2 0 1 7 A N N U A L R E P O R T
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
2017
$’000
2016
$’000
2015
$’000
2014
$’000
2013
$’000
4,058,779
176,668
(16,651)
210
160,227
(24,598)
135,629
(37,456)
(2,146)
96,027
3,833,222
179,776
(13,993)
-
165,783
(24,378)
141,405
(35,879)
(1,542)
103,984
3,246,376
163,077
(13,216)
(7,610)
142,251
(21,293)
120,958
(33,943)
(798)
86,217
2,858,113
138,081
(12,583)
(578)
124,920
(22,080)
102,840
(26,150)
(460)
76,230
2,672,813
122,252
(12,354)
-
109,898
(23,188)
86,710
(22,748)
(353)
63,609
50.3
36.0
100
2017
$’000
369,028
38,131
367,855
10,761
785,775
276,092
762,904
1,038,996
1,824,771
361,121
309,414
288,033
22,600
-
843,603
1,824,771
55.4
35.0
100
2016
$’000
364,449
55,398
335,779
8,166
763,792
319,846
670,796
990,642
47.6
32.0
100
2015
$’000
296,060
105,375
293,435
8,139
703,009
228,479
557,922
786,401
43.0
27.0
100
2014
$’000
242,070
99,020
242,480
7,486
591,056
241,875
525,067
766,942
36.4
23.0
100
2013
$’000
231,205
108,612
198,369
939
539,125
246,082
431,658
677,740
1,754,434
1,489,410
1,357,998
1,216,865
354,710
298,908
264,817
22,505
-
291,298
160,762
281,817
35,440
-
813,494
720,093
292,485
165,733
234,391
30,233
27,781
607,375
344,956
125,259
195,195
5,764
21,612
524,079
1,754,434
1,489,410
1,357,998
1,216,865
OTHER STATISTICS
Net tangible asset backing per share – $
Shares on issue – ‘000
Number of shareholders
Total Debt(1)
Net debt (total debt less bailment finance
less cash) - $’000
Gearing ratio (debt/debt plus equity) – %
Gearing ratio (net debt/net debt plus total equity) – %
2.49
191,008
5,442
793,544
2.44
190,493
5,206
769,525
2.95
184,074
5,062
614,280
2.38
178,519
4,517
579,799
2.34
176,548
4,636
514,889
238,523
266,035
172,611
198,467
199,001
50.2
23.3
50.2
25.8
46.6
19.7
49.5
25.1
48.8
27.0
(1) 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
Company Profile
Board of Directors
Executive Management
Directors’ Report
Auditor’s Declaration of Independence
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
2
4
5
5
6
20
21
27
84
85
91
93
ANNUAL GENERAL MEETING
Our Annual General Meeting will be held at our registered office,
5 Edmund Street, Newstead, Queensland, on Wednesday 16 May
2018 at 9.00 am.
FINANCIAL CALENDAR
2017 financial year end
31 December 2017
Full year results announcement
21 February 2018
Final dividend announcement
21 February 2018
Final dividend record date
29 March 2018
Final dividend payment date
Annual General Meeting
Half year end
18 April 2018
16 May 2018
30 June 2018
Half year results announcement *
22 August 2018
Interim dividend announcement *
22 August 2018
Interim dividend record date *
Mid-September 2018
Interim dividend payment date *
Early October 2018
2018 financial year end
31 December 2018
* estimate only, subject to changes notified to the ASX.
1
COMMUNITY
DRIVEN
In 2017 we continued our long history
of supporting local communities and
charities through various fund raising
activities conducted by our dealerships
in Northern Territory, Queensland,
New South Wales, Victoria, Tasmania
and South Australia.
The support for these communities and
charities during 2017 exceeded $800,000.
NUMEROUS CHARITIES AND WORTHWHILE CAUSES
BENEFITTED FROM OUR FUNDRAISING INITIATIVES
DURING 2017 INCLUDING:
NORTHERN TERRITORY Camp Quality • St Johns Ambulance •
Alzheimers’ NT • Riding for the Disabled NT.
QUEENSLAND Life Flight • Ronald McDonald House (NQ) •
Mooloolaba Surf Life Saving Club • RSPCA (Brisbane &
Toowoomba) • Childrens’ Hospital Christmas Appeal •
Cancer Council.
NEW SOUTH WALES NSW Rural Fire Services • Crohns &
Colitis Disease Australia • Newcastle Meals on Wheels •
Autism Awareness • Surf Life Saving Sydney Northern Beaches.
VICTORIA Autism Awareness • Very Special Kids Foundation •
Rotary Club of Werribee • Rotary Club of Castlemaine.
TASMANIA Hobart City Mission • Launceston City Mission.
SOUTH AUSTRALIA RSB Guide Dogs • Living With Limits
Foundation • Youth Opportunities Foundation • Novita
Childrens’ Service • Riding For Disabled.
Our commitment to community support for over 100 years
led to the establishment of the A.P. Eagers Foundation in 2013.
By utilising the growing scale of our dealership network, the
Foundation enhances our ability to support the communities
in which we operate.
1
VISION
To actively contribute in meaningful and
sustainable ways to communities, families
in need and other worthy causes.
MISSION
To provide support and assistance to these
community-focussed initiatives, by engaging the
collaboration of A.P. Eagers and its automotive
industry network, employees and other stakeholders..
OBJECTIVES
> To encourage and support engagement by
A.P. Eagers and its stakeholders in these initiatives.
> To secure voluntary assistance through financial
support, sponsorship, skills transfer and in-kind
donations to worthy and well-run organisations
and other causes.
> To deliver 100 cents of every dollar donated to the
intended recipients.
> To operate with the highest standards of integrity.
2
2
6
5
1. Motors Group (TAS) The Hobart City Mission 2. Toowoomba Holden (QLD) - RSPCA 3. Bridge Toyota (Darwin) – The Sommerville Community Services
Christmas Appeal 4. Audi Centre Sunshine Coast (QLD) - Mooloolaba Surf Life Saving Club 5. The Kloster Group (Newcastle) - Meals on Wheels
6. Adtrans Hino (Melbourne) - Stuff the Bus 7. Adtrans SA Cars (Adelaide) - Backpacks 4 SA Kids 8. Black Toyota (Dalby) - Life Flight
3
4
7
8
3
ANNUAL REPORT 2017
COMPANY PROFILE
ABOUT US
A.P. Eagers Limited is a pure automotive retail group with our
main operations in 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 20 of the top 20 selling car brands in Australia and
10 of the top 11 selling luxury car brands. In total, we represent
33 car brands and 11 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.
Our operations are generally provided through strategically
clustered dealerships, many of which are situated on properties
owned by us, with the balance leased.
We own $307 million of prime real estate positioned in high
profile, main road locations in Brisbane, Sydney, Melbourne,
Adelaide and Newcastle.
DIVIDENDS AND EPS GROWTH
We have paid a dividend to shareholders every year since listing
in 1957, and a record dividend in 16 of the past 17 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.
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 $4.1 billion, profit after tax has increased from $4.3 million
to $98.2 million in 2017 and the number of employees has
increased from 600 to 4,350.
We 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.
4
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 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.
Daimler Trucks Adelaide and Eblen Motors were acquired
in 2011 and Main North and Unley Nissan and Renault, in
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 us with exposure to the
West Australian market. This investment represented 23.8%
of AHG, valued at $287 million, at the end of 2017.
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 under the brand names, Perfexion and 365+.
In 2014, our Queensland operations expanded through the
acquisition of Ian Boettcher Motors in Ipswich representing
Mazda, Nissan, Volkswagen, Suzuki and Proton, 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 saw further growth with the acquisition of 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 12 car and truck brands.
Our representation in regional Queensland also saw substantial
growth in 2016 with the acquisition of the Crampton Automotive
and Tony Ireland Groups, representing Holden, Hyundai,
Mercedes-Benz, Citroen, Peugeot, Jaguar, Land Rover, Subaru,
Chrysler Jeep Dodge and Isuzu Trucks, and taking us into new
geographic territories in Toowoomba, Townsville and Hervey Bay.
In 2016 we launched our first Carzoos retail stores at Westfield
Garden City and North Lakes, in Brisbane, introducing an
entirely new way for customers to buy and sell used cars.
Carzoos is supported by our new finance initiative, Simplr.
In 2017 we committed to establish a major new automotive
retailing and mobility hub on 61,400m2 within Brisbane Airport’s
new $300 million BNE Auto Mall project in 2021. The plan is to
create a world-class automotive retailing experience for our
customers of the future.
FURTHER INFORMATION
Please visit www.apeagers.com.au for further information
about A.P. Eagers Limited.
BOARD OF DIRECTORS
Timothy Boyd Crommelin BCom, FSIA, FSLE
Chairman of Board, Member of Audit, Risk & Remuneration Committee
David Arthur Cowper BCom, FCA
Director, Chairman of Audit, Risk & Remuneration Committee
Independent, non-executive Director since February 2011.
Chairman of Morgans Holdings (Australia) Limited. Director
of Senex Energy Ltd (appointed October 2010) and Australian
Cancer Research Foundation. Member of the University of
Queensland Senate. 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). Former
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. Vast automotive retail industry
experience and Director of a substantial number of proprietary
limited companies.
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. Director of a substantial number
of proprietary limited companies. Significant management
experience in automotive, transport, manufacturing and
retail industries.
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. 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.
Marcus John Birrell
Director, Member of Audit, Risk & Remuneration Committee
Non-executive Director since July 2016. Director of Australian
Automotive Dealer Association Limited (appointed January 2014,
retired October 2017). A distinguished career in the automotive
industry, including 38 years at manufacturer, financier and retail
level and 21 years as Executive Chairman of Birrell Motors Group.
Sophie Alexandra Moore BBus, CA, FFin
Director (appointed 29 March 2017), Chief Financial Officer
Joined the Company as Chief Financial Officer in August
2015. Appointed to the board in March 2017 with continuing
executive responsibility for accounting, taxation, internal
audit and treasury functions. Previous senior finance roles
with PricewaterhouseCoopers and Flight Centre Travel Group
Limited. Admitted as a chartered accountant in 1997.
Peter William Henley FAIM, MAICD
Director, Member of Audit, Risk & Remuneration Committee
(Retired 22 February 2017)
Independent, non–executive Director from December 2006
until retirement in February 2017. Director of Thorn Group
Ltd (appointed May 2007, retired August 2016). Former Deputy
Chairman of MTQ Insurance Services Ltd. Former Chairman
and Chief Executive Officer of GE Money Motor Solutions. Over
30 years’ local and international experience in the financial
services industry.
EXECUTIVE MANAGEMENT
Keith Thomas Thornton BEc
Chief Operating Officer – Cars
Denis Gerard Stark LLB, BEc
General Counsel & Company Secretary
Commenced in July 2002. Licensed motor dealer. Responsible
for all operational issues in Queensland and Northern Territory
from June 2007 to 31 December 2016. Since January 2017,
national responsibility for the group’s car operations. Significant
retail and wholesale experience in volume, niche and prestige
industry sectors. Prior industry experience with various
manufacturers. Director of Australian Automotive Dealer
Association Limited (appointed September 2014).
Commenced with the Company in January 2008. Responsible
for overseeing the company secretarial, legal, insurance and
investor relations functions and property portfolio. Previous
company secretarial and senior executive experience with public
companies. Admitted as a solicitor in Queensland in 1994 and
Victoria in 1997.
5
ANNUAL REPORT 2017 DIRECTORS’ REPORT
The Directors of A.P. Eagers Limited ABN 87 009 680 013 (the Company) present their report together with the consolidated financial
report of the Company and its controlled entities (the Group), for the year ended 31 December 2017 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 5.
COMPANY SECRETARY
The Company Secretary and his qualifications and experience are detailed on page 5.
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)(2)
D T Ryan
D A Cowper(1)
M J Birrell(1)(3)
S A Moore(4)
Board Meetings
Audit, Risk &
Remuneration Committee Meetings
Held
Attended
Held
Attended
9
9
9
2
9
9
9
7
8
9
9
2
9
9
9
6
4
-
-
1
-
4
3
-
3
-
-
1
-
4
2
-
(1) Audit, Risk & Remuneration Committee members.
(2) Mr Henley retired as a Director on 22 February 2017.
(3) Mr Birrell was appointed to the Audit, Risk & Remuneration Committee on 29 March 2017.
(4) Ms Moore was appointed as a Director on 29 March 2017.
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.
6
FINANCIAL & OPERATIONAL REVIEW
The Directors of A.P. Eagers Limited (ASX: APE) are pleased to report a 2017 Net Profit Before Tax (NPBT) of $135.6 million. This
compares to a record Net Profit Before Tax of $141.4 million in 2016, a decrease of -4.1% on the previous corresponding period
(pcp). Net Profit After Tax was $98.2 million in 2017 compared to a record $105.5 million in 2016, a decrease of -7.0% on the pcp.
Earnings per share (basic) for 2017 were 50.3 cents compared to 55.4 cents on the pcp, a decrease of 9.2%.
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)/expenses (3)
Restructure costs(4)
Underlying profit before tax
Underlying profit after tax (5)
Underlying EPS (basic) cents
Full Year to
December 2017
$Million
Full Year to
December 2016
$ Million
50.3
98.2
135.6
(0.2)
-
0.1
0.1
5.2
140.8
99.6
52.1
55.4
105.5
141.4
(1.2)
-
1.8
(4.5)
-
137.5
100.2
53.3
% Change
(9.2%)
(7.0%)
(4.1%)
2.3%
(0.6%)
(2.3%)
(1) Represents the aggregate value of freehold property fair value adjustments (positive and negative) to the Statement of Profit and Loss.
(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 net of expenses.
(4) Costs related to the restructuring of underperforming and unsustainable automotive division assets and operations.
(5) Underlying profit after tax includes the adjustments per Note (1) above, and the related tax impact at 30% equating to $1.5 million charge in 2017
(2016: $0.3 million benefit).
The Group delivered record trading performances in Victoria, Tasmania, New South Wales Hunter Region and National Trucks division.
However, challenging market dynamics related to our portfolio representation during the year in our two largest geographic market
segments of Queensland and South Australia adversely impacted trading performance versus the pcp. Increased gains on sale of non-
core investments and property helped offset the reduced profit contribution from car retailing operations.
The Company has recorded $5.2 million in one-off costs associated with the re-structuring of underperforming and unsustainable
businesses in the 2017 statutory Net Profit Before Tax.
7
ANNUAL REPORT 2017 Dividends
Business Initiatives
Our Birrell Group acquisition in Victoria/ Tasmania performed
strongly in its first full year of operation within the A.P. Eagers
Group in 2017. All businesses delivered record results assisted
by strong market conditions in Victoria and an improved truck
and car division performance in Tasmania. Encouragingly, these
results have been achieved despite a brand portfolio that was
challenged in Tasmania in 2017. The Crampton and Ireland
Group (Queensland Provincial) acquisitions delivered stronger
results in the second half of 2017.
The Group’s National Trucks division capitalised on strong growth
in the Heavy and Light commercial sales, resulting in a record
result for 2017. This result continues the strong performance
and growth of the National Trucks division since 2015.
