Eagers Automotive Limited

ANNUAL 
REPORT
2018

5 YEAR FINANCIAL SUMMARY

Year ended 31 December

OPERATING RESULTS

REVENUE
EBITDA
  Depreciation and amortisation

 Impairment and property revaluations through  
profit and loss

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

 Assets held at fair value through other 
comprehensive income

  Other non-current assets

  Property assets held for resale

  Other current assets

TOTAL ASSETS

OTHER STATISTICS

  Net tangible asset backing per share – $

  Shares on issue – ‘000

  Number of shareholders

  Total Debt(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) – %

2018
$’000

2017
$’000

2016
$’000

2015
$’000

2014
$’000

 4,112,802 
173,469
(15,641)

 4,058,779 
176,668
(16,651)

 3,833,222 
179,776
(13,993)

 3,246,376 
163,077
(13,216)

 2,858,113 
138,081
(12,583)

 2,433 
160,261
(26,530)
 133,731 
(32,556)
(1,619)
 99,556 

 52.0 
 36.5 
100

2018
$’000

371,405

(124,306)

401,377

8,002

656,478

337,088

774,102

 210 
160,227
(24,598)
 135,629 
(37,456)
(2,146)
 96,027 

 50.3 
 36.0 
100

2017
$’000

369,028

38,131

367,855

10,761

785,775

276,092

762,904

1,111,190

1,767,668

1,038,996

1,824,771

 - 
165,783
(24,378)
 141,405 
(35,879)
(1,542)
 103,984 

 55.4 
 35.0 
100

2016
$’000

364,449

55,398

335,779

8,166

763,792

319,846

670,797

990,643

(7,610)
142,251
(21,293)
 120,958 
(33,943)
(798)
 86,217 

 47.6 
 32.0 
100

2015
$’000

296,060

105,375

293,435

8,139

703,009

228,479

557,922

786,401

(578)
124,920
(22,080)
 102,840 
(26,150)
(460)
 76,230 

 43.0 
 27.0 
100

2014
$’000

242,070

99,020

242,480

7,486

591,056

241,875

525,067

766,942

1,754,435

1,489,410

1,357,998

388,407

313,325

149,774

38,224

-

877,938

1,767,668

1.79

191,309

5,038

884,229

361,121

309,414

288,033

22,600

-

354,710

298,908

264,817

22,505

-

291,298

160,762

281,817

35,440

-

843,603

813,495

720,093

292,485

165,733

234,391

30,233

27,781

607,375

1,824,771

1,754,435

1,489,410

1,357,998

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

295,088

238,523

266,035

172,611

198,467

 57.4 

 31.0 

 50.2 

 23.3 

 50.2 

 25.8 

 46.6 

 19.7 

 49.5 

 25.1 

 (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

Chairman & CEO Report 

AP Eagers Foundation 

Company Profile 

Board of Directors 

Executive Management 

Directors’ Report 

Auditor’s Declaration of Independence 

Financial Statements 

Notes to and forming part of  
the Financial Statements 

Directors’ Declaration 

Independent Auditor’s Report 

Shareholder Information  

Corporate Directory 

2

4

6

7

7

8

24

25

31

92

93

98

100

ANNUAL GENERAL MEETING

Our Annual General Meeting will be held at our registered office, 
5 Edmund Street, Newstead, Queensland, on Wednesday 15 May 
2019 at 9.00 am.

FINANCIAL CALENDAR

2018 financial year end 

31 December 2018

Full year results announcement 

20 February 2019

Final dividend announcement 

20 February 2019

Final dividend record date  

29 March 2019

Final dividend payment date 

Annual General Meeting 

Half year end 

18 April 2019

15 May 2019

30 June 2019

Half year results announcement*  

21 August 2019

Interim dividend announcement*  

21 August 2019

Interim dividend record date*  

Mid-September 2019

Interim dividend payment date*  

Early October 2019

2019 financial year end 

31 December 2019

* estimate only, subject to any changes notified to the ASX.

1

 > Redefining our workforce to deliver a vastly superior 

customer experience, on a more sustainable and productive 
cost base; 

 > Delivering optimised vehicle finance solutions for our 

customers, by executing on our five point operating plan to 
significantly lift finance penetration for vehicle sales and 
become the preferred provider of automotive and mobility 
finance solutions; 

 >

Supporting innovation as our manufacturing partners 
introduce autonomous, connected and electric vehicles as 
well as other emerging product and service innovations to 
meet the evolving preferences of our customers; and 

 > Reinvesting with discipline, combined with rigorous review of 
existing and new operations to support an unrelenting focus 
on long term wealth creation. 

As always, we remain focused on exceeding our stakeholders’ 
expectations while taking advantage of value creating 
opportunities as consolidation, restructuring and rationalisation 
escalate within our industry.

YOUR CONTINUED SUPPORT

On behalf of the Board, we would like to thank all of our 
employees for their hard work and dedicated contribution to the 
outcomes achieved in 2018. 

We would also like to acknowledge our fellow directors for 
their valuable contribution and counsel throughout the year 
and together thank all of our shareholders for their ongoing 
support.

We are excited by the opportunities ahead and look forward to 
delivering on our plans for continued growth in shareholder 
returns. 

Yours faithfully

Tim Crommelin 
Chairman 

Martin Ward 
 Managing Director & Chief 
Executive Officer

CHAIRMAN & CEO REPORT

Dear Shareholders

The Directors of AP Eagers Limited are pleased to present 
shareholders with the annual report for the financial year ended 
31 December 2018 – another outstanding year for the company 
which continued our consistent record of shareholder returns.

STRONG PERFORMANCE IN CHALLENGING CONDITIONS

After three consecutive years of record new vehicle sales, 
2018 saw a decline in the national new vehicle market. 
Notwithstanding these challenging trading conditions, the 
company was able to significantly outperform the market to 
deliver a robust full year financial performance. 

Net Profit After Tax was $101.2 million in 2018, an increase of 
3.1% on the prior year while underlying operating profit before 
tax was $125.7 million, an increase of 1.9%. This improved full 
year operating profit outcome reflects the strong contributions 
from both our car and truck retailing businesses and a 
disciplined approach to driving greater returns on our assets. 

This is an outstanding operational result considering the widely 
reported challenges within the sector and has helped offset 
reduced dividend income from our strategic investment in 
Automotive Holdings Group Limited (AHG) and reduced gains on 
the sale of non-core operations and property.

ROBUST CASH POSITION SUPPORTING RECORD 
SHAREHOLDER RETURNS

Our financial position remains very strong. As a result, we are 
delighted to reward shareholders with a fully franked final 
dividend of 22.5 cents per share (2017: 22.5 cents) which has 
been approved for payment on 18 April 2019 to shareholders 
who were registered on 29 March 2019. 

The total dividend based on 2018 earnings is 36.5 cents per 
share fully franked, representing the 17th record full year 
dividend in the past 18 years, an achievement we are proud of as 
a Board.

THE NEXT 100

A hallmark of AP Eagers’ 106-year track record as the expert 
interface between the manufacturers of motor vehicles and our 
customers has been our ability to adapt and invest in the long 
term. 

We have a clear strategy in place built around five key elements 
aimed at ensuring we maintain our position as a leading 
provider of integrated mobility solutions for the next 100 years:

 >

Engaging our customers, everywhere by continuing to 
develop an omni-channel retail approach, leveraging our 
large and flexible portfolio of owned and leased properties 
and reorganising our retailing facilities for the future like 
our strategically located auto hub at Brisbane airport’s 
proposed Auto Mall, complemented by an increasing 
presence in shopping centres and satellite stores; 

2

 
 
 
 
 
 
 
 
 
THE NEXT 100:

Providing integrated mobility solutions 
for the next 100 years.

OPTIMISE

DEVELOP

GROW

ENGAGE OUR 
CUSTOMERS, 
EVERYWHERE

Online. At the airport. 
In shopping malls.  
In multi-brand 
service hubs.  
At home. At work.

Our flexible owned 
and leased property 
portfolio allows 
us to continue to 
evolve to fit our 
customers’ lifestyles, 
circumstances, wants 
and needs. 

REDEFINE OUR 
WORKFORCE 

Our workforce:  
re-defined and  
re-imagined,  
based on our 
customers’ journey.

This transformation 
is aimed at delivering 
an all new and vastly 
superior customer 
experience on a more 
sustainable and 
productive cost base. 

DELIVER OPTIMISED 
VEHICLE FINANCE 
SOLUTIONS

Capitalise on the 
unique position our 
industry occupies 
in the distribution 
of motor vehicles, 
with the aim of 
becoming the 
preferred provider 
of automotive and 
mobility finance 
solutions.

Deliver ultra-
competitive, highly 
tailored finance 
solutions sourced 
from our extensive 
funding relationships.

SUPPORT 
INNOVATION

REINVEST WITH 
DISCIPLINE

Support our partners 
to introduce ACE 
(autonomous, 
connected and 
electric) and 
other emerging 
product and service 
innovations.

Our partners cover 
circa 95% of the 
total market for new 
vehicles in Australia 
and are at the 
forefront of design, 
performance and 
innovation.

Disciplined use of 
shareholder funds 
combined with 
rigorous review of 
existing and new 
operations to support 
an unrelenting focus 
on long term wealth 
creation. 

Utilise balance sheet 
strength to capitalise 
on evolving and 
emerging market 
trends.

EXCEED STAKEHOLDER EXPECTATIONS
Customers. Employees. Partners. Shareholders. Community.

3

ANNUAL REPORT 2018COMMUNITY
DRIVEN

What is the AP Eagers Foundation?

Our commitment to community support for over 100 years led to the establishment of the  
AP Eagers Foundation in 2013. 

The Foundation is a non-profit organisation committed to supporting our communities and 
worthwhile causes by engaging with our stakeholders and utilizing our growing scale to 
actively contribute in meaningful and sustainable ways.

Partnering with LifeFlight
Black Toyota Dalby Q and 
Brisbane Jaguar Land Rover.

Bridge Toyota (Darwin) – National Schools Tree Day

The Kloster Group (Newcastle) – Meals on Wheels

Adtrans SA Cars (Adelaide) – Minda Incorporated

Torque Honda North Lakes Brisbane– Coast Guard Redcliffe Qld

4

DURING 2018 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.

OUR SUPPORT FOR THESE COMMUNITIES AND 
CHARITIES EXCEEDED $820,000 IN 2018.

Numerous charities and worthwhile causes 
benefitted from our fund raising initiatives during 
2018, including:

NORTHERN TERRITORY Camp Quality • Starlight 
Children’s Foundation • Care Flight • National 
Schools Tree Day.

NEW SOUTH WALES Meals on Wheels Newcastle  
and Hunter Region • RSPCA Newcastle and  
Hunter Region.

QUEENSLAND Royal Flying Doctor Service  
• Queensland Brain Institute • The Australian 
Volunteer Coastguard Redcliffe • Mooloolaba Surf 
Life Saving Club • RACQ Life Flight • Yalari • 
Endeavour Foundation • Oxfam • Ronald McDonald 
House (NQ)

VICTORIA Rotary Club of Castlemaine • Glen 
Waverley Chinese New Year and Lantern Festival • 
National Schools Tree Day • Lara District Rotary Club 
– fund raising for Autism.

TASMANIA Camp Quality • Hobart City Mission – DIY 
Dads • Launceston City Mission – North West 
Outreach Program • Inside Out For Kids • Kennerley 
Children’s Home.

 SOUTH AUSTRALIA Minda Incorporated • Youth 
Opportunities Foundation • Royal Society for the Blind 
– Autism Assistant Dogs • Backpacks 4 SA Kids •  
KickStart for Kids • Novita Childrens’ Services.

VISION
To create a lasting spirit of giving within the AP 
Eagers network for those in need in our community.

MISSION
To engage the AP Eagers network to drive positive 
sustainable change in our community.

OBJECTIVES
•  To encourage and support initiatives of AP Eagers 
stakeholders that help drive positive change for 
those in need

•  To secure voluntary assistance through financial 
support, sponsorship, skills transfer and in-kind 
donations from AP Eagers businesses and 
stakeholders

•  To deliver 100% of donations to intended recipients

•  To operate with the highest standards of integrity

Austral Volkswagen – The Royal Flying Doctor Service

Torque Ford North Lakes Brisbane – The Endeavour Rally

Adtrans SA Cars (Adelaide) – Youth Opportunities

5

ANNUAL REPORT 2018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 21 of the top 22 selling car brands in Australia and  
9 of the top 10 selling luxury car brands. In total, we represent 
26 car brands and 10 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 typically provided through strategically 
clustered dealerships, many of which are situated on 
properties owned by us, with the balance leased.

As at 31 December 2018 we owned $332 million of prime 
real estate positioned in high profile, main road locations in 
Brisbane, Sydney, Melbourne, Adelaide and Newcastle.

DIVIDENDS AND EPS GROWTH

A.P. Eagers has paid a dividend to shareholders every year 
since listing in 1957, and a record dividend in each of the past 10 
years. We have 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 $101.2 million in 2018 and the number of employees has 
increased from 600 to 4,342.

We expanded into the Northern Territory with the acquisition of 
Bridge Toyota in 2005.

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.

6

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 was 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 Holdings Group Limited 
(AHG) was acquired in 2012, providing us with exposure to the 
West Australian market. At the end of 2018 this investment 
represented 28.8% of AHG, valued at $149.2 million.

In 2013, Northern Beaches Land Rover and Jaguar were added 
to our Bill Buckle operations at Brookvale, New South Wales.

A new business, Precision Automotive Technology, was 
established in 2013 to source and distribute our own range of 
car care products.

In 2014, our Queensland operations expanded through the 
acquisition of Ian Boettcher Motors in Ipswich and the Craig 
Black Group 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 and the Victorian businesses Silver Star Motors, 
Mercedes–Benz Ringwood and Waverley Toyota, representing 
12 car and truck brands.

Our presence in regional Queensland grew substantially in 
2016 with the acquisition of the Crampton Automotive and Tony 
Ireland Groups, taking us into new geographic territories in 
Toowoomba, Townsville and Hervey Bay. 

Also in 2016, we launched our first Carzoos retail stores at 
Westfield Garden City and North Lakes shopping centres, 
introducing an entirely new way for customers to buy and 
sell used cars. Carzoos is supported by our finance initiative, 
Simplr.

We completed the acquisition of Toowoomba Motor Group 
(Mitsubishi and Kia), Metro Nissan (Brisbane) and Southern 
Vales Nissan (Adelaide) in 2018.

We have also commenced the design phase for our automotive 
retailing and mobility hub which will be set on 64,124m2 of land 
in Brisbane Airport’s new $300 million BNE Auto Mall. 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 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. Former Director of 
Australian Automotive Dealer Association Limited (appointed 
January 2014, retired October 2017). 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, Chief Financial Officer

Joined the Company as Chief Financial Officer in August 
2015. Appointed as a Director 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.

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. Alternate 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.

7

ANNUAL REPORT 2018DIRECTORS’ REPORT

The Directors of A.P. Eagers Limited ABN 87 009 680 013 (the Company or A.P. Eagers) present their report together with the 
consolidated financial report of the Company and its controlled entities (the Group), for the year ended 31 December 2018 and the 
auditor’s report thereon.

DIRECTORS

The Directors of the Company at any time during or since the end of the year, and their qualifications, experience and special 
responsibilities, are detailed on page 7.

COMPANY SECRETARY

The Company Secretary and his qualifications and experience are detailed on page 7.

DIRECTORS’ MEETINGS

The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each Director 
during the year were:

Board Meetings

Audit, Risk &  
Remuneration Committee Meetings

Held

Attended

Held

Attended

8

8

8

8

8

8

8

8

7

8

8

8

7

8

4

-

-

-

4

4

-

4

-

-

-

4

3

-

T B Crommelin (1)

N G Politis 

M A Ward

D T Ryan

D A Cowper (1)

M J Birrell (1)

S A Moore

(1)  Audit, Risk & Remuneration Committee members.

PRINCIPAL ACTIVITIES

The Group’s principal activities during the year consisted of the selling of new and used motor vehicles, distribution and sale of parts, 
accessories and car care products, repair and servicing of vehicles, provision of extended warranties, facilitation of finance and leasing 
in respect of motor vehicles, and the ownership of property and investments. The products and services supplied by the Group were 
associated with, and integral to, the Group’s motor vehicle dealership operations. There were no significant changes in the nature of the 
Group’s activities during the year.

8

FINANCIAL & OPERATIONAL REVIEW

The Directors of A.P. Eagers Limited (ASX: APE) are pleased to report a 2018 Net Profit Before Tax (NPBT) of $133.7 million. This 
compares to a Net Profit Before Tax of $135.6 million in 2017, a decrease of -1.4% on the previous corresponding period (pcp). Net Profit 
After Tax was $101.2 million in 2018 compared to $98.2 million in 2017, an increase of 3.1% on the pcp. Earnings per share (basic) for 
2018 were 52.0 cents compared to 50.3 cents on the pcp, an increase of 3.4%.

A.P. Eagers has delivered a strong full year operational result in challenging external conditions. Despite declining new vehicle sales 
data across mainland Australia, our car and truck retailing businesses outperformed the market and through a disciplined approach 
to driving improved returns on our assets, helped to deliver an increase in shareholder returns, including a tenth consecutive year of 
dividend growth.

Our ability to adapt and invest in the long term has been a major factor in A.P. Eagers’ 106-year record as the expert interface between 
the manufacturers of motor vehicles and our customers. Whilst the products and services provided by our manufacturing partners will 
continue to evolve, so will the way our customers consume them. A.P. Eagers’ investment in a number of long term growth initiatives 
combined with an active and disciplined approach to portfolio management will enable us to maintain a market leading position and 
grow irrespective of the external environment.

Profit Comparison

Statutory EPS (basic) cents 

Statutory profit after tax

Statutory profit before tax

Impairment adjustments (1) 

     Freehold property adjustments (reversal)

Business acquisition costs (2)

GST (refunds)/expenses (3)

Restructure costs (4)

Gain on sale of assets (5)

Underlying operating profit before tax 

Full Year to 
December 2018
$ Million

Full Year to 
December 2017
$ Million

52.0

101.2

133.7

(2.4)

0.7

(0.3)

-

(6.0)

125.7

50.3

98.2

135.6

(0.2)

0.1

0.1

5.2

(17.5)

123.3

% Change

3.4%

3.1%

(1.4%)

1.9%

(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)  Benefit from the sale of non-core property, businesses and investments.

