
143,847
(21,293)
122,554
SEGMENT PROFIT
Unallocated corporate expenses
PROFIT BEFORE TAX
Income tax expense
NET PROFIT
97,956
(3,256)
16,334
61,085
(48,386)
Depreciation and amortisation
8,226
1,186
3,804
Non cash expenses (reversal of
expenses) other than depreciation
and amortisation
Impairment of trade receivables
2,826
40
47
110
Write down (back) of inventories to
net realisable value
(2,006)
(1,664)
335
-
-
-
-
-
-
ASSETS
Segment assets
LIABILITIES
Segment liabilities
732,798
128,132
343,653
284,827
476,023
99,578
154,819
55,981
NET ASSETS
256,775
28,554
188,834
228,846
Acquisitions of non-current
assets, including assets of
businesses acquired
13,974
468
5,445
10,355
-
-
-
-
-
-
-
-
60
164
(201)
2,326
-
(2,083)
6,500
(5,527)
123,733
(2,775)
120,958
(33,943)
87,015
13,216
3,208
150
(3,670)
1,489,410
786,401
703,009
30,242
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 25 SEGMENT INFORMATION (continued)
Segment reporting 2014
Car
Retailing
$’000
Truck
Retailing
$’000
Property
$’000
Investments
$’000
Eliminations
$’000
Consolidated
$’000
Sales to external customers
2,435,176
373,431
Inter-segment sales
Total sales revenue
Other revenue
TOTAL REVENUE
-
-
2,435,176
373,431
35,232
754
2,470,408
374,185
SEGMENT RESULT
Operating profit before interest
External interest expense allocation
OPERATING CONTRIBUTION
Share of net profit of equity accounted
investments
Business acquisition costs
Investment revaluation
Property revaluation
Profit on sale of property/businesses
76,007
(10,282)
65,725
4,939
(2,761)
-
-
900
5,825
(2,315)
3,510
-
-
-
-
-
54
28,515
28,569
1,379
29,948
20,889
(6,832)
14,057
-
-
-
(2,270)
2,992
-
-
-
12,087
12,087
11,990
(2,651)
9,339
-
-
1,295
-
-
68,803
3,510
14,779
10,634
397
SEGMENT PROFIT
Unallocated corporate expenses
PROFIT BEFORE TAX
Income tax expense
NET PROFIT
Depreciation and amortisation
Non cash expenses (reversal of
expenses) other than depreciation
and amortisation
Impairment of trade receivables
Write down (back) of inventories to
net realisable value
ASSETS
Segment assets
LIABILITIES
Segment liabilities
7,453
1,082
4,048
3,620
277
5,387
(217)
(94)
2,084
-
-
-
-
-
-
-
657,062
146,085
320,460
234,391
438,010
106,285
162,345
60,302
NET ASSETS
219,052
39,800
158,115
174,089
Acquisitions of non-current
assets, including assets of
businesses acquired
58,593
776
6,757
37,901
-
2,808,661
(28,515)
-
(28,515)
2,808,661
-
49,452
(28,515)
2,858,113
-
-
-
-
-
(1,295)
1,692
-
-
-
-
-
-
-
-
-
114,711
(22,080)
92,631
4,939
(2,761)
-
(578)
3,892
98,123
4,717
102,840
(26,150)
76,690
12,583
3,403
183
7,471
1,357,998
766,942
591,056
104,027
61
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 26 CONTRIBUTED EQUITY
(a) Paid up capital
Ordinary shares - fully paid
CONSOLIDATED
2015
$’000
2014
$’000
296,060
242,070
Ordinary shares confer on their holders the right to participate in dividends declared by the Board and to vote at general
meetings of the Company.
Issue price
$4.87
$5.70
$5.55
$7.46
$9.38
$9.55
$10.06
$10.36
$9.89
$’000
231,205
1,077
2,850
6,938
242,070
242,070
4,376
2,557
2,564
33,502
3,462
7,529
296,060
(b) Movements in ordinary share capital:
Date
Details
1 January 2014
Opening balance
10 March 2014
Issue of shares to staff under share incentive schemes
1 July 2014
Issue of options to staff under share incentive schemes
Number
of shares
176,548,318
221,155
500,000
1 October 2014
Issue of options to staff under share incentive schemes
1,250,000
31 December 2014
Closing balance
1 January 2015
Opening balance
1 April 2015
Issue of shares to staff under share incentive schemes
30 June 2015
Issue of options to staff under share incentive schemes
178,519,473
178,519,473
586,825
272,650
268,555
6 July 2015
31 July 2015
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
3,330,775
21 August 2015
Issue of options to staff under share incentive schemes
1 September 2015
Issue of options to staff under share incentive schemes
Closing balance
334,305
761,220
184,073,803
62
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 27 RESERVES AND RETAINED EARNINGS
CONSOLIDATED
(a) Reserves:
Property, plant and equipment revaluation reserve
Hedging reserve - cash flow hedge
Share-based payments reserve
Investment revaluation reserve
Movements:
Property, plant and equipment revaluation reserve :
Balance at beginning of the financial year
Revaluation surplus during the year - gross
Transfer to retained earnings relating to properties sold
Deferred tax
Balance at the end of the financial year
Hedging reserve - cash flow hedge:
Balance at beginning of the financial year
Movement during the year
Deferred tax
Balance at the end of the financial year
Share-based payments reserve:
Balance at beginning of the financial year
Deferred tax
Payments received from employees for exercised shares
Employee share schemes - value of employee services
Transfer to share capital (shares issued)
Current tax on share plans
Balance at the end of the financial year
Investment revaluation reserve:
Balance at beginning of the financial year
Gain on revaluation of available-for-sale investment
Deferred tax
Cumulative gain reclasses to profit or loss on disposal of available for sale financial assets
Balance at the end of the financial year
(b) Retained earnings
Retained profits at the beginning of the financial year
Net profit for the year
Transfer from asset revaluation reserve re properties sold
Transfer from share based payment reserve
Loss on Sale of Non Controlling Interest
Dividends provided for or paid
Retained profits at the end of the financial year
Note
15
27(b)
23
23
23
7
2015
$’000
45,192
(575)
(3,778)
64,536
105,375
61,668
2,187
(18,007)
(656)
45,192
(786)
300
(89)
(575)
5,941
18,160
10,740
3,019
(53,990)
12,352
(3,778)
32,197
49,689
(14,907)
(2,443)
64,536
242,480
86,217
18,007
1,059
-
(54,328)
293,435
2014
$’000
61,668
(786)
5,941
32,197
99,020
73,278
(1,692)
(10,426)
508
61,668
(839)
77
(24)
(786)
4,883
-
-
2,135
(1,077)
-
5,941
31,290
1,296
(389)
-
32,197
198,369
76,230
10,426
-
(75)
(42,470)
242,480
63
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) CREDIT RISK
Credit risk refers to the risk that
a counterparty will default on its
contractual obligations resulting in a
financial loss to the Group. The Group
has adopted a policy of only dealing
with creditworthy counterparties
and obtaining sufficient collateral
where appropriate, as a means of
mitigating the risk of financial loss
from defaults. Further, it is the Group’s
policy that all customers who wish
to trade on credit terms are subject
to credit verification procedures.
Trade receivables consist of a large
number of customers, spread
across geographical areas. Ongoing
credit evaluation is performed on
the financial condition of debtors
and other receivable balances are
monitored on an ongoing basis, with
the result that the Group’s exposure
to bad debts is not significant.
The consolidated entity establishes
an allowance for doubtful debts that
represents its estimate of incurred
losses in respect of trade and other
receivables and investments.
With respect to credit risk arising
from financial assets of the Group
comprised of cash, cash equivalents
and receivables, the Group’s maximum
exposure to credit risk, excluding
the value of any collateral or other
security, at balance date is in the
carrying amount as disclosed in the
statement of financial position and
notes to the financial statements.
The Group’s credit risk on liquid
funds is limited as the counter parties
are major Australian banks with
favourable credit ratings assigned by
international credit rating agencies.
27 RESERVES AND RETAINED
EARNINGS (continued)
(c) Nature and purpose of other
reserves
(i) Property, plant and equipment
revaluation reserve
The property, plant and equipment
revaluation reserve is used to
record increments and decrements
on the revaluation of non-current
assets as described in Note 1(p).
(ii) Hedging reserve
The hedging reserve contains the
effective portion of interest rate
hedge arrangements incurred
as at the reporting date.
(iii) Share-based payments reserve
The share-based payment reserve
is used to recognise the fair value of
performance rights expected to vest
and the fair value of equity expected to
be issued under various share incentive
schemes referred to in Notes 34 and 35.
(iv) Investment revaluation reserve
The investments revaluation reserve
represents the cumulative gains and
losses arising on the revaluation of
available-for-sale financial assets
that have been recognised in other
comprehensive income, net of amounts
reclassified to profit or loss when
those assets have been disposed of
or are determined to be impaired.
28 FINANCIAL INSTRUMENTS
OVERVIEW
The consolidated entity has exposure
to the following key risks from its
use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk (interest rate risk)
This note presents information about
the consolidated entity’s exposure
to each of the above risks, the
consolidated entity’s objectives, policies
and processes for measuring and
managing risk, and the consolidated
entity’s management of capital.