Volatility in the new car market dynamics combined with recent
regulatory pressure has increased activity in the dealership
acquisition/disposal marketplace in general, with price
expectations now at more reasonable multiples. We completed
the acquisition of Porsche Centre Adelaide in the last quarter
of 2017 and we will continue with our disciplined approach in
reviewing further acquisition opportunities.
A.P. Eagers committed to establish a major new automotive
retailing and mobility hub on 61,400m² within Brisbane Airport’s
new $300m BNE Auto Mall project in 2021. The plan is to create
a world-class automotive retailing experience for our customers
of the future. We currently represent 12 major car brands within
the geographic area serviced by the BNE Auto Mall, with the
opportunity for a number of other brands to join the group. The
existing brands collectively represent 48 per cent of the total
automotive industry.
We increased our strategic investment in Automotive Holdings
Group to 23.81% as at 31 December 2017 which was valued
at $287.4 million based on their closing share price of $3.64
per share (2016: $3.95). Whilst not included in the Company’s
Statutory Profit after Tax, a before tax unrealised loss of $22.9
million has been recorded in the Statement of Comprehensive
Income for the 2017 year due to their $3.95 closing share price
at 31 December 2016.
Financial Performance
Total revenue increased by 5.9% to $4.1 billion in 2017 (2016:
$3.8 billion), with all business units reflecting increases in
vehicle sales. The additional contribution from business
acquisitions in 2016 and strong trading in the New South Wales
and Victorian/Tasmanian car divisions also combined to boost
total revenue. On a like-for-like basis, the Group recorded
neutral revenue growth compared to the pcp (0.1% increase),
impacted by challenging trading conditions in Queensland.
A fully franked final dividend of 22.5 cents per share (2016:
22.0 cents) has been approved for payment on 18 April 2018 to
shareholders who are registered on 29 March 2018 (Record
Date). When combined with the interim dividend of 13.5 cents
paid in October 2017, the total dividend based on 2017 earnings is
36.0 cents per share (2016: 35.0 cents) fully franked, an increase
of 2.9% on 2016. The Company’s dividend reinvestment plan
(DRP) will not operate in relation to the final dividend.
Dividends paid to members during the year under review were
as follows:
Year ended 31 December
Final ordinary dividend for the year
ended 31 December 2016 of 22.0
cents (2015: 20.0 cents) per share
paid on 18 April 2017
2017
$’000
2016
$’000
41,984
37,015
Interim ordinary dividend of 13.5
cents (2016: 13.0 cents) per share
paid on 6 October 2017
25,786
67,770
24,625
61,640
External Environment
According to Federal Chamber of Automotive Industry statistics,
Australia’s new motor vehicle sales increased by 0.9% in 2017 to
1,189,116 units compared to a 2.0% increase in 2016. Whilst the
percentage growth rate in sales reduced, 2017 represented the
third record year in a row for total new unit sales volume.
New vehicle sales growth was strongest in Victoria, where the
market was up 4.0% on pcp, and weakest in Western Australia
where the market fell -2.5%. The two other large markets, New
South Wales and Queensland, recorded neutral growth on the
pcp of -0.1% and 0.0%, respectively. The remaining markets also
recorded relatively flat growth on the pcp, with South Australia,
Tasmania and Northern Territory up 1.0%, 0.8% and 0.2%
respectively, and Australian Capital Territory down -1.5%.
A decrease of -2.5% in private sales was offset by a 2.6% increase
in business sales. Luxury vehicle segment contracted from 11.4%
to 10.7% of total market share, finishing -5.0% down, with record
sales from brands such as Mercedes-Benz, Porsche and Maserati,
being offset by declines in Audi, BMW, Infiniti, Lexus, Jaguar,
Volvo, Land Rover, and Mini. Traditional fuel vehicles made up
99% of all new vehicle sales, with the sale of electric vehicles
increasing 46.2% and having total sales of 1,124 units in 2017.
Australian manufactured vehicles represented only 4.8% (2016:
7.4%) of new cars sold in the national market in 2017.
Nationally, the Heavy Commercial segment recorded an 11.8%
(2016: 2.9%) increase with significant increases in light/medium
duty trucks and heavy-duty sales, +7.4% and +22.4% respectively.
The Light Commercial segment recorded an 8.6% increase.
8
DIRECTORS’ REPORT CONTINUED EBITDA decreased by 1.7% to $176.7 million (2016: $179.8 million). Profit margins declined slightly as indicated by the EBITDA/Revenue
ratio of 4.4% (2016: 4.7%) and the NPBT/Sales ratio also declined to 3.3% from 3.7% (2016). This result was impacted by reduced
Finance and Insurance income due to regulatory pressures and challenging trading conditions in Queensland. On an underlying basis
NPBT/Sales for 2017 was 3.5%, down from 3.6% in 2016.
Borrowing costs increased by 0.9% to $24.6 million (2016: $24.4 million), reflecting higher average debt (including additional bailment
finance for the businesses acquired in 2016) being offset by lower interest rates. The increase in depreciation and amortisation costs
by 19.0% to $16.7 million (2016: $14.0 million) reflects the additional depreciation contributed by the businesses and properties acquired
in 2016, the redevelopment of properties and one-off impacts from accelerating depreciation of underperforming assets, offset by the
depreciation charges associated with the properties sold in the second half of 2017.
Business acquisition costs of $0.1 million were expensed in the financial year relating to the acquisition of Porsche Centre Adelaide,
compared to $1.8 million relating to the Birrell, Crampton Automotive and Tony Ireland Group acquisitions.
The Company’s net cash provided by operating activities was $145.0 million in 2017 (2016: $109.7 million), with increases due to
contributions from acquisitions made in 2016, improved EBITDA to cash conversion and lower income taxes paid compared to 2016
due primarily to 2016 tax refund received in 2017 and a lower tax instalment rate.
Results Summary
Consolidated results
Year Ended 31 December
Revenue from operations
Other revenue
Total revenue
Earnings before interest, tax, depreciation and amortisation and impairment
(EBITDA)
Depreciation and Amortisation
Impairment charge/net reversal
Earnings before interest and tax (EBIT)
Borrowing costs
Profit before tax
Income tax expense
Profit after tax
Non-controlling interest in subsidiaries
Attributable profit after tax
Earnings per share - basic
This report is based on accounts which have been audited.
2017
$’000
2016
$’000
Increase/
(Decrease)
4,014,795
3,777,615
43,984
55,607
4,058,779
3,833,222
176,668
(16,651)
210
160,227
(24,598)
135,629
(37,456)
98,173
(2,146)
96,027
179,776
(13,993)
-
165,783
(24,378)
141,405
(35,879)
105,526
(1,542)
103,984
50.3 cents
55.4 cents
6.3%
(20.9%)
5.9%
(1.7%)
19.0%
-
(3.4%)
0.9%
(4.1%)
4.4%
(7.0%)
(7.7%)
(9.2%)
9
ANNUAL REPORT 2017 Segments (1)
Profit before tax from our Car Retail segment was $84.4 million,
a decrease from $104.6 million for 2016. Underlying Profit
before tax for the Car Retail segment was $89.6 million in 2017
(excludes $5.2 million in one-off costs and restructuring of
underperforming and unsustainable businesses), a decrease
from $100.2 million in 2016 (excludes $4.4 million of GST refunds
received in 2016).
Car Retail segment revenue increased by 6.1%, with the increase
primarily attributable to the strong trading in New South Wales,
Victoria and Tasmania and an additional 3 months’ trading from
the Birrell Group and an additional 6 and 9 months’ trading
respectively from the Crampton and Ireland Groups, offset by
lower like-for-like results in Queensland due to challenging
trading conditions. The strong trading was also reflected in
the parts and service businesses with improvements across
the Group.
The National Truck division continues to improve profitability,
delivering a record profit before tax result of $9.0 million
compared to $6.3 million for the pcp, reflecting strong
performance in all departments including improved results
from the new truck division and service division. Revenue
increased by 4.9% reflecting strong performance in the
Victoria and South Australia truck divisions, partly offset
by the divestment of Sydney Truck Centre in June 2017 with
the segment continuing to restructure the business to drive
business optimisation and deliver improved returns.
The value of the property portfolio increased to $307 million as at
31 December 2017 compared to $299 million as at 31 December
2016. Continued management of our property portfolio to
maximise operational and financial outcomes saw the divestment
of five properties and purchase of two additional properties
during 2017. The divested properties included two unused sites,
two non-core sites which will be exited within three years and
one site which was sold to rectify a complicated lease.
The Property segment profit contribution of $32.0 million was
higher than the previous year of $28.2 million, due to strong
outcomes achieved from the Company’s management of its
property portfolio contributing an additional $10.6 million to
pre-tax profit in 2017. Also, 2017 valuation increases of $5.6
million ($0.2 million P&L, $5.4 million revaluation reserve) in
the Queensland and New South Wales portfolios compared with
valuation increases in 2016 of $12.1 million ($1.2 million P&L,
$10.9 million revaluation reserve).
The Investment segment registered a pre-tax loss of $8.4 million
in 2017 compared to a loss of $24.0 million for the pcp, due
primarily to an unrealised revaluation loss on the AHG investment
of $22.9 million. This reflected a 31 December 2017 AHG closing
share price of $3.64 per share compared with $3.95 as at 31
December 2016.
As at 31 December 2017, the 23.81% strategic investment in
AHG had a market value of $287.4 million based on a closing
share price of $3.64 per share.
Financial Position
The Company’s financial position remains very strong. EBITDA
Interest Cover (EBITDA/Borrowing costs) was 7.2 times as at 31
December 2017 compared to 7.2 times as at June 2017 and 7.4
times as at 31 December 2016.
Corporate debt (Term and Capital Loan Facility) net of cash on
hand was lower at $238.5 million as at 31 December 2017 (2016:
$266.0 million) due to strong operating cash generation and
repayment of debt. Total debt including vehicle bailment net of
cash on hand was $782.7 million as at 31 December 2017, as
compared to $751.9 million as at 31 December 2016.
Total gearing (Debt /Debt + Equity), including bailment inventory
financing and finance leases, was 50.2% as at 31 December
2017, consistent with 50.2% as at 31 December 2016. Bailment
finance is cost effective short-term finance secured against
vehicle inventory on a vehicle by vehicle basis. Gearing excluding
bailment, and including cash on hand, was 23.3% as at 31
December 2017, compared to 25.8% as at 31 December 2016.
Total inventory levels increased to $652.7 million at 31 December
2017 from $625.0 million at 31 December 2016.
Net tangible assets increased to $2.49 per share as at 31
December 2017, as compared to $2.44 per share at 31 December
2016, due to higher asset balances including higher value of
AHG investment.
The Company’s cash flow from operations was $145.0 million
for the year ended 31 December 2017 (2016: $109.7 million) with
the increase due to timing of receipts from customers, payments
to suppliers, and lower tax payments.
Outlook and Strategy Update
Although the market dynamics remain challenging, we are
encouraged by the record National new vehicle market volumes
with continued record affordability and aggressive manufacturer
sales campaigns driving customer demand.
Operationally, our initial focus during the first half of the year is
to complete the portfolio adjustments identified as unsustainable
that required the $5.2m restructuring charge. This is expected
to be completed by July 2018. Concurrently we expect to grow
EPS from recent (2016/2017) acquisitions in line with historical
trends and continue to redevelop and reorganise our inner-city
Brisbane facilities (Newstead, Woolloongabba and Windsor) to
provide improved long-term solutions for all stakeholders.
Strategically, we remain focussed on being Australia’s leading
automotive retail partner and our two-pronged approach
of driving value from existing business through process
improvement, operating synergies, portfolio management
and organic growth, while taking advantage of value adding
acquisition opportunities as they present themselves.
(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
10
DIRECTORS’ REPORT CONTINUED In addition, the Company continues to grow and invest in alternative and complimentary related models while exploring alternate
mobility solutions via innovative vehicle usage and ownership platforms. Carzoos continues to be a focus as we refine the business model
to ensure scalability benefits can be realised and maximised in the mid-term. A.P. Eagers plan to continue to be at the forefront of
delivering mobility solutions while being the preferred partner for customers, manufacturers and the communities in which we operate.
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 following metrics:
Statutory NPAT ($ million)
Statutory Earnings per share – basic (c)
Dividend per share (c)
Share Price at year end ($)
2017
98.2
50.3
36.0
7.97
2016
105.5
55.4
35.0
9.22
2015
87.0
47.6
32.0
12.70
2014
76.7
43.0
27.0
5.98
2013
64.0
36.4
23.0
4.96
11
ANNUAL REPORT 2017 2. Non-executive Directors’ Remuneration Framework
(d) Executive Incentive Plan (EIP)
Non-executive Directors are remunerated for their services by
way of fees (and where applicable, superannuation) from the
maximum amount approved for that purpose by shareholders
in general meeting, 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, 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.
(c) Short-term Performance Incentives
Incentive / Bonus
(i)
Non-commission based executives are eligible to receive
short-term incentive payments of up to 30% of base salary in
accordance with contractual arrangements. This is not available
to the Chief Executive Officer, the Chief Operating Office – Cars
(as his remuneration is commission based) or any non-executive
Director. The short-term incentive allocations are 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.
(ii) Commission Structure
A commission structure is included in the remuneration for
the Chief Operating Office - Cars. 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.
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.
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 on 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 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.
(ii) EPS Hurdles
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.
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.
12
DIRECTORS’ REPORT CONTINUED 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. In
these circumstances, 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.
(iii) CEO’s Participation in EIP
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 16, 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.
Accounting accrual
Accounting accrual
6
3
2
2
2
1
,
1
8
4
9
4
0
9
4
8
8
5
5
1
s
’
0
0
0
$
1500
1200
900
600
300
0
Average annual cost
Average annual cost
0
5
8
0
5
8
0
5
8
0
5
8
0
5
8
1500
1200
s
’
0
0
0
$
900
600
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.
13
ANNUAL REPORT 2017 3. Executives’ Remuneration Framework (continued)
(d) Executive Incentive Plan (EIP) (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 or after the year under review, except as shown in these tables.
Chief Executive Officer
Tranche
No.
Grant Date
No.
granted
No.
lapsed
No.
exercised (1)
Fair
value
No.
granted
No.
lapsed
No.
exercised (2)
Fair
value
End of 1st
performance
period
Performance Rights
Options
1
2
3
4
5
4 Jul 2014
83,661
4 Jul 2014
87,268
4 Jul 2014
91,006
4 Jul 2014
94,866
4 Jul 2014
99,067
-
-
-
-
-
83,661
$5.08
467,032
87,268
$4.87
452,127
91,006
$4.67
447,368
-
-
$4.48
420,792
$4.29
416,666
-
-
-
-
-
-
-
-
-
50,000
$0.91
31 Dec 2015
$0.94
31 Dec 2016
$0.95
31 Dec 2017
Status
Vested without
re-testing
Vested without
re-testing
All Performance
Rights and 1/3 of
Options vested without
re-testing. 2/3 of Options
remain unvested and
subject to re-testing
$1.01
31 Dec 2018
$1.02
31 Dec 2019
Unvested
Unvested
(1) Performance rights are automatically exercised upon vesting. 87,268 rights that were granted for 2016 were exercised during the year under review and these
were valued at $805,484 on the day of exercise.