Underlying operating profit before tax was $125.7 million, an increase of 1.9% compared with $123.3 million in 2017. This improved full 
year operating profit before tax represents an increase for both the car and truck retailing businesses, with National Trucks at a record 
level.  This is a very strong full year operational result for the group considering the widely reported challenges within automotive 
retailing during 2018.

Increased profit performance from car and truck retailing operations helped offset reduced dividend income from our strategic 
investment in Automotive Holdings Group Limited (AHG) and reduced gains on sale of non-core operations and property.

9

ANNUAL REPORT 2018Dividend

Business Initiatives

A fully franked final dividend of 22.5 cents per share (2017: 
22.5 cents) has been approved for payment on 18 April 2019 to 
shareholders who are registered on 29 March 2019 (Record 
Date). When combined with the interim dividend of 14.0 cents 
paid in October 2018, the total dividend based on 2018 earnings 
is 36.5 cents per share (2017: 36.0 cents) fully franked, an 
increase of 1.4% on 2017. 

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 2017 of  
22.5 cents (2016: 22.0 cents)  
per share paid on 18 April 2018

Interim ordinary dividend of  
14.0 cents (2017: 13.5 cents)  
per share paid on 5 October 2018

2018
$’000

2017
$’000

43,045

41,984

26,783

69,828

25,786

67,770

External Environment

According to Federal Chamber of Automotive Industry statistics, 
Australia’s new motor vehicle sales decreased by -3.0% in 2018 
to 1,153,111 units compared to a 0.9% increase in 2017. Note 2017 
represented the third record year in a row for total new unit 
sales volume.

Tasmania was the only region to experience new vehicle sales 
growth on the pcp, where the market was up 3.3% on pcp. 
New vehicle sales performance was the weakest in New South 
Wales, down -6.6% on pcp. The two other large markets, 
Queensland and Victoria, recorded sales decline on the pcp of 
-0.7% and -1.8%. The remaining markets also recorded decline 
on the pcp, with South Australia down -1.9%, Western Australia 
down -0.6%, Northern Territory down -4.7% and Australian 
Capital Territory down -1.9%.

A decrease in private and business sales, of -7.5% and -0.8% 
respectively, was partially offset by an 8.1% increase in rental 
sales. Luxury vehicle segment contracted from 10.7% to 10.4% 
of total market share, finishing -5.9% down, with all major 
brands down on pcp except Volvo. Traditional fuel vehicles made 
up 99% of all new vehicle sales, with the sale of electric vehicles 
increasing 20.3% and having total sales of 1,352 units in 2018.

Nationally, the Heavy Commercial segment recorded 
significant growth of 12.4% (2017: 11.8%), with increases in 
light/medium duty trucks and heavy-duty sales of +8.4% and 
+20.9% respectively.

Despite the well reported decline in the headline new car sales 
volume, the Company was able to rebalance the business 
to focus on maximising the performance in the areas of the 
business that offered increased opportunity.

The Victoria/ Tasmania businesses delivered a record result 
in 2018. Our two largest geographic segments of Queensland 
and South Australia recorded improved performance, while 
challenging market dynamics in our New South Wales 
geographic market and portfolio representation in Tasmania 
adversely impacted trading performance versus the pcp.

In 2018, a number of our operating divisions reported positive 
results. The underlying performance of our Used Car 
department, excluding F&I impacts, improved on the back of 
gross margin improvement and a structural change to our 
fixed cost base. The business will continue to scale operations 
to match income opportunity while growing in new segments. 
An example of this is our Cheap Cars business launched in 
Queensland in 2018 with immediate success. This strategy 
will be carefully expanded in 2019 across all regions as an 
incremental profit driver that extracts value in an adjacent part 
of the business.

Both our Parts and Service divisions delivered record years up 
20.8% and 7.9% respectively. These results reflect a focus on 
scaling our operations in both divisions to leverage the record 
car parc following multiple years of record new car sales. Our 
service division has also benefited from a focus on retention 
through improved customer processes.

Underpinning this rebalancing of our operations was a continued 
company-wide focus on reducing the cost base executed without 
compromising income producing activities, reducing employee 
engagement or customer satisfaction levels. This cost out 
program bore fruit in 2018 and there remains an opportunity for 
greater savings in 2019 and beyond.

The Company launched a Business Transformation initiative 
during the year, known internally as BTG, which forms a key 
part of our strategy to ensure we future-proof the business 
as the wider industry transitions. This involves a total re-
design of the traditional structure, roles and cost bases of our 
dealerships while producing a service offering that responds 
to evolving customer wants and needs. The BTG roll out will 
gather momentum in 2019 and beyond and ensure we are 
always able to leverage our role as the expert interface between 
the products and services our OEM partners provide and the 
mobility demands of our customers.

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 Toowoomba Motor Group (Mitsubishi & Kia), 
Metro Nissan (Brisbane) and Southern Vales Nissan (Adelaide) 
in 2018 and we will continue with our disciplined approach in 
reviewing further acquisition opportunities.

10

DIRECTORS’ REPORT CONTINUEDThe Group’s National Trucks division again capitalised on strong growth in the Heavy and Light commercial sales, resulting in a record 
result for 2018. This result continues the strong performance and growth of the National Trucks division since 2015.

A.P. Eagers has commenced the design phase for the major new automotive retailing and mobility hub on 64,124m² within Brisbane 
Airport’s new $300 million BNE Auto Mall project. 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. 

Our strategic 28.84% investment in AHG as at 31 December 2018 was valued at $149.2 million based on their closing share price of 
$1.56 per share. Whilst not included in the Company’s Statutory Profit after Tax, a before tax unrealised loss of $181.4 million has been 
recorded in the Statement of Comprehensive Income for the 2018 year due to the decline in share price relative to the $3.64 closing 
share price at 31 December 2017.

Financial Performance

On a like-for-like basis, revenue increased by +2.1% compared to the pcp. Strong trading in the Queensland (excluding discontinued 
businesses), Victorian and South Australian car divisions and the National Truck division combined to boost revenue, partially offset by 
declines in New South Wales and Tasmania. Total revenue increased by 1.3% to $4.1 billion in 2018.

EBITDA decreased by 1.8% to $173.5 million (2017: $176.7 million). Profit margins declined slightly as indicated by the EBITDA/Revenue 
ratio of 4.2% (2017: 4.4%) and the NPBT/Sales ratio of 3.3% remained static on the pcp. On an underlying basis NPBT/Sales for 2018 was 
3.1%, up from 3.0% in 2017.

Borrowing costs increased to $26.5 million (2017: $24.6 million), reflecting combined impact of higher interest rates and higher average 
bailment and term debt held, partially offset by lower hedging costs. The decrease in depreciation and amortisation costs of 6.1% to 
$15.6 million (2018: $16.7 million) reflects the divestment of non-core properties/businesses in the first half of 2018 and the second half 
of 2017.

Profit before tax included dividends from AHG of $13.9 million, compared to $14.5 million in the pcp, a decline of -3.9%, despite A.P. 
Eagers increasing their holding in AHG from 23.81% at 31 December 2017 to 28.84% at 31 December 2018.

Business acquisition costs of $0.7 million were expensed in the financial year relating to the acquisition of Grand Nissan, Metro Nissan, 
and Toowoomba Motor Group’s Mitsubishi and Kia’s franchises, compared to $0.1 million relating to the Porsche Centre Adelaide 
acquisitions the year before.

Results Summary

Consolidated Results

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.

Full Year to 
December 
2018  
$ Million

Full Year to 
December 
2017  
$ Million

4,063.5 

4,014.8 

49.3 

44.0 

4,112.8

4,058.8

% Change

1.2%

12.2%

1.3%

173.5

(15.6)

2.4

160.3

(26.5)

133.7

(32.6)

101.2

(1.6)

99.6

176.7

(16.7)

0.2

160.2

(24.6)

135.6

(37.5)

98.2

(2.1)

96.0

52.0 cents

50.3 cents

(1.8%)

(6.1%)

-

(0.0%)

7.9%

(1.4%)

(13.1%)

3.1%

3.7%

3.4%

11

ANNUAL REPORT 2018Segments1

Financial Position

Profit before tax from our Car Retail segment was $95.8 million, 
an increase from $84.4 million for 2017. Underlying Operating 
Profit before tax for the Car Retail segment was $95.5 million 
in 2018 (excludes $0.3 million of GST refunds received in 2018), 
an increase from $89.6 million in 2017 (excludes $5.2 million 
in one-off costs and restructuring of underperforming and 
unsustainable businesses).

On a like-for-like basis, revenue increased by 1.1%, with the 
increase primarily attributable to the strong trading in Victoria/
Tasmania and Queensland (excluding discontinued businesses), 
offset by lower results in New South Wales.  The strong trading 
was also reflected in the parts and service businesses with 
improvements across the Group delivering a record result.

The National Truck division delivered record result for the 
second consecutive year, recording a before tax result of 
$10.9 million compared to $9.0 million for the pcp, reflecting 
strong performance in all departments including improved 
results from the new truck division and service division. 
Revenue increased by 12.1% 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 $331.7 million 
as at 31 December 2018 compared to $306.6 million as at 
31 December 2017. Continued management of our property 
portfolio to maximise operational and financial outcomes saw 
the divestment of two properties and purchase of two additional 
properties during 2018.

The Property segment profit contribution of $28.0 million was 
lower than the previous year of $32.0 million. Gains on sale of 
properties were $3.6 million, down $11.8 million on pcp. This 
was partially offset by valuation increases of $13.7 million ($2.4 
million P&L, $11.3 million revaluation reserve) compared with 
valuation increases in 2017 of $5.6 million ($0.2 million P&L, 
$5.4 million revaluation reserve).

The Investment segment registered a pre-tax loss of $171.1 
million in 2018 compared to a loss of $8.4 million for the pcp, 
due primarily to an unrealised revaluation loss on the AHG 
investment of $181.4 million. This reflected a 31 December 2018 
AHG closing share price of $1.56 per share compared with $3.64 
as at 31 December 2017, a decline of 57.1%.

As at 31 December 2018, the 28.84% strategic investment in AHG 
had a market value of $149.2 million based on a closing share 
price of $1.56 per share.

The Company’s financial position remains very strong. EBITDA 
Interest Cover (EBITDA/Borrowing costs) was 6.5 times as at 31 
December 2018 compared to 6.9 times as at June 2018 and 7.2 
times as at 31 December 2017.

Corporate debt (Term and Capital Loan Facility) net of cash on 
hand was higher at $295.1 million as at 31 December 2018 (2017: 
$238.5 million) and total debt including vehicle bailment net 
of cash on hand was higher at $865.4 million as compared to 
$782.7 million as at 31 December 2017.

Total gearing (Debt /Debt + Equity), including bailment inventory 
financing and finance leases, was 57.4% as at 31 December 
2018, as compared to 50.2% as at 31 December 2017. 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 31.0% as at 31 
December 2018, compared to 23.3% as at 31 December 2017. 
Both gearing ratios were impacted by the lower valuation of 
the AHG investment at 31 December 2018, with gearing ratios 
excluding this impact being 52.3% and 26.8% respectively.

Total inventory levels increased to $691.2 million at 31 December 
2018 from $652.7 million at 31 December 2017.

Net tangible assets were $1.79 per share as at 31 December 
2018, as compared to $2.49 per share at 31 December 2017, due 
to lower valuation of the AHG investment at 31 December 2018.

The reduction in the Company’s net cash provided by operating 
activities by $56.0 million to $89.0 million in 2018 (2017: $145.0 
million) was driven by three items totalling $43.2 million together 
with an investment in working capital. Firstly, tax payments 
increased by $20.0 million to $41.0 million in 2018 due to the 2017 
balancing tax payment which arose from lower instalment rate 
in 2017 due to favourable tax position in 2016. Additionally, the 
2018 operating cashflow was reduced due to the timing of both 
the receipt of upfront insurance monies (~$14.2 million) in the 
prior year and payments associated with provisions for business 
restructuring activities ($9.0 million) undertaken in 2017. The 
residual increase in net working capital (~$22.0 million) was 
driven by the increased investment in used cars and trucks and 
parts stock levels, consistent with the performance of these 
businesses. Excluding these items, the operating cash flow 
would have been consistent year on year.

Outlook and Strategy Update

For 106 years A.P. Eagers has operated successfully as the 
expert interface between the manufacturers of motor vehicles 
and the users of motor vehicles, our customers. Whilst the 
products and services provided by our manufacturing partners 
will continue to evolve (i.e. electric, connected, evolving 
automation etc) so will the way our customers choose to 
consume them (i.e. buy, sell, subscribe, share, fund, service, 
repair etc). A.P. Eagers will continue to use its skills, its assets 
and its 106 years of knowledge to maintain a leadership position 
as the “expert interface”.

1 

 Changes in fair value of property and investments are recognised as profit and loss adjustments for segment reporting purposes but are not recorded in the 
Group’s Statutory Net Profit After Tax

12

DIRECTORS’ REPORT CONTINUEDAn example of this approach is our Carzoos used car model. 
The Carzoos business, after prudent early investment, is now 
into the break-even phase of its business growth plan. With the 
business trading on a solid platform and continued exceptional 
customer feedback we will transition more traditional A.P. 
Eagers used car operations into the model and look to open a 
third store in south-east Queensland in 2019.

Note: All national sales figures are based on Federal Chamber of Automotive 
Industry statistics sourced through VFACTS.

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.

A.P. Eagers is making significant progress with a number of 
strategic initiatives, including:

 >

Following the positive outcome from the businesses we 
exited in 2017 and 2018 we are continuously reviewing 
our franchise portfolio to identify underperforming and 
unsustainable businesses without burdening shareholders 
with significant write downs.

 > 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.

 > Whilst current market dynamics are not easy, the transition 
occurring within the industry is accelerating consolidation, 
rationalisation and restructuring, and A.P. Eagers intends to 
capitalise on these opportunities.

 >

The revised vehicle financing models were implemented by 
all financiers within the Automotive industry on 1 November 
2018.  The new financing models have been developed to 
provide highly transparent and ultra-competitive pricing 
with interest rates tailored to individual customer profiles.  
These new models are expected to significantly lift finance 
penetration within Australia with a shift towards the higher 
penetration rates in the USA and UK of 84% and 89%, over 
the coming years.   
 A.P. Eagers has implemented a five-point strategic plan 
designed to excel in future finance penetration rates.  With 
one major financier we have evidence of more competitive 
rates, increasing volume and penetration, improving margin 
retention and reducing the need for low rate marketing 
campaigns. At the same time, we are receiving positive 
feedback from clients and staff on the new transparent 
systems and processes.

 >

Strategically, and in response to customer preferences, 
we continue to redevelop and reorganise our future 
retailing facilities including inner-city Brisbane (Newstead, 
Woolloongabba, Indooroopilly and Windsor) to provide 
improved long-term solutions for all stakeholders. The 
Brisbane Airport Auto Mall, shopping centres and satellite 
operations are favoured by a number of our brand partners.

 > As the industry continues to evolve the Company will 

further develop its alternate and complementary business 
activities. We remain disciplined in our investments into 
new businesses, making sure they meet the dual mandate 
of, firstly, aligning with consumer mobility wants and needs 
and, secondly, creating incremental medium and long-term 
shareholder value.   

13

ANNUAL REPORT 2018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 ($)

2018

101.2

52.0

36.5

6.00

2017

98.2

50.3

36.0

7.97

2016

105.5

55.4

35

9.22

2015

87.0

47.6

32

12.70

2014

76.7

43.0

27

5.98

2.  Non-executive Directors’ Remuneration Framework

Non-executive Directors are remunerated for their services by way of fees and 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.

The following fees plus superannuation were paid to non-executive Directors for the year under review:

Chairman of Board

$100,000 per annum

Chairman of Audit, Risk & Remuneration Committee

$85,000 per annum, increased to $100,000 per annum in July 2018

Non-executive Directors

$85,000 per annum

The board, with the assistance of the Audit, Risk & Remuneration Committee, annually reviews non-executive Director fees, taking into 
account relevant market conditions.

Non-executive Directors do not participate in schemes designed for the remuneration of executives, equity schemes or retirement 
allowance programmes, nor do they receive performance-based bonuses.

3.  Executives’ Remuneration Framework

(a)  Base Pay

Each executive is offered a competitive base pay to reflect the market for a comparable role. Base pay is reviewed annually and on 
promotion to ensure it remains competitive with the market. It may be delivered as a combination of cash and superannuation that the 
executive elects to salary sacrifice.

(b)  Benefits

Executives receive benefits including the provision of fully maintained motor vehicles, personal health and fitness programs and, in 
the case of the Chief Executive Officer, personal insurance. Retirement benefits are delivered under superannuation funds providing 
accumulation benefits. No lump sum defined benefits are provided.

14

DIRECTORS’ REPORT CONTINUED(c)  Short-term Performance Incentives

(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.

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.

(i) 

Incentive / Bonus

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 non-executive Directors, the Chief Executive Officer 
or the Chief Operating Office – Cars (as his remuneration is 
commission based).

These short-term incentive payments are determined by the 
Chief Executive Officer in consultation with the Chairman on a 
discretionary basis after considering individual and Company 
achievements and performances during annual review.

(ii)  Commission Structure

A commission incentive 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.

(d)   Executive Incentive Plan (EIP) – Long-term and  

Short-term Incentive

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 available to executives only. It 
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.

15

ANNUAL REPORT 2018(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 20, 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

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.

s
’
0
0
0
$

1500

1200

900

600

300

0

16

DIRECTORS’ REPORT CONTINUED(iv)  Grants to Key Management Personnel

The following tables show details of current grants of performance rights and options over unissued ordinary shares, which were 
granted to key management personnel in or before the year under review. No rights or options were granted to, lapsed or were 
exercised by, key management personnel during 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 Jul 2014

83,661

-

83,661

$5.08 467,032

4 Jul 2014

87,268

-

87,268

$4.87 452,127

4 Jul 2014

91,006

-

91,006

$4.67 447,368

-

-

-

$0.91 31 Dec 2015

50,000 
exercised  
in 2016

Status

Vested without  
re-testing

$0.94 31 Dec 2016

Vested without  
re-testing

-

-

$0.95 31 Dec 2017

4

4 Jul 2014

94,866

-

94,866

$4.48 420,792

-

-

$1.01 31 Dec 2018

All Performance 
Rights and 1/3 of 
Options vested 
without re-testing. 
2/3 of Options remain 
unvested and subject 
to 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

5

4 Jul 2014

99,067

-

-

$4.29 416,666

-

-

$1.02 31 Dec 2019

Unvested

(1)   Performance rights are automatically exercised upon vesting. 91,006 rights that were granted for 2017 were exercised during the year under review and these 

were valued at $764,450 on the day of exercise.