Further quantitative disclosures
are included throughout these
consolidated financial statements.
64
The Directors has overall responsibility
for the establishment and oversight
of the consolidated entity’s risk
management framework.
The Directors has established
an Audit, Risk and Remuneration
Committee which is responsible for
monitoring, assessing and reporting
on the consolidated entity’s risk
management system. The committee
will provide regular reports to the
Board of Directors on its activities.
The consolidated entity’s risk
management policies are established
to identify and analyse the risks faced
by the consolidated entity, to set
appropriate risk limits and controls,
and to monitor risks and adherence
to limits. Risk management policies
and systems are reviewed regularly to
reflect changes in market conditions
and the consolidated entity’s activities.
The Audit, Risk and Remuneration
Committee oversees how management
monitors compliance with the risk
management policies and procedures
and reviews the adequacy of the risk
management framework in relation to
the risks. The Committee is assisted in
its oversight by Internal Audit. Internal
Audit undertakes both regular and
ad hoc reviews of risk management
controls and procedures, the results of
which are reported to the Committee.
The Group’s principal financial
instruments comprise bank loans,
bailment finance, cash, short-term
deposits and interest rate swap
contracts. The main purpose of these
financial instruments is to raise
finance for and fund the Group’s
operations and to hedge the Group’s
exposures to interest rate volatility.
The Group has various other financial
instruments such as trade debtors
and trade creditors which arise
directly from its operations. It is,
and has been throughout the period
under review, the Group’s policy that
no speculative trading in financial
instruments shall be undertaken.
The main risk arising from the Group’s
financial instruments are interest rate
risk, credit risk and liquidity risk. The
Board reviews and agrees policies
for managing each of these risks
and they are summarised below.
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
28 FINANCIAL INSTRUMENTS
(i)
Interest rate risk
(ii) Interest rate sensitivity
The Group is exposed to interest
rate risk as a consequence of its
financing facilities as set out in Notes
19 & 22. Funds are borrowed by
the Group at both fixed and floating
interest rates. The Group’s policy is
to manage its interest cost using a
mix of fixed and variable rate debt.
The Group’s policy is to keep between
50% and 80% of its borrowings
at fixed rates of interest. As at 31
December 2015, approximately 62%
(2014: 65%) of the Group’s borrowings
were at a fixed rate of interest. The
Group hedges part of the interest
rate risk (see Note 18) by swapping
floating for fixed interest rates.
The consolidated entity
classifies interest rate swaps
as cash flow hedges.
The net fair value of the swaps at
31 December 2015 was $822,000
liability (2014: $1,122,000 liability)
and has been recognised in equity
for the consolidated entity.
(continued)
LIQUIDITY RISK
Liquidity risk is the risk that the
consolidated entity will not be able to
meet its financial obligations as they
fall due. The consolidated entity’s
approach to managing liquidity is to
ensure, as far as possible, that it will
always have sufficient liquidity to meet
its liabilities when due, under both
normal and stressed conditions.
The Group’s overall objective is to
maintain a balance between continuity
of funding and flexibility through the
use of bank overdrafts and bank loans.
The Group also manages liquidity risk
by maintaining adequate reserves,
banking facilities and reserve
borrowing facilities by continuously
monitoring forecast and actual cash
flows and matching the maturity
profiles of financial assets and
liabilities. Information on available
facilities can be found in Note 22.
MARKET RISK
Market risk is the risk that changes in
market prices, such as interest rates,
will affect the consolidated entity’s
income or the value of its holdings of
financial instruments. The objective of
market risk management is to manage
and monitor market risk exposures
within acceptable parameters, whilst
optimising the return on risk.
The sensitivity analyses below
have been determined based on
the exposure to interest rates for
both derivative and non-derivative
instruments at reporting date and
the stipulated change taking place
at the beginning of the financial year
and held constant throughout the
reporting period. A 50 basis point
increase or decrease is used when
reporting interest rate risk internally
to key management and represents
management’s assessment of the
possible change in interest rates.
At reporting date, if interest rates
had been 50 basis points higher or
lower and all other variable were
held constant, the Group’s net profit
after tax would increase/decrease
by $1,593,000 (2014: $1,425,000 )
per annum. This is mainly due to the
Group’s exposures to interest rates
on its variable rate borrowings.
(iii) Interest rate swap contracts
Under interest rate swap contracts,
the Group agrees to exchange the
difference between fixed and floating
rate interest amounts calculated on
agreed notional principal amounts.
Such contracts enable the Group to
mitigate the cash flow exposures on
the issued variable rate debt held.
The fair value of interest rate swaps
at the reporting date is determined
by discounting future cash flows
using the curves at reporting date
and the credit risk inherent in the
contract, and are disclosed below.
The average interest rate is based
on the outstanding balances at
the start of the financial period.
65
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 28 FINANCIAL INSTRUMENTS (continued)
The following tables detail the notional principal amounts and remaining terms of interest rate swap contracts outstanding as
at reporting date:
Outstanding floating for
fixed contracts
Less than 1 year
Between 1 - 2 years
Between 2 -3 years
Between 3 - 4 years
Average contracted fixed
interest rate
2015
%
2014
%
Notional principal
amount
Fair
value
2015
$’000
2014
$’000
2015
$’000
2014
$’000
3.31%
2.72%
2.26%
2.38%
2.67%
3.49%
3.31%
3.22%
-
33,500
46,200
8,000
15,000
22,500
33,500
23,700
-
3.33%
102,700
79,700
(227)
(458)
(36)
(101)
(822)
(188)
(472)
(462)
-
(1,122)
The interest rate swaps settle on a monthly basis. The floating rate on the interest rate swaps is the Australian BBSW. The
Group will settle the difference between the fixed and floating interest rate on a net basis.
All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as
cash flow hedges in order to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings.
The interest rate swaps and the interest payments on the loan occur simultaneously and the amount deferred in equity is
recognised in profit or loss over the loan period.
CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and
the advantages and security afforded by a sound capital position.
There were no changes in the consolidated entity’s approach to capital management during the period.
66
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 28 FINANCIAL INSTRUMENTS (continued)
CREDIT RISK
(i) Exposure to Credit Risk
The carrying amount of financial assets (as per Notes 9, 11 and 12) represents the maximum credit exposure. The maximum
exposure to credit risk as the reporting date was:
Trade and other receivables
Less: Provision for doubtful receivables
CONSOLIDATED
2015
$’000
-
2014
$’000
-
177,720
143,744
(2,771)
(2,622)
174,949
141,122
(ii) Impairment Losses
The aging of trade receivables at reporting date is detailed in Note 9.
(iii) Fair values & Exposures to Credit & Liquidity Risk
Detailed in the following table, the Directors consider that the carrying amounts of financial assets and financial liabilities
recorded in the financial statements approximate their fair value (2014: fair value).
Financial assets
Trade and other receivables net of doubtful debts
Cash and cash equivalents
Financial liabilities
Bills payable and fully drawn advances
Capital loan
Vehicle bailment
Finance lease payables
Trade and other payables
Derivative financial instruments
174,949
37,535
212,484
154,000
55,000
404,134
1,146
141,122
23,777
164,899
144,000
70,000
357,555
8,244
133,563
128,038
822
1,122
748,665
708,959
The fair value of financial assets and financial liabilities are determined as follows:
• The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices (includes listed redeemable notes, bills of exchange,
debentures and perpetual notes).
• The fair values of derivative instruments are calculated using quoted prices. Where such prices are not available, discounted
cash flow analysis is performed using the applicable yield curve for the duration of the instruments for non-optional
derivatives and option pricing models for optional derivatives. Interest rate swaps are measured at the present value of
future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates.
67
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 28 FINANCIAL INSTRUMENTS (continued)
Maturity profile
The below table provides a maturity profile for the Group’s financial instruments that are exposed to interest rate risk at
balance date. The amounts disclosed in the table are gross contractual undiscounted cash flows (principal and interest)
required to settle the respective liabilities. The interest rate is based on the rate applicable as at the end of the financial period.
1 - 2 years
$’000
2 - 3 years
$’000
3 - 4 years
$’000
4 - 5 years
$’000
5+ years
$’000
Total
$’000
Contractual maturities of financial liabilities
At 31 December 2015
INTEREST BEARING
Floating rate
Financial assets
Cash and cash equivalents
Less than
1 year
$’000
37,535
Average interest rate
2.43%
Financial liabilities
Vehicle bailment (current)
Fully drawn advances
Fully drawn advances (1)
Capital loan (Non-current)
404,134
3,197
36,701
208
444,240
-
3,197
47,697
208
51,102
-
45,058
-
208
45,266
-
-
-
-
-
-
-
1,442
-
208
1,650
-
-
-
33,082
-
208
33,290
-
-
-
-
-
5,225
5,225
37,535
-
404,134
85,976
84,398
6,265
580,773
Average interest rate
4.39%
4.50%
4.16%
4.16%
4.16%
4.16%
-
Fixed rate
Financial liabilities
Capital loan (Non-current)
Finance lease payables
2,600
417
3,017
2,600
807
3,407
51,300
-
51,300
Average interest rate
5.18%
5.20%
5.20%
-
-
-
-
NON INTEREST BEARING
Financial assets
Property sale receivables
Trade debtors
32,013
109,116
141,129
16,707
-
16,707
6,884
-
6,884
6,884
-
6,884
Trade and other payables
133,563
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,500
1,224
57,724
-
62,488
109,116
171,604
133,563
(1)
The amount included in fully drawn advances relate to variable rates that are hedged with interest rate swaps to fixed rates.