(2) No options were exercised during the year under review. 50,000 options were exercised during 2016.
Chief Operating Officer - Cars
Tranche
No.
Grant Date
No.
granted
No.
lapsed
No.
exercised (1)
Fair
value
No.
granted
No.
lapsed
No.
exercised (2)
Fair
value
End of 1st
performance
period
Performance Rights
Options
1
2
3
4
5
4 July 2014
19,685
4 July 2014
20,533
4 July 2014
21,413
4 July 2014
22,321
4 July 2014
23,310
-
-
-
-
-
19,685
$5.08
109,890
20,533
$4.87
106,382
21,413
$4.67
105,263
-
-
$4.48
$4.29
99,009
98,039
-
-
-
-
-
-
-
-
-
-
$0.91
31 Dec 2015
$0.94
31 Dec 2016
$0.95
31 Dec 2017
Status
Vested without
re-testing
Vested without
re-testing
All Performance
Rights and 1/3 of
Options vested without
re-testing. 2/3 of Options
remain unvested and
subject to re-testing
$1.01
31 Dec 2018
$1.02
31 Dec 2019
Unvested
Unvested
(1) Performance rights are automatically exercised upon vesting. 20,533 rights that were granted for 2016 were exercised during the year under review and these
were valued at $189,520 on the day of exercise.
(2) No options were exercised during the year under review.
14
DIRECTORS’ REPORT CONTINUED
-
-
-
-
-
-
-
-
-
-
General Counsel & Company Secretary
Performance Rights
Options
No.
granted
No.
lapsed
No.
exercised (1)
Fair
value
Tranche
No.
1
2
3
4
5
6
7
8
Grant Date
27 Mar 2013
27 Mar 2013
27 Mar 2013
27 Mar 2013
27 Mar 2013
4 July 2014
4 July 2014
4 July 2014
-
-
-
-
-
2,460
2,566
2,676
No.
granted
26,880
26,880
26,040
25,510
25,250
13,736
13,297
13,157
-
-
-
-
-
-
-
-
-
-
2,460
2,566
2,676
$5.08
$4.87
$4.67
No.
lapsed
No.
exercised (2)
Fair
value
End of 1st
performance
period
Status
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.93
31 Dec 2013
Vested without re-testing
$0.93
$0.96
$0.98
$0.99
$0.91
$0.94
31 Dec 2014 Vested without re-testing
31 Dec 2015 Vested without re-testing
31 Dec 2016 Vested without re-testing
31 Dec 2017 Vested without re-testing
31 Dec 2015 Vested without re-testing
31 Dec 2016 Vested without re-testing
$0.95
31 Dec 2017
All Performance
Rights and 1/3 of
Options vested without
re-testing. 2/3 of Options
remain unvested and
subject to re-testing
$1.01
31 Dec 2018
$1.02
31 Dec 2019
Unvested
Unvested
9
10
4 July 2014
4 July 2014
2,790
2,913
-
-
$4.48
$4.29
12,376
12,254
(1) Performance rights are automatically exercised upon vesting. 2,566 rights that were granted for 2016 were exercised during the year under review and these
were valued at $23,684 on the day of exercise.
(2) No options were exercised during the year under review.
Chief Financial Officer
Performance Rights
Options
No.
granted
No.
lapsed
No.
exercised (1)
Fair
value
No.
granted
No.
lapsed
No.
exercised (2)
Fair
value
End of 1st
performance
period
Status
Tranche
No.
1
2
3
4
5
Grant Date
12 Jun 2015
12 Jun 2015
12 Jun 2015
2,227
4,624
4,796
12 Jun 2015
12 Jun 2015
4,975
5,167
-
-
-
-
-
2,227
4,624
4,796
$8.98
$8.65
$8.34
14,084
27,027
26,143
-
-
$8.04
$7.74
25,316
25,000
-
-
-
-
-
-
-
-
-
-
$1.42
31 Dec 2015 Vested without re-testing
$1.48
31 Dec 2016 Vested without re-testing
$1.53
31 Dec 2017
All Performance
Rights and 1/3 of
Options vested without
re-testing. 2/3 of Options
remain unvested and
subject to re-testing
$1.58
31 Dec 2018
$1.60
31 Dec 2019
Unvested
Unvested
(1) Performance rights are automatically exercised upon vesting. 4,624 rights that were granted for 2016 were exercised during the year under review and these
were valued at $42,680 on the day of exercise.
(2) No options were exercised during the year under review.
Further details of the performance rights and options granted under the EIP are specified in notes 37 and 38 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 three months’ notice 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.
15
ANNUAL REPORT 2017
5. Executive Employment Agreements (continued)
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.
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.
Short-term benefits
Salary & fees
$
Bonus &
commission (4)
$
Non-monetary &
other benefits (1)
$
Post-
employment
benefits
Super-
annuation
benefits
$
Share-based
payments
Performance
Rights & Options
(2) (3)
$
Performance
-related
percentage
%
Total
$
100,000
1,205,004
85,000
14,167
85,000
85,000
85,000
-
-
-
-
-
-
-
682
9,500
-
110,182
97,268
30,000
904,070
2,236,342
682
99
682
682
682
8,075
1,346
8,075
8,075
8,075
-
-
-
-
-
93,757
15,612
93,757
93,757
93,757
-
40
-
-
-
-
-
328,502
1,987,673
66,800
66,800
41,125
141,902
20,660
93,806
89,141
546,228
29
993,211
3,283,392
205,676
647,828
(22,599)
20,049
212,722
1,063,676
292,006
497,682
73,000
720,828
33,405
10,806
27,741
47,790
31,834
457,986
244,556
1,521,662
81
23
2017
Directors
T B Crommelin
Chairman
M A Ward
Managing Director & CEO
N G Politis
Non-executive Director
P W Henley
Non-executive Director(5)
D T Ryan
Non-executive Director
D A Cowper
Non-executive Director
M J Birrell
Non-executive Director
S A Moore
Executive Director &
Chief Financial Officer(6)
Executives
K T Thornton
Chief Operating Officer - Cars
D G Stark
General Counsel &
Company Secretary
(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.
For Mr Thornton, this includes a $78,017 reduction in the accrued provision for long service leave as a result of his reduced commission in 2017.
(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 13 under the heading “CEO’s Participation in EIP” of which the treatment of share plan expense is applicable to all key
management personnel.
(4) For Mr Thornton, this is a commission representing 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.
(5) Mr Henley retired as a Director on 22 February 2017.
(6) Ms Moore was appointed as a Director on 29 March 2017.
16
DIRECTORS’ REPORT CONTINUED 2016
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
M J Birrell
Non-executive Director (5)
Executives
K T Thornton
General Manager Qld & NT
D G Stark
General Counsel &
Company Secretary
S A Moore
Chief Financial Officer
Short-term benefits
Salary & fees
$
Bonus &
commission (4)
$
Non-monetary &
other benefits (1)
$
Post-
employment
benefits
Super-
annuation
benefits
$
Share-based
payments
Performance
Rights & Options
(2) (3)
$
Performance
-related
percentage
%
Total
$
100,000
1,200,000
85,000
85,000
85,000
85,000
42,500
1,682,500
-
-
-
-
-
-
-
-
635
9,500
-
110,135
136,556
35,000
948,336
2,319,892
635
635
635
635
275
140,006
8,075
8,075
8,075
8,075
4,038
80,838
-
-
-
-
-
93,710
93,710
93,710
93,710
46,813
948,336
2,851,680
200,004
819,230
62,663
19,616
223,138
1,324,651
286,677
73,000
46,554
27,234
55,218
488,683
306,006
62,400
30,116
22,253
101,330
522,105
792,687
954,630
139,333
69,103
379,686
2,335,439
-
41
-
-
-
-
-
79
26
31
(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.
(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 13 under the heading “CEO’s Participation in EIP” of which the treatment of share plan expense is applicable to all key
management personnel.
(4) For Mr Thornton, this is a commission representing 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.
(5) Mr Birrell was appointed as a Director on 27 July 2016.
17
ANNUAL REPORT 2017 7. Relevant Interest in the Company’s Shares Held by Key Management Personnel
2017
Directors
M A Ward
N G Politis
P W Henley(1)
D T Ryan
T B Crommelin
D A Cowper
M J Birrell
S A Moore(2)
Executives
K T Thornton
D G Stark
1 January
2017
Dividend
Reinvestment
Plan
Executive
Incentive
Plan
Purchases
Sales
31 December
2017
4,211,387
68,419,139
113,092
0
378,286
12,053
2,000,000
2,227
428,585
140,574
75,705,343
0
0
0
0
0
0
0
0
0
0
-
87,268
0
2,000,000
2,298,655
0
0
0
0
0
0
4,624
20,533
2,566
393,942
0
0
5,000
3,000
0
0
0
0
0
0
0
0
0
0
0
0
0
68,813,081
113,092
0
383,286
15,053
2,000,000
6,851
449,118
143,140
114,991
401,942
2,000,000
74,222,276
(1) This table includes changes for Mr Henley up to his retirement as a Director on 22 February 2017.
(2) Ms Moore was appointed as a Director on 29 March 2017.
1 January
2016
Dividend
Reinvestment
Plan
Executive
Incentive
Plan
Purchases
Sales
31 December
2016
4,115,085
68,079,091
111,825
0
357,229
8,248
0
448,135
145,624
0
0
0
0
0
0
0
0
0
0
0
133,661
0
0
0
0
0
0
12,641
340,048
4,000
0
21,057
3,805
2,000,000
50,000
4,211,387
0
68,419,139
2,733
113,092
0
0
0
0
0
378,286
12,053
2,000,000
933,635
115,950
2,227
0
0
0
953,185
121,000
0
428,585
140,574
2,227
73,265,237
-
1,185,473
2,381,551
1,126,918
75,705,343
2016
Directors
M A Ward
N G Politis
P W Henley
D T Ryan
T B Crommelin
D A Cowper
M J Birrell
Executives
K T Thornton
D G Stark
S A Moore
18
DIRECTORS’ REPORT CONTINUED DIRECTORS’ INTERESTS
The relevant interest of each Director in shares, rights and options issued by the Company as at the date of this report are as follows:
Ordinary Shares (fully paid)
Share Options(1)
Performance Rights(1)
T B Crommelin
N G Politis
M A Ward
D T Ryan
D A Cowper
M J Birrell
S A Moore
383,286
68,813,081
2,389,661
-
15,053
2,000,000
11,647
-
-
-
-
2,153,985
193,933
-
-
-
-
-
-
117,570
10,142
(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
NON-AUDIT SERVICES
No options or performance rights were granted by the Company
over unissued fully paid ordinary shares during the year under
review, and none have been granted since the end of the year.
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.
640,652 shares were issued as a result of the exercise of options
during or since the year under review.
175,843 shares were issued on the exercise of performance
rights during or since the year under review.
At the date of this report, there are 7,628,707 unissued shares
under option and 370,781 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.
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 35 to 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.
AUDITOR
Deloitte Touche Tohmatsu continues in office as auditor of the
Group in accordance with section 327 of the Corporations Act 2001.
Martin Ward
Director
Brisbane, 21 February 2018
19
ANNUAL REPORT 2017
AUDITOR’S DECLARATION OF INDEPENDENCE
20
FINANCIAL
STATEMENTS
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
22
23
24
25
26
27
84
85
91
93
21
ANNUAL REPORT 2017 STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2017
Revenue
Other Gains
CONSOLIDATED
2017
$’000
2016
$’000
4,058,779
3,833,222
17,934
4,326
Notes
3
4
Share of net profits of associate
43(d)
407
191
Changes in inventories of finished goods and work in progress
Raw materials and consumables purchased
Employee benefits expense
Finance costs
Depreciation and amortisation expense
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
The above Statement of Profit or Loss should be read in conjunction with the accompanying notes.