(2)  No options were exercised during the year under review.

17

ANNUAL REPORT 2018 
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 Jul 2014

19,685

4 Jul 2014

20,533

4 Jul 2014

21,413

-

-

-

19,685

$5.08

109,890

20,533

$4.87

106,382

21,413

$4.67

105,263

-

-

-

-

-

-

$0.91 31 Dec 2015

$0.94 31 Dec 2016

$0.95 31 Dec 2017

4

4 Jul 2014

22,321

-

22,321

$4.48

99,009

-

-

$1.01 31 Dec 2018

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

All Performance 
Rights and 1/3 of 
Options vested 
without re-testing. 
2/3 of Options remain 
unvested and subject 
to re-testing

5

4 Jul 2014

23,310

-

-

$4.29

98,039

-

-

$1.02 31 Dec 2019

Unvested

(1)   Performance rights are automatically exercised upon vesting. 21,413 rights that were granted for 2017 were exercised during the year under review and these 

were valued at $179,869 on the day of exercise.

(2)  No options were exercised during the year under review.

General Counsel & Company Secretary

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 Jul 2014

2,460

4 Jul 2014

2,566

4 Jul 2014

2,676

-

-

-

2,460

$5.08

13,736

2,566

$4.87

13,297

2,676

$4.67

13,157

-

-

-

-

-

-

$0.91 31 Dec 2015

$0.94 31 Dec 2016

$0.95 31 Dec 2017

4

4 Jul 2014

2,790

-

2,790

$4.48

12,376

-

-

$1.01 31 Dec 2018

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

All Performance 
Rights and 1/3 of 
Options vested 
without re-testing. 
2/3 of Options remain 
unvested and subject 
to re-testing

5

4 Jul 2014

2,913

-

-

$4.29

12,254

-

-

$1.02 31 Dec 2019

Unvested

(1)   Performance rights are automatically exercised upon vesting. 2,676 rights that were granted for 2017 were exercised during the year under review and these 

were valued at $22,478 on the day of exercise.

(2)  No options were exercised during the year under review.

18

DIRECTORS’ REPORT CONTINUED 
 
Chief Financial 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

12 Jun 2015

2,227

12 Jun 2015

4,624

12 Jun 2015

4,796

-

-

-

2,227

$8.98

14,084

4,624

$8.65

27,027

4,796

$8.34

26,143

-

-

-

-

-

-

$1.42 31 Dec 2015

$1.48 31 Dec 2016

$1.53 31 Dec 2017

4

12 Jun 2015

4,975

-

4,975

$8.04

25,316

-

-

$1.58 31 Dec 2018

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

All Performance 
Rights and 1/3 of 
Options vested 
without re-testing. 
2/3 of Options remain 
unvested and subject 
to re-testing

5

12 Jun 2015

5,167

-

-

$7.74

25,000

-

-

$1.60 31 Dec 2019

Unvested

(1)   Performance rights are automatically exercised upon vesting. 4,796 rights that were granted for 2017 were exercised during the year under review and these 

were valued at $40,286 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 36 and 37 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.

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.

19

ANNUAL REPORT 2018 
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 

1,210,833 

85,000 

85,000 

92,500 

85,000 

-   

-   

-   

-   

-   

-   

813 

9,500 

-   

110,313 

170,358 

25,000 

189,060 

1,595,251 

813 

813 

813 

813 

8,075 

8,075 

8,788 

8,075 

-   

-   

-   

-   

93,888 

93,888 

102,101 

93,888 

-   

12 

-   

-   

-   

-   

456,516 

2,114,849 

150,000 

150,000 

31,907 

206,330 

14,449 

81,962 

22,857 

675,729 

26 

211,917 

2,765,058

200,004 

698,259 

118,226 

10,266 

44,485 

1,071,240 

69 

292,006 

492,010 

87,600 

785,859 

35,315 

153,541 

27,741 

38,006 

5,561 

448,221 

21 

50,045 

1,519,461

2018

Directors

T B Crommelin   
Chairman

M A Ward   
Managing Director & CEO

N G Politis   
Non-executive Director

D T Ryan   
Non-executive Director

D A Cowper   
Non-executive Director

M J Birrell   
Non-executive Director

S A Moore   
Executive Director & CFO

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. 

(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 16 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.

20

DIRECTORS’ REPORT CONTINUED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 16 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.

21

ANNUAL REPORT 20187.  Relevant Interest in the Company’s Shares Held by Key Management Personnel

2018

Directors

M A Ward

N G Politis

D T Ryan

T B Crommelin

D A Cowper

M J Birrell

S A Moore

Executives

K T Thornton

D G Stark

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
2018

Dividend

Reinvestment

Plan

Executive
 Incentive
Plan

Purchases

Sales

31 December
2018

2,298,655 

68,813,081 

-   

383,286 

15,053 

2,000,000 

6,851 

449,118 

143,140 

74,109,184 

-   

-   

-   

-   

-   

-   

-   

-   

-   

-   

91,006 

-   

-   

-   

-   

-   

4,796 

21,413 

2,676 

-   

690,500 

-   

9,000 

-   

-   

-   

-   

-   

119,891 

699,500 

-   

-   

-   

-   

-   

-   

-   

-   

-   

-   

2,389,661 

69,503,581 

-   

392,286 

15,053 

2,000,000 

11,647 

-   

470,531 

145,816 

74,928,575 

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. 

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

392,286

69,535,038

2,484,527

-

15,053 

2,000,000

16,622

-

-

-

-

2,153,985

99,067

-

-

-

-

-

-

117,570

5,167

(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.

22

DIRECTORS’ REPORT CONTINUED 
 
 
 
 
 
 
 
 
SHARES UNDER OPTION

NON-AUDIT SERVICES

No options or performance rights were granted by the Company 
over unissued fully paid ordinary shares during or since the year 
under review.

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.

300,823 shares were issued as a result of the exercise of options 
and no shares were issued on the exercise of performance 
rights, during or since the year under review.

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.

At the date of this report, there are 6,862,796 unissued shares 
under option and 190,157 unvested performance rights.

INDEMNIFICATION AND INSURANCE

The Company’s constitution provides that, to the extent 
permitted by law, the Company must indemnify each person who 
is or has been a Director or Secretary against liability incurred 
in or arising out of the discharge of duties as an officer of the 
Company or out of the conduct of the business of the Company 
and specified legal costs. The indemnity is enforceable without 
the person having to incur any expense or make any payment, 
is a continuing obligation and is enforceable even though the 
person may have ceased to be an officer of the Company.

At the start of the financial year under review and at the start 
of the following financial year, the Company paid insurance 
premiums in respect of Directors and Officers liability insurance 
contracts. The contracts insure each person who is or has been 
a Director or executive officer of the Company against certain 
liabilities arising in the course of their duties to the Company 
and its controlled entities. The Directors have not disclosed 
details of the nature of the liabilities covered or the amount of 
the premiums paid in respect of the insurance contracts as such 
disclosure is prohibited under the terms of the contracts.

AUDITOR

Deloitte Touche Tohmatsu continues in office as auditor of the 
Group in accordance with section 327 of the Corporations Act 2001.

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 34 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.

Martin Ward 
Director

Brisbane, 20 February 2019

23

ANNUAL REPORT 2018 
AUDITOR’S DECLARATION OF INDEPENDENCE

Deloitte Touche Tohmatsu 
ABN 74 490 121 060 
Level 23, Riverside Centre 
123 Eagle Street 
Brisbane, QLD, 4000 
Australia 

Phone: +61 7 3308 7000 
www.deloitte.com.au 

The Board of Directors
A.P. Eagers Limited
5 Edmund Street
Newstead, QLD 4006

20 February 2019

Dear Board Members

A.P. Eagers Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the 
following declaration of independence to the directors of A.P. Eagers Limited.

As lead audit Partner for the audit of the financial statements of A.P. Eagers Limited for the 
financial year ended 31 December 2018, I declare that to the best of my knowledge and belief, 
there have been no contraventions of:

(i)

the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Stephen Tarling
Partner
Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. 

Member of Deloitte Touche Tohmatsu Limited  

24

 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 

26

27

28

29

30

31

92

93

98

100

25

ANNUAL REPORT 2018STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2018

Revenue

Other Gains

      CONSOLIDATED

2018 
$’000

2017
$’000

4,112,802

4,058,779

8,492

17,934

Notes

3

4

Share of net profits of associate

41(d)

77

407

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.

39,459

27,645

(3,439,625)

(3,374,157)

(330,622)

(331,009)

(26,530)

(15,641)

(24,598)

(16,651)

(214,681)

(222,721)

133,731

135,629

(32,556)

101,175

(37,456)

98,173

5

5

6

31(e)

29(b)

99,556

1,619

101,175

96,027

2,146

98,173

Cents

Cents

39(a)

39(b)

52.0

51.7

50.3

49.5

26

STATEMENT OF PROFIT OR LOSS AND  
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018

Profit for the year

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

Fair value gain arising from cash flow hedges during the year

Income tax expense

Reclassification adjustments net of tax relating to available-for-sale financial assets 
disposed of in the year

Items that will not be reclassified subsequently to profit or loss

Gain on revaluation of property

Income tax expense

Changes in the fair value of financial assets at FVOCI

Income tax benefit

Total other comprehensive loss for the year

Notes

29(a)

29(a)

29(a)

29(a)

29(a)

29(a)

      CONSOLIDATED

2018
$’000

RESTATED
2017 
$’000

101,175

98,173

103

(31)

-

72

11,266

(3,380)

278

(84)

(1,482)

(1,288)

5,380

(1,614)

(181,400)

(22,920)

30,059

6,876

(143,455)

(12,278)

(143,383)

(13,566)

Total comprehensive (loss)/income for the year

(42,208)

84,607

Total comprehensive (loss)/income attributable to:

Owners of the parent

Non-controlling interests

(43,827)

1,619

(42,208)

82,461

2,146

84,607

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

27

ANNUAL REPORT 2018STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018 

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Prepayments and deposits

Property sale receivable

Total current assets

Non-current assets

Other loans receivable

Financial assets at fair value through other comprehensive income

Investments in associates

Property, plant and equipment

Intangible assets

Deferred tax 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.

28

      CONSOLIDATED

2018 
$’000

RESTATED
2017 
$’000

18,868

156,286

690,167

12,617

-

877,938

8,303

149,774

12,077

388,407

313,325

17,844

889,730

10,827

161,807

652,652

11,172

7,145

843,603

10,600

288,033

12,000

361,121

309,414

-

981,168

1,767,668

1,824,771

145,919

152,853

35

20

571,615

545,200

2,190

48,481

5,862

13,221

46,041

5,569

774,102

762,904

Notes

8

9

10

11(a)

11(b)

12

13

14

15

16

17

18

19

20(a)

21

22

23

24(a)

312,614

248,344

19

17

25

26

28

29(a)

29(b)

31(e)

-

-

5,052

19,422

337,088

118

2,273

5,988

19,369

276,092

1,111,190

1,038,996

656,478

785,775

371,405

(124,306)

401,377

648,476

8,002

656,478

369,028

38,131

367,855

775,014

10,761

785,775

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018

Consolidated entity 2018

Notes

Issued
capital
$’000

Asset 
revaluation 
reserve
$’000

Hedging 
reserve
$’000

Balance at 1 January 2018

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:
Shares acquired by employee 
share trust
Share based payments 
expense
Dividends provided for or paid
Purchase of shares from 
non-controlling interests
Payments received from 
employees for exercised 
shares
Income tax on items taken to 
or transferred directly from 
equity
Shares issued pursuant to 
staff share plan

369,028
-
-

52,728
-
7,886

29(a)

-
-

-

-
-

-

-

-

29(a)

2,377
2,377

7,886
(3,794)

-

-
-

-

-

-

-
-

Share- 
based 
payments 
reserve
$’000

(34,368)
-
-

Investment 
revaluation 
reserve
$’000

19,868
-
(151,341)

Attributable 
to owners  
of the 
parent
$’000

775,014
99,556
(143,383)

Retained 
earnings
$’000

367,855
99,556
-

Non- 
controlling 
interests
$’000

Total
$’000

10,761
1,619
-

785,775
101,175
(143,383)

-
-

(151,341)
-

99,556
3,794

(43,827)
-

1,619
-

(42,208)
-

(97)
-
72

72
-

-

-
-

-

-

-

-
-

(13,965)

391
-

-

4,664

(3,973)

(2,377)
(15,260)

-

-
-

-

-

-

-
-

-

(13,965)

-

(13,965)

-
(69,828)

391
(69,828)

-
(2,041)

391
(71,869)

-

-

-

-

(2,337)

(2,337)

4,664

(3,973)

-

-

4,664

(3,973)

-
(69,828)

-
(82,711)

-
(4,378)

-
(87,089)

Balance at 31 December 2018

371,405

56,820

(25)

(49,628) (131,473) 401,377

648,476

8,002

656,478

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 payments 
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

364,449
-
-

-
-

-
-

29(a)

4,579

-

-
-

-
4,579

52,781
-
3,766

3,766
(3,819)

(291)
-
194

194
-

(34,486)
-
-

37,394
-
(17,526)

335,779
96,027
-

755,626
96,027
(13,566)

-
-

(17,526)
-

96,027
3,819

82,461
-

8,166
2,146
-

2,146
-

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

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

29

ANNUAL REPORT 2018      CONSOLIDATED

2018 
$’000

2017 
$’000

Notes

4,495,529

4,426,933

(4,369,230)

(4,258,688)

5

3

40

31(c)

29(a)

29(a)

7

8

16,139

(26,530)

(40,983)

13,868

196

88,989

(5,138)

(38,891)

2,807

19,456

-

(43,142)

(64,908)

4,664

95,000

(13,965)

(30,394)

(1,100)

(69,828)

(417)

7,235

(24,598)

(20,995)

14,501

588

144,976

(11,534)

(29,383)

2,303

32,115

3,116

(49,134)

(52,517)

1,636

43,200

-

(77,500)

1,400

(67,770)

(213)

(16,040)

(99,247)

8,041

10,827

18,868

(6,788)

17,615

10,827

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018 

Cash flows from operating activities

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Receipts from insurance claims

Interest and other costs of finance paid

Income taxes paid

Dividends received

Interest received

Net cash provided by operating activities

Cash flows from investing activities

Payment for acquisition of businesses - net of cash acquired

Payments for property, plant and equipment

Proceeds from sale of businesses

Proceeds from sale of property, plant and equipment

Proceeds from sale of available-for-sale financial assets

Payments for shares in other corporations

Net cash used in investing activities

Cash flows from financing activities

Proceeds from issues of shares and other equity securities

Proceeds from borrowings

Payments for shares acquired by the trust

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 financing activities

Net increase/(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.

30

NOTES TO AND FORMING PART OF  
THE FINANCIAL STATEMENTS
31 DECEMBER 2018

1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  General information and basis of preparation

The financial report covers the Group (consolidated entity) of 
A.P. Eagers Limited and its subsidiaries (consolidated financial 
statements). A.P. Eagers Limited is a publicly listed company 
incorporated and domiciled in Australia.

The financial report has been prepared on a going-concern 
basis, in line with AASB 101.

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 AASB 2, leasing 
transactions that are within the scope of AASB 117, and 
measurements that have some similarities to fair value but are 
not fair value, such as net realisable value in AASB 102 or value 
in use in AASB 136.

In addition, for financial reporting purposes, fair value 
measurements are categorised into Level 1, 2 or 3 based on the 
degree to which the inputs to the fair value measurements are 
observable and the significance of the inputs to the fair value 
measurements in its entirety, which are described as follows:

 >

 >

 >

Level 1 inputs are quoted prices (unadjusted) in active 
markets for identical assets or liabilities that the entity can 
access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included 
within Level 1, that are observable for the asset or liability, 
either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or 
liability.

Functional and presentation currency

The functional and presentation currency of the Group is the 
Australian Dollar.

The financial statements were authorised for issue by the 
Directors on the 20th of February 2019.

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.

31

ANNUAL REPORT 20181  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(b)  Basis of consolidation continued

The Company considers all relevant facts and circumstances 
in assessing whether or not the Company’s voting rights in an 
investee are sufficient to give it power, including:

 >

 >

 >

 >

the size of the Company’s holding of voting rights relative to 
the size and dispersion of holdings of the other vote holders;

potential voting rights held by the Company, other vote 
holders or other parties;

rights arising from other contractual arrangements; and

any additional facts and circumstances that indicate that 
the Company has, or does not have, the current ability to 
direct the relevant activities at the time that decisions need 
to  
be made, including voting patterns at previous 
shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains 
control over the subsidiary and ceases when the Company 
loses control of the subsidiary. Specifically, income and 
expenses of a subsidiary acquired or disposed of during the 
year are included in the consolidated statement of profit or loss 
and other comprehensive income from the date the Company 
gains control until the date when the Company ceases to 
control the subsidiary.

Profit or loss and each component of other comprehensive 
income are attributed to the owners of the Company and to 
the non-controlling interests. Total comprehensive income 
of subsidiaries is attributed to the owners of the Company 
and to the non-controlling interests even if this results in 
the non-controlling interests having a deficit balance. When 
necessary, adjustments are made to the financial statements of 
subsidiaries to bring their accounting policies into line with the 
Group’s accounting policies.

All intra-group 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.

(ii)  Investments in associates

An associate is an entity over which the Group has significant 
influence. Significant influence is the power to participate in 
the financial and operating policy decisions of the investee but 
is not control over those policies. 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.

