ANNUAL
REPORT
2019
5 YEAR FINANCIAL SUMMARY
Year ended 31 December
OPERATING RESULTS
FROM CONTINUING OPERATIONS
REVENUE
EBITDA
Depreciation and amortisation
Impairment and property revaluations through
profit and loss
EBIT
Finance costs
PROFIT BEFORE TAX
Income tax expense
PROFIT FROM CONTINUING OPERATIONS
GROUP TRADING RESULTS
Loss from discontinued Operations
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
Other current assets
TOTAL ASSETS
OTHER STATISTICS
Net tangible asset backing per share – $
Shares on issue – ‘000
Number of shareholders
Total Debt(1)
2019
$’000
RESTATED
2018
$’000
2017
$’000
2016
$’000
2015
$’000
5,816,979
4,112,802
4,058,779
3,833,222
3,246,376
342,407
(95,217)
(244,925)
2,265
(65,569)
(63,304)
(17,176)
(80,480)
(48,644)
(2,789)
(131,913)
215,283
(46,137)
-
169,146
(40,744)
128,402
(30,906)
97,496
-
(1,619)
95,877
(62.4)
36.5
100
2019
$’000
50.1
36.5
100
RESTATED
2018
$’000
176,668
(16,651)
210
160,227
(24,598)
135,629
(37,456)
96,027
-
(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
179,776
(13,993)
-
165,783
(24,378)
141,405
(35,879)
103,984
-
(1,542)
103,984
55.4
35.0
100
2016
$’000
364,449
55,398
335,779
8,166
763,792
319,846
670,796
990,642
163,077
(13,216)
(7,610)
142,251
(21,293)
120,958
(33,943)
86,217
-
(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
1,754,434
1,489,410
371,405
(124,306)
380,558
8,002
635,659
544,994
818,696
1,363,690
1,999,349
1,038,996
1,824,771
388,407
313,325
149,774
269,905
877,938
361,121
309,414
288,033
22,600
843,603
354,710
298,908
264,817
22,505
813,494
291,298
160,762
281,817
35,440
720,093
1,999,349
1,824,771
1,754,434
1,489,410
1.68
191,309
5,038
899,405
2.49
191,008
5,442
793,544
2.44
190,493
5,206
769,525
2.95
184,074
5,062
614,280
1,173,069
(551,813)
209,933
9,423
840,612
1,496,588
2,538,050
4,034,638
4,875,250
475,415
758,737
2,366
1,241,361
2,397,371
4,875,250
1.02
256,933
9,955
1,744,826
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) – %
(1) Bailment Finance
368,708
310,264
238,523
266,035
172,611
67.5
30.5
58.6
32.8
50.2
23.3
50.2
25.8
46.6
19.7
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
Company Profile
AP Eagers Foundation
Board of Directors
Executive Management
Directors’ Report
Auditor’s Declaration of Independence
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Addition to Note 33 Investments In Subsidiaries
Shareholder Information
Corporate Directory
2
4
6
6
7
23
25
31
104
105
110
120
122
ANNUAL GENERAL MEETING
Our Annual General Meeting will be held, on Wednesday 22 July
2020 at 9.00 am. Venue to be confirmed.
DIVIDEND
Our final dividend for 2019 was paid on 20 April 2020. As
announced on 20 March 2020, it was reduced from 22.5 cents to
11.25 cents per share due to the uncertainty of the duration and
impact of the COVID-19 coronavirus pandemic.
FINANCIAL CALENDAR
2019 financial year end
31 December 2019
Full year results announcement
27 February 2020
Final dividend announcement
Final dividend record date
Final dividend payment date
Half year end
Annual General Meeting
27 February 2020
and 20 March 2020
1 April 2020
20 April 2020
30 June 2020
22 July 2020
Half year results announcement*
26 August 2020
Interim dividend announcement*
26 August 2020
Interim dividend record date*
Mid-September 2020
Interim dividend payment date*
Early October 2020
2020 financial year end
31 December 2020
* estimate only, subject to any changes notified to the ASX.
1
ANNUAL REPORT 2019
COMPANY PROFILE
ABOUT US
A.P. Eagers Limited is an automotive retail group with our
main operations in Queensland, Adelaide, Darwin, Melbourne,
Sydney, the Newcastle/Hunter Valley region of New South
Wales, Perth, Tasmania and New Zealand.