68
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 28 FINANCIAL INSTRUMENTS (continued)
At 31 December 2014
INTEREST BEARING
Floating rate
Financial assets
Cash and cash equivalents
Loan receivable
Less than
1 year
$’000
1 - 2 years
$’000
2 - 3 years
$’000
3 - 4 years
$’000
4 - 5 years
$’000
5+ years
$’000
Total
$’000
23,777
566
24,343
-
566
566
-
566
566
-
566
566
-
566
566
-
10,353
10,353
23,777
13,183
36,960
Average interest rate
3.48%
5.78%
5.78%
5.78%
5.78%
5.78%
-
Financial liabilities
Vehicle bailment (current)
Fully drawn advances
Fully drawn advances (1)
Capital loan (Non-current)
361,831
2,393
26,143
938
391,305
-
55,997
35,440
938
92,375
-
-
24,026
938
24,964
-
-
-
938
938
-
-
-
938
938
-
-
-
21,960
21,960
361,831
58,390
85,609
26,650
532,480
Average interest rate
4.76%
4.62%
4.70%
4.69%
4.69%
4.69%
-
Fixed rate
Financial liabilities
Bills payable
Capital loan (Non-current)
Finance lease payables
473
2,600
6,018
9,091
9,737
2,600
1,920
14,257
-
2,600
837
3,437
-
51,300
-
51,300
Average interest rate
5.32%
5.12%
5.18%
5.20%
-
-
-
-
-
NON INTEREST BEARING
Financial assets
Property sale receivables
Trade debtors
Financial liabilities
Trade and other payables
6,717
105,792
112,509
6,717
-
6,717
6,884
-
6,884
6,884
-
6,884
6,884
-
6,884
128,036
-
-
-
-
-
-
-
-
-
-
-
-
-
10,210
59,100
8,775
78,085
-
34,086
105,792
139,878
128,036
(1)
The amount included in fully drawn advances relate to variable rates that are hedged with interest rate swaps to fixed rates.
Estimation of Fair Value
The following summarises the major methods and assumptions used in estimating the fair value of financial instruments:
Loans and Borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows.
Trade and Other Receivables/Payables
For receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All
other receivables/payables are discounted to determine the fair value.
Interest Rate Swaps
The fair value of interest rate swaps is calculated based on the present value of the estimated future cash flows of these instruments.
69
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 29 INVESTMENTS IN SUBSIDIARIES
NAME OF ENTITY
Eagers Retail Pty Ltd
Eagers MD Pty Ltd
Eagers Finance Pty Ltd
Nundah Motors Pty Ltd
Eagers Nominees Pty Ltd
Austral Pty Ltd
E G Eager & Son Pty Ltd
A.P. Group Ltd
A.P. Ford Pty Ltd
A.P. Motors Pty Ltd
A.P. Motors (No.1) Pty Ltd
A.P. Motors (No.2) Pty Ltd
A.P. Motors (No.3) Pty Ltd
Associated Finance Pty Limited
Leaseline & General Finance Pty Ltd
City Automotive Group Pty Ltd
PPT Investments Pty Ltd
PPT Holdings No 1 Pty Ltd
PPT Holdings No 2 Pty Ltd
PPT Holdings No 3 Pty Ltd
Bill Buckle Holdings Pty Ltd
Bill Buckle Autos Pty Ltd
Bill Buckle Leasing Pty Ltd
Adtrans Group Limited
Adtrans Corporate Pty Ltd
Adtrans Automotive Group Pty Ltd
Stillwell Trucks Pty Ltd
Adtrans Trucks Pty Ltd
Graham Cornes Motors Pty Ltd
Whitehorse Trucks Pty Ltd
Adtrans Used Pty Ltd
Adtrans Hino Pty Ltd
Adtrans Australia Pty Ltd
Melbourne Truck and Bus Centre Pty Ltd
Adtrans Truck Centre Pty Ltd
Adtrans Trucks Adelaide Pty Ltd
Precision Automotive Technology Pty Ltd
IB Motors Pty Ltd
IB MD Pty Ltd
Black Auto South West Pty Ltd
South West Queensland Motors Pty Ltd
BASW Pty Ltd
Western Equipment Rentals Pty Ltd
Boonarga Welding Pty Ltd
Black Auto CQ Pty Ltd
CH Auto Pty Ltd
Auto Ad Pty Ltd
Motors TAS Pty Ltd
Boon 2 Pty Ltd
MB VIC Pty Ltd
Boon 4 Pty Ltd
70
EQUITY HOLDING
2015
%
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
100
100
80
100
80
80
80
80
100
100
100
100
100
100
100
2014
%
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
100
100
80
100
80
80
80
80
100
100
-
-
-
-
-
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 29 INVESTMENTS IN SUBSIDIARIES (continued)
All subsidiaries are either directly controlled by A.P. Eagers Limited, or are wholly owned within the Group, have ordinary class
of shares and are incorporated in Australia.
Information relating to A.P. Eagers Limited (‘the parent entity’)
Financial position
Assets
Current assets
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Equity
Issued capital
Retained earnings
Reserves
Asset revaluation reserve
Investment revaluation reserve
Share based payments reserve
Financial performance
Profit for the year
Other comprehensive income
2015
$’000
2014
$’000
13,120
488,298
501,418
-
28,380
28,380
-
425,612
425,612
21,168
14,520
35,688
296,060
113,631
242,070
108,033
1,683
64,536
(2,872)
1,684
32,196
5,941
473,038
389,924
61,490
46,199
58,159
1,021
All subsidiaries were parties to a deed of cross guarantee with A.P. Eagers Limited pursuant to ASIC Class Order 98/1418
which has been lodged with and approved by Australian Securities and Investments Commission as at 31 December 2015.
Under the deed of cross guarantee each of these companies guarantee the debts of the other named companies. The
aggregate assets and liabilities of these companies at 31 December 2015 and their aggregate net profit after tax for the year
ended 31 December 2015 match the reported balances within the Statement of Financial Position and the Statement of Profit
or Loss respectively.
As a party to the deed of cross guarantee, each of the wholly-owned subsidiaries (marked *) is relieved from the requirement to
prepare and lodge an audited financial report.
Also refer Notes 30(a) and 30(b) in respect of guarantees entered into by the parent entity in relation to debts of its subsidiaries.
71
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED)
29 INVESTMENTS IN SUBSIDIARIES (continued)
(a) Acquisition of businesses
The Group acquired the following businesses during the 2015 year as detailed below:
Year
2015
Name of business
Auto Advantage
Date of
acquisition
Principal activity
Proportion
acquired
1/08/2015
Motor Vehicle Broker
100%
During 2015 the acquired businesses contributed revenues of $1,225,000 and profit before tax of $36,000. If the acquisition had
occurred on 1 January 2015, the consolidated revenue and the consolidated profit before tax would have been $2,938,000 and
$86,000 respectively.
(i) Allocation of purchase consideration
The purchase price of business acquired has been allocated as follows:
Cash consideration
Contingent Consideration (ii)
Total purchase consideration
Fair value of net identifiable assets
Goodwill
Consolidated fair value at acquisition date
Net assets acquired
Receivables, prepayments
Property, plant and equipment
Deferred tax assets
Creditors, borrowings and provisions
Net assets acquired
Acquisition cost
Goodwill on acquisition (i)
2015
Auto
Advantage
$’000
669
326
995
(40)
1,033
993
2015
$’000
5
8
22
(75)
(40)
993
1,033
(i)
Goodwill arose in the business combinations because as at the date of acquisition the consideration paid for the combination included amounts in relation to
the benefit of expected synergies and future revenue and profit growth from the businesses acquired. These benefits were not recognised separately from
goodwill as the future economic benefits arising from them could not be reliably measured in time for inclusion in this financial statements. Therefore, the
amount allocated to goodwill on acquisition has been provisionally determined at the end of the reporting period.
(ii)
Under the contingent consideration arrangement an additional $326,400 is required to be paid if Auto Advantage’s volume exceeds 765 units and 1530 units
ending 365 and 730 days respectively. Management consider that it is probable that this payment will be required.
Cash consideration on acquisition
669
72
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 29 INVESTMENTS IN SUBSIDIARIES (continued)
The Group acquired the following business during the 2014 year as detailed below:
Name of business
Ian Boettcher Group
Year
2014
2014
2014
Volvo Franchise from Currimundi Motors Pty Ltd 25-Jul-14
Volvo Franchise
Black Group
01-Oct-2014
Motor Dealership
Date of
acquisition
Principal activity
Proportion
acquired
01-Jul-14
Motor Dealership
100%
100%
100%
During 2014 the acquired businesses contributed revenues of $110,711,000 and profit before tax of $698,000. If the acquisition
had occurred on 1 January 2014, the consolidated revenue and the consolidated profit before tax would have been $3,069
million and $108 million respectively.