32

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018The requirements of AASB 128 are applied to determine whether 
it is necessary to recognise any impairment loss with respect 
to the Group’s investment in an associate. When necessary, the 
entire carrying amount of the investment (including goodwill) is 
tested for impairment of assets as a single asset by comparing 
its recoverable amount (higher of value in use and fair value 
less costs of disposal) with its carrying amount. Any impairment 
loss recognised forms part of the carrying amount of the 
investment. Any reversal of that impairment loss is recognised 
in accordance with AASB 136 to the extent that the recoverable 
amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the 
date when the investment ceases to be an associate, or when 
the investment is classified as held for sale. When the Group 
retains an interest in the former associate and the retained 
interest is a financial asset, the Group measures the retained 
interest at fair value at that date and the fair value is regarded 
as its fair value on initial recognition in accordance with AASB 9. 
The difference between the carrying amount of the associate at 
the date the equity method was discontinued, and the fair value 
of any retained interest and any proceeds from disposing of a 
part interest in the associate is included in the determination 
of the gain or loss on disposal of the associate. In addition, the 
Group accounts for all amounts previously recognised in other 
comprehensive income in relation to that associate on the same 
basis as would be required if that associate had directly disposed 
of the related assets or liabilities. Therefore, if a gain or loss 
previously recognised in other comprehensive income by that 
associate would be reclassified to profit or loss on the disposal 
of the related assets or liabilities, the Group reclassifies the 
gain or loss from equity to profit or loss (as a reclassification 
adjustment) when the equity method is discontinued.

(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 sale of motor vehicles and parts is recognised 
when the performance obligation has been satisfied. The 
performance obligation is considered to be satisfied at a point 
in time when the vehicles or parts are invoiced and physically 
dispatched or collected.

(ii)  Service revenue

Service work on customers’ vehicles is carried out under 
instruction from the customer. Service revenue is recognised 
over time based on when the performance obligation is 
satisfied, which is when services are rendered. Revenue arising 
from the sale of parts fitted to customers’ vehicles during 
service is recognised at a point in time upon satisfaction of 
the performance obligation, which is considered by the Group 
to be upon delivery of the fitted parts to the customer upon 
completion of the service.

(iii)  Rental income

Rental income from operating leases is recognised on a 
straightline basis over the lease term.

(iv)  Finance and Insurance Income

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.

The Group acts as an agent in the sale of vehicle finance 
and insurance products. The revenue from the sale of these 
products is recognised at a point in time when the performance 
obligation is satisfied, which is upon delivery of the vehicle and 
the transfer of control to the customer.

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 portion 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.

(v)  Interest revenue

Interest revenue is recognised on a time proportional basis, 
taking into account the effective interest rates applicable to the 
financial assets.

(vi)  Property, Plant and Equipment Sales Revenue

Income from the sale of property, plant and equipment is 
recognised when the performance obligation is satisfied, at the 
transfer of ownership.

(vii) 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.

33

ANNUAL REPORT 20181  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(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; and

amortisation of ancillary costs incurred in connection with 
the arrangement of borrowings.

(f)  Taxes

A.P. Eagers Limited and its wholly-owned Australian entities are 
part of a tax consolidated group in accordance with Part 3-90 
of the Income Tax Assessment Act 1936. The existence of a tax 
consolidated group allows for wholly-owned corporate groups to 
operate as a single entity for income tax purposes.

The head entity, A.P. Eagers Limited, and the wholly-owned 
entities in the tax consolidated group continue to account 
for their own income tax expense, current and deferred tax 
amounts in accordance with the A.P. Eagers Tax Funding 
Agreement. These tax amounts are measured by adopting 
a notional tax approach which requires each Member to 
calculate their separate tax amounts as if each entity in the 
tax consolidated group continues to be a standalone taxpayer. 
Assets or liabilities arising for wholly-owned subsidiaries under 
the Tax Funding Arrangement are recognised as accounts 
receivable from or payable to other entities in the Group. In 
addition to its own income tax expense, current and deferred 
tax amounts, the head entity also recognises the current tax 
liabilities (or assets) and the deferred tax assets arising from 
unused tax losses and tax credits assumed from controlled 
entities in the tax consolidated group.

(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, where at the 
time of the transaction the temporary differences 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.

(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. Please refer 
to Note 1(aa)(1.1.1) for the assessment of AASB 16 Leases, which 
is applicable 1 January 2019.

(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.

34

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(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 the transaction 
price, less the expected lifetime credit losses to be recognised 
from initial recognition of the receivables.

The Group applies the simplified approach permitted by AASB 9, 
which requires expected lifetime credit losses to be recognised 
from initial recognition of the receivables. The expected credit 
losses on these financial assets are estimated using a provision 
matrix based on the Group’s historical credit loss experience.

(l)  Inventories

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.

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(p)). 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 acquisition 
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.

(i) 

Impairment of long lived assets (excluding goodwill)

Assets that have an indefinite useful life are not subject to 
amortisation and are tested annually for impairment. Assets 
that are subject to amortisation are reviewed for impairment 
whenever events or changes in circumstances indicate that the 
carrying amount may not be recoverable. An impairment loss is 
recognised for the amount by which the asset’s carrying amount 
exceeds its recoverable amount. The recoverable amount is 
the higher of an asset’s fair value less costs of disposal and its 
value in use. For the purposes of assessing impairment, assets 
are grouped at the lowest levels for which there are separately 
identifiable cash flows (cash-generating units “CGU”) and 
these cash flows are discounted using the estimated weighted 
average cost of capital of the asset/CGU. An impairment loss 
is recognised in profit or loss immediately, unless the relevant 
asset is carried at fair value, in which case the impairment loss 
is treated as a revaluation decrease (refer Note 1(n)). Where an 
impairment loss subsequently reverses, the carrying amount 
of the asset (CGU) is increased to the revised estimate of its 
recoverable amount, but only to the extent that the increased 
carrying amount does not exceed the carrying amount that 
would have been determined had no impairment losses been 
recognised for the asset (CGU) in prior years. A reversal of an 
impairment loss is recognised in profit or loss immediately, 
unless the relevant asset is carried at fair value, in which case, 
the reversal of the impairment loss is treated as a revaluation 
increase (refer Note 1(n)).

35

ANNUAL REPORT 20181  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(m) Investments and other financial assets
Investments are recognised and derecognised on settlement 
date where the purchase or sale of an investment is under a 
contract whose terms require delivery of the investment within 
the time-frame established by the market concerned. They are 
initially measured at fair value, net of transaction costs, except 
for those financial assets classified as 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 remaining financial assets in the 
following measurement categories:

 >

Those to be measured subsequently at fair value (either 
through other comprehensive income, or through profit or 
loss); and

 >

Those to be measured at amortised cost.

The classification depends on the entity’s business model for 
managing the financial assets and the contractual terms of the 
cash flows.

For assets measured at fair value, gains and losses will either 
be recorded in profit or loss or OCI. For investments in equity 
instruments that are not held for trading, the classification 
will depend on whether the Group has made an irrevocable 
election at the time of initial recognition to account for the equity 
investment at FVOCI.

(i) Measurement

At initial recognition, the Group measures a financial asset at its 
fair value plus, in the case of a financial asset not at fair value 
through profit or loss (FVPL), transaction costs that are directly 
attributable to the acquisition of the financial asset. Transaction 
costs of financial assets carried at FVPL are expensed in profit 
or loss.

Financial assets with embedded derivatives are considered in 
their entirety when determining whether their cash flows are 
solely payment of principal and interest.

(a) Equity instruments

The Group subsequently measures all equity investments at 
fair value. 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.

Where the Group’s management has elected to present fair 
value gains and losses on equity investments in OCI, there is 
no subsequent reclassification of fair value gains and losses to 
profit or loss following the derecognition of the investment. 

Dividends from such investments continue to be recognised in 
profit or loss as other income when the Group’s right to receive 
payments is established.

Impairment losses (and reversal of impairment losses) on equity 
investments measured at FVOCI are not reported separately 
from other changes in fair value. The Group recognises the 
payment of dividends in the profit and loss for those equity 
instruments measured at FVOCI.

(ii) Impairment

The Group assesses at each balance date whether there is 
objective evidence that a financial asset or group of financial 
assets is impaired. For trade receivables, the Group applies 
the simplified approach permitted by AASB 9, which requires 
expected lifetime losses to be recognised from initial recognition 
of the receivables. The expected credit losses on these financial 
assets are estimated using a provision matrix based on the 
Group’s historical credit loss experience.

Derivatives and hedging

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, as to 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.

(i) Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of derivatives 
that are designated and qualify as cash flow hedges is 
recognised in the cash flow hedge reserve within equity. The 
gain or loss relating to the ineffective portion is recognised 
immediately in profit or loss, within other income/(expenses).

When forward contracts are used to hedge forecast 
transactions, the Group generally designates only the change in 
fair value of the forward contract related to the spot component 
as the hedging instrument. Gains or losses relating to the 
effective portion of the change in the spot component of the 
forward contracts are recognised in the cash flow hedge 
reserve within equity. The change in the forward element of the 
contract that relates to the hedged item is recognised within OCI 
in the costs of hedging reserve within equity. In some cases, the 
entity may designate the full change in fair value of the forward 
contract as the hedging instrument. In such cases, the gains or 
losses relating to the effective portion of the change in fair value 
of the entire forward contract are recognised in the cash flow 
hedge reserve within equity.

36

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018Amounts accumulated in equity are reclassified in the periods 
when the hedged item affects profit or loss, as follows:

(a)   Where the hedged item subsequently results in the 

recognition of a non-financial asset (such as inventory), both 
the deferred hedging gains and losses and the deferred 
time value of the contracts, if any, are included within the 
initial cost of the asset. The deferred amounts are ultimately 
recognised in profit or loss as the hedged item affects profit 
or loss.

(b)   The gain or loss relating to the effective portion of the 

interest rate swaps hedging variable rate borrowings is 
recognised in profit or loss within Finance costs at the same 
time as the interest expense on hedged borrowings.

When a hedging instrument expires, or is sold or terminated, or 
when a hedge no longer meets the criteria for hedge accounting, 
any cumulative deferred gain or loss and deferred costs of 
hedging in equity at that time remains in equity until the forecast 
transaction occurs, resulting in the recognition of a non-
financial asset such as inventory. When the forecast transaction 
is no longer expected to occur, the cumulative gain or loss 
and deferred costs of hedging that were reported in equity are 
immediately reclassified to profit or loss.

(n)  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 period 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 
 > Plant & equipment 
 >

Leasehold improvements 

40 years
3 - 10 years
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.

(o)  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/or strong customer awareness within 
a particular geographic location. The trademarks are valued 
using a discounted cash flow methodology. The majority of the 
Group’s 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.

(p)  Goodwill

Goodwill represents the excess of the cost of an acquisition 
over the fair value of the Group’s share of the net identifiable 
assets of the acquired subsidiary, associate or business at 
the date of acquisition. Goodwill on acquisition of subsidiaries 
and businesses is included in intangible assets. Goodwill on 
acquisition of associates is included in investment in associates. 
Goodwill acquired in business combinations is not amortised. 
Instead, goodwill is tested for impairment annually, or more 
frequently if events or changes in circumstances indicate that 
it might be impaired, and is carried at cost less accumulated 
impairment losses. An impairment loss for goodwill is 
recognised immediately in profit or loss and is not reversed in a 
subsequent period. Gains and losses on the disposal of an entity 
include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of 
impairment testing (refer Note 16(a)).

37

ANNUAL REPORT 20181  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

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.

(v)  Dividends

Provision is made for the amount of any dividend declared on or 
before the end of the year but not distributed at balance date.

(w) 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; and

 > 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.

(q)  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.

(r)  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.

(s)  New motor vehicle stock and related bailment

Motor vehicles secured under bailment plans are provided to 
the Group under bailment agreements between the floor plan 
loan providers and entities within the Group. The Group obtains 
title to the vehicles immediately prior to sale. Motor vehicles 
financed under bailment plans held by the Group are recognised 
as trading stock with the corresponding liability shown as owing 
to the finance provider.

(t)  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.

(u)  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.

38

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(x)  Non-current assets held for sale

1.1  Application of new and revised accounting standards

1.1.1  AASB 9 Financial Instruments - applied from  

1 January 2018

AASB 9 Financial Instruments (“AASB 9”) replaces AASB 139 
Financial Instruments: Recognition and Measurement (“AASB 
139”) for annual periods beginning on or after 1 January 2018, 
bringing together all three aspects of the accounting for 
financial instruments:

1. 

 Classification and measurement of financial assets and 
financial liabilities;

2. 

Impairment of financial assets; and

3.  Hedge accounting.

With the exception of hedge accounting, which the Group applied 
prospectively, the Group has applied AASB 9 retrospectively, and 
adjusted comparative information where required.

The adoption of AASB 9 from 1 January 2018 resulted in 
minimal changes in accounting policies. The new accounting 
policies are set out in Note 1(m). The impact on the financial 
report is set out below.

1.1.1(a) Impact of adoption

(i) Classification and measurement of financial assets

All recognised financial assets that are within the scope of 
AASB 9 are required to be subsequently measured at amortised 
cost or fair value on the basis of the entity’s business model for 
managing the financial assets and the contractual cash flow 
characteristics of the financial assets.

On adoption of AASB 9, the Group also has the option to make 
the following irrevocable election at initial recognition of a 
financial asset:

 >

The Group may irrevocably elect to present subsequent 
changes in fair value of an equity investment that is neither 
held for trading nor contingent consideration recognised by an 
acquirer in a business combination to which AASB 3 Business 
Combinations applies in other comprehensive income.

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 profit or loss when the sale is recognised.

(y)  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.

(z)  New or revised standards and interpretations that are 

first effective in the current reporting period

The Group has applied the following amendments for the first 
time for the annual reporting period commencing 1 January 
2018, which have not have any material impacts:

 > AASB 2017-3 Amendments to Australian Accounting 

Standards - Clarifications to AASB 4

 > AASB 2017-1 Amendments to Australian Accounting 

Standards - Transfers of Investment Property, Annual 
Improvements 2014-2016 Cycle and other Amendments 
[AASB 1, AASB 128 & AASB 140]

 > AASB 2016-5 Amendments to Australian Accounting 

Standards - Classification and Measurement of Share-based 
Payment Transactions

The Group has applied the following standards for the first time 
for the annual reporting period commencing 1 January 2018:

 > AASB 9 - Financial Instruments

 > AASB 15 - Revenue from Contracts with Customers

The impact of the application of these standards has been 
assessed below.

39

ANNUAL REPORT 20181  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(z)  New or revised standards and interpretations that are first effective in the current reporting period continued

The date of initial application of AASB 9 is 1 January 2018. The Group has applied the requirements of AASB 9 to instruments that 
continue to be recognised as at 1 January 2018. The Group has not applied AASB 9 to those instruments that have been derecognised 
in prior periods. Comparative amounts in relation to instruments that have not been derecognised as at 1 January 2018 have been 
restated as follows:

Classification impact:

Statement of Other Comprehensive Income 
(extract) - 12 months to 31 December 2017

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

Items that will not be reclassified subsequently to profit or loss

Changes in the fair value of financial assets at FVOCI

Income tax benefit

As originally
presented
$’000

Adjustments
arising from
AASB 9
$’000

Restated
$’000

(22,920)

6,876

(1,482)

278

(84)

22,920

(6,876)

-

-

-

-

-

(1,482)

278

(84)

(17,332)

16,044

(1,288)

-

-

-

(22,920)

(22,920)

6,876

6,876

(16,044)

(16,044)

Total other comprehensive income for the period, net of tax

(17,332)

-

(17,332)

The Group elected to present in other comprehensive income (“OCI”) changes in the fair value of all its equity investments previously 
classified as available-for-sale, as these investments are held as a strategic investment. As a result, assets with a fair value of 
$288,033,000 were reclassified from available-for-sale financial assets to financial assets at FVOCI and net fair value losses of 
$16,044,000 were reclassified from the available-for-sale financial assets reserve to the FVOCI reserve on 1 January 2018.

Financial assets - 1 January 2018

Closing balance 31 December 2017 - AASB 139

Available-
for-sale
$’000

288,033

FVOCI
$’000

-

Reclassify investments from available-for-sale to FVOCI

(288,033)

288,033

Opening balance 1 January 2018 - AASB 9

-

288,033

40

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018 (ii) Impairment of financial assets

1.1.2   AASB 15 Revenue from Contracts with Customers - 

The Group has Trade and other receivables, and financial assets 
that are subject to AASB 9’s new expected credit loss model.

The Group was required to revise its impairment methodology 
under AASB 9 for each of these classes of assets. The impact 
of the change in impairment methodology on the Group’s 
accounting policies has been disclosed in Note 1(m).

Trade receivables

Prior to the adoption of AASB 9, in accordance with AASB 
139, the Group applied an incurred credit loss model. Upon 
adoption of AASB 9, the Group has elected to apply the simplified 
approach to measuring expected credit losses, which uses the 
lifetime expected loss allowance for all trade receivables. To 
measure the expected credit losses, trade receivables have 
been grouped based on shared credit risk characteristics and 
the days past due. On this basis, the impact of the expected loss 
allowance under AASB 9 against the loss incurred under AASB 
139 is not considered material to the Group.

(iii) Derivatives and hedge accounting 

The new general hedge accounting requirements retain the 
three types of hedge accounting. However, greater flexibility 
has been introduced to the types of transactions eligible 
for hedge accounting, specifically, broadening the types of 
instruments that qualify for hedging instruments and the types 
of risk components of non-financial items that are eligible for 
hedge accounting. In addition, the effectiveness test has been 
overhauled and replaced with the principle of an ‘economic 
relationship’. Retrospective assessment of hedge effectiveness 
is also no longer required. Enhanced disclosure requirements 
regarding the Group’s risk management activities have also 
been introduced. In accordance with AASB 9’s transition 
provisions for hedge accounting, the Group has applied the 
AASB 9 hedge accounting requirements prospectively from the 
date of initial application on 1 January 2018.

The Group’s interest rate swaps in place as at 31 December 
2017 qualify as cash flow hedges under AASB 9, and therefore 
no prior period adjustments are required. From 1 January 
2018, all interest rate swaps held by the Group will remain 
effective and designated as cash flow hedges, and therefore 
there is no impact on the year end financial report. In the 
twelve months to 31 December 2018, the Group recognised 
net fair value gains of $72,000 in the cash flow hedge reserve. 
There has been no impact on the cash flow hedge reserve from 
the transition to AASB 9.

applied from 1 January 2018

The Group has adopted AASB 15 Revenue from Contracts with 
Customers (“AASB 15”) from 1 January 2018, which supersedes 
AASB 118 Revenue (“AASB 118”). AASB 15 is based on the 
principle that revenue is recognised when control of a good 
or service transfers to a customer. The Group adopted AASB 
15 using the modified retrospective method of adoption. The 
Group’s revised accounting policies have been disclosed in Note 
1(d). Apart from providing more extensive disclosures on the 
Group’s revenue transactions, the application of AASB 15 has 
not had a material impact on the Group.