We represent a diversified portfolio of automotive brands,
including all of the top 20 selling car brands in Australia and
9 of the top 10 selling luxury car brands. In total, we represent
33 car brands and 12 truck and bus brands.
Our core business consists of the ownership and operation of
motor vehicle dealerships. We provide full facilities including
the sale of new and used vehicles, service, parts and the
facilitation of allied consumer finance.
Our operations are typically provided through strategically
clustered dealerships, many of which are situated on
properties owned by us, with the balance leased.
We own $267 million of prime real estate positioned in high
profile, main road locations in Brisbane, Sydney, Melbourne
and Adelaide.
We are currently in the advanced design phase of 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 retail
experience for our customers of the future.
DIVIDENDS AND EPS GROWTH
A.P. Eagers has paid a dividend to shareholders every year
since listing in 1957. We have a track record of delivering
Earnings Per Share (EPS) growth from acquisitions.
ORIGINS
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. Reynella Subaru was
added to the group during 2014.
Caloundra City Autos Group was acquired in Queensland’s
growing Sunshine Coast region in 2010.
Expansion of our truck and bus operations also occurred in
late 2010 with the addition of new franchises in New South
Wales, Victoria and South Australia. Daimler Trucks Adelaide
was added in 2011.
Eblen Motors was acquired in 2011 and Main North and Unley
Nissan and Renault were added in 2013, complementing our
existing operations in South Australia.
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.
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.
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.
Also in 2016, we launched our 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.
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.
We completed the acquisition of Toowoomba Motor Group
(Mitsubishi and Kia), Metro Nissan (Brisbane) and Southern
Vales Nissan (Adelaide) in 2018.
A strategic holding in listed Automotive Group Holdings
Limited (AHG) was acquired in 2012, providing exposure to the
West Australian market. In 2019 this investment grew to full
ownership of AHG, bringing direct ownership of significant
operations in Perth, Newcastle/Hunter Valley, Sydney,
Brisbane, Melbourne and Auckland, New Zealand.
FURTHER INFORMATION
Please visit www.apeagers.com.au for further information
about A.P. Eagers Limited.
GROWTH
Since 2000, our sales revenue from continuing operations,
which excludes operations during the period either divested
or held for sale, has increased from $500 million to $5.8
billion in 2019, and the number of employees has increased
from 600 to 8,432.
We expanded into the Northern Territory with the acquisition of
Bridge Toyota in 2005.
Our operations in New South Wales grew with the acquisition
of Bill Buckle Auto Group in Sydney’s northern beaches region
including Brookvale in 2008. Northern Beaches Land Rover
and Jaguar were added to our Bill Buckle operations in 2013.
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 2019 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 organization 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.
2
4
1
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
3
4
5
6
7
1. Adtrans Group (SA Cars Division) Annual Golf Day 2. Torque Toyota North Lakes for the Mater Hospital Foundation Smiddy Challenge
- Bike Ride 3. Red Nose Day Appeal supported by John Andrew Mazda – Auckland New Zealand 4. Adtrans Trucks Division supporting
the Castlemaine Rotary Club 5. Eagers Nissan Brisbane, supporting the Downey Park Netball Association – Windsor 6. Bridge Toyota
Dealership Darwin - Junior Golf Clinic 7. This car was donated by the Zupps Group for raffling at the Mater Foundation 2019 Gala Ball
During 2019 we continued our
long history of supporting local
communities and charities through
various fund raising activities
conducted by both the AP Eagers
Foundation and the AP Eagers
dealerships in Northern Territory,
Queensland, New South Wales,
Victoria, Tasmania, South Australia,
Western Australia and New Zealand.
Our support for these communities
and charities exceeded $1,300,000
in 2019.
NEW SOUTH WALES
Bear Cottage • Elouera Surf Club •
Mental Wheel Tour • Kids Rehabilitation
- Children’s Hospital Westmead • The
Better Foundation • Convey for Kids •
Camden Men’s Shed
WESTERN AUSTRALIA
Heart Kids WA • Walk for a
Reason Telethon • Ronald
McDonald Annual Charity Ball
NORTHERN TERRITORY
Starlight Foundation • Variety - The
Children’s Charity • Planet Arc National
Schools Tree Planting Day • National
Bushfire Disaster Appeal
QUEENSLAND
St. Vincent de Paul Society • The City of
Townsville Flood Disaster Appeal • North
Western Queensland Rural Flood Disaster
Appeal • The Breakfast Club Redcliffe.