(ii) Allocation of purchase consideration
The purchase price of business acquired has been allocated as follows:
Cash consideration
Issue of ordinary shares
Total purchase consideration
Fair value of net identifiable assets
Goodwill
Consolidated fair value at acquisition date
Net assets acquired
Cash
Receivables, prepayments
Inventory
Property, plant and equipment
Deferred tax assets
Creditors, borrowings and provisions
Identifiable intangible assets
Net assets acquired
Acquisition cost
Goodwill on acquisition (1)
Cash consideration on acquisition
Cash acquired on acquisition
Net cash flow on acquisition of business
Volvo
Franchise
Sunshine
Coast
$’000
Ian
Boettcher
Group
$’000
100
-
100
-
100
100
11,257
2,850
14,107
1,063
13,044
14,107
Black
Group
$’000
26,510
6,938
33,448
7,297
26,151
33,448
2014
Total
Consolidated
$’000
37,867
9,788
47,655
8,360
39,295
47,655
2014
$’000
1,049
5,577
10,979
16,008
945
(27,515)
1,317
8,360
47,655
39,295
37,867
(1,049)
36,818
(i)
Goodwill arose in the business combinations because as at the date of acquisition the consideration paid for the combination included amounts in relation to
the benefit of expected synergies and future revenue and profit growth from the businesses acquired. In the prior year, the amount allocated to goodwill on
acquisition was provisionally determined, and no changes made in the current period.
73
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 29 INVESTMENTS IN SUBSIDIARIES (continued)
(b) Disposal of businesses
The Group sold the following business during the 2015 year as detailed below:
Year
2015
Name of business
Date
of sale
Principal activity
Proportion
disposed
Western Equipment Rentals
30-Nov-2015
Retail Franchise
100%
Net assets disposed of
Property, plant and equipment
Creditors, borrowings and provisions
Intangible assets
Net assets disposed
Total consideration received (100% Cash)
Gain on sale
CONSOLIDATED
2015
$’000
45
(4)
350
391
441
50
The Group sold the following business during the 2014 year as detailed below:
Year
2014
Name of business
Eagers Mitsubishi
Date
of sale
Principal activity
Proportion
disposed
31-Oct-14
Motor Dealership
100%
Net assets disposed of
Property, plant and equipment
Creditors, borrowings and provisions
Net assets disposed
Total consideration received (100% Cash)
Gain on sale
(c) Details of non-wholly owned subsidiaries
CONSOLIDATED
2014
$’000
48
(214)
(166)
734
900
The table below shows details of non-wholly owned subsidiaries of the Group. The Group have reviewed its subsidiaries that
have non-controlling interests and note that they are not material to the reporting entity.
Individually immaterial subsidiaries with non-controlling interest
798
460
8,139
7,486
Profit allocated to
non-controlling interests
2014
$’000
2015
$’000
Accumulated
non-controlling interests
2014
$’000
2015
$’000
Movement - Non Controlling Interest
Balance at the beginning of the financial year
Profit for the Year
Issue of shares
Payment of dividend
Balance as at the end of the financial year
74
CONSOLIDATED
2015
$’000
7,486
798
-
(145)
8,139
2014
$’000
939
460
6,929
(842)
7,486
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 30 CONTIGENT LIABILITIES
(a) Parent entity
Unsecured guarantees, indemnities and undertakings have been given by the parent entity in the normal course of business
in respect of financial and trade arrangements entered into by its subsidiaries. It is not anticipated that the parent entity will
become liable for any amount in respect thereof. At 31 December 2015 no subsidiary was in default in respect of any arrangement
guaranteed by the parent entity and all amounts owed have been brought to account as liabilities in the financial statements.
(b) Deed of cross guarantee
A.P. Eagers Limited and all of its subsidiaries were parties to a deed of cross guarantee lodged with the Australian Securities
and Investments Commission as at 31 December 2015. Under the deed of cross guarantee each company within the closed
Group guarantees the debts of the other companies. The maximum exposure of the parent entity in relation to the cross
guarantees is $776,992,000 (2014: $731,254,000).
(c) Buy back agreements
As at 31 December 2015, entities within the Group had entered into sale and buy back agreements for new vehicles. The financial
exposure to the Group is immaterial.
31 COMMITMENTS FOR EXPENDITURE
(a) Capital Commitments
Capital expenditure for land, buildings, plant and equipment contracted for at the end of the
reporting period but not recognised as liabilities is as follows:
Within one year
(b) Finance Lease Liabilities
CONSOLIDATED
2015
$’000
2014
$’000
23,292
74
Commitments for minimum lease payments in relation to finance lease liabilities are payable as follows:
Within one year
Later than 1 year but not later than 5 years
Later than 5 years
Less future finance charges
Present value of minimum lease payments
(c) Operating Lease Commitments
417
806
-
1,223
(78)
1,145
6,026
1,914
835
8,775
(531)
8,244
Commitments for minimum lease payments in relation to non-cancellable operating leases for premises are payable as follows:
Within one year
Later than 1 year but not later than 5 years
Later than 5 years
25,118
66,442
41,990
25,633
68,754
47,612
133,550
141,999
The consolidated entity leases property under non-cancellable operating leases with expiry dates between 31 January 2016
and 1 July 2035.
Leases generally provide for a right of renewal at which time the lease is renegotiated. Lease rental payments comprise a base
amount plus an incremental contingent rental based on movements in the consumer price index or a fixed percentage increase.
75
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 32 REMUNERATION OF AUDITOR
Amounts received or due and receivable by Deloitte Touche Tomatsu (“Deloitte”) for:
- audit or review of the financial report of the parent entity and any other entity in the
consolidated entity
Amounts received or due and receivable by related entities of Deloitte for:
– other services in relation to the parent entity and any other entity in the consolidated entity
CONSOLIDATED
2015
$’000
2014
$’000
600
526
250
850
63
589
33 SUBSEQUENT EVENTS
On 6 November 2015 the Group announced to the market a signed heads of agreement for the Birrell Motors Group. The
transaction will incorporate the car and truck retail business of Motors Group Tasmania, Silver Star Motors (Mercedes-Benz)
in Doncaster and Burwood, Victoria, the Mercedes-Benz Ringwood dealership in Victoria and Waverley Toyota in Glen Waverley,
Victoria. The businesses represent 12 car and truck brands across a number of locations in Tasmania and the eastern suburbs
of Melbourne. Notably they included the state wide representation for Holden, HSV, Hyundai, Citroen, Isuzu trucks, Volvo
trucks, Mack trucks and UD trucks in Tasmania, and Mercedes-Benz passenger vehicles in Melbourne’s Doncaster-Burwood-
Ringwood corridor.
Initial expected consideration of $114 million inclusive of goodwill and estimated net assets reflects expected sustainable
earnings (Profit Before Tax) from existing operations of approximately $18 million per annum. Subject to the business
achieving earnings growth targets during the four years post completion, additional deferred consideration of up to
$19.8 million will be payable.
The initial consideration will be funded through the issue of 2.2 million shares to the vendors and cash drawn from available
funds and existing debt facilities.
A.P. Eagers Limited will also acquire three properties associated with the Mercedes-Benz business in Doncaster, Blackburn
and Ringwood, for further consideration of $26.05 million.
After successful completion of due diligence the contracts have been signed with an expected settlement date of 31 March 2016.
On 19 January 2016 the Group announced to the market a signed heads of agreement for Crampton Automotive Group.
The transaction includes West-Star Motors and Toowoomba Holden operating in Toowoomba and representing the
Mercedes-Benz, Hyundai, Peugeot, Citroen, Performax, HSV and Holden brands along with Port City Autos representing
Holden, Subaru, Chrysler Jeep Dodge, and Isuzu trucks brands in Maryborough/Hervey Bay, Queensland. Currently the
business generates an annual revenue of approximately $130 million.
Total estimated consideration of $30 million inclusive of goodwill, estimated net assets and transaction costs but excluding
vehicle inventory, reflects expected sustainable earnings (Profit Before Tax) from existing operations of approximately
$6 million per annum. The consideration will be funded through the issue of one million ordinary A.P. Eagers Limited shares to
the vendors and cash drawn from available funds and existing debt facilities. The transaction is expected to be completed by
30 June 2016.
76
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 34 KEY MANAGEMENT PERSONNEL
The remuneration report included in the Directors’ Report sets out the remuneration policies of the consolidated entity and the
relationship between these policies and the consolidated entity’s performance.
The following have been identified as key management personnel (KMP) with authority and responsibility for planning, directing
and controlling the activities of the Group, directly or indirectly during the financial year:
The specified Executives of A.P. Eagers Limited during the financial year were:.
(a) Details of key management personnel
(i) Directors
T B Crommelin
Chairman (non-executive)
M A Ward
P W Henley
N G Politis
D T Ryan
D A Cowper
S A Moore*
S G Best
K T Thornton
D G Stark
Managing Director and Chief Executive Officer
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (non-executive)
Chief Financial Officer (from 3 August 2015)
Chief Financial Officer (up to 31 July 2015)
General Manager – Queensland and Northern Territory
General Counsel & Company Secretary
(ii) Executives
*
During the year Stephen Best ceased in the role of Chief Financial Officer and was appointed to the role of the Chief Commercial Officer in a non KMP
capacity. Sophie Moore was appointed to the role of Chief Financial Officer. Mr Best’s remuneration has been included in the report up to the date he ceased
his role as the Chief Financial Officer.