5(a)
5(a)
6
32(e)
30(b)
27,645
94,844
(3,374,157)
(3,230,501)
(331,009)
(311,423)
(24,598)
(16,651)
(24,378)
(13,993)
(222,721)
(210,883)
135,629
141,405
(37,456)
98,173
(35,879)
105,526
96,027
2,146
98,173
103,984
1,542
105,526
Cents
Cents
40(a)
40(b)
50.3
49.5
55.4
54.0
22
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
CONSOLIDATED
2017
$’000
2016
$’000
Notes
Profit for the year
98,173
105,526
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Gain on revaluation of property
Income tax expense relating to items that will not be reclassified subsequently
Items that may be reclassified subsequently to profit or loss
Loss on revaluation of available for sale investment
Income tax benefit
Reclassification adjustments net of tax 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
30(a)
30(a)
30(a)
30(a)
30(a)
30(a)
30(a)
5,380
(1,614)
3,766
(22,920)
6,876
(1,482)
(17,526)
278
(84)
194
10,842
(3,253)
7,589
(36,819)
11,046
(1,369)
(27,142)
405
(121)
284
Total other comprehensive income/(loss) for the year
(13,566)
(19,269)
Total comprehensive income for the year
84,607
86,257
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
82,461
2,146
84,607
84,715
1,542
86,257
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
23
ANNUAL REPORT 2017 STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2017
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax receivables
Prepayments and deposits
Property sale receivable
Total current assets
Non-current assets
Other loans receivable
Available-for-sale financial assets
Investments in associates
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Borrowings - bailment and other current loans
Current tax liabilities
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
24
Notes
8
9
10
11
12(a)
12(b)
13
14
15
16
17
18
19
20(a)
21
22
23
CONSOLIDATED
2017
$’000
2016
$’000
10,827
161,807
652,652
-
11,172
7,145
843,603
10,600
288,033
12,000
361,121
309,414
981,168
17,615
148,746
625,007
3,817
8,844
9,466
813,495
10,612
264,817
11,893
354,710
298,908
940,940
1,824,771
1,754,435
152,853
133,601
20
210
545,200
485,875
13,221
51,360
250
-
51,111
-
762,904
670,797
24(a)
248,344
283,650
19
25
26
27
29
30(a)
30(b)
32(e)
118
2,273
5,988
19,369
276,092
206
7,447
9,226
19,317
319,846
1,038,996
990,643
785,775
763,792
369,028
38,131
367,855
775,014
10,761
785,775
364,449
55,398
335,779
755,626
8,166
763,792
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Consolidated entity 2017
Balance at 1 January 2017
Profit for the year
Other comprehensive income
Total comprehensive
income for the year
Transfer to retained earnings
Transactions with owners
in their capacity as owners:
Share based payment expense
Dividends provided for or paid
Shares issued pursuant
to Staff share plan
Payments received
from employees for
exercised shares
Sale of shares to
non-controlling interests
Prior year tax adjustment
Income tax on items taken
to or transferred directly
from equity
Issued
capital
$’000
364,449
-
-
-
-
-
-
4,579
-
-
-
-
4,579
Asset
revaluation
reserve
$’000
Hedging
reserve
$’000
52,781
-
3,766
3,766
(3,819)
(291)
-
194
194
-
Share-
based
payments
reserve
$’000
(34,486)
-
-
Investment
revaluation
reserve
$’000
37,394
-
(17,526)
Attributable
to owners
of the
parent
$’000
755,626
96,027
(13,566)
Retained
earnings
$’000
335,779
96,027
-
-
-
(17,526)
-
96,027
3,819
82,461
-
Non-
controlling
interests
$’000
8,166
2,146
-
2,146
-
Total
$’000
763,792
98,173
(13,566)
84,607
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,105
-
(4,579)
1,636
-
536
420
118
-
-
-
-
-
-
-
-
-
(67,770)
2,105
(67,770)
-
(1,455)
2,105
(69,225)
-
-
-
-
-
1,636
-
536
-
-
1,904
-
-
1,636
1,904
536
-
(67,770)
420
(63,073)
-
449
420
(62,624)
Balance at 31 December 2017
369,028
52,728
(97)
(34,368)
19,868
367,855
775,014
10,761
785,775
Consolidated entity 2016
Balance at 1 January 2016
Profit for the year
Other comprehensive income
Total comprehensive
income for the year
Transactions with owners
in their capacity as owners:
Shares issued as
consideration for business
acquisitions
Share based payments
Non-controlling interests
on acquisition of subsidiary
Payment of dividend
Shares issued pursuant
to Staff share plan
Payments received
from employees for
exercised shares
Current tax on share plan
Income tax on items taken
to or transferred directly
from equity
296,060
-
-
45,192
-
7,589
(575)
-
284
(3,778)
-
-
64,536
-
(27,142)
293,435
103,984
-
694,870
103,984
(19,269)
8,139
1,542
-
703,009
105,526
(19,269)
-
7,589
284
-
(27,142)
103,984
84,715
1,542
86,257
32,450
-
-
-
35,939
-
-
-
68,389
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,966
-
-
(35,939)
6,948
(28)
(4,655)
(30,708)
-
-
-
-
-
-
-
-
-
-
-
32,450
2,966
-
-
32,450
2,966
-
(61,640)
-
(61,640)
(368)
(1,147)
(368)
(62,787)
-
-
-
-
6,948
(28)
-
-
-
-
6,948
(28)
-
(61,640)
(4,655)
(23,959)
-
(1,515)
(4,655)
(25,474)
Balance at 31 December 2016
364,449
52,781
(291)
(34,486)
37,394
335,779
755,626
8,166
763,792
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
25
ANNUAL REPORT 2017 STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
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
CONSOLIDATED
2017
$’000
2016
$’000
Notes
4,426,933
4,154,100
(4,258,688)
(4,012,247)
7,235
(24,598)
(20,995)
14,501
588
8,737
(24,151)
(34,028)
14,633
2,678
Net cash provided by operating activities
41
144,976
109,722
Cash flows from investing activities
Payment for acquisition of businesses - net of cash acquired
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
32(c)
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
30(a)
(11,534)
(29,383)
-
2,303
32,115
3,116
(49,134)
(52,517)
1,636
43,200
(77,500)
1,400
(118,333)
(52,706)
(500)
-
50,077
2,633
(29,469)
(148,298)
6,948
114,650
(41,145)
-
7
8
(67,770)
(61,640)
(213)
(99,247)
(6,788)
17,615
10,827
(157)
18,656
(19,920)
37,535
17,615
Proceeds from borrowings
Repayment of borrowings
Transactions with non-controlling interests
Dividends paid to members of A.P. Eagers Limited
Dividends paid to minority shareholders of a subsidiary
Net cash (used in)/provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
26
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
31 DECEMBER 2017
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Functional and presentation currency
(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 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.
The functional and presentation currency of the Group is the
Australian Dollar.
The financial statements were authorised for issue by the
directors on the 21st of February 2018.
Reallocation of liabilities
In preparation of the financial report, the Group has reclassified
“provision for annual leave” from “trade and other payables”
to “current provisions”. In addition to this, an adjustment to
reclassify certain transactions from “trade payables” to “other
payables” has been affected in the notes. The comparatives have
been reclassified for the purposes of consistency. Total amount
reclassified is $24,318,000 (2016: $24,705,000).
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 or Group) 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.
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.
27
ANNUAL REPORT 2017 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(b) Basis of consolidation (continued)
(ii) Investments in associates
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.
(i)
Changes in the Group’s 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.
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. If the Group holds, directly or
indirectly, 20% or more of the voting power of the investee, it is
presumed the Group has significant influence, unless it can be
clearly demonstrated that this is not the case. Refer to further
details in Note 2(a)(i).
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.
The requirements of AASB 139 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.
28
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 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 139.
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.
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.
(ii) Service revenue
Service work on customers’ vehicles is carried out under
instruction from the customer. Service revenue is recognised
based upon when services are rendered. 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) Property, Plant and Equipment sales revenue
Revenue from the sales of property, plant and equipment is
recognised when the buyer has accepted the risks and rewards
of ownership, generally at the transfer of ownership.
(vi) 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.
(vii) 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
29
ANNUAL REPORT 2017 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(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.
(h) Business combinations
The acquisition 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 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 Australian government bond rate that matches the
future maturity period.
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.
(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.
(ii) Goods and services tax (“GST”)
Revenues, expenses, assets and liabilities 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.
30
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 (i) Impairment of long lived assets (excluding goodwill)
(l) Inventories
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 Note1(p)).
(j) Cash and cash equivalents
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.
New motor vehicles and 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. This is effected through
the application of a specific provision percentage against cost
of vehicles based on age. 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.
(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.
31
ANNUAL REPORT 2017 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(m) Investments and other financial assets (continued)
(i) Available-for-sale financial assets (continued)
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.
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, 12(b) and 13).
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 19.
(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
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.
32
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 (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. Revaluations are made with sufficient regularity to
ensure that the carrying amount does not differ materially from
that which would be determined using fair value at the end of
the reporting or immediately prior to the initial classification of
assets held for sale. 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:
> Buildings
40 years
> Plant & equipment
3 - 10 years
>
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 consumer’s 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 17).
(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.
33
ANNUAL REPORT 2017 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(u) New motor vehicle stock and related bailment
(x) Dividends
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.
(v) Provisions
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 fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of equity
instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if any,
is recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment
to the share-based payments reserve.
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. Where non-current
assets are sold above the lower of their previous carrying
amounts and fair value less costs to sell, this gain is recognised
in the Profit and Loss when the sale is recognised.
(aa) Rounding of amounts
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the
financial report. Amounts in the financial report have been
rounded off in accordance with that instrument to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
34
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 (ab) New or revised standards and interpretations that are first effective in the current reporting period
The group has applied the following standards and amendments for the first time for their annual reporting period commencing
1 January 2017:
> AASB 2016-1 Amendments to Australian Accounting Standards - Recognition of Deferred Tax Assets for Unrealised Losses
> AASB 2016-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 107, and
> AASB 2017-2 Amendments to Australian Accounting Standards - Further Annual Improvements 2014-2016 Cycle.
The application of these amendments has not had any material impact on the disclosures or the amounts recognised in the Group’s
consolidated financial statements.
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2017 reporting
periods and have not been early adopted by the Group.
The potential impact of the new or revised Standards and Interpretations has been contemplated below.
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.
Title of standard
Nature of change
Impact
Date of adoption by group
AASB 9 Financial Instruments
AASB 9 addresses the classification, measurement and derecognition of financial assets and
financial liabilities, introduces new rules for hedge accounting and a new impairment model
for financial assets.
Management has reviewed the Group’s financial assets and liabilities to assess the impact of
adoption of the new Standard on 1 January 2018.
The Group’s equity instruments that are currently classified as available for-sale will satisfy the
conditions for classification as at fair value through other comprehensive income (FVOCI), hence
there will be no change to the classification and measurement of these financial assets.
Gains/losses realised on the sale of the financial assets at FVOCI will no longer be transferred
to profit or loss on sale, but instead reclassified below the line from the FVOCI reserve to
retained earnings.
All other financial assets and financial liabilities will continue to be measured on the same bases
as is currently adopted under AASB 139.
The new hedge accounting rules will align the accounting for hedging instruments more closely
with the Group’s risk management practices. The Group has confirmed that its current hedge
relationships will qualify as continuing hedges upon the adoption of AASB 9.
Management does not anticipate that the application of the AASB 9 hedge accounting and
new impairment model requirements will have a material impact on the Group’s consolidated
financial statements.
Must be applied for financial years commencing on or after 1 January 2018. The Group will apply
the new rules prospectively from 1 January 2018, with the practical expedients permitted under
the standard. Comparatives for 2017 will not be restated.
35
ANNUAL REPORT 2017 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
List of Standards and Interpretations in issue not yet effective (continued)
Title of standard
Nature of change
Impact
Date of adoption by group
Title of standard
Nature of change
AASB 15 Revenue from Contracts with Customers
The AASB has issued a new standard for the recognition of revenue. This will replace AASB
118 which covers revenue arising from the sale of goods and the rendering of services. The
new standard is based on the principle that revenue is recognised when control of a good or
service transfers to a customer. The standard permits either a full retrospective or a modified
retrospective approach for the adoption.
Management has engaged a third party to assist in the review of the adoption of the new standard
on the Group’s revenue from contracts with customers. Whilst this assessment is ongoing, the
following areas are currently noted as being affected; however, the impact at this stage is not
considered to be significant:
> Accounting for warranties – AASB 15 requires that if a warranty provides a customer
with a service in addition to the assurance that the product complies with agreed-upon
specifications, the promised service is a performance obligation. This means that the entity
shall allocate a portion of the total transaction price to that performance obligation. This will
result in deferral of revenue associated with the sale of standard and premium warranties,
which will need to be recognised over the life of the warranty.
> Accounting for returns/refunds of sales and commissions – AASB 15 requires a right of
return liability to be recognised for the probable refund of sales and commissions. This will
have an impact on the revenue recognised in the Group’s consolidated financial statements,
as any sale or commission with a high probability of being refunded shall be deferred into the
right of return liability account and recognised after the refund period expires.
Mandatory for financial years commencing on or after 1 January 2018. The group intends to
adopt the standard using the modified retrospective approach which means that the cumulative
impact of the adoption will be recognised in retained earnings as of 1 January 2018 and that
comparatives will not be restated.
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the
balance sheet, as the distinction between operating and finance leases has been removed. Under
the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals
are recognised. The only exceptions are short term and low-value leases. The accounting for
lessors will not significantly change.
Impact
Management has reviewed the Group’s lease arrangements to assess the impact of adoption
of the new Standard on 1 January 2019.
The standard will affect primarily the accounting for the Group’s operating leases. As at the
reporting date, the group has non-cancellable operating lease commitments of $224,415,000,
see note 34. Management notes that some of these relate to payments for short-term and low
value leases which will be recognised on a straight-line basis as an expense in the Group’s
consolidated financial statements.
However, the Group has not yet assessed what other adjustments, if any, are necessary for
example because of the change in the definition of the lease term and the different treatment
of variable lease payments and of extension and termination options. It is therefore not yet
possible to estimate the amount of right-of-use assets and lease liabilities that will have to be
recognised on adoption of the new standard and how this may affect the Group’s profit or loss
and classification of cash flows going forward.
Date of adoption by group
Mandatory for financial years commencing on or after 1 January 2019. The Group does not intend
to adopt the standard before its effective date.
36
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017
2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
(a) Critical accounting estimates, assumptions
(iv) Provisions for warranties
A provision for warranties of $5,319,000 (2016: $4,870,000)
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 22.
(v) New and demonstrator vehicle write down to net realisable value
In determining the amount of write-downs for new and
demonstrator vehicle inventory, management has made
judgements based on the expected net realisable value of
inventory. Historic experience and current knowledge of the
products has been used in determining any write-downs to net
realisable value. Refer to Note 10.
(vi) Used vehicle write down to net realisable value
In determining the amount of write-downs required for used
vehicle inventory, management has, in consultation with
published used vehicle valuations, made judgements based
on the expected net realisable value of that inventory. Historic
experience, current knowledge of the products and the
valuations from an independent used car publication has been
used in determining any write-downs to net realisable value.
Refer to Note 10.
(vii) Fair value of assets and liabilities acquired in a
business combination
The acquisitions made by the Group have required a number of
judgements and estimates to be made. The directors have judged
that no significant intangible assets have been acquired in the
business combinations other than Goodwill (see also (ii) above).
Additionally as part of the acquisition and negotiation process
judgements have been made as to the fair value of vehicle and
parts inventory, warranties and other assets and liabilities
acquired. Further judgements and estimates have been made
in relation to the probability of achieving future milestones of
certain acquired businesses as disclosed in Note 32(b).
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)
Classification of investment in Automotive Holdings Group (AHG)
During the period ended 31 December 2017, the Group increased
its shareholding in AHG Limited to 23.81% of the equity shares.
Although the Group owns over 20% of the voting power of
AHG Limited, the Directors have rebutted the presumption of
exercising significant influence on the basis that the Group has
no representation on the Board of Directors of AHG Limited
and limited ability to participate in policy making decisions.
Therefore the investment in AHG Limited has been accounted
for as an available for sale financial asset until such time as
significant influence is deemed to exist.
(ii) Recoverability of goodwill and other intangibles with indefinite
useful lives
Goodwill and other intangibles with indefinite useful lives with a
carrying value of $309,414,000 (2016: $298,908,000) 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 of disposal
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 17.
(iii) Fair value estimation of land and buildings
Land and buildings (including construction in progress) with
a carrying value of $306,572,000 (2016: $298,507,000) are
carried at fair value. Fair value inherently involves estimates
and judgements to be made. The directors determine the fair
value of land and buildings at least annually and if required in
contemplation of sale. The directors’ assessment 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 16.
37
ANNUAL REPORT 2017 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
Fair value gains on financial assets at fair value through profit or loss
Gain on disposal of Available for Sale Investments
CONSOLIDATED
2017
$’000
2016
$’000
2,544,143
2,393,429
749,391
473,982
246,396
883
728,236
433,475
224,360
238
4,014,795
3,779,738
14,501
14,442
408
1,314
7,312
15,385
5,064
43,984
440
6,103
6,104
16,961
9,434
53,484
4,058,779
3,833,222
15,644
210
2,080
17,934
1,136
1,235
1,955
4,326
38
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 5 EXPENSES
(a) Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Total depreciation
Amortisation
Leasehold improvements
Brand names
Total amortisation
CONSOLIDATED
2017
$’000
2016
$’000
Notes
16
16
17
3,771
10,399
14,170
2,387
94
2,481
3,637
8,399
12,036
1,863
94
1,957
Total Depreciation and Amortisation
16,651
13,993
Finance costs
Vehicle bailment & related hedge
Other
Total finance expense
Rental expense relating to operating leases
Minimum lease payments
Superannuation
Provision expenses
Inventory
Warranties
Bad debts
Share-based payments
Business acquisition costs
Business restructuring costs
12,773
11,825
24,598
12,537
11,841
24,378
41,391
37,221
29,866
27,942
4,043
7,642
79
6,275
6,879
580
11,764
13,734
2,105
2,966
62
1,758
5,145
-
39
ANNUAL REPORT 2017
CONSOLIDATED
2017
$’000
2016
$’000
Notes
37,808
(352)
37,456
272
(624)
(352)
26,885
8,994
35,879
8,407
587
8,994
135,629
141,405
40,689
42,422
19
(4,350)
400
(63)
-
761
37,456
304
(4,390)
355
(371)
(306)
(2,135)
35,879
5,178
7,672
6
INCOME TAX
(a) Income tax expense
Current income tax expense
Deferred income tax (benefit)/expense
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
25
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Tax at the Australian tax rate of 30.0% (2016 - 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible capital expenditure
Non-taxable dividends
Non-allowable expenses
Property (revaluation) / impairment
Tax offsets
Sundry items
Income tax expense
(c) Tax benefit/(expense) relating to items of other comprehensive income
Aggregate deferred tax arising in the reporting period and directly debited
to other comprehensive income
40
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017
7 DIVIDENDS
(a) Ordinary dividends fully franked based on tax paid @ 30%
Final dividend for the year ended 31 December 2016 of 22.0 cents per share (2015: 20.0 cents)
paid on 15 April 2017
Interim dividend of 13.5 cents per share (2016: 13.0 cents) paid on 6 October 2017
Total dividends paid
CONSOLIDATED
2017
$’000
2016
$’000
41,984
25,786
67,770
37,015
24,625
61,640
Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan
during the years ended 31 December 2017 and 2016 were as follows:
Paid in cash
67,770
61,640
(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 22.5 cents per share, fully franked based on tax paid at 30%. The aggregate
amount of the proposed dividend expected to be paid on 18 April 2018 out of the retained profits
at 31 December 2017 but not recognised as a liability at year-end is:
43,083
41,923
(c) Franked dividends
The final dividend recommended after 31 December 2017 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 2017.