The Hummingbird Children’s Hospice.
Meals on Wheels. Beyond Blue. Lifeline.
Rural Aid • Dalby Hospital Palliative Care
Room. Longreach Fire Brigade • PCYC
Emerald. Lifeline Darling Downs • Smiling
for Smiddy • Mater Hospital Foundation •
Lions Youth Emergency Accommodation
Centre • Royal Flying Doctor Service • 3rd
Space • Traction Community • St. Johns
Ambulance • Micah Projects • Planet
Arc National Schools Tree Planting Day •
Youth Opportunities Charity
VICTORIA
Glen Allen School for children with
disabilities • Planet Arc National Schools
Tree Planting Day • Panthers Football
Club for children with disabilities • Rotary
Club of Castlemaine.
TASMANIA
St. Giles Society • Glenhaven Family Care.
Camp Quality • Launceston City Mission
• Kennerley Children’s Home • DIY Dads •
Hobart City Mission • Inside Out For Kids.
SOUTH AUSTRALIA
The Lotus Project • Autism SA • Living
Without Limits • Youth Opportunities •
Kick Start for Kids • Back Pack for Kids
NEW ZEALAND
Cure Kids • Westpac Rescue
Helicopter Trust •
5
ANNUAL REPORT 2019 BOARD OF DIRECTORS
Timothy Boyd Crommelin BCom, FSIA, FSLE
Chairman of Board, Member of Audit, Risk & Remuneration Committee
Independent, non-executive Director since February 2011.
Chairman of Morgans Holdings (Australia) Limited. Director
of Senex Energy Ltd (2010 to present) 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 (2014 to present).
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.
David Arthur Cowper BCom, FCA
Director, Chairman of Audit, Risk & Remuneration Committee
Independent, non-executive Director since July 2012. Chartered
accountant, with more than 35 years in the profession. Former
partner of Horwath Chartered Accountants and Deloitte Touche
Tohmatsu. Former Chairman of Horwath’s motor industry
specialisation unit for six years. Area of professional
specialisation while at Horwath and Deloitte was in providing
audit, financial and taxation services to public and large private
companies in the motor industry.
EXECUTIVE MANAGEMENT
Keith Thomas Thornton BEc
Chief Operating Officer – Cars
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 (2014 to present).
6
Marcus John Birrell
Director, Member of Audit, Risk & Remuneration Committee
Non-executive Director since July 2016. Former Director of
Australian Automotive Dealer Association Limited (2014 to 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.
Greg James Duncan OAM, Bec, FCA
Director
Independent, non-executive Director since December 2019.
Chairman of Cox Automotive Australia Board of Management
(2016 to present). Director of advisory and investment firm JWT
Bespoke Pty Ltd (2013 to present). Former owner and Executive
Chairman of Trivett Automotive Group, Australia’s largest
prestige automotive business. Former Director of Automotive
Holdings Group Ltd (2015 to 2019).
David Scott Blackhall BCom, MBA, FAICD
Director
Independent, non-executive Director since December 2019.
Over half a century of automotive industry experience with
manufacturers, including at Managing Director level, as dealer
principal and owner of various automotive franchises, and as Chief
Executive of Australian Automotive Dealer Association (2016 to
2019). Managing Director of corporate advisory firm Raglan Ridge
Advisors. Former Director of Automotive Holdings Group Ltd (2019).
Michelle Victoria Prater BBus, CPA, ACIS, AICD
Director
Non-executive Director since February 2020. Executive
Chairman of APPL Group (2004 to present), a property
development and investment group with an extensive automotive
property portfolio including significant properties leased to AP
Eagers dealerships. Former executive roles at corporate and
operational levels with Automotive Holdings Group Ltd (1993 to
2004) including as an executive Director (2002 to 2004).
Denis Gerard Stark LLB, BEc
General Counsel & Company Secretary
Commenced with the Company in January 2008. Responsible
for overseeing the company secretarial, legal, insurance
and investor relations functions and property portfolio
administration. Previous company secretarial and senior
executive experience with public companies. Admitted as a
solicitor in Queensland in 1994 and Victoria in 1997.