(b) Compensation of key management personnel
The aggregate compensation made to key management personnel of the Company and the Group is set out below.
CONSOLIDATED
2015
$’000
2014
$’000
3,999,836
3,305,611
146,493
1,634,339
136,006
597,699
5,780,668
4,039,316
Short term
Post employment benefits
Share based payments
(c) Option holdings of key management personnel
Details of options held by key management personnel can be found in Note 34(f).
(d) Loans to key management personnel
There are no loans to key management personnel.
(e) Other transactions with key management personnel
Other transactions with key management personnel are detailed in Note 36.
(f) Share Based Payments
Plan A: EPS Performance Rights and Options - Key Executives
The Group commenced an Earnings Per Share (EPS) based performance rights and option compensation scheme
for specific executive officers in 2009. The fair value of these performance rights and options is calculated on grant
date and recognised over the period to vesting. The vesting of the performance rights and options granted is based
on the achievement of specified earnings per share growth targets and interest cover thresholds. The fair value has
been calculated using a binomial option pricing model based on numerous variables including the following:
77
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 34 KEY MANAGEMENT PERSONNEL (continued)
Performance Rights
Award date 29 October 2009
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 29 October 2009
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
27-Mar-11
28-Aug-16
$ 1.82
1.6 years
30%
4.37%
6.0%
27-Mar-11
28-Aug-16
$ 1.82
$ 1.82
4.3 years
30%
5.29%
6.0%
27-Mar-12
28-Aug-16
$ 1.82
2.6 years
30%
4.89%
6.0%
27-Mar-12
28-Aug-16
$ 1.82
$ 1.82
4.8 years
30%
5.32%
6.0%
27-Mar-13
28-Aug-16
$ 1.82
3.6 years
30%
5.18%
6.0%
27-Mar-13
28-Aug-16
$ 1.82
$ 1.82
5.3 years
30%
5.33%
6.0%
27-Mar-14
28-Aug-16
$ 1.82
4.6 years
30%
5.31%
6.0%
27-Mar-14
28-Aug-16
$ 1.82
$ 1.82
5.8 years
30%
5.33%
6.0%
27-Mar-15
30-Sep-17
$ 1.82
5.6 years
30%
5.33%
6.0%
30-Mar-15
30-Sep-17
$ 1.82
$ 1.82
6.8 years
30%
5.33%
6.0%
The General Manager, Queensland and Northern Territory, the previous General Manager of Kloster Motor Group and the
previous Chief Financial Officer have been granted rights and options under the EPS share incentive plan (Plan A). The modified
grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the rights
and options at grant date and the probability of the EPS and interest cover targets being achieved and vesting occurring. The
number of performance rights and options granted under the plan is as follows:
Performance Rights
Number
82,830
112,035
118,880
126,265
134,205
Performance Options
Number
381,945
475,545
472,975
475,545
465,430
Grant Date
29-Oct-09
29-Oct-09
29-Oct-09
29-Oct-09
29-Oct-09
Grant Date
29-Oct-09
29-Oct-09
29-Oct-09
29-Oct-09
29-Oct-09
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
Expiry Date
28-Aug-16
28-Aug-16
28-Aug-16
28-Aug-16
30-Sep-17
Expiry Date
28-Aug-16
28-Aug-16
28-Aug-16
28-Aug-16
30-Sep-17
Fair Value
at Grant Date
$ 1.66
$ 1.56
$ 1.47
$ 1.39
$ 1.30
Fair Value
at Grant Date
$ 0.36
$ 0.36
$ 0.37
$ 0.37
$ 0.38
No rights or options were forfeited during the year. A total of 134,205 rights were issued and 898,745 options exercised
during the year. As a result of the EPS and interest cover targets being achieved the performance rights and options for each
performance period have vested.
As at 31 December 2014 the full amount of the rights and options had been expensed with a cumulative cost of $1,675,000.
78
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 34 KEY MANAGEMENT PERSONNEL (continued)
Plan B: EPS Performance Rights and Options – Managing Director
The Group commenced an Earnings Per Share (EPS) based performance rights and option compensation scheme for the
Managing Director in 2010. The fair value of these performance rights and options was calculated on grant date and was
recognised over the period to vesting. The vesting of the performance rights and options granted was based on the achievement
of specified earnings per share growth targets and interest cover thresholds. The fair value was calculated using a binomial
option pricing model based on numerous variables including the following:
Performance Rights
Award date 22 June 2010
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 22 June 2010
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
27-Mar-11
28-Aug-16
$ 2.50
0.8 years
30%
4.87%
4.90%
27-Mar-11
28-Aug-16
$ 2.50
$ 1.82
3.5 years
30%
4.87%
4.90%
27-Mar-12
28-Aug-16
$ 2.50
1.8 years
30%
4.97%
4.90%
27-Mar-12
28-Aug-16
$ 2.50
$ 1.82
4.0 years
30%
4.97%
4.90%
27-Mar-13
28-Aug-16
$ 2.50
2.8 years
30%
5.02%
4.90%
27-Mar-13
28-Aug-16
$ 2.50
$ 1.82
4.5 years
30%
5.02%
4.90%
27-Mar-14
28-Aug-16
$ 2.50
3.8 years
30%
5.08%
4.90%
27-Mar-14
28-Aug-16
$ 2.50
$ 1.82
5.0 years
30%
5.08%
4.90%
27-Mar-15
30-Sep-17
$ 2.50
4.8 years
30%
5.19%
4.90%
27-Mar-15
30-Sep-17
$ 2.50
$ 1.82
6.1 years
30%
5.19%
4.90%
The Managing Director was granted rights and options under the EPS share incentive plan (Plan B). The modified grant date
method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the rights and
options at grant date and the probability of the EPS and interest cover targets being achieved and vesting occurring. The
number of performance rights and options granted under the plan is as follows:
Performance Rights
Number
36,890
82,440
89,000
94,890
105,140
Performance Options
Number
416,665
815,215
810,810
815,215
797,870
Grant Date
28-May-10
28-May-10
28-May-10
28-May-10
28-May-10
Grant Date
28-May-10
28-May-10
28-May-10
28-May-10
28-May-10
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
Expiry Date
28-Aug-16
28-Aug-16
28-Aug-16
28-Aug-16
30-Sep-17
Expiry Date
28-Aug-16
28-Aug-16
28-Aug-16
28-Aug-16
30-Sep-17
Fair Value
at Grant Date
$ 2.40
$ 2.29
$ 2.18
$ 2.07
$ 1.97
Fair Value
at Grant Date
$ 0.81
$ 0.81
$ 0.81
$ 0.80
$ 0.81
During the year the managing director exercised all options (3,655,775) and the remaining rights per 2014’s performance period
(105,140) were granted.
As at 31 December 2014 the full amount of the rights and options had been expensed with a cumulative cost of $3,826,828.
79
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 34 KEY MANAGEMENT PERSONNEL (continued)
Plan C: EPS Performance Rights and Options – Key Executives 2014
The Group commenced an Earnings Per Share (EPS) based performance rights and option compensation scheme for specific
executive officers in 2014. The fair value of these performance rights and options is calculated on grant date and recognised
over the period to vesting. The vesting of the performance rights and options granted is based on the achievement of specified
earnings per share growth targets and interest cover thresholds. The fair value has been calculated using a binomial option
pricing model based on numerous variables including the following:
Performance Rights
Award date 4 July 2014
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 4 July 2014
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
31-Mar-16
04-Jul-21
$ 5.47
1.7 years
25%
2.51%
4.2%
31-Mar-16
04-Jul-21
$ 5.47
$ 5.47
4.4 years
25%
2.90%
4.2%
31-Mar-17
04-Jul-21
$ 5.47
2.7 years
25%
2.63%
4.2%
31-Mar-17
04-Jul-21
$ 5.47
$ 5.47
4.9 years
25%
2.98%
4.2%
31-Mar-18
04-Jul-21
$ 5.47
3.7 years
25%
2.79%
4.2%
31-Mar-18
04-Jul-21
$ 5.47
$ 5.47
5.4 years
25%
3.06%
4.2%
31-Mar-19
30-Sep-22
$ 5.47
4.7 years
25%
2.96%
4.2%
31-Mar-19
30-Sep-22
$ 5.47
$ 5.47
5.9 years
25%
3.24%
4.2%
31-Mar-20
30-Sep-22
$ 5.47
5.7 years
25%
3.13%
4.2%
31-Mar-20
30-Sep-22
$ 5.47
$ 5.47
7.0 years
25%
3.31%
4.2%
The Managing Director, General Manager Queensland and Northern Territory, previous Chief Financial Officer, General
Counsel and Company Secretary and four other senior executives have been granted rights and options under the EPS share
incentive plan (Plan C). The modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan
is determined by the value of the rights and options at grant date and the probability of the EPS and interest cover targets being
achieved and vesting occurring. The number of performance rights and options granted under the plan is as follows:
Performance Rights
Number
137,791
137,571
143,464
149,551
156,173
Performance Options
Number
769,228
712,760
705,258
663,363
656,857
Grant Date
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
Grant Date
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
Expiry Date
04-Jul-21
04-Jul-21
04-Jul-21
30-Sep-22
30-Sep-22
Expiry Date
04-Jul-21
04-Jul-21
04-Jul-21
30-Sep-22
30-Sep-22
Fair Value
at Grant Date
$ 5.08
$ 4.87
$ 4.67
$ 4.48
$ 4.29
Fair Value
at Grant Date
$ 0.91
$ 0.94
$ 0.95
$ 1.01
$ 1.02
No rights or options were forfeited or expired during the year. As a result of the EPS target being achieved the performance
rights and options relating to the 31 December 2015 performance period have vested.