Franking credits available for subsequent reporting periods based on a tax rate of 30.0% (2016 - 30.0%)
166,029
169,770
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
(18,464)
(17,967)
8 CURRENT ASSETS – CASH AND CASH EQUIVALENTS
Current assets
Cash at bank and on hand
Short term deposits
10,827
-
10,827
12,615
5,000
17,615
The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows.
41
ANNUAL REPORT 2017 9 CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
Trade and other receivables
Provision for doubtful receivables
CONSOLIDATED
2017
$’000
2016
$’000
164,429
151,933
(2,622)
(3,187)
161,807
148,746
(a) The ageing of lease, property and trade receivables at 31 December 2017 is detailed below:
CONSOLIDATED
2017
2016
Not past due
Past due 0-30 days
Past due 31 days plus
Total
Gross
$’000
154,100
5,283
5,046
Provision
$’000
Gross
$’000
Provision
$’000
1,985
142,265
132
505
5,325
4,343
2,504
108
575
3,187
164,429
2,622
151,933
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 net carrying amount of $9,692,000 (2016: $8,985,000) 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 62 days (2016: 62 days).
(b) Movement in provision for doubtful receivables
Opening balance
Additional provisions
Amounts written off during the year
Closing balance
CONSOLIDATED
2017
$’000
3,187
(79)
(486)
2,622
2016
$’000
2,771
580
(164)
3,187
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.
42
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 10 CURRENT ASSETS – INVENTORIES
New and demonstrator 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
CONSOLIDATED
2017
$’000
501,770
(10,458)
491,312
2016
$’000
473,127
(8,900)
464,227
101,319
103,594
(5,109)
96,210
67,123
(1,993)
65,130
(5,664)
97,930
64,678
(1,828)
62,850
652,652
625,007
11 CURRENT ASSETS - CURRENT TAX RECEIVABLES
Current tax receivables
-
3,817
12 CURRENT ASSETS – OTHER CURRENT ASSETS
(a) Prepayments and deposits
Prepayments and deposits
(b) Property sale receivables
Property sale receivables
Sale of property where proceeds are expected to be received within 12 months of balance date.
13 NON-CURRENT ASSETS – RECEIVABLES
Other loans receivable
11,172
8,844
7,145
9,466
10,600
10,612
43
ANNUAL REPORT 2017 14 NON-CURRENT ASSETS – AVAILABLE-FOR-SALE INVESTMENTS CARRIED AT FAIR VALUE
Available-for-sale financial assets
Shares in a listed company - Automotive Holdings Group Limited (1)
Shares in a listed company - Smartgroup Corporation Ltd (1)
Shares in an unlisted company - Dealercell Holdings Pty Ltd (2)
CONSOLIDATED
2017
$’000
2016
$’000
287,445
-
588
261,989
2,828
-
288,033
264,817
(1) The Directors have assessed the fair value of the investment as at 31 December 2017 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.
(2) The Directors have assessed the fair value of the investment as at 31 December 2017 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 2017 are as follows:
Unobservable inputs used in determination of fair values
Class of Financial Assets
and Liabilities
Level 1 Available-for-sale
investments - listed entities
Level 3 Available-for-sale
investments - unlisted entities
Carrying
Amount
31/12/17
$’000
287,445
588
Carrying
Amount
31/12/16
$’000
264,817
Valuation Technique
Key Input
Quoted bid prices in an
active market.
Quoted bid prices in an
active market.
- 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.
15 NON-CURRENT ASSETS – INVESTMENTS IN ASSOCIATES
Shares in associate - Norna Limited
Shares in associate - DealerMotive Ltd
Shares in associate - Carzapp Pty Ltd
CONSOLIDATED
2017
$’000
1,620
10,380
-
2016
$’000
1,620
9,973
300
12,000
11,893
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting (refer Note 43).
Reconciliation of the carrying amount of investment in associate is set out in Note 43(b).
44
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 16 NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings - at fair value
Directors’ valuation
Land
Buildings
Total land and buildings
Construction in progress - at cost
Construction in progress
Leasehold improvements
At cost
Accumulated depreciation
Total leasehold improvements
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
CONSOLIDATED
2017
$’000
2016
$’000
199,489
106,860
306,349
188,108
106,693
294,801
223
3,706
28,756
(11,847)
16,909
85,795
(48,155)
37,640
32,469
(14,328)
18,141
78,032
(39,970)
38,062
Total property, plant and equipment
361,121
354,710
45
ANNUAL REPORT 2017 16 NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
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 2017 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.
Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at 31 December 2017 are as follows:
Carrying
Amount
31/12/17
$’000
Carrying
Amount
31/12/16
$’000
75,313
49,747
Class of
Financial
Assets &
Liabilities
Level 3
Car – HBU
Alternate
Use
Level 3 Car
Dealership
199,591
205,157
Unobservable inputs used in determination of fair values
Valuation
Technique
Key Input
Input
Average /
Range
2017
Average /
Range
2016
Direct
comparison
External
valuations
Price
/sqm land
Average
$2,276/sqm
Average
$1,563/sqm
Other Key
Information
Land size
Range
$1,260 -
$4,004/sqm
Range
$1,262 -
$3,584/sqm
Range
(weighted
average)
2017
Range
(weighted
average)
2016
Average
5,516 sqm
Average
7,952 sqm
Range
2,015 -
18,070 sqm
Range
779 to 24,160
sqm
External
valuations
industry
benchmarks
Summation
method,
income
capitali-
sation and
direct
comparison
Capitalisa-
tion rate
Average
7.3%
Average
7.3%
Net rent /
sqm land
Average
$100/sqm
Average
$102/sqm
Range
3.2% - 10.9%
Range
3.1% - 9.9%
Range
$25 -
$297/sqm
Range
$25 - $297/
sqm
Net rent /
sqm GBA
Average
$206/sqm
Average
$212/sqm
Range
$106 -
$1,573/sqm
Range
$73 - $806/
sqm
Level 3
Development
- Car
Dealership
Level 3
Truck
Dealership
-
9,328
Direct
comparison
External
valuations
Price
/sqm land
Average
$0/sqm
Average
$458/sqm
Range
$0/sqm
Range
$330 - $817
/sqm
18,098
18,319
Direct
comparison
External
valuations
Price
/sqm land
Price/
sqm GBA
Average
$324/sqm
Average
$328/sqm
Land size
Average
18,641 sqm
Average
18,641 sqm
Range
$201 - $428
/sqm
Range
$203 - $434
/sqm
Range
7,218 -
25,700 sqm
Range
7,218 to
25,700 sqm
Net rent/
sqm land
Average
$22/sqm
Range
$17 -
$27/sqm
Capitalisa-
tion rate
Average
6.7%
Average
$30/sqm
Range
$17 to
$43/sqm
Average
9.2%
Range
5.6% - 8.7%
Range
7.9% to 9.8%
Level 3
Other
Logistics
13,347
12,250
Income
capitalisa-
tion method
supported
by market
comparison
Total
306,349
294,801
External
valuations
Capitalisa-
tion Rate
Average
7.1%
Average
7.8%
Net rent /
sqm GBA
Average
$109/sqm
Average
$109/sqm
Range
6.4% - 9.5%
Range
6.9% - 8.4%
Range
$79 -
$179/sqm
Range
$79 -
$179/sqm
There were no transfers between levels in the year.
46
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 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 refers 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 $132,688,000 (2016: $130,861,000). If freehold
buildings (including construction in progress) were carried at historical cost, its current carrying value (after depreciation) would be
$106,860,000 (2016: $106,693,000).
Non-current assets pledged as security
Refer to Note 24 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:
Consolidated 2017
Freehold
land
$’000
Opening net book amount
188,108
Construction
in progress
$’000
Leasehold
improve-
ments
$’000
Motor
vehicles
under lease
$’000
Freehold
buildings
$’000
106,693
1,748
2,190
-
-
99,377
10,999
(46)
-
-
22,432
(16,641)
5,380
210
26,461
(22)
10,842
1,235
3,706
4,782
(8,265)
-
-
-
18,141
2,421
(1,266)
-
-
(2,387)
277
3,429
-
-
-
-
14,509
5,121
374
-
-
(1,863)
-
(3,637)
188,108
106,693
3,706
18,141
Additions
Disposals/transfers
Revaluation gain
credited to asset
revaluation reserve
Revaluation charged to
profit and loss
Depreciation/
amortisation charge
Carrying amount
at end of year
Additions
Disposals/transfers
Revaluation gain
credited to asset
revaluation reserve
Revaluation charged
to profit and loss
Depreciation/
amortisation charge
Carrying amount
at end of year
-
(3,771)
199,489
106,860
223
16,909
Consolidated 2016
Opening net book amount
149,592
Plant and
equipment
$’000
38,062
12,875
Total
$’000
354,710
44,258
(2,898)
(26,880)
-
-
5,380
210
(10,399)
(16,557)
37,640
361,121
1,140
-
(1,140)
26,403
22,583
(2,525)
291,298
68,593
(3,359)
10,842
1,235
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,399)
(13,899)
38,062
354,710
47
ANNUAL REPORT 2017 17 NON-CURRENT ASSETS – INTANGIBLES
Goodwill
Trade marks/brand names
Movement - Goodwill
Balance at the beginning of the financial year
Additional amounts recognised:
- from business combinations during the year (Note 32(a))
Balance at the end of the financial year
Movement - Trade marks/brand names
Balance at the beginning of the financial year
Amortisation of brand names
Balance at the end of the financial year
(a) Impairment tests for goodwill
CONSOLIDATED
2017
$’000
302,833
6,581
309,414
2016
$’000
292,233
6,675
298,908
292,233
153,993
10,600
302,833
138,240
292,233
6,675
(94)
6,581
6,769
(94)
6,675
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. The Group has four CGUs in
the Car Automotive segment grouped by state(s) (QLD & NT, NSW, VIC & TAS, SA) and one national CGU for the Truck segment.
A segment-level summary of the goodwill allocation is presented as follows:
Automotive dealership operations:
Goodwill
Trade marks/brand names
Truck dealership operations:
Goodwill
Trade marks/brand names
294,683
5,531
300,214
8,150
1,050
9,200
284,283
5,625
289,908
7,950
1,050
9,000
309,414
298,908
The recoverable amount of a CGU or group of CGU’s 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. If relevant, 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 2018 financial budgets approved by the Board, a 3% (2016: 3%) perpetual growth
rate and a pre-tax discount rate of 11% (2016: 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 segment, however
see Note 32(b) for considerations surrounding contingent consideration.
For the truck 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 segment.
48
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 18 CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade and other payables
Trade payables (1)
Other payables
CONSOLIDATED
2017
$’000
2016
$’000
56,555
96,298
57,652
75,949
152,853
133,601
(1) 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.
19 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
20
20
118
118
138
210
210
206
206
416
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 31).
Bailment finance of the Group currently bears an average variable interest rate at 31 December 2017 of 4.18% (2016: 4.12%). 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 14% (2016: 34%) 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 $138,000
(2016: $416,000) has been recognised in equity in the hedging reserve (Note 30(a)). No portion was ineffective.
Valuation of derivative financial instruments
Details of the Group’s derivative financial instruments and information about the fair value hierarchy as at 31 December 2017 are as follows:
Class of Financial
Assets and Liabilities
Level 2
Cash flow hedges – Interest
rate swaps
Unobservable inputs used in determination of fair values
Carrying
Amount
31/12/17
$’000
Carrying
Amount
31/12/16
$’000
Valuation Technique
Key Input
138
416
Discounted cash flow
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.
There were no transfers between levels in the year.
49
ANNUAL REPORT 2017 20 CURRENT LIABILITIES - BORROWINGS - BAILMENT AND OTHER CURRENT LOANS
(a) Bailment finance and other current loans
Bailment finance
Capital loan
(i) Bailment finance
CONSOLIDATED
2017
$’000
2016
$’000
544,194
1,006
545,200
485,875
-
485,875
Bailment finance is provided on a vehicle by vehicle basis by various finance providers at an average interest rate of 4.18% p.a.
applicable at 31 December 2017 (2016: 4.12%). Bailment finance is repayable within a short period after the vehicle is sold to a third
party, generally within 48 hours.
(ii) Interest rate risk exposures
Details of the Group’s exposure to interest rate changes on interest bearing liabilities is set out in Note 31.
(iii) Fair value disclosures
Details of the Group’s fair value of interest bearing liabilities is set out in Note 31.
(iv) Security
Details of the security relating to each of the secured liabilities and further information on bank loans is set out in Note 24.
21 CURRENT LIABILITIES – CURRENT TAX LIABILITIES
Income tax
13,221
-
22 CURRENT LIABILITIES – PROVISIONS
Annual Leave
Long Service Leave
Warranties
24,318
21,723
5,319
51,360
24,705
21,536
4,870
51,111
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Warranties
Carrying amount at the start of the year
Additional provisions recognised
Payments charged against provisions
Acquired through business combination
4,870
7,642
(7,193)
-
5,319
4,183
6,879
(6,789)
597
4,870
(b) Warranty Provision
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.
50
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017
23 CURRENT LIABILITIES – OTHER CURRENT LIABILITIES
Other current liabilities
CONSOLIDATED
2017
$’000
2016
$’000
250
-
Other current liabilities represent the estimated fair value of the contingent consideration relating to the acquisition of Tony Ireland
Group (see Note 32(b)). There has been no change in the fair value of the contingent consideration since the acquisition date.