DIRECTORS’ REPORT
The Directors of A.P. Eagers Limited ABN 87 009 680 013 (the Company or AP Eagers) (ASX: APE) present their report together with
the consolidated financial report of the Company and its controlled entities (the Group), for the year ended 31 December 2019 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 6.
COMPANY SECRETARY
The Company Secretary and his qualifications and experience are detailed on page 6.
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
Attended
Held
Attended
Held
10
9
10
10
9
9
10
1
1
-
10
10
10
10
10
10
10
1
1
-
4
-
-
-
4
4
-
-
-
-
4
-
-
-
4
4
-
-
-
-
T B Crommelin (1)
N G Politis
M A Ward
D T Ryan
D A Cowper (1)
M J Birrell (1)
S A Moore
G J Duncan (2)
D S Blackhall (2)
M V Prater (3)
(1) Audit, Risk & Remuneration Committee members
(2) Appointed as a Director on 6 December 2019
(3) Appointed as a Director on 3 February 2020
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.
7
ANNUAL REPORT 2019 FINANCIAL & OPERATIONAL REVIEW
AP Eagers today announced its results for the full year ended 31 December 2019 (FY19). On a continuing basis, the Company delivered
Underlying Operating Profit Before Tax1 of $100.4 million, down 3.0% on the prior corresponding period (pcp). The results include the
consolidation of Automotive Holdings Group Limited (AHG) from 19 August 2019, the date on which the Group’s ownership interest in
AHG exceeded 50% following the offer being declared unconditional on 16 August 2019. APE achieved 100% ownership of AHG on 24
October. AHG’s operations contributed $17.6 million to the consolidated underlying operating profit before tax1 for the four months
ended 31 December 2019.
The trading result reflects challenging economic conditions including subdued consumer confidence, a tighter finance market and
increasing competitive pressures. According to Federal Chamber of Automotive Industry statistics, Australia’s new motor vehicle sales
in 2019 decreased by 7.8% on the pcp.
On a statutory basis (including discontinued operations), the Company recorded a Statutory Net Loss Before Tax from continuing
operations of $63.3 million for 2019 compared to a Net Profit Before Tax of $128.4 million in 2018. The 2019 statutory result was
impacted by significant items totalling $163.7 million before tax, predominately non-cash items (net of contributions from Kloster Motor
Group divested October 2019). Statutory Net Loss After Tax (including discontinued operations) for 2019 was $129.1 million as compared
to a profit of $97.5 million in 2018. Earnings per share (basic) for 2019 is a loss of 62.4 cents compared to a profit of 50.1 cents in the pcp.
KEY FINANCIAL HIGHLIGHTS
Year to December, from Continuing Operations
Statutory Results
Revenue
EBITDA
Statutory (Loss) / Profit Before Tax
Statutory (Loss) / Profit After Tax
Statutory EPS (loss) / profit (basic) cents
Total Dividend per Share – cents
Underlying Operating Results (1)
Revenue (1)
EBITDA (1)
Underlying Profit Before Tax (1)
Underlying Profit After Tax (1)
Earning per Share – cents (1)
Full Year to
December 2019
$ Million
Restated
Full Year to
December 2018 (2)
$ Million
5,817.0
342.4
(63.3)
(80.5)
(39.4)
36.5
4,112.8
215.3
128.4
97.5
50.1
36.5
5,478.4
3,689.3
163.2
100.4
69.2
31.5
142.1
103.5
71.4
36.5
% Change
41.4%
(54.7%)
(149.3%)
(182.5%)
(178.6%)
-
48.5%
14.9%
(3.0%)
(3.1%)
(13.8%)
The Company’s Underlying1 Operating Profit Before Tax from continuing operations reflects a decrease for both the car and truck
retailing businesses for APE on a standalone basis. The underlying1 operational result is impacted by the widely reported challenges on
new car sales within automotive retailing during 2019.
The drop in new vehicle sales across the market also impacted AP Eagers F&I division. Notwithstanding the market softness, the result
from parts and service was solid and the result from used cars was strong, with profit increasing. AP Eagers also experienced a decline
in underlying1 profit due to the strategic divestment of five properties, with the property segment impacted by loss of internal rent.