1.1.2(a) Impact of adoption

Revenue is measured based on the consideration specified in 
a contract with a customer and excludes amounts collected 
on behalf of third parties. The Group recognises revenue when 
it transfers control of a product or service to a customer. The 
Group recognises revenue from the following major sources:

(i)  New vehicles, used vehicles and associated parts sales;

(ii)  Service of vehicles;

(iii)  Sale of vehicle warranties; and

(iv)  Vehicle finance and insurance products.

(i) New and used vehicles

In previous reporting periods, revenue from the sale of new and 
used motor vehicles was recognised when the buyer accepted 
the risks and rewards of ownership, which generally occurred 
when the vehicle was delivered. In applying AASB 15, revenue 
associated with the sale of new and used vehicles is recognised 
when the performance obligation of the sale has been made and 
control of the vehicle has transferred to the customer, which is 
on the delivery of the vehicle. Therefore, the adoption of AASB 
15 has not had a material impact on revenue recognition on 
vehicle sales.

Under the Group’s standard contract terms, the customer 
has a right to return the product within a specified period and 
the Group is obliged to refund the purchase price. Prior to the 
adoption of AASB 15, AASB 137 Provisions, Contingent Liabilities 
and Contingent Assets (“AASB 137”) required the amount of 
revenue related to expected vehicle returns to be deferred and 
recognised in the Statement of Financial Position within Trade 
and other payables as a provision. In prior reporting periods, 
the expected vehicle returns were not material to the Group. 
Under AASB 15, the consideration received from the customer 
is considered variable, given the contract allows the customer 
to return the products, and requires the recognition of a refund 
liability and a corresponding adjustment to revenue for those 
vehicles that the Group expects to be returned. The Group 
provides a 7 day right of return guarantee for the majority of 
used vehicles sold. The Group uses its accumulated historical 
experience to estimate the number of returns on a portfolio 
level using the expected value method. It is considered highly 
probable that a significant reversal in the cumulative revenue 
recognised will not occur.

41

ANNUAL REPORT 20181  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(v) Finance and insurance revenue

The Group acts as an agent in sales of finance and insurance 
products to customers. Prior to the adoption of AASB 15, 
revenue associated with the sale of finance and insurance 
products has been combined with the sale of vehicles, and 
therefore recognised in line with the recognition of vehicle 
revenue. Upon adoption of AASB 15, the Group remains an agent 
in the sale of finance and insurance products. Furthermore, 
the performance obligation relating to finance and insurance 
revenue is satisfied when the product is provided to the 
customer, consistent with the general practice applied under 
AASB 118, and therefore does not require an adjustment in the 
financial report.

Contracts with finance and insurance providers stipulate a 
period in which the revenue provided to the Group can be 
clawed back if certain criteria in the contract between the 
provider and customer is not satisfied. AASB 15 classifies 
commission revenue as variable revenue, given the contract 
allows the provider to clawback commissions paid. Therefore, 
an adjustment to revenue and a refund liability are required 
by AASB 15 to reflect the balance which the Group expects 
to refund the providers. The Group has applied the expected 
value method to estimate the value of commissions that would 
be clawed back, as this method best predicts the amount of 
variable consideration to which the Group will be entitled. The 
impact of the clawback provisions has been calculated, and is 
not considered to be material for the Group or highly probable to 
result in a significant reversal of revenue recognised.

Certain new accounting standards and interpretations have 
been published that are not mandatory for 31 December 2018 
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.

(aa) 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.

1.1.1 AASB 16 Leases

AASB 16 was issued in February 2016 and is applicable for 
reporting periods beginning on or after 1 January 2019. The 
application of AASB 16 will result in almost all leases being 
recognised on the balance sheet by lessees, as the distinction 
between operating and finance leases is 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.

(z)   New or revised standards and interpretations that are 
first effective in the current reporting period continued

(ii) Parts

Revenue arising from the sale of parts was previously 
recognised under AASB 118 when the buyer accepted the risks 
and rewards of ownership, which was generally by taking 
delivery of the part, or delivery of the vehicle to which the part 
was fitted. Following the adoption of AASB 15, the performance 
obligation has been assessed by the Group as delivery of parts 
to the customer. As such the adoption of AASB 15 has resulted 
in no changes to the accounting treatment of revenue associated 
with parts sales.

(iii) Service revenue

The Group provides services work on customers’ vehicles 
which is carried out under instruction from the customer. These 
services can be obtained from other providers. Prior to the 
adoption of AASB 15, revenue from the provision of services 
was recognised based on when the services were rendered, at 
invoiced amounts. Generally, the risks and rewards of ownership 
are transferred to the customer at the point in time in which the 
service repairs are transferred to the buyer. In adopting AASB 
15, revenue relating to the service of vehicles is recognised over 
time. In applying AASB 15, no adjustments have been made to 
the financial statements, as the nature of services provided by 
the Group typically results in the service being commenced and 
completed on the same day.

(iv) Warranties revenue

The Group sells extended warranties beyond those provided 
by the manufacturer, which further protects the customer 
for repairs and defects in the vehicle over a specified period. 
In reporting periods prior to 2018, the consideration received 
for extended warranties was bundled with the vehicle sale, 
and therefore recognised by the Group at the point in time the 
risks and rewards of the vehicle transferred to the customer. 
Furthermore, as required by AASB 137, the Group recognised 
a provision on the Statement of Financial Position for the 
estimated costs of fulfilling the obligation.

Under AASB 15, warranties are considered to be a distinct 
service as they are both regularly supplied by the Group 
to customers on a stand-alone basis and are available to 
customers from other providers in the market. As a result, 
where vehicles are being sold with an extended warranty 
included, a portion of the vehicle sale price is required to be 
allocated to the warranty based on the stand-alone selling 
price of those services. Revenue relating to the warranties is 
recognised over time, while the transaction price allocated to 
these services is recognised as a contract liability at the time 
of the initial sales transaction and is released on a straight-line 
basis over the period of the service. In transitioning to AASB 
15, the effect of deferring revenue associated with the sale 
of extended warranties and accounting for warranties as a 
separate performance obligation is not material.

42

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018AASB 16 will change how the Group accounts for leases 
previously classified as operating leases under AASB 117, which 
were off-balance sheet. On initial application of AASB 16, the 
Group will:

 > Recognise right-of-use assets and lease liabilities in the 

consolidated statement of financial position, initially measured 
at the present value of the future lease payments; and

 > Recognise depreciation of right-of-use assets and interest on 
lease liabilities in the consolidated statement of profit or loss.

1. Impact on Lease Accounting

The Group has reviewed all the Group’s leasing arrangements in 
light of the changes required under AASB 16. The standard will 
affect the accounting for the Group’s operating leases.

As at the reporting date, the Group had non-cancellable 
operating lease commitments of $259 million, see Note 33(b). 
Included in these non-cancellable operating lease commitments 
are low value leases (less than $5,000) and short-term leases 
(less than 12 months). The Group will adopt the practical 
expedient, allowing the Group to recognise these low value and 
short term leases on a straight-line basis as an expense in profit 
or loss. The low value leases and short-term leases held by the 
Group are not material.

For the remaining lease commitments the Group has modelled 
the impacted leases existing at the reporting date and expects 
to recognise right-of-use assets in the region of approximately 
$220 million, with lease liabilities of approximately $250 million 
on 1 January 2019, and deferred tax assets of $9 million. Overall, 
net assets will decrease by approximately $20 million.

As at the reporting date, all things being equal, the 2019 net 
profit before tax of the Group will decrease by approximately $4 
million as a result of adopting the new rules.

In modelling these scenarios, the Directors have made certain 
assumptions and judgements in relation to economic conditions 
including, but not limited to: the incremental borrowing rates, 
composition of the lease portfolio, and likely exercise of renewal 
options that may cause the actual output to differ from that 
concluded in FY19.

Operating cash flows will increase and financing cash flows 
decrease by approximately $27 million as repayment of the 
principal portion of the lease liabilities will be classified as cash 
flows from financing activities. Interest costs associated with 
the lease liabilities will remain classified as cash flows from 
operating activities.

The Group’s activities as a lessor are not material and hence 
the Group does not expect any significant impact on the 
financial statements.

2. Application by Group

The Group will apply the standard from its mandatory 
adoption date of 1 January 2019. The Group will apply the full 
retrospective method and will restate comparative amounts for 
the year prior to first adoption.

43

ANNUAL REPORT 20182  CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

(iv)  Deferred Tax Asset

Recognition and measurement of deferred tax assets require 
certain judgements and assumptions to be made, including but 
not necessarily limited to the expected realisation of certain 
assets and liabilities and the likelihood and timing of profits 
available in the future (refer to Note 17).

(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 
23 and Note 26.

(a)  Critical accounting estimates, assumptions and 

judgements

Estimates, assumptions and judgements are continually 
evaluated and are based on historical experience and other 
factors, including expectations of future events that may have 
a financial impact on the Group and that are believed to be 
reasonable under the circumstances.

The Group makes estimates, assumptions and judgements 
concerning the future. The resulting accounting estimates 
will, by definition, seldom equal the related actual results. The 
estimates, assumptions and judgements that have a significant 
risk of causing a material adjustment to the carrying amounts of 
assets and liabilities are discussed below:

(i)  Classification of investment in Automotive Holdings Group 
(AHG)

In the period ended 31 December 2018, the Group increased 
its shareholding in Automotive Holdings Group Limited (AHG 
Limited) to 28.84% 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, no material transactions with 
AHG Limited, and no participation in policy-making decisions. 
Therefore, in line with our election made on application of AASB 
9, the investment in AHG Limited is accounted for as an asset 
held at fair value through other comprehensive income (FVOCI).

(ii)  Recoverability of goodwill and other intangibles with indefinite 
useful lives

Goodwill and other intangibles with indefinite useful lives with a 
carrying value of $313,325,000 (2017: $309,414,000) 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 16(a).

(iii)  Fair value estimation of land and buildings

Land and buildings (including construction in progress) with 
a carrying value of $331,674,000 (2017: $306,572,000) 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 15. 

44

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 20183  REVENUE

Set out below is the disaggregation of the Group’s revenue from contracts with customers:

Consolidated Revenue for the year ended 31 December 2018

Type of goods or service

New Vehicles

Used Vehicles

Parts

Service

Other

Revenue from external customers

Timing of revenue recognition

At a point in time

Over time

Total revenue from external customers

Geographical markets

Australia

Consolidated Revenue for the year ended 31 December 2017

Type of goods or service

New Vehicles

Used Vehicles

Parts

Service

Other

Revenue from external customers

Timing of revenue recognition

At a point in time

Over time

Total revenue from external customers

Geographical markets

Australia

Retailing
$’000

Property
$’000

Investments
$’000

Total
$’000

2,613,228

688,655

502,019

258,862

35,818

4,098,582

3,839,720

258,862

4,098,582

-

-

-

-

352

352

352

-

352

-

-

-

-

13,868

13,868

2,613,228

688,655

502,019

258,862

50,038

4,112,802

13,868

3,853,940

-

258,862

13,868

4,112,802

4,098,582

352

13,868

4,112,802

Retailing
$’000

Property
$’000

Investments
$’000

Total
$’000

2,544,143

749,391

473,982

246,396

29,396

4,043,308

3,796,912

246,396

4,043,308

-

-

-

-

970

970

970

-

970

-

-

-

-

14,501

14,501

2,544,143

749,391

473,982

246,396

44,867

4,058,779

14,501

3,812,383

-

246,396

14,501

4,058,779

4,043,308

970

14,501

4,058,779

45

ANNUAL REPORT 20184  OTHER GAINS

Gain on disposal of non-financial assets

Reversal of impairment of land and buildings

Gain on disposal of Available-for-sale financial assets

5  EXPENSES

Profit before income tax includes the following specific expenses:

Depreciation

  Buildings

  Plant and equipment

Total depreciation

Amortisation

  Leasehold improvements

  Brand names

Total amortisation

            CONSOLIDATED

2018 
$’000

6,059

2,433

-

8,492

2017 
$’000

15,644

210

2,080

17,934

            CONSOLIDATED

2018 
$’000

2017 
$’000

3,679

9,867

13,546

2,056

39

2,095

3,771

10,399

14,170

2,387

94

2,481

Note

15

15

15

16

Total Depreciation and Amortisation

15,641

16,651

Finance costs

  Vehicle bailment

  Other

Total finance expense

Rental expense relating to operating leases

  Minimum lease payments

Superannuation

Provision expenses

Inventory

  Allowance for expected credit losses

Share-based payments

Business acquisition costs

Business restructuring costs

46

14,631

11,899

26,530

12,773

11,825

24,598

40,812

41,391

29,119

29,866

3,159

188

3,347

391

680

-

4,043

79

4,122

2,105

62

5,145

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018 
6 

INCOME TAX

(a)  Income tax expense

Current income tax expense

Deferred income tax expense/(benefit)

            CONSOLIDATED

2018 
$’000

2017 
$’000

Note

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

17

(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% (2017 - 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

Application of capital loss against current year capital gains

Sundry items

Income tax expense

(c)  Tax benefit relating to items of other comprehensive income

Aggregate deferred tax arising in the reporting period and directly debited to other  
comprehensive income

29,961

2,595

32,556

2,595

-

2,595

37,808

(352)

37,456

272

(624)

(352)

133,731

135,629

40,119

40,689

173

(4,161)

532

(730)

(2,760)

(617)

32,556

19

(4,350)

400

(63)

-

761

37,456

26,648

5,178

47

ANNUAL REPORT 20187  DIVIDENDS

(a)  Ordinary dividends fully franked based on tax paid @ 30%

Final dividend for the year ended 31 December 2017 of 22.5 cents per share (2016: 22.0 cents)  
paid on 18 April 2018

Interim dividend of 14.0 cents (2017: 13.5 cents) per share paid on 5 October 2018

Total dividends paid

Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment  
plan during the years ended 31 December 2018 and 2017 were as follows:

Paid in cash

(b)  Dividends not recognised at year end

            CONSOLIDATED

2018 
$’000

2017 
$’000

43,045

26,783

69,828

41,984

25,786

67,770

69,828

67,770

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 2019 out of the retained profits at 31 December 
2018 but not recognised as a liability at year end is:

43,045

43,083

(c)  Franked dividends

The final dividend recommended after 31 December 2018 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 2018.

Franking credits available for subsequent reporting periods based on a tax rate of 30.0% (2017: 30.0%)

181,877

166,029

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

(18,448)

(18,464)

8  CURRENT ASSETS – CASH AND CASH EQUIVALENTS

Current assets 

Cash at bank and on hand

18,868

10,827

The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows.

48

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018 
9  CURRENT ASSETS – TRADE AND OTHER RECEIVABLES

Trade and other receivables

Allowance for expected credit losses

(a)  The ageing of trade receivables at 31 December 2018 is detailed below:

            CONSOLIDATED

2018 
$’000

2017 
$’000

158,950

164,429

(2,664)

(2,622)

156,286

161,807

Not past due

Past due 0-30 days

Past due 31 days plus

Total

            CONSOLIDATED

2018 

2017 

Gross 
$’000

Provision 
$’000

Gross 
$’000

Provision 
$’000

147,220

2,004

154,100

6,837

4,893

171

489

5,283

5,046

158,950

2,664

164,429

1,985

132

505

2,622

Included in the Group’s trade receivables balance are debtors with a net carrying amount of $11,070,000 (2017: $9,692,000) which are 
past due at the reporting date. The Group has applied the expected credit losses methodology to these trade receivables, in line with 
AASB 9. The average age of these receivables is 62 days (2017: 62 days).

(b)  Movement in expected credit losses

Opening balance

Additional provisions

Amounts written off during the year

Closing balance

            CONSOLIDATED

2018 
$’000

2,622

188

(146)

2,664

2017 
$’000

3,187

(79)

(486)

2,622

The Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial 
recognition of the receivable. The expected credit losses on these financial assets are estimated using a provision matrix based on the 
Group’s historical credit losses experience. In line with this, the Group has provided 10% for all receivables over 90 days and 2.5% of 
total trade receivables excluding motor vehicle debtors.

49

ANNUAL REPORT 2018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

11  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.

12  NON-CURRENT ASSETS – RECEIVABLES

Other loans receivable

            CONSOLIDATED

2018 
$’000

519,795

(8,022)

511,773

2017 
$’000

501,770

(10,458)

491,312

110,379

101,319

(5,209)

105,170

75,653

(2,429)

73,224

(5,109)

96,210

67,123

(1,993)

65,130

690,167

652,652

12,617

11,172

-

7,145

8,303

10,600

50

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201813  NON-CURRENT ASSETS – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Financial assets at fair value through other comprehensive income

Shares in a listed company - Automotive Holdings Group Limited (1)

Shares in an unlisted company - Dealercell Holdings Pty Limited (2)

            CONSOLIDATED

2018 
$’000

2017 
$’000

149,186

287,445

588

588

149,774

288,033

(1)   The Directors have assessed the fair value of the investment as at 31 December 2018 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 2018 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 Financial assets at fair value through other comprehensive income

Details of the Group’s assets held at fair value through other comprehensive income and information about the fair value hierarchy as at 
31 December 2018 are as follows:

Unobservable inputs used in determination of fair values

Class of Financial Assets  
and Liabilities

Level 1 Financial assets at  
fair value through other 
comprehensive income - 
Listed entities

Level 3 Financial assets at  
fair value through other 
comprehensive income - 
Unlisted entities

Carrying
Amount
31/12/18
$’000

149,186

Carrying
Amount
31/12/17
$’000

287,445

Valuation Technique

Key Input

Quoted bid prices in an active 
market.

Quoted bid prices in an active 
market.

588

588 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.

14  NON-CURRENT ASSETS – INVESTMENTS IN ASSOCIATES

Shares in associate - Norna Limited

Shares in associate - DealerMotive Limited

            CONSOLIDATED

2018 
$’000

1,620

10,457

12,077

2017 
$’000

1,620

10,380

12,000

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting (refer Note 41).

Reconciliation of the carrying amount of investment in associate is set out in Note 41(b).

51

ANNUAL REPORT 2018 
15  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

2018 
$’000

2017 
$’000

220,304

107,018

327,322

199,489

106,860

306,349

4,352

223

22,874

(9,020)

13,854

96,033

(53,154)

42,879

28,756

(11,847)

16,909

85,795

(48,155)

37,640

Total property, plant and equipment

388,407

361,121

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 2018 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.