24 NON-CURRENT LIABILITIES – BORROWINGS (SECURED)
(a) Borrowings – others
Term facility
Capital loan
SECURED LIABILITIES
Total secured liabilities (current and non-current) are:
Term facility (i)
Capital loan (ii)
Bailment finance (iii)
170,200
78,144
248,344
204,500
79,150
283,650
170,200
79,150
544,194
793,544
204,500
79,150
485,875
769,525
(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) 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 to Note 10.
Refer to Note 31 for maturities.
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
Inventories
Other current assets
Total assets pledged as security
304,456
674,645
297,083
651,999
544,194
143,416
485,875
177,304
1,666,711
1,612,261
51
ANNUAL REPORT 2017 24 NON-CURRENT LIABILITIES – BORROWINGS (SECURED) (CONTINUED)
FINANCING ARRANGEMENTS
The consolidated entity has access to the following lines of credit at balance date:
Total facilities
Term facility (i)
Working capital facility (includes bank overdraft) (ii)
Capital loan (iii)
Bailment finance (iv)
Bank guarantees
Used at balance date
Term facility
Capital loan
Bailment finance
Bank guarantees
Unused at balance date
Term facility
Working capital facility (includes bank overdraft)
Bailment finance
Bank guarantees
CONSOLIDATED
2017
$’000
2016
$’000
290,000
260,000
25,000
79,150
694,294
27,018
25,000
79,150
671,534
22,000
1,115,462
1,057,684
170,200
79,150
544,194
15,039
808,583
119,800
25,000
150,100
11,979
306,879
204,500
79,150
485,875
19,879
789,404
55,500
25,000
185,659
2,121
268,280
(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) 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.
(iii) Capital loan facility at balance date was provided on a non-amortisable (interest only) basis for a fixed term.
(iv) 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.
52
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 25 NON-CURRENT LIABILITIES – DEFERRED TAX LIABILITIES
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Book versus tax carrying value of plant and equipment
Inventory valuation
Prepayments
Provisions
Doubtful debts
Employee benefits
Warranties
Property receivable
Sundry items
Total amounts recognised in profit or loss
Amounts recognised directly in equity
Revaluation of available-for-sale investment
Revaluation of property, plant and equipment
Hedge liability
Share options trust
Total amounts recognised directly in equity
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 2017
Deferred tax assets relating to business combinations
Reinstatement of Gabba Property
Deferred tax expense/(benefit)
Current year adjustments related to prior year deferred tax
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
Share options trust
Arising on income and expenses reclassified from equity to profit & loss
- relating to available-for-sale financial assets
Closing balance at 31 December 2017
6(a)
30(a)
30(a)
30(a)
30(a)
CONSOLIDATED
2017
$’000
2016
$’000
2,273
7,447
(866)
4,384
1,715
(788)
(15,609)
(2,254)
-
(4,324)
(17,742)
8,603
18,898
(41)
(7,445)
20,015
7,447
(109)
1,557
(352)
(48)
(6,876)
1,614
84
(420)
(624)
2,273
(1,488)
4,225
661
(956)
(13,310)
(5,339)
(66)
(937)
(17,210)
15,964
16,094
(125)
(7,276)
24,657
7,718
(2,343)
-
8,994
(3,318)
(11,046)
3,253
121
4,655
(587)
7,447
53
ANNUAL REPORT 2017
26 NON-CURRENT LIABILITIES – PROVISIONS
Employee benefits - long service leave
Make good provision (a)
CONSOLIDATED
2017
$’000
5,988
-
5,988
2016
$’000
7,256
1,970
9,226
(a) A make good clause under a long term property lease had been recognised in the financial statements. The lessor of the property
had been provided with a bank guarantee of $1,970,000 in respect of the estimated make good cost and rental costs. The provision
has been derecognised in 2017 upon the execution of a new lease agreement on the leased property.
(b) Movement in the make good provision:
Balance at start of year
Payments against provision
Derecognised during the year
Carrying amount at end of year
1,970
-
(1,970)
-
2,122
(152)
-
1,970
27 NON-CURRENT LIABILITIES – OTHER NON-CURRENT LIABILITIES
Other (contingent consideration)
19,369
19,317
Other liabilities represent the estimated fair value of the contingent consideration relating to the acquisitions of Birrell Motors Group
and Tony Ireland Group (see Note 32(b)). There has been no change in the fair value of the contingent consideration since the acquisition
date except for unwinding of the discounting.
54
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 28 SEGMENT INFORMATION
(b) Truck Retailing
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 DealerMotive Ltd,
Automotive Holdings Group Limited, Smartgroup Corporation
Limited (divested in 2017), and Dealercell Holdings Pty Ltd.
Geographic Information
The Group operates in one principal geographic location,
being Australia.
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 (a) Car Retailing (b) Truck Retailing (c) Property
and (d) 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.
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.
(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 business.
55
ANNUAL REPORT 2017 28 SEGMENT INFORMATION (CONTINUED)
(e) Segment results
Segment reporting 2017
Car
Retailing
$’000
Truck
Retailing
$’000
Property
$’000
Investments
$’000
Eliminations
$’000
Consolidated
$’000
Sales to external customers
3,661,620
381,688
Inter-segment sales
Total sales revenue
TOTAL REVENUE
-
3,661,620
3,661,620
-
381,688
381,688
970
26,554
27,524
27,524
18,639
(7,652)
10,987
-
-
-
5,590
15,376
-
14,501
-
4,058,779
-
(26,554)
-
14,501
14,501
(26,554)
4,058,779
(26,554)
4,058,779
14,500
(2,468)
12,032
407
-
(22,920)
-
2,080
-
-
-
-
-
-
22,920
(5,380)
-
-
145,985
(24,598)
121,387
407
(62)
-
210
17,724
(5,145)
10,332
(1,289)
9,043
-
-
-
-
-
-
9,043
31,953
(8,401)
17,540
134,521
102,514
(13,189)
89,325
-
(62)
-
-
268
(5,145)
84,386
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
Business restructuring costs
SEGMENT PROFIT
Unallocated corporate expenses
PROFIT BEFORE TAX
Income tax expense
NET PROFIT
Depreciation and amortisation
(11,303)
(1,079)
(4,269)
Non-cash expenses (reversal of expenses)
other than depreciation and amortisation
Impairment of trade receivables
Write down (back) of inventories
to net realisable value
3,815
471
(337)
43
(1,330)
161
-
-
-
-
-
-
-
ASSETS
Segment assets
LIABILITIES
Segment liabilities
NET ASSETS
1,101,925
102,273
322,747
297,826
682,749
419,176
87,305
14,968
190,039
132,708
78,903
218,923
Acquisitions of non-current assets
24,230
1,468
28,957
48,546
56
1,108
135,629
(37,456)
98,173
(16,651)
3,478
514
(1,169)
1,824,771
1,038,996
785,775
103,201
-
-
-
-
-
-
-
-
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 Segment reporting 2016
Car
Retailing
$’000
Truck
Retailing
$’000
Property
$’000
Investments
$’000
Eliminations
$’000
Consolidated
$’000
Sales to external customers
3,449,738
363,802
Inter-segment sales
Total sales revenue
TOTAL REVENUE
-
3,449,738
3,449,738
-
363,802
363,802
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
114,777
(13,005)
101,772
191
(1,758)
4,418
-
-
-
8,090
(1,826)
6,264
-
-
-
-
-
-
SEGMENT PROFIT
104,623
6,264
Unallocated corporate expenses
PROFIT BEFORE TAX
Income tax expense
NET PROFIT
5,240
25,071
30,311
30,311
23,013
(7,994)
15,019
-
-
-
-
12,077
1,136
28,232
14,442
-
3,833,222
-
(25,071)
-
14,442
14,442
(25,071)
3,833,222
(25,071)
3,833,222
14,392
(1,553)
12,839
-
-
-
-
-
-
-
-
-
(38,774)
-
1,955
38,774
(10,842)
-
160,272
(24,378)
135,894
191
(1,758)
4,418
-
1,235
3,091
(23,980)
27,932
143,071
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
9,192
3,293
448
1,676
980
3,821
(358)
(44)
(194)
(152)
-
-
-
-
-
-
ASSETS
Segment assets
LIABILITIES
Segment liabilities
NET ASSETS
1,067,473
91,488
320,813
274,660
661,164
406,309
69,100
22,388
197,173
123,640
63,205
211,455
Acquisitions of non-current assets
155,135
104
52,852
35,039
(1,666)
141,405
(35,879)
105,526
13,993
2,783
404
1,482
1,754,434
990,642
763,792
243,130
-
-
-
-
-
-
-
-
57
ANNUAL REPORT 2017 29 CONTRIBUTED EQUITY
(a) Paid up capital
Ordinary shares - fully paid
CONSOLIDATED
2017
$’000
2016
$’000
369,028
364,449
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.
(b) Movements in ordinary share capital
Date
01-Jan-2017
16-Jan-2017
24-Feb-2017
27-Mar-2017
04-Jul-2017
Details
Opening balance
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
31-Dec-2017
Closing balance
01-Jan-2016
09-Feb-2016
29-Feb-2016
17-Mar-2016
31-Mar-2016
01-Jul-2016
19-Jul-2016
17-Aug-2016
05-Oct-2016
07-Nov-2016
31-Dec-2016
Opening balance
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
Issue of shares as partial consideration for acquisition
of Birrell Motors Group
Issue of shares for Crampton acquisition
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
Issue of options to staff under share incentive schemes
Closing balance
Number
of shares
190,492,806
50,460
175,843
116,960
172,409
191,008,478
184,073,803
220,430
164,031
615,175
2,200,000
937,742
1,164,695
50,000
1,008,375
58,555
190,492,806
Issue price
$9.06
$9.28
$9.27
$8.16
$11.30
$10.90
$10.48
$9.75
$11.73
$11.80
$12.25
$10.20
$9.87
$’000
364,449
457
1,632
1,084
1,406
369,028
296,060
2,491
1,788
6,447
21,450
11,000
13,742
612
10,281
578
364,449
58
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 30 RESERVES AND RETAINED EARNINGS
(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/(deficit) 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 options
Prior period tax adjustment
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/(loss) on revaluation of available-for-sale investment
Deferred tax
Cumulative gain (net of tax) reclassed to profit or loss on disposal
of available for sale financial assets
Balance at the end of the financial year
Notes
16
30(b)
25
25
25
25
CONSOLIDATED
2017
$’000
52,728
(97)
2016
$’000
52,781
(291)
(34,368)
(34,486)
19,868
38,131
37,394
55,398
52,781
5,380
(3,819)
(1,614)
52,728
(291)
278
(84)
(97)
(34,486)
420
1,636
536
2,105
45,192
10,842
-
(3,253)
52,781
(575)
405
(121)
(291)
(3,778)
(4,655)
6,948
-
2,966
(4,579)
(35,939)
-
(28)
(34,368)
(34,486)
37,394
(22,920)
6,876
(1,482)
19,868
64,536
(36,819)
11,046
(1,369)
37,394
59
ANNUAL REPORT 2017 30 RESERVES AND RETAINED EARNINGS (CONTINUED)
(b) Retained earnings
Retained profits at the beginning of the financial year
Net profit for the year
Less: NCI Share
Transfer from asset revaluation reserve re properties sold
Dividends provided for or paid
Retained profits at the end of the financial year
(c) Nature and purpose of other reserves
(i) Property, plant and equipment revaluation reserve
CONSOLIDATED
2017
$’000
2016
$’000
Notes
335,779
98,173
(2,146)
3,819
(67,770)
367,855
293,435
105,526
(1,542)
-
(61,640)
335,779
7
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 37 and 38.
(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.
31 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.
The Directors have overall responsibility for the establishment and oversight of the consolidated entity’s risk management framework.
The Directors have 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.
60
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 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.
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.
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 24.
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.
(i)
Interest rate risk
The Group is exposed to interest rate risk as a consequence
of its financing facilities as set out in Notes 20 & 24. 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 0% and 50% of its
borrowings at fixed rates of interest. As at 31 December 2017,
approximately 29% (2016: 42%) of the Group’s borrowings were
at a fixed rate of interest. The Group hedges part of the interest
rate risk (see Note 19) 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 2017 was
$138,000 liability (2016: $416,000 liability), with the movement
being recognised in equity for the consolidated entity.
(ii) Interest rate sensitivity
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 $3,923,000
(2016: $3,699,000) per annum. This is mainly due to the Group’s
exposures to interest rates on its variable rate borrowings.
61
ANNUAL REPORT 2017 31 FINANCIAL INSTRUMENTS (CONTINUED)
MARKET RISK (continued)
(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.
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
Average contracted
fixed interest rate
Notional principal amount
Fair value
2017
%
2.34%
2.38%
-
2.36%
2016
%
2.59%
2.34%
2.38%
2.44%
2017
$’000
8,000
15,000
-
23,000
2016
$’000
46,200
8,000
15,000
69,200
2017
$’000
2016
$’000
(20)
(118)
-
(138)
(210)
(54)
(152)
(416)
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.
CREDIT RISK
(i) Exposure to Credit Risk
The carrying amount of financial assets (as per Notes 9, 12(b) and 13) represents the maximum credit exposure. The maximum
exposure to credit risk as the reporting date was:
CONSOLIDATED
2017
$’000
2016
$’000
182,174
172,011
(2,622)
(3,187)
179,552
168,824
Trade and other receivables
Less: Provision for doubtful receivables
62
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 (ii) Impairment Losses
The ageing 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.
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
Trade and other payables
Derivative financial instruments
CONSOLIDATED
2017
$’000
2016
$’000
179,552
10,827
190,379
170,200
78,144
544,194
152,853
138
168,824
17,615
186,439
204,500
79,150
485,875
133,601
416
945,529
903,542
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.
63
ANNUAL REPORT 2017 31 FINANCIAL INSTRUMENTS (CONTINUED)
CREDIT RISK (continued)
(iii) Fair values & Exposures to Credit & Liquidity Risk (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.
Contractual maturities of financial liabilities
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
At 31 December 2017
INTEREST BEARING
Floating rate
Financial assets
Cash and cash equivalents
10,827
Average interest rate
2.46%
Financial liabilities
Vehicle bailment (current)
566,364
-
-
-
-
-
-
-
-
-
-
-
-
Fully drawn advances
Fully drawn advances (1)
Capital loan (Non-current)
7,425
445
3,037
6,488
181
4,335
577,271
11,004
6,733
146,805
31,574
-
4,335
11,068
-
4,335
151,140
-
57,373
88,947
-
-
-
-
-
28,907
28,907
Average interest rate
4.00%
3.55%
3.43%
3.45%
3.76%
4.65%
Fixed rate
Financial liabilities
Capital loan (Non-current)
1,305
Average interest rate
5.20%
NON-INTEREST BEARING
Financial assets
Property sale receivables
Trade debtors
7,145
172,408
179,553
Financial liabilities
Trade and other payables
152,872
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) The amount included in fully drawn advances relate to variable rates that are hedged with interest rate swaps to fixed rates.