(1) Underlying operating results refers to continuing operations, adjusted for significant items and including removal of Kloster Motor Group’s (KMG) contribution
from 2019 and comparative financial information, outlined and reconciled to statutory results in the investor presentation on slides 35 (FY2019) and 36
(comparative financial information) of the Investor Presentation. Underlying operating figures are non-financial measures and have not been subject to audit
by the Company’s external auditors
(2) Comparative financial information in the Full Year report and Appendix 4E commentary has been restated for the new lease accounting standard (AASB 16).
8
DIRECTORS’ REPORT CONTINUED Dividend
Strategic Developments
A fully franked final dividend of 22.5 cents per share (2018:
22.5 cents) has been approved for payment on 20 April 2020 to
shareholders who are registered on 1 April 2020 (Record Date).
When combined with the interim dividend of 14.0 cents paid in
October 2019, the total dividend based on 2019 earnings is 36.5
cents per share (2018: 36.5 cents) fully franked.
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:
AP Eagers continues to focus on the creation of long term value
for shareholders, underpinned by execution of its ‘NEXT 100’
strategy. During the period, the Company made substantial
progress in a number of key areas including:
> Entering into the advanced design phase of our world class
automotive retailing and mobility hub at Brisbane Airport
Auto Mall as well as our shopping centre plans.
> Active management of APE’s property portfolio with a focus
on flexibility – during the period AP Eagers executed the sale
and leaseback of its Newstead properties and acquired a
strategic site in Albion (QLD).
Year ended 31 December
Final ordinary dividend for the year
ended 31 December 2018 of 22.5
cents (2017: 22.5 cents) per share
paid on 18 April 2019
Interim ordinary dividend of 14.0
cents (2018: 14.0 cents) per share
paid on 17 October 2019
2019
$’000
2018
$’000
>
43,045
43,045
35,037
78,082
26,783
69,828
External Environment
According to Federal Chamber of Automotive Industry statistics,
Australia’s new motor vehicle sales decreased by -7.8% in
2019 as compared to 2018. The decline in new vehicles sales
for the month of December 2019 on pcp represented the 21st
consecutive monthly decline in new vehicle sales on pcp.
The challenging market conditions were reflected across the
Australian industry, with every State recording a decline on
pcp. The larger markets of Queensland, New South Wales and
Victoria, recorded sales declines on the pcp of 7.2%, 8.4% and
8.7% respectively. The remaining markets also recorded a
decline on the pcp, with South Australia and Western Australia
down 5.4%, Tasmania down 2.3%, Northern Territory down
16.0% and Australian Capital Territory down 11.7%.
The decrease in new motor vehicles sales on pcp was
experienced across all buyer types, with private sales down
7.6%, business sales down 8.7%, government sales down 5.9%
and rental sales down 4.5%. Luxury vehicle segment increased
from 10.4% to 10.9% of total market share, finishing 3.8% down,
with mixed performance across the brands. While the role of
plug-in hybrid and electric vehicles grew 116%, it was from a
very low base with traditional fuel vehicles accounting for 99% of
all new vehicle sales.
Nationally, the Heavy Commercial segment contracted 8.3%,
with decreases in light/medium duty trucks and heavy-duty
sales of 6.9% and 11.1% respectively.
Transition to new financing model well underway with
improvement in penetration evident (shortfall in new
vehicle F&I volume related with total new car market down
7.8% and used vehicle F&I still impacted by cyclical credit
constraints). However, our progress continues to be slower
than anticipated as the government-instigated regulatory
intervention into the automotive retail finance model
combined with tighter credit conditions following the banking
royal commission creates headwinds to not only improved
finance penetration but also vehicle sales in general.
> Achieving $20.1 million in annualised pre-tax merger
synergies by the end of period as the combined business
aims to deliver a more sustainable and productive cost base.
>
Significant progress achieved in growing volume, revenue
and income in our scalable ‘fixed price’ used car models
(EasyAuto123 and Zooper) with plans to simplify the brands
and further integrate the Carlins auction business and
franchised automotive in 2020.
> AP Eagers remains committed to the divestment of the
Refrigerated Logistics business as soon as commercially
possible and at a reasonable price. The divestment process
is progressing and AP Eagers anticipates being in a position
to make an announcement in relation to the divestment in
the near future.