52

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at 31 December 2018 are as follows:

Class of 
Financial 
Assets & 
Liabilities

Level 3  
Car – HBU 
Alternate 
Use

Level 3  
Car 
Dealership

Unobservable inputs used in determination of fair values

Carrying 
Amount 
31/12/18 
$’000

Carrying 
Amount 
31/12/17 
$’000

74,821

75,313

Valuation 
Technique

Key Input

Input

Average / 
Range  
2018

Average / 
Range  
2017

Direct 
comparison

External 
valuations

Price/sqm 
land

Average 
$2,261/sqm

Average 
$2,276/sqm

Other Key 
Information

Land size

Range 
$1,240 
- $3,990 
/sqm

Capitalisa-
tion rate

Average 
7.2%

Range 
$1,260 
- $4,004 
/sqm

Average 
7.3%

210,566

199,591

External 
valuations 
industry 
benchmarks

Summation 
method, 
income 
capitalisa-
tion and 
direct 
comparison

Range 
(weighted 
average)  
2018

Range 
(weighted 
average)  
2017

Average 
5,516 sqm

Average 
5,516 sqm

Range  
2,015 
- 18,070 sqm

Range  
2,015 
- 18,070 sqm

Level 3  
Truck 
Dealership

24,778

18,098

Direct 
comparison

External 
valuations

Price/sqm 
land 
Price 
/sqm GBA

Net rent  
/ sqm Land

Average 
$98/sqm

Average 
$100/sqm

Range 3.3% 
- 12.3%

Range 3.2% 
- 10.9%

Range  
$25 - $297 
/sqm

Range  
$25 - $297 
/sqm

Net rent  
/sqm GBA

Average 
$211/sqm

Average 
$206/sqm

Range  
$106 
- $1,573 
/sqm

Range  
$106 
- $1,573 
/sqm

Average 
$443/sqm

Average 
$324/sqm

Land size

Average 
18,641 sqm

Average 
18,641 sqm

Range  
$282 - $596 
/sqm

Range  
$201 - $428 
/sqm

Range  
7,218 
- 25,700 
sqm

Net rent 
/sqm land

Average 
$22/sqm

Range  
7,218 
- 25,700  
sqm

Average 
$22/sqm

Range  
$17 - $27 
/sqm

Range  
$17 - $27 
/sqm

Capitalisa-
tion rate

Average 
4.9%

Average 
6.7%

Range  
4.4% - 6.2%

Range  
5.6% - 8.7%

Level 3 
Other 
Logistics

17,157

13,347

Income 
capitalisa-
tion method 
supported by 
market 
comparison

External 
valuations

Capitalisa-
tion Rate

Average 
5.6%

Average 
7.1%

Net rent  
/sqm GBA

Average 
$109/sqm

Average 
$109/sqm

Range  
3.9% - 7.9%

Range  
6.4% - 9.5%

Range  
$79 - $179 
/sqm

Range  
$79 - $179 
/sqm

Total

327,322

306,349

There were no transfers between levels in the year.

Explanation of asset classes: Car - Highest and Best Use (HBU) alternate use refers to properties currently operated as car dealerships 
which have a HBU greater than that of a car dealership; Car Dealership refers to properties operating as car dealerships with a HBU 
consistent with that use; Truck Dealership refers to properties being operated as truck dealerships with a HBU consistent with that use; 
Other Logistics are industrial properties used for parts warehousing and vehicle logistics.

53

ANNUAL REPORT 201815  NON-CURRENTS ASSETS - PROPERTY, PLANT & EQUIPMENT CONTINUED

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 $146,186,000 (2017: $132,688,000). If freehold 
buildings were carried at historical cost, its current carrying value (after depreciation) would be $107,018,000 (2017: $106,860,000).

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:

Freehold
buildings
$’000

106,860

4,929

(1,092)

Construction
in progress
$’000

223

5,200

(1,071)

Leasehold
improve-
ments
$’000

16,909

4,253

(5,252)

Plant and
equipment
$’000

37,640

16,619

Total
$’000

361,121

45,019

(1,513)

(15,830)

Consolidated 2018

Opening net book amount

Additions

Disposals/Transfers

Revaluation gain recognised in asset 
revaluation reserve

Revaluation recognised in profit and loss

Freehold
land
$’000

199,489

14,018

(6,902)

11,266

2,433

-

-

-

-

-

Depreciation/amortisation charge

-

(3,679)

Carrying amount at end of year

220,304

107,018

4,352

Consolidated 2017

Opening net book amount

Additions

Disposals/Transfers

Revaluation gain recognised in asset 
revaluation reserve

Revaluation recognised in profit and loss

Depreciation/amortisation charge

188,108

22,432

(16,641)

5,380

210

-

106,693

1,748

2,190

-

-

(3,771)

3,706

4,782

(8,265)

-

-

-

Carrying amount at end of year

199,489

106,860

223

54

-

-

-

-

(2,056)

13,854

(9,867)

42,879

18,141

2,421

(1,266)

-

-

38,062

12,875

(2,898)

-

-

(2,387)

16,909

(10,399)

37,640

11,266

2,433

(15,602)

388,407

354,710

44,258

(26,880)

5,380

210

(16,557)

361,121

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201816  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 31(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

            CONSOLIDATED

2018 
$’000

306,783

6,542

313,325

2017 
$’000

302,833

6,581

309,414

302,833

292,233

3,950

306,783

10,600

302,833

6,581

(39)

6,542

6,675

(94)

6,581

(a)  Impairment tests for goodwill
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

298,633

5,492

304,125

8,150

1,050

9,200

294,683

5,531

300,214

8,150

1,050

9,200

313,325

309,414

The recoverable amount of a CGU or group of CGUs to which goodwill and other indefinite life intangible assets is allocated is 
determined based on the greater of its value in use and its fair value less costs of disposal. Fair value is determined as being the 
amount obtainable from the sale of a CGU in an arms length transaction between knowledgeable and willing parties at balance date. 
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 2019 financial budgets approved by the Board, perpetual growth rates taking into 
consideration historical performance and expected operating conditions, a pre-tax discount rate of 11% (2017: 11%), and growth rates 
not deemed to exceed the long term average growth rate for the industry. Sensitivity analysis has been performed on the assumptions 
used in the model, including increasing discount rates by up to 2% and flexing growth scenarios to no growth and -3% growth.

Based on these scenarios, the Directors have concluded that changes in the key assumptions are not expected to cause the carrying 
amount of the CGUs to exceed the recoverable amount, however see Note 26 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.

55

ANNUAL REPORT 201817  NON-CURRENT ASSETS - DEFERRED TAX ASSETS

Deferred tax assets

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

  Expected credit losses

  Employee benefits

Sundry items

Total amounts recognised in profit or loss

Amounts recognised directly in equity

Revaluation of financial assets at fair value through other comprehensive income

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 2018

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 financial assets at fair value through other comprehensive income

  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 2018

6(a)

29(a)

29(a)

29(a)

29(a)

56

Notes

            CONSOLIDATED

2018 
$’000

17,844

2017 
$’000

-

-

(2,273)

754

(6,274)

(1,931)

808

15,889

5,456

14,702

21,434

(20,763)

10

2,461

3,142

(2,273)

115

-

(2,595)

(78)

30,059

(3,380)

(31)

(3,973)

-

17,844

866

(4,384)

(1,715)

788

15,609

6,578

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)

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201818  CURRENT LIABILITIES – TRADE AND OTHER PAYABLES

Trade and other payables

Trade payables (1)

Other payables

(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

            CONSOLIDATED

2018 
$’000

2017 
$’000

66,854

79,065

56,555

96,298

145,919

152,853

35

35

-

-

35

20

20

118

118

138

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 30).

Bailment finance of the Group currently bears an average variable interest rate at 31 December 2018 of 4.43% (2017: 4.18%). 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 6% (2017: 14%) 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 $35,000 
(2017: $138,000) has been recognised in equity in the hedging reserve (Note 30 (iii)). 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 2018 are as follows:

Unobservable inputs used in determination of fair values

Class of  
Financial Assets and Liabilities

Level 2  
Cash flow hedges –  
Interest rate swaps

Carrying
Amount
31/12/18
$’000

35

Carrying
Amount
31/12/17
$’000

Valuation 
Technique

Key Input

138 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.

57

ANNUAL REPORT 201820  CURRENT LIABILITIES - BORROWINGS - BAILMENT AND OTHER CURRENT LOANS

(a)  Bailment finance and other current loans

Bailment finance

Capital loan

(i)  Bailment finance

            CONSOLIDATED

2018 
$’000

2017 
$’000

570,273

1,342

571,615

544,194

1,006

545,200

Bailment finance is provided on a vehicle by vehicle basis by various finance providers at an average interest rate of 4.43% p.a. 
applicable at 31 December 2018 (2017: 4.18%). 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 30.

(iii)  Fair value disclosures

Details of the Group’s fair value of interest bearing liabilities is set out in Note 30.

(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

2,190

13,221

22  CURRENT LIABILITIES – PROVISIONS

Annual Leave

Long Service Leave

24,287

24,194

48,481

24,318

21,723

46,041

58

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201823  CURRENT LIABILITIES – OTHER CURRENT LIABILITIES

Contract liabilities

Contingent consideration

            CONSOLIDATED

2018 
$’000

5,862

-

5,862

2017 
$’000

5,319

250

5,569

Contingent consideration represents the estimated fair value of the contingent consideration relating to the acquisition of Tony Ireland 
Group. The contingent consideration was payable up to a maximum of $500,000 based on the Tony Ireland Group achieving future 
earnings performance targets. The Tony Ireland Group achieved an earnings performance target that resulted in a payment of $221,000 
in 2018. The remainder of the contingent consideration has been released.

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)

235,700

76,914

312,614

235,700

78,256

570,273

884,229

170,200

78,144

248,344

170,200

79,150

544,194

793,544

(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 30 for maturities.   

59

ANNUAL REPORT 201824  NON-CURRENT LIABILITIES – BORROWINGS (SECURED) CONTINUED

ASSETS PLEDGED AS SECURITY

The carrying amounts of assets pledged as security are:

Non-current assets pledged as security

Freehold land and buildings - first mortgage

Other non-current assets

Current assets pledged as security

Inventories

Other current assets

Total assets pledged as security

FINANCING ARRANGEMENTS

The consolidated entity has access to the following lines of credit at balance date:

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

2018 
$’000

2017 
$’000

329,674

540,214

304,456

674,645

570,273

146,765

544,194

143,416

1,586,926

1,666,711

290,000

290,000

25,000

78,256

767,469

27,018

25,000

79,150

694,294

27,018

1,187,743

1,115,462

235,700

78,256

570,273

15,176

899,405

54,300

25,000

197,196

11,842

288,338

170,200

79,150

544,194

15,039

808,583

119,800

25,000

150,100

11,979

306,879

(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.

60

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201825  NON-CURRENT LIABILITIES - PROVISIONS

Long Service Leave

            CONSOLIDATED

2018 
$’000

5,052

2017 
$’000

5,988

(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 was 
derecognised in 2017 upon the execution of a new lease agreement on the leased property.

26  NON-CURRENT LIABILITIES - OTHER NON-CURRENT LIABILITIES

Other (contingent consideration)

19,422

19,369

Other non-current liabilities represent the estimated fair value of the contingent consideration relating to the acquisition of Birrell 
Motors Group. 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, 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 2020 based on the track record of the 
acquired businesses, and upside in the business for luxury vehicles. Should the businesses not achieve the expected future milestones, 
the associated goodwill balance will be reviewed for impairment within the VIC & TAS CGU. There has been no change in the fair value 
of the contingent consideration since the acquisition date except for unwinding of the discounting.

61

ANNUAL REPORT 201827  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 Limited, 
Automotive Holdings Group Limited, Smartgroup Corporation 
Limited (divested in 2017), and Dealercell Holdings Pty Limited.

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 operating 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 property plant and equipment and 
investment reserves in equity (refer Note 1(n)). 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. Funding costs in relation to bills payable 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.

62

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(e)  Segment results

Segment reporting 2018

Car Retailing
$’000

Truck
Retailing
$’000

Property
$’000

Investments
$’000

Eliminations
$’000

Consolidated
$’000

Sales to external customers

3,670,590

427,992

Inter-segment sales

Total sales revenue

TOTAL REVENUE

-

3,670,590

3,670,590

-

427,992

427,992

352

24,014

24,366

24,366

17,878

(7,088)

10,790

-

-

-

13,699

3,554

-

13,868

-

4,112,802

-

(24,014)

-

13,868

13,868

(24,014)

4,112,802

(24,014)

4,112,802

13,868

(3,681)

10,187

77

-

-

-

-

-

-

(181,400)

181,400

-

-

-

(11,266)

-

-

152,140

(26,530)

125,610

77

(680)

-

2,433

6,023

318

12,652

(1,706)

10,946

-

-

-

-

-

-

10,946

28,043

(171,136)

170,134

133,781

107,742

(14,055)

93,687

-

(680)

-

-

2,469

318

95,794

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

Son of Holdback (net of costs)

SEGMENT PROFIT

Unallocated corporate expenses

PROFIT BEFORE TAX

Income tax expense

NET PROFIT

Depreciation and amortisation

(10,843)

(1,119)

(3,679)

Non cash expenses (reversal of 
expenses) other than depreciation and 
amortisation

Impairment of trade receivables

Write down (back) of inventories to net 
realisable value

1,498

(5)

(2,210)

549

47

310

-

-

-

-

-

-

-

ASSETS

Segment assets

LIABILITIES

Segment liabilities

NET ASSETS

1,154,003

122,457

310,131

181,077

718,857

435,146

108,929

13,528

159,785

150,346

123,619

57,458

Acquisitions of non-current assets

23,459

1,363

24,148

43,142

(50)

133,731

(32,556)

101,175

(15,641)

2,047

42

(1,900)

1,767,668

1,111,190

656,478

92,112

-

-

-

-

-

-

-

-

63

ANNUAL REPORT 201827  SEGMENT INFORMATION CONTINUED

(e)  Segment results continued

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

(1,330)

(337)

43

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

64

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 201828  CONTRIBUTED EQUITY

(a)  Paid up capital

Ordinary shares - Fully paid

            CONSOLIDATED

2018 
$’000

2017 
$’000

371,405

369,028

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.

Included in the share capital is 1,026,077 (2017: Nil) number of ordinary shares held by the Employee Share Trust that were purchased 
during the period on market.

(b)  Movements in ordinary share capital

Date

Details

01-Jan-2018

Opening balance

Number 
of shares

191,008,478

Issue price

10-Jan-2018

Issue of shares to staff under share incentive schemes

300,823

$7.90

31-Dec-2018

Closing balance

01-Jan-2017

16-Jan-2017

24-Feb-2017

27-Mar-2017

04-Jul-2017

Opening balance

Issue of shares to staff under share incentive schemes

Issue of shares to staff under share incentive schemes

Issue of shares to staff under share incentive schemes

Issue of shares to staff under share incentive schemes

31-Dec-2017

Closing balance

191,309,301

190,492,806

50,460

175,843

116,960

172,409

191,008,478

$9.06

$9.28

$9.27

$8.16

$’000

369,028

2,377

371,405

364,449

457

1,632

1,084

1,406

369,028

65

ANNUAL REPORT 201829  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 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

Shares acquired by the Employee Share Trust

Employee share schemes - value of employee services

Transfer to share capital (shares issued)

Balance at the end of the financial year

Investment revaluation reserve:

Balance at beginning of the financial year

Loss on revaluation of financial assets held at fair value through other comprehensive 
income

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

66

            CONSOLIDATED

2018 
$’000

2017 
$’000

Notes

56,820

(25)

52,728

(97)

(49,628)

(34,368)

(131,473)

(124,306)

19,868

38,131

52,728

11,266

(3,794)

(3,380)

56,820

(97)

103

(31)

(25)

52,781

5,380

(3,819)

(1,614)

52,728

(291)

278

(84)

(97)

(34,368)

(34,486)

(3,973)

4,664

-

(13,965)

391

(2,377)

(49,628)

420

1,636

536

-

2,105

(4,579)

(34,368)

15

29(b)

17

17

17

19,868

37,394

(181,400)

(22,920)

17

30,059

6,876

-

(131,473)

(1,482)

19,868

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(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

2018 
$’000

2017 
$’000

Notes

367,855

101,175

(1,619)

3,794

(69,828)

401,377

335,779

98,173

(2,146)

3,819

(67,770)

367,855

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(n).

(ii)  Hedging reserve

The hedging reserve contains the effective portion of interest rate hedge arrangements incurred as at the reporting date.

(iii)  Investment revaluation reserve

The investment revaluation reserve represents the cumulative gains and losses arising on assets held at FVOCI 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.

(iv)  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 36 and 37.

30  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.

67

ANNUAL REPORT 201830  FINANCIAL INSTRUMENTS CONTINUED

LIQUIDITY RISK

Overview continued

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 exposure 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 risks 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. The Group applies the 
simplified approach permitted by AASB 9, which requires 
expected lifetime credit losses to be recognised from initial 
recognition of the receivable. The expected credit losses on 
these financial assets are estimated using a provision matrix 
based on the Group’s historical credit loss experience.

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 at balance date, 
excluding the value of any collateral or other security, is 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 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 set out in Note 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 2018, 
approximately 21% (2017: 29%) of the Group’s borrowings were 
at a fixed rate of interest (excluding bailment finance). 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 2018 was 
$35,000 liability (2017: $138,000 liability), with the movement 
being recognised in equity for the consolidated entity.

 (ii)  Interest rate sensitivity

The sensitivity analysis 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 variables were held constant, the Group’s 
net profit after tax would increase/decrease by $4,421,000 
(2017: $3,923,000) per annum. This is mainly due to the Group’s 
exposures to interest rates on its variable rate borrowings.

68

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(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

          Average contracted  

fixed interest rate

Notional  
principal amount

2018
%

2.38% 

- 

2.38% 

2017
%

2.34% 

2.38% 

4.72% 

2018
$’000

15,000

-

15,000

2017
$’000

8,000

15,000

23,000

       Fair value

2018
$’000

2017
$’000

(35)

-

(35)

(20)

(118)

(138)

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.