The value of the performance rights and options expensed during the year was $1,812,713, with a cumulative expense being
recognised at 31 December 2015 of $2,201,602 (2014: $388,889).
80
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 35 OTHER SHARE BASED PAYMENTS
Recognised share-based payments expenses
Refer Note 27 for movements on share based payments reserve.
Plan D: EPS Performance Rights and Options – Senior Management (A)
The Group commenced an Earnings Per Share (EPS) based performance rights and option compensation scheme for nineteen
specific management personnel in 2010. The fair value of these performance rights and options is calculated on grant date and
recognised over the period to vesting. The vesting of the performance rights and options granted is based on the achievement of
specified earnings per share growth targets and interest cover thresholds. The fair value has been calculated using a binomial
option pricing model based on numerous variables including the following:
Performance Rights
Award date 27 January 2010
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 27 January 2010
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
27-Mar-11
27-Jan-17
$ 2.42
1.2 years
30%
5.06%
5.10%
27-Mar-11
27-Jan-17
$ 2.42
$ 2.42
4.1 years
30%
5.06%
5.10%
27-Mar-12
27-Jan-17
$ 2.42
2.2 years
30%
5.11%
5.10%
27-Mar-12
27-Jan-17
$ 2.42
$ 2.42
4.6 years
30%
5.11%
5.10%
27-Mar-13
27-Jan-17
$ 2.42
3.2 years
30%
5.17%
5.10%
27-Mar-13
27-Jan-17
$ 2.42
$ 2.42
5.1 years
30%
5.17%
5.10%
Specific executives have been granted rights and options under the EPS share incentive plan (Plan D). This includes the General
Counsel & Company Secretary. The modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the
plan is determined by the value of the rights and options at grant date and the probability of the EPS and interest cover targets
being achieved and vesting occurring. The number of performance rights and options granted under the plan is as follows:
Performance Rights
Number
162,310
219,265
230,750
Performance Options
Number
547,705
731,250
714,690
Grant Date
27-Jan-10
27-Jan-10
27-Jan-10
Grant Date
27-Jan-10
27-Jan-10
27-Jan-10
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
Expiry Date
27-Jan-17
27-Jan-17
27-Jan-17
Expiry Date
27-Jan-17
27-Jan-17
27-Jan-17
Fair Value
at Grant Date
$ 2.28
$ 2.17
$ 2.06
Fair Value
at Grant Date
$ 0.50
$ 0.52
$ 0.53
A total of 31,320 rights and 114,470 options were forfeited during the year. As a result of the EPS and interest cover targets
being achieved the performance rights and options for each Performance Period have vested. A total of $228,775 options were
exercised during the year.
No costs of the share plan were expensed during 2015 (2014: $nil). The share plan was fully expensed by the end of 2012.
81
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 35 OTHER SHARE BASED PAYMENTS (continued)
Plan E: EPS Performance Rights and Options – Senior Management (B)
The Group commenced an Earnings Per Share (EPS) based performance rights and option compensation scheme for three
specific executive officers in 2010. The fair value of these performance rights and options is calculated on grant date and
recognised over the period to vesting. The vesting of the performance rights and options granted is based on the achievement of
specified earnings per share growth targets and interest cover thresholds. The fair value has been calculated using a binomial
option pricing model based on numerous variables including the following:
Performance Rights
Award date 18 November 2010
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 18 November 2010
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
27-Mar-11
27-Jan-17
$ 2.52
0.4 years
30%
4.91%
5.00%
27-Mar-11
27-Jan-17
$ 2.52
$ 2.52
3.3 years
30%
4.91%
5.00%
27-Mar-12
27-Jan-17
$ 2.52
1.4 years
30%
4.93%
5.00%
27-Mar-12
27-Jan-17
$ 2.52
$ 2.52
3.8 years
30%
4.93%
5.00%
27-Mar-13
27-Jan-17
$ 2.52
2.4 years
30%
4.95%
5.00%
27-Mar-13
27-Jan-17
$ 2.52
$ 2.52
4.3 years
30%
4.95%
5.00%
Specific executives have been granted rights and options under the EPS share incentive plan (Plan E). The modified grant
date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the rights
and options at grant date and the probability of the EPS and interest cover targets being achieved and vesting occurring. The
number of performance rights and options granted under the plan is as follows:
Performance Rights
Number
7,785
40,650
42,735
Performance Options
Number
39,925
189,785
181,365
Grant Date
18-Nov-10
18-Nov-10
18-Nov-10
Grant Date
18-Nov-10
18-Nov-10
18-Nov-10
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
End Performance
Period
31-Dec-10
31-Dec-11
31-Dec-12
Expiry Date
27-Jan-17
27-Jan-17
27-Jan-17
Expiry Date
27-Jan-17
27-Jan-17
27-Jan-17
Fair Value
at Grant Date
$ 2.47
$ 2.35
$ 2.23
Fair Value
at Grant Date
$ 0.48
$ 0.51
$ 0.53
As a result of the EPS and interest cover targets being achieved the performance rights and options for each performance
period have vested. No options were forfeited during the year. A total of 272,650 options were exercised during the year.
No costs of the share plan were expensed during 2015 (2014: $nil). The share plan was fully expensed by the end of 2012.
82
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 35 OTHER SHARE BASED PAYMENTS (continued)
Plan F: EPS Performance Options – Senior Management 2013
The Group commenced an Earnings Per Share (EPS) based share option compensation scheme for 57 specific senior staff,
including the Company Secretary/General Counsel. The fair value of these performance options is calculated on grant date and
recognised over the period to vesting. The vesting of the performance options granted is based on the achievement of specified
earnings per share growth targets. The fair value has been calculated using a binomial option pricing model based
on numerous variables including the following:
Performance Options
Award date 27 March 2013
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
31-Mar-15
31-Mar-20
$ 4.84
$ 5.04
4.5 years
30%
3.08%
4.20%
31-Mar-16
31-Mar-20
$ 4.84
$ 5.04
4.5 years
30%
3.08%
4.20%
31-Mar-17
31-Mar-20
$ 4.84
$ 5.04
5.0 years
30%
3.13%
4.20%
31-Mar-18
31-Mar-20
$ 4.84
$ 5.04
5.5 years
30%
3.17%
4.20%
31-Mar-19
31-Mar-20
$ 4.84
$ 5.04
6.0 years
30%
3.22%
4.20%
Specific executives have been granted options under the EPS share incentive plan (Plan F). The modified grant date method (AASB 2)
is applied to this incentive plan whereby the cost of the plan is determined by the value of the options at grant date and the probability
of the EPS targets being achieved and vesting occurring. The number of options granted under the plan is as follows:
Performance Options
Number
951,950
951,950
921,930
903,040
893,850
Grant Date
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
End Performance
Period
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
Expiry Date
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
Fair Value
at Grant Date
$ 0.93
$ 0.93
$ 0.96
$ 0.98
$ 0.99
A total of 783,380 options in 2015 were forfeited or expired during the year. As a result of the EPS target being achieved the
performance options relating to the 31 December 2015 performance period have vested.