10,827
566,364
199,025
626
102,322
868,337
1,305
7,145
172,408
179,553
152,872
64
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 Maturity profile (continued)
At 31 December 2016
INTEREST BEARING
Floating rate
Financial assets
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
Cash and cash equivalents
17,615
Average interest rate
2.39%
Financial liabilities
Vehicle bailment (current)
506,322
-
-
-
Fully drawn advances
Fully drawn advances (1)
Capital loan (Non-current)
8,596
1,145
1,036
112,197
52,145
1,036
517,099
165,378
-
-
-
3,677
181
1,036
4,894
-
-
-
3,677
-
1,036
4,713
-
-
-
-
-
-
3,677
-
1,036
4,713
99,951
-
41,138
141,089
Average interest rate
4.10%
3.35%
3.79%
3.51%
3.51%
3.51%
Fixed rate
Financial liabilities
Capital loan (Non-current)
2,669
51,305
Average interest rate
5.20%
5.20%
NON-INTEREST BEARING
Financial assets
Property sale receivables
Trade debtors
9,466
159,358
168,824
-
-
-
Financial liabilities
Trade and other payables
158,305
19,317
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,615
506,322
231,775
53,471
46,318
837,886
53,974
9,466
159,358
168,824
177,622
(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.
65
ANNUAL REPORT 2017 32 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
AP Townsville 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
WS Motors Pty Ltd
MB VIC Pty Ltd
Carzoos Pty Ltd
Crampton Automotive Pty Ltd
Motors Group (Glen Waverley) Pty Ltd
66
EQUITY HOLDING
2017
%
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
80
100
100
100
100
100
100
80
2016
%
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
100
80
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 32 INVESTMENTS IN SUBSIDIARIES (CONTINUED)
Name of Entity
Port City Autos Pty Ltd
Adverpro Pty Ltd
AP Queensland (No. 1) Pty Ltd
Eurocars (SA) Pty Ltd
Finmo Pty Ltd
EQUITY HOLDING
2017
%
100
100
100
100
100
2016
%
100
100
100
-
-
*
*
*
*
*
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
2017
$’000
2016
$’000
-
519,535
519,535
11,366
25,975
37,341
-
510,553
510,553
5,836
16,005
21,841
369,028
122,835
364,449
115,459
1,683
19,868
(31,220)
482,194
1,683
37,394
(30,274)
488,711
74,230
(17,526)
60,221
(38,774)
All subsidiaries were parties to a deed of cross guarantee with A.P. Eagers Limited pursuant to ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785 which has been lodged with and approved by Australian Securities and Investments Commission as
at 31 December 2017. 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 2017 and their aggregate net profit after tax for the year ended
31 December 2017 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 33(a) and 33(b) in respect of guarantees entered into by the parent entity in relation to debts of its subsidiaries.
67
ANNUAL REPORT 2017
32 INVESTMENTS IN SUBSIDIARIES (CONTINUED)
(a) Acquisition of businesses
The Group acquired the following business during the 2017 year as detailed below:
Year
2017
2017
2017
Name of business
Fuso Hallam
Crash Supplies
Porsche Centre Adelaide
Date of acquisition
Principal activity
14-Jul-17
01-Sep-17
28-Sep-17
Motor Dealership
Parts Supplier
Motor Dealership
Proportion
acquired
100%
100%
100%
During 2017 the acquired businesses contributed revenue of $14,974,039 and profit before tax of $230,529 to the consolidated result.
If the acquisitions had occurred on 1 January 2017, the consolidated revenue and the consolidated profit before tax of the acquired
businesses would have been approximately $51,550,000 and $1,658,000 respectively.
Allocation of purchase consideration
The purchase price of the businesses acquired has been allocated as follows:
Cash consideration
Total purchase consideration
Consolidated fair value at acquisition date
Net assets acquired
Cash
Receivables, prepayments
Inventory
Property, plant and equipment
Deferred tax assets
Creditors, borrowings and provisions
Net assets acquired
Acquisition cost
Goodwill on acquisition (i)
Fuso
Hallam
$’000
325
325
Crash
Supplies
$’000
1,165
1,165
Porsche
Centre
Adelaide
$’000
11,376
11,376
2017
Total
Consolidated
$’000
12,866
12,866
2017
$’000
1,496
536
4,868
512
109
(5,255)
2,266
12,866
10,600
(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 these financial statements. Therefore, the
amount allocated to goodwill on acquisition has been provisionally determined at the end of the reporting period.
Cash consideration on acquisition
Cash acquired on acquisition
Net cash flow on acquisition of business
12,866
(1,496)
11,370
68
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 (b) Acquisition of businesses in prior year
The Group acquired the following business during the 2016 year as detailed below:
Year
2016
2016
2016
2016
Name of business
Birrell Motors Group
Jeep/Kia Ipswich
Crampton Automotive Group
Tony Ireland Motors
Date of acquisition
Principal activity
1-Apr-16
15-Apr-16
1-July-16
1-Oct-16
Motor Dealership
Motor Dealership
Motor Dealership
Motor Dealership
Proportion
acquired
100% (1)
100%
100%
100%
(1) As part of the Birrell Motors Group acquisition 80% shares of Motors Group (Glen Waverley) Pty Ltd were acquired. The remaining 20% interest is accounted
for as a non controlling interest.
During 2016 the acquired businesses contributed revenue of $418,718,346 and profit before tax of $10,054,210 to the consolidated result.
If the acquisition had occurred on 1 January 2016, the consolidated revenue and the consolidated profit before tax of the Group would
have been $4,069 million and $146 million respectively.
Allocation of purchase consideration
The purchase price of the businesses acquired has been allocated as follows:
Cash consideration
Issue of ordinary shares
Contingent consideration(i)
Total purchase consideration
Consolidated fair value at acquisition date
Net assets acquired
Cash
Receivables, prepayments
Other investments
Inventory
Property, plant and equipment
Deferred tax assets
Creditors, borrowings and provisions
Deferred tax liabilities
Net assets acquired
Acquisition cost
Non-Controlling Interest
Goodwill on acquisition(ii)
Birrell
Motors
Group
$’000
85,976
21,450
18,590
Jeep/Kia
Ipswich
$’000
1,222
-
-
Crampton
Motor
Group
$’000
24,896
11,000
-
Tony Ireland
Group
$’000
2016
Total
Consolidated
$’000
9,603
121,697
-
500
32,450
19,090
126,016
1,222
35,896
10,103
173,237
2016
$’000
3,364
6,276
250
62,547
12,550
2,375
(52,700)
(32)
34,630
173,237
(367)
138,240
(i)
The purchase consideration for the acquisition of Birrell Motors Group included a contingent consideration amount payable up to a maximum value of
$19,800,000 (discounted value of $18,590,000 at date of acquisition), contingent on Birrell Motors Group achieving future earnings performance targets for
2018 and 2019. The directors have judged that the full contingent consideration will be payable in 2019 based on the track record of the acquired businesses,
upside in the business and outlook for luxury vehicles in particular. This necessarily requires an element of estimation. Should the businesses not achieve the
expected future milestones, the associated goodwill balance will be reviewed for impairment within the VIC & TAS CGU.
The purchase consideration for the acquisition of the Tony Ireland Group includes an earn out payable up to a maximum value of $500,000. The earn out is
contingent on the Tony Ireland Group achieving future earnings performance targets.
(ii) 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 these financial statements.
69
ANNUAL REPORT 2017
32 INVESTMENTS IN SUBSIDIARIES (CONTINUED)
(b) Acquisition of businesses in prior year (continued)
Cash consideration on acquisition
Cash acquired on acquisition
Net cash flow on acquisition of businesses
2016
$’000
121,697
(3,364)
118,333
(c) Disposal of businesses
The Group sold the following business during the 2017 year as detailed below:
Year
2017
Name of business
Sydney Truck Centre
Date of sale
08-Jun-17
Principal activity
Proportion disposed
Motor Dealership
100%
Net assets disposed of
Receivables, prepayments
Inventory
Creditors, borrowings and provisions
Net assets disposed
Total consideration received (100% Cash)
Gain on sale
(d) Disposal of businesses in prior year
There were no businesses sold by the Group during 2016.
(e) Details of non-wholly owned subsidiaries
2017
$’000
324
3,106
(1,127)
2,303
2,303
-
The table below shows details of non-wholly owned subsidiaries of the Group. The Group has reviewed its subsidiaries that have
non-controlling interests and note that they are not material to the reporting entity.
Profit allocated to
non-controlling interests
Accumulated
non-controlling interests
2017
$’000
2016
$’000
2017
$’000
2016
$’000
Individually immaterial subsidiaries with non-controlling interest
2,146
1,542
10,761
8,166
Movement – Non-Controlling Interest
Balance at the beginning of the financial year
Profit for the year
Payment / (repayment) for shares
Payment of dividend
Balance at the end of the financial year
70
CONSOLIDATED
2017
$’000
8,166
2,146
1,904
(1,455)
10,761
2016
$’000
8,139
1,542
(368)
(1,147)
8,166
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 33 CONTINGENT 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 2017 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 2017. 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
$1,012,855,000 (2016: $968,800,000).
(c) Buy back agreements
As at 31 December 2017, entities within the Group had entered into sale and buy back agreements for new vehicles. The financial
exposure to the Group is immaterial.
34 COMMITMENTS FOR EXPENDITURE
CONSOLIDATED
2017
$’000
2016
$’000
(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
218
2,949
(b) Operating lease commitments
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
39,640
107,255
77,520
224,415
38,758
103,067
83,450
225,275
The consolidated entity leases property under non-cancellable operating leases with expiry dates between 31 January 2018 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.
35 REMUNERATION OF AUDITOR
Amounts received or due and receivable by Deloitte Touche Tohmatsu (“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
745
762
274
1,019
438
1,200
71
ANNUAL REPORT 2017 36 SUBSEQUENT EVENTS
Commencing 16 January 2018, the Group acquired a further 3.7 million shares in Automotive Holdings Group Limited (‘AHG’) at a total
cost of $13.4 million through a series of on-market share purchases. As a result, the Group’s shareholding in AHG increased from
23.81% as at 31 December 2017 to 24.94%.
37 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
S A Moore
D A Cowper
P W Henley
N G Politis
D T Ryan
M J Birrell
D G Stark
K T Thornton
(ii) Executives
Managing Director and Chief Executive Officer
Director and Chief Financial Officer - appointed 29th March 2017
Director (non-executive)
Director (non-executive) - resigned 22nd February 2017
Director (non-executive)
Director (non-executive)
Director (non-executive)
General Counsel & Company Secretary
Chief Operating Officer - Cars
(b) Compensation of key management personnel
The aggregate compensation made to key management personnel of the Company and the Group is as follows:
Short term
Post employment benefits
Share based payments
3,425
137
1,238
4,800
3,709
150
1,328
5,187
CONSOLIDATED
2017
$’000
2016
$’000
(c) Option holdings of key management personnel
Details of options held by key management personnel can be found in Note 37(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 39.
72
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 (f) Share Based Payments
Plan C: EPS Performance Rights and Options – Key Executives 2014
The Group commenced an Earnings Per Share (EPS) based performance rights and options 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-17
04-Jul-21
$ 5.47
2.7 years
25%
2.63%
4.2%
31-Mar-18
04-Jul-21
$ 5.47
3.7 years
25%
2.79%
4.2%
31-Mar-19
30-Sep-22
$ 5.47
4.7 years
25%
2.96%
4.2%
31-Mar-20
30-Sep-22
$ 5.47
5.7 years
25%
3.13%
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
$ 5.47
4.9 years
25%
2.98%
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
$ 5.47
5.9 years
25%
3.24%
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 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
A total of 30,168 rights and 136,039 options were forfeited or expired during the year. A total of 137,571 rights were issued and 130,289
options exercised during the year.
As a result of the partial achievement of specific EPS and interest coverage targets, all of the performance rights and one third of the
options relating to the 31 December 2017 performance period have vested.
The value of the performance rights and options expensed during the year was $1,363,178, with a cumulative expense being recognised
at 31 December 2017 of $5,059,792 (2016: $3,696,614).
73
ANNUAL REPORT 2017 38 OTHER SHARE BASED PAYMENTS
Recognised share-based payments expenses
Refer Note 30(a) for movements in 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 options 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-12
27-Jan-17
$ 2.42
2.2 years
30%
5.11%
5.10%
27-Mar-13
27-Jan-17
$ 2.42
3.2 years
30%
5.17%
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
$ 2.42
4.6 years
30%
5.11%
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 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
End Performance Period
Expiry Date
Fair Value at Grant Date
27-Jan-10
27-Jan-10
27-Jan-10
31-Dec-10
31-Dec-11
31-Dec-12
27-Jan-17
27-Jan-17
27-Jan-17
$ 2.28
$ 2.17
$ 2.06
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
27-Jan-10
27-Jan-10
27-Jan-10
31-Dec-10
31-Dec-11
31-Dec-12
27-Jan-17
27-Jan-17
27-Jan-17
$ 0.50
$ 0.52
$ 0.53
No rights or options were forfeited or expired during the year. A total of 50,460 options were exercised during the year.
No costs of the share plan were expensed during 2017 (2016: $nil). The share plan was fully expensed by the end of 2012.
74
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 Plan F: EPS Performance Options – Senior Management 2013
The Group commenced an Earnings Per Share (EPS) based share options 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
911,510
892,840
883,750
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 65,650 options in 2017 were forfeited or expired during the year. A total of 159,080 options were exercised during the year.
As a result of the specific EPS target being achieved the options relating to the 31 December 2017 performance period have vested.
The value of the options expensed during the year was $132,142, with a cumulative expense being recognised at 31 December 2017
of $3,607,822 (2016: $3,475,680).
75
ANNUAL REPORT 2017 38 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 options compensation scheme for four 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
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
21-Jan-22
21-Jan-22
21-Jan-22
30-Sep-22
30-Sep-22
$5.85
$5.85
$5.85
$5.85
$5.85
1.2 years
2.2 years
3.2 years
4.2 years
5.2 years
22%
2.20%
4.4%
22%
2.12%
4.4%
22%
2.11%
4.4%
22%
2.15%
4.4%
22%
2.22%
4.4%
31-Mar-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
21-Jan-22
21-Jan-22
21-Jan-22
30-Sep-22
30-Sep-22
$5.85
$5.65
$5.85
$5.65
$5.85
$5.65
$5.85
$5.65
$5.85
$5.65
4.1 years
4.6 years
5.1 years
5.9 years
6.4 years
22%
2.15%
4.4%
22%
2.18%
4.4%
22%
2.21%
4.4%
22%
2.28%
4.4%
22%
2.33%
4.4%
Four specific executives have been granted rights and 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 rights and options at
grant date and the probability of the EPS targets being achieved and vesting occurring. The number of rights and options granted
under the plan is as follows:
Performance Rights
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
14,412
15,065
15,746
16,459
17,202
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
$5.55
$5.31
$5.08
$4.86
$4.65
Performance Options
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
95,235
93,020
93,020
91,953
93,020
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
$0.84
$0.86
$0.86
$0.87
$0.86
A total of 6,175 performance rights and 34,748 options were forfeited or expired during the year. A total of 15,065 performance rights
were issued during the year.
As a result of the partial achievement of specific EPS and interest coverage targets, all of the performance rights and one third of the
options relating to the 31 December 2017 performance period have vested.
The value of the performance rights and options expensed during the year was $151,658, with a cumulative expense being recognised
as at 31 December 2017 of $574,293 (2016: $422,635).