69

ANNUAL REPORT 2018            
30  FINANCIAL INSTRUMENTS CONTINUED

CREDIT RISK

(i)  Exposure to Credit Risk

The carrying amount of financial assets (as per Notes 9, 11(b) and 12) represents the maximum credit exposure. The maximum 
exposure to credit risk as at the reporting date was:

Trade and other receivables

Less: Allowance for expected credit losses

(ii)  Impairment Losses

The aging of trade receivables at reporting date is detailed in Note 9.

(iii)  Fair values & Exposures to Credit & Liquidity Risk

            CONSOLIDATED

2018 
$’000

2017 
$’000

167,253

182,174

(2,664)

(2,622)

164,589

179,552

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 expected credit losses

Cash and cash equivalents

Financial liabilities

Bills payable and fully drawn advances

Capital loan

Vehicle bailment

Trade and other payables

Derivative financial instruments

164,589

18,868

183,457

235,700

78,256

570,273

145,919

35

179,552

10,827

190,379

170,200

79,150

544,194

152,853

138

1,030,183

946,535

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.

70

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(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 2018

INTEREST BEARING

Floating rate

Financial assets

Cash and cash equivalents

18,868

Average interest rate

1.81%

Financial liabilities

Vehicle bailment (current)

Fully drawn advances

Fully drawn advances (1)

Capital loan (Non-current)

595,851

10,631

181

2,011

608,674

-

-

-

-

-

-

-

-

-

-

-

-

10,631

197,705

52,219

50,957

-

2,346

12,977

-

2,346

200,051

-

7,168

59,387

-

2,151

53,108

-

-

-

-

-

26,791

26,791

Average interest rate

4.13%

3.61%

3.51%

3.67%

3.98%

4.71%

Fixed rate

Financial liabilities

Capital loan (Non-current)

1,957

1,957

1,957

1,957

50,957

Average interest rate

3.84%

NON INTEREST BEARING

Financial assets

Trade debtors

164,589

Financial liabilities

Trade and other payables

145,919

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(1)  The amount included in fully drawn advances relate to variable rates that are hedged with interest rate swaps to fixed rates.

18,868

595,851

322,143

181

42,813

960,988

58,785

164,589

145,919

71

ANNUAL REPORT 201830  FINANCIAL INSTRUMENTS CONTINUED

CREDIT RISK continued

(iii)  Fair values & Exposures to Credit & Liquidity Risk continued

Maturity profile continued

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

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

10,827

566,364

199,025

626

102,322

868,337

1,305

7,145

172,408

179,553

152,872

(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.

72

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018NOTES TO AND FORMING PART OF  
THE FINANCIAL STATEMENTS
31 DECEMBER 2018

31  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

*

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

*
*
*
*
*
*
*
*
*

*

*

*
*
*
*
*
*
*
*

     EQUITY HOLDING

2018 
%
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
100
80
100
100
100
100
100
100
100
100
80

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

73

ANNUAL REPORT 201831  INVESTMENTS IN SUBSIDIARIES CONTINUED

Name of Entity

Port City Autos Pty Ltd

Adverpro Pty Ltd

Cheap Cars QLD Pty Ltd

Eurocars (SA) Pty Ltd

Finmo Pty Ltd

   EQUITY HOLDING

2018
%

100

100

100

100

100

2017
%

100

100

100

100

100

*

*

*

*

*

All subsidiaries that 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

2018
$’000

2017
$’000

-

426,334

426,334

6,480

64,866

71,346

-

519,535

519,535

11,366

25,975

37,341

371,405

134,428

369,028

122,835

1,683

(107,112)

(45,416)

354,988

1,683

19,868

(31,220)

482,194

81,707

(151,341)

74,230

(17,526)

All 100% owned 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 2018. Under the deed of cross guarantee each of these companies guarantee the debts of the other 
named companies.

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 32(a) and 32(b) in respect of guarantees entered into by the parent entity in relation to debts of its subsidiaries.

74

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018 
(a)  Acquisition of businesses

The Group acquired the following businesses during the 2018 year as detailed below:

Year

2018

2018

2018

Name of business

Southern Vales Nissan

Metro Nissan

Toowoomba Motor Group

Date of acquisition

Principal activity

29-Jun-2018

31-Aug-2018

09-Oct-2018

Motor Dealership

Motor Dealership

Motor Dealership

Proportion 
acquired

100%

100%

100%

During 2018 the acquired businesses contributed revenue of $15,703,000 and a profit before tax of $400,000 to the consolidated result. 
If the acquisition had occurred on 1 January 2018, the consolidated revenue and the consolidated profit before tax of the Group would 
have been approximately $4,210,473,000 and $134,931,000 respectively.

Allocation of purchase consideration

The purchase price of the businesses acquired has been allocated as follows:

Cash consideration 

Contingent consideration

Total purchase consideration

Consolidated fair value at acquisition date

Net assets acquired

Receivables, prepayments

Inventory

Property, plant and equipment

Creditors, borrowings and provisions

Net assets acquired

Acquisition cost

Goodwill on acquisition (i)

Southern
 Vales
 Nissan
$’000

1,901

-

1,901

Metro
Nissan
$’000

1,395

-

1,395

Toowoomba
Motor
Group
$’000

2018
Total
Consolidated
$’000

1,613

19

1,632

4,909

19

4,928

2018
$’000

44

4,481

376

(3,923)

978

4,928

3,950

(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

Net cash flow on acquisition of businesses

(4,909)

(4,909)

75

ANNUAL REPORT 201831  INVESTMENTS IN SUBSIDIARIES CONTINUED

(b)  Acquisition of businesses in prior year

The Group acquired the following businesses during the 2017 year, which have been finalised in the 2018 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 businesses

12,866

(1,496)

11,370

76

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(c)  Disposal of businesses

The Group sold the following businesses during the 2018 year as detailed below:

Year

2018

2018

2018

Name of business

Surfers City Holden

Austral Volvo

Eagers Kia

Date of sale

01-Jun-2018

22-Jun-2018

31-Aug-2018

Principal activity

Motor Dealership

Motor Dealership

Motor Dealership

Net assets disposed of

Receivables, Prepayments

Inventory

Property, plant and equipment

Creditors, borrowings and provisions

Net assets disposed

Total consideration received (100% Cash)

Gain on sale

Proportion disposed

100%

100%

100%

CONSOLIDATED
2018
$’000

4

676

231

(573)

338

2,807

2,469

(d)  Disposal of businesses in prior year

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

2017
$’000

324

3,106

(1,127)

2,303

2,303

-

77

ANNUAL REPORT 201831  INVESTMENTS IN SUBSIDIARIES CONTINUED

(e)  Details of non-wholly owned subsidiaries

The table below shows details of non-wholly owned subsidiaries of the Group. The Group have reviewed its subsidiaries that have non-
controlling interests and note that they are not material to the reporting entity.

Profit allocated to
non-controlling interests

Accumulated
non-controlling interests

2018
$’000

2017
$’000

2018
$’000

2017
$’000

Individually immaterial subsidiaries with non-controlling interest

1,619

2,146

8,002

10,761

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

32  CONTINGENT LIABILITIES

(a)  Parent entity

      CONSOLIDATED

2018 
$’000

10,761

1,619

(2,337)

(2,041)

8,002

2017 
$’000

8,166

2,146

1,904

(1,455)

10,761

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 2018 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 100% owned subsidiaries were parties to a deed of cross guarantee lodged with the Australian 
Securities and Investments Commission as at 31 December 2018. 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 
$1,031,832,000 (2017: $1,012,855,000).

78

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201833  COMMITMENTS FOR EXPENDITURE

      CONSOLIDATED

2018 
$’000

2017 
$’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

5,292

218

(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

39,895

157,008

62,317

259,220

39,640

107,255

77,520

224,415

Included within our operating lease commitments is the minimum lease payment of $32.8 million committed to within 2-5 years, 
under a non-cancellable lease that has not yet commenced. The lease relates to vacant land for future development and is expected 
to commence in December 2020. The lease agreement contains an option to prepay the lease at the end of the first 12 months after 
commencement instead of regular monthly lease payments. The Directors have not yet made a decision over the rent payment options 
as outlined in the contract.

The consolidated entity leases property under non-cancellable operating leases with expiry dates between 31 January 2019 and 31 
October 2029.

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.

34  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

816

745

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

90

906

274

1,019

35  SUBSEQUENT EVENTS

No matter or circumstance has occurred subsequent to year end that has significantly affected, or may significantly affect, the operations 
of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent financial years.

79

ANNUAL REPORT 201836  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

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

Director (non-executive)

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 set out below:

      CONSOLIDATED

2018 
$’000

2017 
$’000

  Short term

  Post employment benefits

  Share based payments

(c)  Option holdings of key management personnel

Details of options held by key management personnel can be found in Note 36(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 38.

3,903

120

262

4,285

3,425

137

1,238

4,800

80

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(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 performance rights and options granted under the plan is as follows:

Performance Rights

Number
137,791
137,571
143,464
149,551
156,173

Performance Options

Number
769,228
712,760
705,258
663,363
656,857

Grant Date
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14

Grant Date
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

Expiry Date
04-Jul-21
04-Jul-21
04-Jul-21
30-Sep-22
30-Sep-22

Expiry Date
04-Jul-21
04-Jul-21
04-Jul-21
30-Sep-22
30-Sep-22

Fair Value at Grant Date
$ 5.08
$ 4.87
$ 4.67
$ 4.48
$ 4.29

Fair Value at Grant Date
$ 0.91
$ 0.94
$ 0.95
$ 1.01
$ 1.02

A total of 5,704 rights and 33,403 options were forfeited or expired during the year. A total of 133,829 rights were issued and 31,419 
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 2018 performance period have vested.

The value of the performance rights and options expensed during the year was $272,469, with a cumulative expense being recognised at 
31 December 2018 of $5,332,261 (2017: $5,059,792).

81

ANNUAL REPORT 201836  KEY MANAGEMENT PERSONNEL CONTINUED

(f)  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
12-Jun-22
$9.25
0.8 years
24%
1.98%
3.7%

31-Mar-17
12-Jun-22
$9.25
1.8 years
24%
1.99%
3.7%

31-Mar-18
12-Jun-22
$9.25
2.8 years
24%
2.06%
3.7%

31-Mar-19
30-Sep-22
$9.25
3.8 years
24%
2.18%
3.7%

31-Mar-20
30-Sep-22
$9.25
4.8 years
24%
2.33%
3.7%

31-Mar-16
12-Jun-22
$9.25
$9.25
3.9 years
24%
2.19%
3.7%

31-Mar-17
12-Jun-22
$9.25
$9.25
4.4 years
24%
2.27%
3.7%

31-Mar-18
12-Jun-22
$9.25
$9.25
4.9 years
24%
2.35%
3.7%

31-Mar-19
30-Sep-22
$9.25
$9.25
5.5 years
24%
2.46%
3.7%

31-Mar-20
30-Sep-22
$9.25
$9.25
6.1 years
24%
2.54%
3.7%

Two specific executives have been granted performance 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

Number
17,605
33,783
32,678
31,645
31,250

Grant Date
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15

Grant Date
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

Expiry Date
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22

Expiry Date
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22

Fair Value at Grant Date
$8.98
$8.65
$8.34
$8.04
$7.74

Fair Value at Grant Date
$1.42
$1.48
$1.53
$1.58
$1.60

No performance rights or options were forfeited or expired during the year. A total of 5,995 performance rights were issued and no 
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 2018 performance period have vested.

The value of the performance rights and options expensed during the year was $28,569, with a cumulative expense being recognised as 
at 31 December 2018 of $349,974 (2017: $321,405).

82

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201837  OTHER SHARE BASED PAYMENTS

Recognised share-based payments expenses

Refer Note 29(a) for movements in share based payments reserve.

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

End Performance Period

Expiry Date

Fair Value at Grant Date

27-Mar-13

27-Mar-13

27-Mar-13

27-Mar-13

27-Mar-13

31-Dec-14

31-Dec-15

31-Dec-16

31-Dec-17

31-Dec-18

31-Mar-20

31-Mar-20

31-Mar-20

31-Mar-20

31-Mar-20

$ 0.93

$ 0.93

$ 0.96

$ 0.98

$ 0.99

A total of 25,250 options were forfeited or expired during the year. A total of 534,930 options were exercised during the year.

No costs of the share plan were expensed during 2018 (2017: $132,142). The share plan was fully expensed by the end of 2017, with a 
cumulative expense recognised of $3,607,822.

83

ANNUAL REPORT 201837  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
21-Jan-22
$5.85
1.2 years
22%
2.20%
4.4%

31-Mar-17
21-Jan-22
$5.85
2.2 years
22%
2.12%
4.4%

31-Mar-18
21-Jan-22
$5.85
3.2 years
22%
2.11%
4.4%

31-Mar-19
30-Sep-22
$5.85
4.2 years
22%
2.15%
4.4%

31-Mar-20
30-Sep-22
$5.85
5.2 years
22%
2.22%
4.4%

31-Mar-16
21-Jan-22
$5.85
$5.65
4.1 years
22%
2.15%
4.4%

31-Mar-17
21-Jan-22
$5.85
$5.65
4.6 years
22%
2.18%
4.4%

31-Mar-18
21-Jan-22
$5.85
$5.65
5.1 years
22%
2.21%
4.4%

31-Mar-19
30-Sep-22
$5.85
$5.65
5.9 years
22%
2.28%
4.4%

31-Mar-20
30-Sep-22
$5.85
$5.65
6.4 years
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
14,412
15,065
15,746
16,459
17,202

Performance Options

Number
95,235
93,020
93,020
91,953
93,020

Grant Date
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15

Grant Date
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

Expiry Date
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22

Expiry Date
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22

Fair Value at Grant Date
$5.55
$5.31
$5.08
$4.86
$4.65

Fair Value at Grant Date
$0.84
$0.86
$0.86
$0.87
$0.86

No performance rights or options were forfeited or expired during the year. A total of 13,778 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 2018 performance period have vested.

The value of the performance rights and options expensed during the year was $34,998, with a cumulative expense being recognised as 
at 31 December 2018 of $609,291 (2017: $574,293).

84

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018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
12-Feb-22
$6.26
1.1 years
22%
1.91%
4.2%

31-Mar-17
12-Feb-22
$6.26
2.1 years
22%
1.85%
4.2%

31-Mar-18
12-Feb-22
$6.26
3.1 years
22%
1.87%
4.2%

31-Mar-19
30-Sep-22
$6.26
4.1 years
22%
1.95%
4.2%

31-Mar-20
30-Sep-22
$6.26
5.1 years
22%
2.05%
4.2%

31-Mar-16
12-Feb-22
$6.26
$6.26
4.1 years
22%
1.94%
4.2%

31-Mar-17
12-Feb-22
$6.26
$6.26
4.6 years
22%
1.99%
4.2%

31-Mar-18
12-Feb-22
$6.26
$6.26
5.1 years
22%
2.04%
4.2%

31-Mar-19
30-Sep-22
$6.26
$6.26
5.9 years
22%
2.14%
4.2%

31-Mar-20
30-Sep-22
$6.26
$6.26
6.4 years
22%
2.20%
4.2%

A specific senior staff member has been granted performance rights and options under the Specific Target share plan (Plan I). The 
modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the 
rights and options at grant date and the probability of specific targets being achieved and vesting occurring. The number of rights and 
options granted under the plan is as follows:

Performance Rights

Number
9,045
9,440
9,836
11,406
11,881

Performance Options

Number
97,590
95,294
94,186
102,272
102,272

Grant Date
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15

Grant Date
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15
12-Feb-15

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

End Performance Period
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

Expiry Date
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22

Expiry Date
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
30-Sep-22

Fair Value at Grant Date
$5.97
$5.72
$5.49
$5.26
$5.05

Fair Value at Grant Date
$0.83
$0.85
$0.86
$0.88
$0.88

A total of 23,287 rights and 204,544 options were forfeited or expired during the year. A total of 9,836 performance rights were issued 
and 287,070 options exercised during the year.

As a result of the specific senior staff member leaving the Group in 2018, all of the performance rights and options that had not yet 
vested have lapsed.

No costs of the share plan were expensed during 2018 (2017: $161,139), with a cumulative expense being recognised of $512,134.

85

ANNUAL REPORT 201837  OTHER SHARE BASED PAYMENTS CONTINUED

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-24
$9.75
1.0 year
27%
1.95%
3.8%

31-Mar-18
31-Mar-24
$9.75
2.0 years
27%
1.88%
3.8%

31-Mar-19
31-Mar-24
$9.75
3.0 years
27%
1.90%
3.8%

31-Mar-20
31-Mar-24
$9.75
4.0 years
27%
1.98%
3.8%

31-Mar-17
31-Mar-24
$9.75
$10.34
4.5 years
27%
2.03%
3.8%

31-Mar-18
31-Mar-24
$9.75
$10.34
5.0 years
27%
2.08%
3.8%

31-Mar-19
31-Mar-24
$9.75
$10.34
5.5 years
27%
2.13%
3.8%

31-Mar-20
31-Mar-24
$9.75
$10.34
6.0 years
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
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

End Performance Period
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19

Expiry Date
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24

Expiry Date
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24

Fair Value at Grant Date
$9.39
$9.04
$8.70
$8.37

Fair Value at Grant Date
$1.56
$1.63
$1.67
$1.71

No performance rights or options were forfeited or expired during the year. No rights were issued and no options were exercised during 
the year.

As a result of the specific targets not being achieved the performance rights and options relating to the 31 December 2018 performance 
period have not vested.

The value of the performance rights and options expensed during the year was $54,475, with a cumulative expense being recognised as 
at 31 December 2018 of $449,986 (2017: $395,511).

86

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 201838  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 $92,174 (2017: $510,641) and purchases of $159,382 (2017: $398,021) 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 $4,441,343 (2017: $4,351,456) 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.

 Furthermore, during the twelve months ended 31 December 2018, Mr M Birrell purchased stock with a value of $484,888 from one 
of the subsidiaries. This transaction was carried out under terms and conditions no more favourable than those which is reasonable 
to expect would have applied if the transactions were at arm’s length.

 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, totalling $204,164 (2017: $76,605), are commissions paid to the 
consolidated entity 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. The company commenced trading on 1 June 2017.

 Finally, 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 in 2020 if a specified performance target is met. The contingent 
consideration has been recognised as a financial liability as at 31 December 2018, refer to Note 26.

(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 31.