The value of the performance options expensed during the year was $625,492, with a cumulative expense being recognised at
31 December 2015 of $2,705,492 (2014: $2,080,000).
83
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 35 OTHER SHARE BASED PAYMENTS (continued)
Plan G: Specific Target Performance Rights and Options
The Group commenced a performance rights and option compensation scheme for a specific senior staff member,
based on achieving certain defined operating targets for a specific business entity. The fair value of these performance
rights and options is calculated on grant date and recognised over the period to vesting. The fair value has been
calculated using a binomial option pricing model based on numerous variables including the following:
Performance Rights
Award date 27 March 2013
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 27 March 2013
Vesting date
Expiry date
Share price at grant date
Exercise Price
Expected life
Volatility
Risk free interest rate
Dividend yield
31-Mar-15
31-Mar-20
$ 4.84
2.0 years
30%
2.88%
4.20%
31-Mar-15
31-Mar-20
$ 4.84
$5.04
4.5 years
30%
3.08%
4.20%
31-Mar-16
31-Mar-20
$ 4.84
2.0 years
30%
2.88%
4.20%
31-Mar-16
31-Mar-20
$ 4.84
$5.04
4.5 years
30%
3.08%
4.20%
31-Mar-17
31-Mar-20
$ 4.84
3.0 years
30%
2.95%
4.20%
31-Mar-17
31-Mar-20
$ 4.84
$5.04
5.0 years
30%
3.13%
4.20%
31-Mar-18
31-Mar-20
$ 4.84
4.0 years
30%
3.04%
4.20%
31-Mar-18
31-Mar-20
$ 4.84
$5.04
5.5 years
30%
3.17%
4.20%
31-Mar-19
31-Mar-20
$ 4.84
5.0 years
30%
3.13%
4.20%
31-Mar-19
31-Mar-20
$ 4.84
$5.04
6.0 years
30%
3.22%
4.20%
A specific executive have been granted performance rights and options under the Specific Target share plan (Plan G). The
modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of
the rights and options at grant date and the probability of specific targets being achieved and vesting occurring. The number of
options granted under the plan is as follows:
Performance Rights
Number
11,240
11,240
11,740
12,220
12,760
Performance Options
Number
107,530
107,530
104,170
102,040
101,010
Grant Date
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
Grant Date
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
End Performance
Period
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
End Performance
Period
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
Expiry Date
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
Expiry Date
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
Fair Value
at Grant Date
$ 4.45
$ 4.45
$ 4.26
$ 4.09
$ 3.92
Fair Value
at Grant Date
$ 0.93
$ 0.93
$ 0.96
$ 0.98
$ 0.99
During the year this employee ceased employment. Remaining rights and options were forfeited. As a result of the specific
targets being achieved the performance rights and options relating to the 31 December 2013 and 31 December 2014
performance period have previously vested. A total of 215,060 options and 22,480 rights were exercised during the year.
The value of the performance rights and options expensed during the year was $677,923, with a cumulative expense being
recognised as at 31 December 2015 of $977,923 (2014: $300,000).
84
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 35 OTHER SHARE BASED PAYMENTS (continued)
Plan H: EPS Performance Rights and Options – Key Executives
The Group commenced a new Earnings Per Share (EPS) based performance rights and option compensation scheme for
two specific executive officers in 2015. The fair value of these performance rights and options is calculated on grant date
and recognised over the period to vesting. The fair value has been calculated using a binomial option pricing model based on
numerous variables including the following:
Performance Rights
Award date 21 January 2015
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 21 January 2015
Vesting date
Expiry date
Share price at grant date
Exercise Price
Expected life
Volatility
Risk free interest rate
Dividend yield
31-Mar-16
21-Jan-22
$5.85
1.2 years
22%
2.20%
4.4%
31-Mar-16
21-Jan-22
$5.85
$5.65
4.1 years
22%
2.15%
4.4%
31-Mar-17
21-Jan-22
$5.85
2.2 years
22%
2.12%
4.4%
31-Mar-17
21-Jan-22
$5.85
$5.65
4.6 years
22%
2.18%
4.4%
31-Mar-18
21-Jan-22
$5.85
3.2 years
22%
2.11%
4.4%
31-Mar-18
21-Jan-22
$5.85
$5.65
5.1 years
22%
2.21%
4.4%
31-Mar-19
30-Sep-22
$5.85
4.2 years
22%
2.15%
4.4%
31-Mar-19
30-Sep-22
$5.85
$5.65
5.9 years
22%
2.28%
4.4%
31-Mar-20
30-Sep-22
$5.85
5.2 years
22%
2.22%
4.4%
31-Mar-20
30-Sep-22
$5.85
$5.65
6.4 years
22%
2.33%
4.4%
Two specific executives have been granted options under the EPS share incentive plan (Plan H). The modified grant date
method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the options at grant
date and the probability of the EPS targets being achieved and vesting occurring. The number of options granted under the plan
is as follows:
Performance Rights
Number
14,412
15,065
15,746
16,459
17,202
Performance Options
Number
95,235
93,020
93,020
91,953
93,020
Grant Date
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
Grant Date
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
Expiry Date
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
Expiry Date
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
Fair Value
at Grant Date
$5.55
$5.31
$5.08
$4.86
$4.65
Fair Value
at Grant Date
$0.84
$0.86
$0.86
$0.87
$0.86
No performance rights or options were forfeited or expired during the year. As a result of the specific targets being
achieved the performance rights and options relating to the 31 December 2015 Performance Period have vested.
The value of the performance rights and options expensed during the year was $233,980, with a cumulative expense being
recognised as at 31 December 2015 of $233,980.
85
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 35 OTHER SHARE BASED PAYMENTS (continued)
Plan I: EPS Performance Rights and Options – Key Executives
The Group commenced in 2015 a new performance rights and option compensation scheme for a specific senior staff member,
based on achieving certain defined operating targets for a specific business entity. The fair value of these performance rights
and options is calculated on grant date and recognised over the period to vesting. The fair value has been calculated using a
binomial option pricing model based on numerous variables including the following:
Performance Rights
Award date 12 February 2015
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 12 February 2015
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
31-Mar-16
12-Feb-22
$6.26
1.1 years
22%
1.91%
4.2%
31-Mar-16
12-Feb-22
$6.26
$6.26
4.1 years
22%
1.94%
4.2%
31-Mar-17
12-Feb-22
$6.26
2.1 years
22%
1.85%
4.2%
31-Mar-17
12-Feb-22
$6.26
$6.26
4.6 years
22%
1.99%
4.2%
31-Mar-18
12-Feb-22
$6.26
3.1 years
22%
1.87%
4.2%
31-Mar-18
12-Feb-22
$6.26
$6.26
5.1 years
22%
2.04%
4.2%
31-Mar-19
12-Feb-22
$6.26
4.1 years
22%
1.95%
4.2%
31-Mar-19
30-Sep-22
$6.26
$6.26
5.9 years
22%
2.14%
4.2%
31-Mar-20
12-Feb-22
$6.26
5.1 years
22%
2.05%
4.2%
31-Mar-20
30-Sep-22
$6.26
$6.26
6.4 years
22%
2.20%
4.2%
A specific senior staff member have been granted performance rights and options under the Specific Target share plan (Plan
I). The modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the
value of the rights and options at grant date and the probability of specific targets being achieved and vesting occurring. The
number of options granted under the plan is as follows:
Performance Rights
Number
9,045
9,440
9,836
11,406
11,881
Performance Options
Number
97,590
95,294
94,186
102,272
102,272
Grant Date
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
Grant Date
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
Expiry Date
12-Feb-22
12-Feb-22
12-Feb-22
12-Feb-22
12-Feb-22
Expiry Date
12-Feb-22
12-Feb-22
12-Feb-22
12-Feb-22
12-Feb-22
Fair Value
at Grant Date
$5.97
$5.72
$5.49
$5.26
$5.05
Fair Value
at Grant Date
$0.83
$0.85
$0.86
$0.88
$0.88
No performance rights or options were forfeited or expired during the year. As a result of the specific targets being achieved
the performance rights and options relating to the 31 December 2015 Performance Period have vested since balance date.
The value of the performance rights and options expensed during the year was $179,997, with a cumulative expense being
recognised as at 31 December 2015 of $179,997.
86
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
35 OTHER SHARE BASED PAYMENTS (continued)
Plan J: EPS Performance Rights and Options – Key Executives
The Group commenced a new Earnings Per Share (EPS) based performance rights and option compensation scheme for
two specific executive officers in 2015. The fair value of these performance rights and options is calculated on grant date and
recognised over the period to vesting. The vesting of the performance rights and options granted is based on the achievement of
specified earnings per share growth targets and interest cover thresholds. The fair value has been calculated using a binomial
option pricing model based on numerous variables including the following:
Performance Rights
Award date 12 June 2015
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 12 June 2015
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
31-Mar-16
12-Jun-22
$9.25
0.8 years
24%
1.98%
3.7%
31-Mar-16
12-Jun-22
$9.25
$9.25
3.9 years
24%
2.19%
3.7%
31-Mar-17
12-Jun-22
$9.25
1.8 years
24%
1.99%
3.7%
31-Mar-167
12-Jun-22
$9.25
$9.25
4.4 years
24%
2.27%
3.7%
31-Mar-18
12-Jun-22
$9.25
2.8 years
24%
2.06%
3.7%
31-Mar-18
12-Jun-22
$9.25
$9.25
4.9 years
24%
2.35%
3.7%
31-Mar-19
30-Sep-22
$9.25
3.8 years
24%
2.18%
3.7%
31-Mar-19
12-Jun-22
$9.25
$9.25
5.5 years
24%
2.46%
3.7%
31-Mar-20
30-Sep-22
$9.25
4.8 years
24%
2.33%
3.7%
31-Mar-20
12-Jun-22
$9.25
$9.25
6.1 years
24%
2.54%
3.7%
Two specific executives have been granted options under the EPS share incentive plan (Plan J). The modified grant date method
(AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the options at grant date
and the probability of the EPS targets being achieved and vesting occurring. The number of options granted under the plan is
as follows:
Performance Rights
Number
2,783
5,780
5,995
6,218
6,458
Performance Options
Number
17,605
33,783
32,678
31,645
31,250
Grant Date
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
Grant Date
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
End Performance
Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
Expiry Date
12-Jun-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22
Expiry Date
12-Jun-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22
Fair Value
at Grant Date
$8.98
$8.65
$8.34
$8.04
$7.74
Fair Value
at Grant Date
$1.42
$1.48
$1.53
$1.58
$1.60
No performance rights or options were forfeited or expired during the year. As a result of the specific targets being achieved
the performance rights and options relating to the 31 December 2015 Performance Period have vested.