76
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 Plan I: EPS Performance Rights and Options – Key Executives
The Group commenced in 2015 a new performance rights and options 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
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22
$6.26
$6.26
$6.26
$6.26
$6.26
1.1 years
2.1 years
3.1 years
4.1 years
5.1 years
22%
1.91%
4.2%
22%
1.85%
4.2%
22%
1.87%
4.2%
22%
1.95%
4.2%
22%
2.05%
4.2%
31-Mar-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22
$6.26
$6.26
$6.26
$6.26
$6.26
$6.26
$6.26
$6.26
$6.26
$6.26
4.1 years
4.6 years
5.1 years
5.9 years
6.4 years
22%
1.94%
4.2%
22%
1.99%
4.2%
22%
2.04%
4.2%
22%
2.14%
4.2%
22%
2.20%
4.2%
A specific senior staff member has been granted 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 rights and options granted
under the plan is as follows:
Performance Rights
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
9,045
9,440
9,836
11,406
11,881
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22
$5.97
$5.72
$5.49
$5.26
$5.05
Performance Options
Number
97,590
95,294
94,186
102,272
102,272
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22
$0.83
$0.85
$0.86
$0.88
$0.88
No performance rights or options were forfeited or expired during the year. A total of 9,440 performance rights were issued during the year.
As a result of the specific performance targets being achieved the performance rights and options relating to the 31 December 2017
performance period have vested since balance date.
The value of the performance rights and options expensed during the year was $161,139, with a cumulative expense being recognised as
at 31 December 2017 of $512,134 (2016: $350,995).
77
ANNUAL REPORT 2017 38 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 options 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
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
$9.25
$9.25
$9.25
$9.25
$9.25
0.8 years
1.8 years
2.8 years
3.8 years
4.8 years
24%
1.98%
3.7%
24%
1.99%
3.7%
24%
2.06%
3.7%
24%
2.18%
3.7%
24%
2.33%
3.7%
31-Mar-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
3.9 years
4.4 years
4.9 years
5.5 years
6.1 years
24%
2.19%
3.7%
24%
2.27%
3.7%
24%
2.35%
3.7%
24%
2.46%
3.7%
24%
2.54%
3.7%
Two specific executives have been granted rights and 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 rights and options at
grant date and the probability of the EPS targets being achieved and vesting occurring. The number of rights and options granted
under the plan is as follows:
Performance Rights
Number
2,783
5,780
5,995
6,218
6,458
Performance Options
Grant Date
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
End Performance Period
Expiry Date
Fair Value at Grant Date
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
$8.98
$8.65
$8.34
$8.04
$7.74
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
17,605
33,783
32,678
31,645
31,250
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
$1.42
$1.48
$1.53
$1.58
$1.60
No performance rights or options were forfeited or expired during the year. A total of 5,780 performance rights were issued during the year.
As a result of the partial achievement of specific EPS and interest coverage targets, all of the performance rights and one third of the
options relating to the 31 December 2017 performance period have vested.
The value of the performance rights and options expensed during the year was $111,421, with a cumulative expense being recognised as
at 31 December 2017 of $321,405 (2016: $209,984).
78
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 Plan K: EPS Performance Rights and Options – Key Executives
The Group commenced a new Earnings Per Share (EPS) based performance rights and options compensation scheme for one specific
executive officer in 2016. 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 31 March 2016
Vesting date
Expiry date
Share price at grant date
Expected life
Volatility
Risk free interest rate
Dividend yield
Performance Options
Award date 31 March 2016
Vesting date
Expiry date
Share price at grant date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$9.75
1.0 year
27%
1.95%
3.8%
$9.75
$9.75
$9.75
2.0 years
3.0 years
4.0 years
27%
1.88%
3.8%
27%
1.90%
3.8%
27%
1.98%
3.8%
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$9.75
$10.34
$9.75
$10.34
$9.75
$10.34
$9.75
$10.34
4.5 years
5.0 years
5.5 years
6.0 years
27%
2.03%
3.8%
27%
2.08%
3.8%
27%
2.13%
3.8%
27%
2.18%
3.8%
One specific executive has been granted rights and options under the EPS share incentive plan (Plan K). 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 targets being achieved and vesting occurring. The number of rights and options granted
under the plan is as follows:
Performance Rights
Number
7,987
8,296
8,620
8,960
Performance Options
Number
48,076
46,012
44,910
43,859
Grant Date
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
Grant Date
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
End Performance Period
Expiry Date
Fair Value at Grant Date
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$9.39
$9.04
$8.70
$8.37
End Performance Period
Expiry Date
Fair Value at Grant Date
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$1.56
$1.63
$1.67
$1.71
No performance rights or options were forfeited or expired during the year. A total of 7,987 rights were issued during the year.
As a result of the specific targets not being achieved the performance rights and options relating to the 31 December 2017 performance
period have not vested.
The value of the performance rights and options expensed during the year was $181,063, with a cumulative expense being recognised
as at 31 December 2017 of $395,511 (2016: $214,448).
79
ANNUAL REPORT 2017 39 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 $510,641 (2016: $462,274) and purchases of $398,021 (2016: $520,476) 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) Mr M Birrell is a director and owner of a number of properties leased by subsidiaries of A. P. Eagers. The lease transactions of
$4,351,456 (2016 for 6 months since his appointment to the board: $1,956,301) have been 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.
Mr M Birrell also has a consultancy arrangement with AP Eagers whereby he is paid a consultancy fee in consideration for provision
of professional services provided for AP Eagers’ Victorian and Tasmanian businesses. There were nil transactions (2016: nil) since
his appointment to the board.
Mr M Birrell was a party to the Birrell Motors Group business acquisition which is subject to a contingent consideration
arrangement whereby an additional amount is payable at 31 December 2019 if a specified performance target is met. The
contingent consideration has been recognised as a financial liability as at 31 December 2017, refer to Note 27.
Finally, Mr M Birrell is a director and owner of a company involved in the provision of finance to the motor vehicle industry with
whom the consolidated entity transacts business. These transactions, since the company commenced operations 1 June 2017,
are commissions paid to the consolidated entity, totalling $76,605, 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.
(iii) 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 32.
40 EARNINGS PER SHARE
(a) Basic earnings per share
CONSOLIDATED
2017
Cents
2016
Cents
Earnings attributable to the ordinary equity holders of the Company
50.3
55.4
(b) Diluted earnings per share
Earnings attributable to the ordinary equity holders of the Company
49.5
54.0
80
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017
(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
Diluted 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 diluted earnings per share
Weighted average number of ordinary shares outstanding during the year
Shares deemed to be issued for no consideration in respect of employee options (1)
Weighted average number of ordinary shares outstanding during the year used
in the calculation of diluted earnings per share
CONSOLIDATED
2017
$’000
2016
$’000
98,173
(2,146)
96,027
105,526
(1,542)
103,984
96,027
96,027
103,984
103,984
Number
Number
190,865,298
187,811,094
3,167,755
4,747,506
194,033,053
192,558,600
(1) 329,818 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.
41 RECONCILIATION OF NET PROFIT AFTER TAX TO THE NET CASH INFLOWS FROM OPERATIONS
Net profit after tax
98,173
105,526
Depreciation and amortisation
Net gain on sale of available-for-sale financial assets
5
4
Share of profits of associate
Dividends from investments
Gain on sale of property, plant & equipment
Employee share scheme expense
Non controlling interest adjustments
Property receivable and deposits
Gain to property revaluation (through P&L)
(Increase)/decrease in assets
Receivables
Inventories
Prepayments
Increase/(decrease) in liabilities
Creditors (including bailment finance)
Provisions
Taxes payable
Net cash inflow from operating activities
16,651
(2,080)
(407)
-
(15,644)
2,105
-
2,321
(210)
(13,061)
(27,645)
(2,328)
13,993
(1,955)
(191)
191
(1,136)
2,966
(535)
22,547
(1,235)
(39,631)
(94,844)
(588)
78,225
(2,988)
11,864
103,090
5,737
(4,213)
144,976
109,722
81
ANNUAL REPORT 2017
42 NON-CASH TRANSACTIONS
In 2017, the Group entered into a contract for the sale of 157-159 Newmarket Road, Windsor. As a result a profit of $2.3 million was
recognised in 2017 and was included in the amount disclosed in Note 4. Consideration for the sale totalling $7.2 million will be received
in 2018.
43 INVESTMENTS IN ASSOCIATES
(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:
Name of company
Unlisted securities
Norna Limited (formerly MTQ Insurance Services Limited)
DealerMotive Ltd
Carzapp Pty Ltd
OWNERSHIP INTEREST
CONSOLIDATED
2017
%
20.65
25.50
-
2016
%
20.65
25.76
10.00
2017
$’000
1,620
10,380
-
2016
$’000
1,620
9,973
300
12,000
11,893
Norna Limited (formerly MTQ Insurance Servers Limited)
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 2018. 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 (2016: 20.65%) and will continue to equity account
the investment in the associate which has been equity accounted from 1 January 2006 (refer Note 15), 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.
DealerMotive Limited
In 2016, AP Eagers transferred its shares in One Way Traffic Pty Ltd (Carsguide) and Auto Trader Australia Pty Ltd (Auto Trader) to
DealerMotive Limited (DealerMotive) under a scheme of arrangement, in return for an equal dollar value of shares in DealerMotive.
AP Eagers also subscribed to shares in DealerMotive during the year as part of a capital raising. AP Eagers holds a 25.5% shareholding
in DealerMotive as at 31 December 2017.
DealerMotive Limited is incorporated in Australia. Its principal activity for the period is holding a 30% investment in Cox Automotive
Australia, a subsidiary of Cox Automotive. Cox Automotive Australia controls and operates Manheim Australia, Dealer Solutions and
One Way Traffic (Carsguide) businesses and owns the Auto Traders brand.
(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
Equity accounted investments acquired
Disposal of investment
Carrying amount at the end of the financial year
82
CONSOLIDATED
2017
$’000
2016
$’000
11,893
407
-
-
(300)
12,000
1,620
191
(191)
10,273
-
11,893
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2017 (c) Summarised financial information of associates
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
2017
$’000
2016
$’000
68,922
3,375
46,786
6,827
112
925
50,537
57
Based on the last published results for the 12 months to 30 June 2017 plus unaudited results up to 31 December 2017.
Profit from ordinary activities after income tax
407
191
(e) Dividends received from associates
Dividends received from associates
(f) Reporting date of associates
The associates reporting dates are 30 June annually.
-
191
83
ANNUAL REPORT 2017 DIRECTORS’ DECLARATION
The Directors declare that:
(a) 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;
(b) 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;
(c) in the directors’ 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 Corporations (Wholly owned Companies)
Instrument 2016/785. 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 Corporation
Instrument applies, as detailed in Note 32 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,
21st February 2018
84
INDEPENDENT AUDITOR’S REPORT
85
ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT CONTINUED
86
87
ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT CONTINUED
88
89
ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT CONTINUED
90
SHAREHOLDER INFORMATION
AS AT 12 MARCH 2018
EQUITY SECURITIES
The company’s quoted securities consist of 191,309,301 ordinary fully paid shares (ASX: APE).
TOP 20 HOLDERS OF ORDINARY SHARES
WFM Motors Pty Ltd
Patterson Cheney Investments Pty Ltd
Jove Pty Ltd
HSBC Custody Nominees (Australia) Limited
Alan Piper Investments (No1) Pty Ltd
Milton Corporation Limited
Argo Investments Limited
UBS Nominees Pty Ltd
Citicorp Nominees Pty Limited
Berne No 132 Nominees Pty Ltd <315738 A/C>
Martin Ward
Birrell Investments Pty Ltd
Diane Colman
Australian Foundation Investment Company Limited
J P Morgan Nominees Australia Limited
Hegford Pty Ltd
ANZ Trustees Limited
National Nominees Limited
Peter Gary Robinson
Trevor Reading
No. of Shares
% of Issued Shares
68,782,275
12,591,761
10,560,000
8,751,237
6,406,250
5,833,107
4,432,620
2,812,452
2,562,199
2,444,101
2,389,661
2,000,000
1,881,710
1,404,001
1,313,784
1,264,563
1,181,920
1,174,348
1,116,455
1,107,550
35.97
6.58
5.52
4.57
3.35
3.05
2.32
1.47
1.34
1.28
1.25
1.05
0.98
0.73
0.69
0.66
0.62
0.61
0.58
0.58
91
ANNUAL REPORT 2017 SHAREHOLDER INFORMATION
AS AT 12 MARCH 2018 CONTINUED
Distribution of Shareholders
Range
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 and over
No. of Shareholders
1,967
1,990
606
823
103
5,489
134 shareholders hold less than a marketable parcel of 58 shares at $8.75 per share.
Substantial Shareholders*
Notice Date
No. of
Shares*
WFM Motors Pty Ltd
17 October 2012
62,817,353
Patterson Cheney Investments Pty Ltd
2 May 2016
12,591,761
Jove Pty Ltd
11 July 2012
10,193,381
* As disclosed in substantial holding notices received by the company.
Performance Rights and Options
370,781 unvested performance rights, 2,276,860 unvested options and 5,343,076 vested options are on issue to forty-nine
holders pursuant to the Executive Incentive Plan. Vesting is subject to the achievement of pre-determined performance
hurdles, as described in the Directors’ Report. The rights and options do not have any dividend or voting rights.
On-market Buy-back
The company does not have a current on-market share buy-back.
Voting Rights
The following voting rights attach to ordinary shares, subject to the company’s constitution:
> A shareholder entitled to attend and vote at a meeting may do so in person or by proxy, attorney or corporate representative.
> On a show of hands, each shareholder entitled to vote has one vote.
> On a poll, each shareholder entitled to vote has one vote for each fully paid share and a fraction for each partly paid share.
>
If a share is held jointly with two or more holders in attendance, only the holder whose name appears first in the register may vote.
Corporate Governance Statement
The company’s Corporate Governance Statement is located on the company’s website at
http://www.apeagers.com.au/shareholders/corporate-governance/.
92
CORPORATE DIRECTORY
A.P. EAGERS LIMITED
ABN 87 009 680 013
INCORPORATION
Incorporated in Queensland on 17 April 1957
REGISTERED OFFICE
5 Edmund Street
Newstead Qld 4006
POSTAL ADDRESS
PO Box 199
Fortitude Valley Qld 4006
TELEPHONE
(07) 3608 7100
FACSIMILE
(07) 3608 7111
WEBSITE
www.apeagers.com.au
AUDITOR
Deloitte Touché Tohmatsu
Grosvenor Place
225 George Street
Sydney NSW 2000
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 1, 200 Mary Street
Brisbane Qld 4000
Enquiries within Australia: 1300 552 270
Enquiries outside Australia: +61 3 9415 4000
BOARD OF DIRECTORS
Tim Crommelin, Chairman, Non-executive Director
Martin Ward, Managing Director & Chief Executive Officer
Nick Politis, Non-executive Director
Dan Ryan, Non-executive Director
David Cowper, Non-executive Director
Marcus Birrell, Non-executive Director
Sophie Moore, Executive Director & Chief Financial Officer
COMPANY SECRETARY
Denis Stark, General Counsel & Company Secretary
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93
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