87

ANNUAL REPORT 2018 
 
 
39  EARNINGS PER SHARE

(a)  Basic earnings per share

      CONSOLIDATED

2018 
Cents

2017 
Cents

Earnings attributable to the ordinary equity holders of the Company

52.0

50.3

(b)  Diluted earnings per share

Earnings attributable to the ordinary equity holders of the Company

51.7

49.5

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)

      CONSOLIDATED

2018 
$’000

2017 
$’000

101,175

(1,619)

99,556

98,173

(2,146)

96,027

99,556

99,556

96,027

96,027

Number

 Number

191,301,059

190,865,298

1,387,987

3,167,755

Weighted average number of ordinary shares outstanding during the year used in the calculation of 
diluted earnings per share

192,689,046

194,033,053

(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.

88

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018 
40  RECONCILIATION OF NET PROFIT AFTER TAX TO THE NET CASH INFLOWS FROM OPERATIONS

Net profit after tax

Depreciation and amortisation

Net gain on sale of available-for-sale financial assets

Share of profits of associate

Gain on sale of property, plant & equipment

Employee share scheme expense

Profit on sale of business

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

Notes

5

4

      CONSOLIDATED

2018 
$’000

101,175

15,641

-

(77)

(3,554)

391

(2,573)

7,145

(2,433)

5,522

(37,516)

(1,445)

18,293

2,047

(13,627)

2017 
$’000

98,173

16,651

(2,080)

(407)

(15,644)

2,105

-

2,321

(210)

(13,061)

(27,645)

(2,328)

78,225

(2,988)

11,864

Net cash inflow from operating activities

88,989

144,976

89

ANNUAL REPORT 2018 
 
 
 
 
 
41  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 Limited

       OWNERSHIP INTEREST

      CONSOLIDATED

2018
%

20.65

25.50

2017
%

20.65

25.50

2018
$’000

1,620

10,457

12,077

2017
$’000

1,620

10,380

12,000

Norna Limited (formerly MTQ Insurance Services 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 2019. 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 (2017: 20.65%) and will continue to equity account 
the investment in the associate which has been equity accounted from 1 January 2006 (refer Note 14), until the final distributions are 
received and Norna Limited is liquidated.

Norna Limited is incorporated in Australia. Its principal activities for the period up to the sale remained the sale of consumer credit 
and insurance products, as well as undertaking investment activities. Since the sale, the entity has ceased operations with the only 
transactions being related to holding costs and interest until the final terms of the sale agreement are met and the entity is liquidated.

DealerMotive Limited

DealerMotive Limited is incorporated in Australia. Its principal activities 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 investments in associates

Carrying amount at the beginning of the financial year

Equity share of profit from ordinary activities after income tax

Disposal of investment

Carrying amount at the end of the financial year

      CONSOLIDATED

2018 
$’000

2017 
$’000

12,000

11,893

77

-

407

(300)

12,077

12,000

90

NOTES TO AND FORMING PART OF  THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2018(c)  Summarised financial information of associates

The aggregate profits, assets and liabilities of associates are:

Revenue

Profits from ordinary activities after income tax expense

Assets

Liabilities

      CONSOLIDATED

2018 
$’000

2017 
$’000

50,659

371

50,864

8,712

68,922

3,375

46,786

6,827

(d)  Share of profits from associates

Based on the last published results for the 12 months to 30 June 2018 plus unaudited results up to 31 December 2018.

Profit from ordinary activities after income tax

77

407

(e)  Reporting date of associates

The associates reporting dates are 30 June annually.

91

ANNUAL REPORT 2018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; and

(c)   in the director’s opinion, the attached financial statements are in compliance with International Financial Reporting Standards as 

stated in Note 1(a) to the financial statements; and

(d)   the directors have been given the declarations required by s.295A of the Corporations Act 2001

At the date of this declaration, the company is within the class of companies affected by ASIC 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 31 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, 
20th February 2019

92

INDEPENDENT AUDITOR’S REPORT

Deloitte Touche Tohmatsu 
ABN 74 490 121 060 
Level 25 and 26, Riverside Centre 
123 Eagle Street 
Brisbane, QLD, 4000 
Australia 

Phone: +61 7 3308 7000 
www.deloitte.com.au 

Independent Auditor’s Report                                                 

to the Members of A.P. Eagers Limited 

Report on the Audit of the Financial Report 

Opinion 

We  have  audited  the  financial  report  of  A.P.  Eagers  Limited  (the  “Company”)  and  its  subsidiaries  (the 
“Group”) which comprises the consolidated statement of financial position as at 31 December 2018, the 
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of 
changes in equity and the consolidation statement of cash flows for the year then ended, and notes to the 
financial statements, including a summary of significant accounting policies, and the directors’ declaration.  

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 
2001, including:  

(i)  

giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its  
financial performance for the year then ended; and   

(ii)  

complying with Australian Accounting Standards and the Corporations Regulations 2001. 

Basis for Opinion 

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those 
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section 
of our report. We are independent of the Group in accordance with the auditor independence requirements 
of  the  Corporations  Act  2001  and  the  ethical  requirements  of  the  Accounting  Professional  and  Ethical 
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to 
our  audit  of  the  financial  report  in  Australia.  We  have  also  fulfilled  our  other  ethical  responsibilities  in 
accordance with the Code.  

We  confirm  that  the  independence  declaration  required  by  the  Corporations  Act  2001,  which  has  been 
given to the directors of the Company, would be in the same terms if given to the directors as at the time 
of this auditor’s report. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 
our opinion. 

Key Audit Matters  

Key audit matters are those matters that, in our professional judgement, were of most significance in our 
audit of the financial report for the current period. These matters were addressed in the context of our 
audit  of  the  financial  report  as  a  whole,  and  in  forming  our  opinion  thereon,  and  we  do  not  provide  a 
separate opinion on these matters.  

Liability limited by a scheme approved under Professional Standards Legislation. 

Member of Deloitte Touche Tohmatsu Limited  

93

ANNUAL REPORT 2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITOR’S REPORT CONTINUED

Key Audit Matter 

Recoverability of goodwill 

As detailed in note 16, the Group has 
recognised goodwill of $313.3 million at 31 
December 2018 as a result of historic 
acquisitions over a number of years.  

As set out in note 2a (ii), the director’s 
assessment of the recoverability of goodwill 
requires the exercise of significant judgement, 
in particular, in estimating future growth 
rates, discount rates and the expected cash 
flows of businesses (cash generating units or 
CGUs) to which the goodwill has been 
allocated. 

Estimating future cash flows requires the 
exercise of judgement as to the likely impact 
of: 



Competitive pressures in specific 

            markets; and 



Technological, legislative and 
regulatory developments across the 
automotive industry. 

We have focused our testing on the CGUs that 
were most sensitive to the above mentioned 
factors.  

How the scope of our audit responded to the 
Key Audit Matter 

Our procedures, performed in conjunction with our 
valuation specialists included, but were not limited 
to: 















Obtaining an understanding of the key 
controls and processes associated with the 
preparation and review of the valuation 
models used to assess the CGUs. 

Reconfirming our previously obtained 
understanding of the Group’s identification of 
CGUs.  

Evaluating management’s ability to 
accurately forecast cash flows by assessing 
the accuracy of the prior year forecasts 
against actual outcomes. 

Testing the mathematical accuracy of the 
cash flow models.  

Challenging the reasonableness of 
management’s assumptions by: 

o

o

o

o

Evaluating the discount rate utilised 
by management to an independently 
calculated discount rate 
Assessing forecast cash flows by 
evaluating them against past results 
Comparing growth rates with third 
party data for the motor industry 
Performing sensitivity analysis on 
the cash flows with a focus on 
growth and discount rates. 

Comparing the CGU’s forecast cash flows to 
the board approved budget; and 

Assessing the appropriateness of the 
disclosures in note 2a (ii) and note 16 to the 
financial statements.  

94

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Audit Matter 

Recoverable amount of used and 
demonstrator vehicles inventory 

As disclosed in note 10 the Group has 
recognised provisions against the cost of its 
new and used motor vehicle and truck 
inventory amounting to $13.2 million. 

As set out in note 2a (v) and (vi) the 
estimation of net realisable value requires the 
directors to make certain judgements and 
estimates based on the age, condition, brand 
of the vehicle and historic sales outcomes.  

How the scope of our audit responded to the 
Key Audit Matter 

Our procedures included, but were not limited to: 









Developing an understanding of 
management’s processes and judgements 
applied in estimating the net realisable value 
of demonstrator and used vehicles and 
trucks. 

Validating the aging and cost, on a sample 
basis, of used, demonstrator vehicle and 
truck inventory at year-end as key inputs 
into management’s calculation of the write 
down provisions. 

Evaluating management’s judgements in 
estimating net realisable value by: 

Comparing the carrying value of 
vehicles and trucks to post year-end 
sales; and/or 
Evaluating the carrying value of 
vehicle and truck inventory to 
external third party valuation data; 
and/or 
Comparison to historical sales data. 

o

o

o

Assessing the appropriateness of the 
disclosures in note 2a (v), (vi) and note 10 
to the financial statements. 

Classification of investment in 
Automotive Holdings Group Limited 

Our procedures included, but were not limited to: 

As detailed in note 13 the Group holds an 
investment in Automotive Holdings Group 
Limited (AHG) of $149.2 million relating to its 
28.84% shareholding. 

As disclosed in note 2a (i), in accounting for 
its investment in AHG, the Group has 
exercised judgement in rebutting the 
presumption of having significant influence 
over the entity, despite holding more than 
20% of the issued share capital of that entity. 







Evaluating management’s determination that 
the Group does not exert significant 
influence over AHG against guidance from 
the relevant accounting standards. 

Assessing whether the Group and its related 
parties have relationships and/or influence 
over AHG, including through Board 
representation, historical voting patterns and 
additional interests.  

Assessing the appropriateness of the 
disclosures in note 2a (i) and 13 to the 
financial statements. 

Other Information  

The  directors  are  responsible  for  the  other  information.  The  other  information  comprises  the  Directors’ 
Report,  which  we  obtained  prior  to  the  date  of  this  auditor’s  report,  and  also  includes  the  following 
information which will be included in the annual report (but does not include the financial report and our 
auditor’s  report  thereon):  the  Company  Profile,  the  5  Year  Financial  Summary  and  the  A.P.  Eagers 
Foundation Report, which are expected to be made available to us after that date.  

Our opinion on the financial report does not cover the other information and we do not and will not express 
any form of assurance conclusion thereon. 

In  connection  with  our  audit  of  the  financial  report,  our  responsibility  is  to  read  the  other  information 
identified above and, in doing so, consider whether the other information is materially inconsistent with 
the  financial  report  or  our  knowledge  obtained  in  the  audit,  or  otherwise  appears  to  be  materially 
misstated. If, based on the work we have performed on the other information that we obtained prior to 
the  date  of  this  auditor’s  report,  we  conclude  that  there  is  a  material  misstatement  of  this  other 
information, we are required to report that fact. We have nothing to report in this regard.  

95

ANNUAL REPORT 2018 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
INDEPENDENT AUDITOR’S REPORT CONTINUED

When we read the Company Profile, the 5 Year Financial Summary and the A.P. Eagers Foundation Report, 
if we conclude that there is a material misstatement therein, we are required to communicate the matter 
to the directors and use our professional judgement to determine the appropriate action.  

Responsibilities of the Directors for the Financial Report 

The directors of the Company are responsible for the preparation of the financial report that gives a true 
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for 
such  internal  control  as  the  directors  determine  is  necessary  to  enable  the  preparation  of  the  financial 
report that gives a true and fair view and is free from material misstatement, whether due to fraud or 
error.  

In preparing the financial report,  the directors are responsible for assessing the ability of the Group to 
continue  as  a  going  concern,  disclosing,  as  applicable,  matters  related  to  going  concern  and  using  the 
going  concern  basis  of  accounting  unless  the  directors  either  intend  to  liquidate  the  Group  or  to cease 
operations, or has no realistic alternative but to do so.  

Auditor’s Responsibilities for the Audit of the Financial Report 

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free 
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes 
our  opinion.  Reasonable  assurance  is  a  high  level  of  assurance,  but  is  not  a  guarantee  that  an  audit 
conducted in accordance with the Australian Auditing Standards will always detect a material misstatement 
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or 
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken 
on the basis of this financial report. 

As  part  of  an  audit  in  accordance  with  the  Australian  Auditing  Standards,  we  exercise  professional 
judgement and maintain professional scepticism throughout the audit. We also:   













Identify  and  assess  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence  that  is  sufficient  and  appropriate  to  provide  a  basis  for  our  opinion.  The  risk  of  not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.

Obtain  an  understanding  of  internal  control  relevant  to  the  audit  in  order  to  design  audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our  auditor’s  report.  However,  future  events  or  conditions  may  cause  the  Group  to  cease  to
continue as a going concern.

Evaluate  the  overall  presentation,  structure  and  content  of  the  financial  report,  including  the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business  activities  within  the  Group  to  express  an  opinion  on  the  financial  report.  We  are
responsible for the direction, supervision and performance of the Group’s audit. We remain solely
responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the 
audit and significant audit findings, including any significant deficiencies in internal control that we identify 
during our audit.  

96

We also provide the directors with a statement that we have complied with relevant ethical requirements 
regarding  independence,  and  to  communicate  with  them  all  relationships  and  other  matters  that  may 
reasonably be thought to bear on our independence, and where applicable, related safeguards.  

From  the  matters  communicated  with  the  directors,  we  determine  those  matters  that  were  of  most 
significance  in  the  audit  of  the  financial  report  of  the  current  period  and  are  therefore  the  key  audit 
matters.  We  describe  these  matters  in  our  auditor’s  report  unless  law  or  regulation  precludes  public 
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should 
not be communicated in our report because the adverse consequences of doing so would reasonably be 
expected to outweigh the public interest benefits of such communication. 

Report on the Remuneration Report 

Opinion on the Remuneration Report 

We have audited the Remuneration Report included in pages 14 to 22 of the Directors’ Report for the 
year ended 31 December 2018.  

In our opinion, the Remuneration Report of A.P. Eagers Limited, for the year ended 31 December 2018, 
complies with section 300A of the Corporations Act 2001.  

Responsibilities 

The directors of the Company are responsible for the preparation and presentation of the Remuneration 
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an 
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing 
Standards.  

DELOITTE TOUCHE TOHMATSU 

Stephen Tarling 
Partner 
Chartered Accountants 
Brisbane, 20 February 2019 

97

ANNUAL REPORT 2018SHAREHOLDER INFORMATION 
AS AT 8 MARCH 2019

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

Alan Piper Investments (No1) Pty Ltd

HSBC Custody Nominees (Australia) Limited

Milton Corporation Limited

Citicorp Nominees Pty Limited

Argo Investments Limited

UBS Nominees Pty Ltd

J P Morgan Nominees Australia Pty Limited

Berne No 132 Nominees Pty Ltd <315738 A/C>

Four Leaf Family Pty Ltd 

Birrell Investments Pty Ltd 

Diane Colman

National Nominees Limited

Hegford Pty Ltd

Australian Foundation Investment Company Limited

Peter Gary Robinson

Trevor Reading

Crampton Automotive (Investment) Pty Ltd 

No. of Shares

% of Issued Shares

69,504,232

12,591,761

10,560,000

6,406,250

6,357,231

5,833,107

5,397,001

4,432,620

3,188,957

2,524,608

2,444,101

2,076,776

2,000,000

1,881,710

1,598,918

1,271,563

1,156,617

1,116,455

1,107,550

937,742

36.33

6.58

5.52

3.35

3.32

3.05

2.82

2.32

1.67

1.32

1.28

1.09

1.05

0.98

0.84

0.66

0.60

0.58

0.58

0.49

98

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

1,837

1,766

562

766

102

5,033

155 shareholders hold less than a marketable parcel of 67 shares at $7.49 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

190,157 unvested performance rights, 1,832,804 unvested options and 5,029,992 vested options are on issue to forty-six 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/.

99

ANNUAL REPORT 2018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 
Riverside Centre 
123 Eagle Street 
Brisbane Qld 4001

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

100

CONTROLLED ENTITIES

Adtrans Australia Pty Ltd  
Adtrans Automotive Group Pty Ltd  
Adtrans Corporate Pty Ltd  
Adtrans Group Ltd  
Adtrans Hino Pty Ltd  
Adtrans Truck Centre Pty Ltd  
Adtrans Trucks Adelaide Pty Ltd  
Adtrans Trucks Pty Ltd  
Adtrans Used Pty Ltd  
Adverpro Pty Ltd  
A.P. Ford Pty Ltd  
A.P. Group 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  
AP Townsville Pty Ltd  
Associated Finance Pty Ltd  
Austral Pty Ltd  
Auto Ad Pty Ltd  
BASW Pty Ltd  
Bill Buckle Autos Pty Ltd  
Bill Buckle Holdings Pty Ltd  
Bill Buckle Leasing Pty Ltd  
Black Auto CQ Pty Ltd  
Boonarga Welding Pty Ltd  
Carzoos Pty Ltd  
CH Auto Pty Ltd  
Cheap Cars QLD Pty Ltd  
City Automotive Group Pty Ltd  
Crampton Automotive Pty Ltd  
E.G. Eager & Son Pty Ltd  
Eagers Finance Pty Ltd  
Eagers MD Pty Ltd  
Eagers Nominees Pty Ltd  
Eagers Retail Pty Ltd  
Eurocars (SA) Pty Ltd  
FinMo Pty Ltd  
Graham Cornes Motors Pty Ltd  
IB MD Pty Ltd  
IB Motors Pty Ltd  
Leaseline & General Finance Pty Ltd  
MB Vic Pty Ltd  
Melbourne Truck and Bus Centre Pty Ltd  
Motors Group (Glen Waverley) Pty Ltd  
Motors Tas Pty Ltd  
Nundah Motors Pty Ltd  
Port City Autos Pty Ltd  
PPT Holdings No 1 Pty Ltd  
PPT Holdings No 2 Pty Ltd  
PPT Holdings No 3 Pty Ltd  
PPT Investments Pty Ltd  
Precision Automotive Technology Pty Ltd  
South West Queensland Motors Pty Ltd  
Stillwell Trucks Pty Ltd  
Western Equipment Rentals Pty Ltd  
Whitehorse Trucks Pty Ltd  
WS Motors Pty Ltd  

ABN 47 008 278 171
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ABN 17 106 764 327
ABN 45 151 699 651
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ABN 72 612 630 618
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ABN 50 135 015 191
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ABN 20 600 297 783
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ABN 90 169 209 607
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ABN 99 608 791 804