The value of the performance rights and options expensed during the year was $83,322, with a cumulative expense being
recognised as at 31 December 2015 of $83,322.
87
A.P. Eagers ANNUAL REPORT 201531 DECEMBER 2015 (CONTINUED)
36 RELATED PARTIES
Key management personnel
Other information on key management personnel has been disclosed in the Directors’ Report.
Remuneration and retirement benefits
Information on the remuneration of key individual management personnel has been disclosed in the Remuneration Report
included in the Directors’ Report.
Other transactions of directors and director related entities
The aggregate amount of “Other transactions” with key management personnel are as follows:
(i)
Mr N G Politis is a director and shareholder of a number of companies involved in the motor industry with whom the
consolidated entity transacts business. These transactions, sales of $466,281 (2014: $580,024) and purchases of $341,762
(2014: $354,239) during the last 12 months, are primarily the sale and purchase of spare parts and accessories and are
carried out under terms and conditions no more favourable than those which it is reasonable to expect would have applied if
the transactions were at arm’s length.
(ii) Controlled entities may, from time to time, sell motor vehicles, parts and servicing of motor vehicles for domestic use to
directors of entities in the consolidated entity or their director-related entities within a normal employee relationship on
terms and conditions no more favourable than those which it is reasonable to expect would have been adopted if dealing
with the Directors or their director-related entities at arm’s length in the same circumstances.
Wholly-owned group
The parent entity of the wholly-owned group is A.P. Eagers Limited. Information relating to the wholly-owned group is set out
in Note 29.
37 EARNINGS PER SHARE
CONSOLIDATED
2015
Cents
2014
Cents
(a) Basic earnings per share
Earnings attributable to the ordinary equity holders of the Company
47.6
43.0
(b) Diluted earnings per share
Earnings attributable to the ordinary equity holders of the Company
46.1
41.6
88
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 37 EARNINGS PER SHARE (continued)
(c) Reconciliation of earnings used in calculating earnings per share
Basic earnings per share
Profit attributable to the ordinary equity holders of the Company used in calculating basic
earnings per share:
Profit for the year
Less: attributable to non-controlling interest
Profit attributable to the ordinary equity holders of the Company used in calculating basic
earnings per share
CONSOLIDATED
2015
$’000
2014
$’000
87,015
(798)
76,690
(460)
86,217
76,230
Diluted earnings per share
Profit for the year less attributable to non-controlling interest
86,217
76,230
Profit attributable to the ordinary equity holders of the Company used in calculating diluted
earnings per share
86,217
76,230
Weighted average number of ordinary shares outstanding during the year
180,997,843
177,289,994
Profit attributable to the ordinary equity holders of the Company used in calculating diluted
earnings per share (1)
6,214,054
5,873,128
Weighted average number of ordinary shares outstanding during the year used in the
calculation of diluted earnings per share
187,211,897
183,163,122
(1) 146,961 performance options representing potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of
ordinary shares for the purposes of diluted earnings per share.
89
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 38 RECONCILIATION OF NET PROFIT AFTER TAX TO THE NET CASH INFLOWS FROM OPERATIONS
Net profit after tax
Depreciation and amortisation
Impairment of goodwill
Net (gain)/loss on sale of available-for-sale financial assets
Share of profits of associate
Dividends from investments
Profit on sale of property,plant & equipment
Employee share scheme expense
Non controlling interest adjustments
Profit on sale of business
Property receivable and deposits
Impairment to property
(Increase)/decrease in assets -
Receivables
Inventories
Prepayments
Increase/(decrease) in liabilities -
Creditors (including bailment finance)
Provisions
Taxes payable
Net cash inflow from operating activities
39 NON-CASH TRANSACTIONS
CONSOLIDATED
2015
$’000
87,015
13,216
5,527
(3,490)
(164)
164
(2,886)
3,018
(1,406)
(50)
28,403
2,083
2014
$’000
76,690
12,583
-
-
(4,939)
7,646
(2,414)
2,135
(1,850)
(900)
22,553
-
(30,412)
(57,327)
(5,883)
(31,370)
(49,336)
5,810
48,263
4,997
(6,515)
64,608
1,051
(3,045)
84,553
99,222
During the year the Group entered into unconditional contracts for the sale of 80 McLachlan Street, Fortitude Valley and a
parcel of land in Newstead. As a result a combined profit of $3.010 million was recognised and is included within the amount
disclosed in Note 4. Consideration for the sales totalling $32.013 million is to be realised in full in 2016. This balance is
recognised in the statement of financial position under current assets “Property sale receivable”.
In 2014 the Group announced that it had entered into unconditional contracts for the sale of 44 Ipswich Road, 33 Jurgens Street
and 79 Logan Road in Woolloongabba. As a result a combined profit of $2.211 million was recognised and is included within the
amount disclosed in Note 4. Consideration for the sale which totalled over $35.879 million is being realised in staged payments
over the next 4 years. As at 31 December 2015, the Group had received $5.404 million of the consideration. The balance is
recognised on the statement of financial position under non-current assets “Property sale receivable”.
90
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) 40 INVESTMENTS IN ASSOCIATE
(a) Carrying amounts
Investments in associate are accounted for in the consolidated financial statements using the equity method of accounting.
Information relating to the associate is set out below:
OWNERSHIP INTEREST
CONSOLIDATED
2015
%
2014
%
2015
$’000
2014
$’000
Name of company
Unlisted securities
Norna Limited (formerly MTQ Insurance Services Limited)
20.65
20.65
1,620
1,620
In 2014 MTQ Insurance Services Limited changed its name to Norna Limited. On 29 August 2014 MTA Insurance Limited (a
wholly owned subsidiary of Norna Limited) was sold to AAI Limited with settlement to take place in instalments, the final of
which is expected to be realised in 2016. Once the sale is completed Norna Limited will be liquidated.
AP Eagers Limited will remain a shareholder in Norna Limited with a 20.65% interest (2014: 20.65%) and will continue to equity
account the investment in the associate which has been equity accounted from 1 January 2006 (refer Note 14), until the final
distributions are received and Norna Limited is liquidated.
Norna Limited is incorporated in Australia. Its principal activities for the period up to the sale remained the sale of consumer
credit and insurance products, as well as undertaking investment activities. Since the sale, the entity has ceased operations
with the only transactions being related to holding costs and interest until the final terms of the sale agreement are met and the
entity is liquidated.
(b) Movement in the carrying amounts of investment in associate
Carrying amount at the beginning of the financial year
Equity share of profit from ordinary activities after income tax
Dividends received during the year
Carrying amount at the end of the financial year
(c) Summarised financial information of associate
The aggregate profits, assets and liabilities of associate are:
Revenue
Profits from ordinary activities after income tax expense
Assets
Liabilities
(d) Share of associate profit
CONSOLIDATED
2015
$’000
1,620
164
(164)
1,620
188
712
8,107
128
2014
$’000
4,327
4,939
(7,646)
1,620
31,244
23,519
10,049
53
(Based on the last published results for the 12 months to 30 June 2015 plus unaudited results up
to 31 December 2015).
Profit from ordinary activities after income tax
164
4,939
(e) Dividends received from associate
Dividends received from associate
(f) Reporting date of associate
The associate reporting dates are 30 June annually.
164
7,646
91
A.P. Eagers ANNUAL REPORT 2015NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 31 DECEMBER 2015 (CONTINUED) DIRECTORS’ DECLARATION
The Directors declare that :
(a)
(b)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable;
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and
performance of the consolidated entity; and
(c)
In the Director’s opinion, the attached financial statements are in compliance with International Financial Reporting
Standards as stated in Note 1(a) to the financial statements; and
(d)
the Directors have been given the declarations required by s.295A of the Corporations Act 2001
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature
of the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full
of any debt in accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class
Order applies, as detailed in Note 29 to the financial statements will, as a group, be able to meet any obligations or liabilities to
which they are, or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
M A Ward
Director
Brisbane,
24 February 2016
92
A.P. Eagers ANNUAL REPORT 2015
INDEPENDENT AUDITOR’S REPORT
2692
93
A.P. Eagers ANNUAL REPORT 2015 INDEPENDENT AUDITOR’S REPORT
(CONTINUED)
13 21
94
A.P. Eagers ANNUAL REPORT 2015
SHAREHOLDER INFORMATION
AS AT 11 MARCH 2016
EQUITY SECURITIES
The Company’s quoted securities consist of 184,458,264 ordinary fully paid shares (ASX: APE).
TOP 20 HOLDERS OF ORDINARY SHARES
No. of Shares
% of Issued Shares
WFM Motors Pty Ltd
Patterson Cheney Investments Pty Ltd
Jove Pty Ltd
Alan Piper Investments (No 1) Pty Ltd
Milton Corporation Limited
Argo Investments Limited
Martin Ward
Citicorp Nominees Pty Limited
National Nominees Limited
Berne No 132 Nominees Pty Ltd <315738 A/C>
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Diane Colman
RBC Investor Services Australia Nominees Pty Limited
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