Acquisition Accounting for AHG
A key part of accounting for the acquisition of AHG is measuring
the fair value of the consideration and the fair value of the asset
acquired and liabilities assumed at the date of acquisition, a
process referred to as Purchase Price Allocation (PPA) process.
The fair value of acquisition consideration is measured based
on (AHG’s) share price on the date APE achieved control, being
19 August 2019, for accounting purposes. AHG’s share price on
the date of the original offer was $1.78 per share (5 April 2019),
increasing to $3.09 per share on acquisition date. This resulted
in a significant uplift in the value of the offer for accounting
purposes, $246 million above our initial offer value.
Based on the work undertaken by management and independent
valuation experts, the fair value of the assets acquired and
liabilities assumed at the date of acquisition resulted in a
reduction in AHG’s tangible net asset value of $145 million. The
reduction primarily adjusted the value of property, plant and
equipment, and reduced the value of Refrigerated Logistics
business and assets.
9
ANNUAL REPORT 2019 The impact of the PPA process was that goodwill, being the fair
value of the acquisition consideration in excess of the fair value
of net tangible and identifiable intangible assets, was inflated by
this technical accounting treatment.
The goodwill on acquisition of AHG combined with APE’s
existing goodwill was assessed for impairment at 31 December,
resulting in a $209.2 million impairment recorded against
goodwill and $35.7 million against property plant and equipment
in the Car Retailing and Trucks Retailing segments. A $34.8
million impairment was recorded in discontinued operations,
relating to the write-down of Refrigerated Logistics business to
reflect market valuation at 31 December 2019.
Financial Performance
Statutory revenue from continuing operations increased by
41.4% to $5,817.0 million. Underlying1 revenue increased by
48.5% to $5,478.4 million. The increase is primarily driven by
AHG’s contribution of $1,867.1 million. Excluding AHG and on a
like-for-like basis, total underlying1 segment revenue decreased
by 2.9% compared to the pcp, outperforming the national
market. Strong trading in the Tasmanian car division was offset
by the combined declines in Queensland, New South Wales and
South Australia and the trucks division, with these markets
impacted by tough trading conditions.
EBITDA from continuing operations decreased by 54.7% to
$97.5 million in 2019 (2018: $215.3 million). Underlying1 EBITDA
increased by 14.9% to $163.2 million in 2019 (2018: $142.1
million). AHG contributed $41.5 million for the four months.
Excluding AHG, underlying1 EBITDA decreased by $20.4 million
compared to the pcp. Profit margins decreased as indicated by
the underlying1 operating EBITDA/Revenue ratio of 3.0% (2018:
3.9%), with a comparable reduction in underlying1 operating
NPBT/Sales ratio of 1.8% (2018: 2.8%). The reduction in margins
was impacted by missed KPIs on new automotive vehicle sales
and margin compression, both due to challenging trading
conditions and clearance of aged stock in AHG operations.
Statutory borrowing costs from continuing operations increased
by 60.9% to $65.6m. Underlying1 borrowing costs increased by
69.4% to $63.0 million for 2019 (2018: $37.2 million). The increase
is predominately from AHG contribution of $24.3 million, which
was driven by the impact of the new lease standard which has
a greater impact on AHG compared to APE. Excluding AHG,
underlying1 borrowing costs increased $1.5 million (+4.0%) due
to the accelerated expensing of capitalised borrowing costs
upon refinancing APE’s syndicated debt facility to incorporate
AHG’s senior debt under a single merged facility. The refinance
was completed in December 2019, realising a lower cost finance
package under the merged facility.
Statutory depreciation and amortisation charges from
continuing operations increased by 106.4% to $95.2 million
for 2019 (2018: $46.1 million). Underlying1 depreciation and
amortisation charges increased by 117.4% to $93.7 million for
2019 (2018: $37.2 million). The increase is from AHG contributing
$50.7 million, impacted by the new lease standard which has
a greater impact on AHG compared to APE. Excluding AHG,
underlying1 depreciation and amortisation charges decreased
$0.2 million (-0.4%), reflecting the divestment of non-core
properties/businesses in 2019.
Statutory loss before tax for 2019 was impacted by
impairment charges, merger and integration costs, employee
underpayment and restructuring costs, the new lease
standard and the AHG Board not declaring a dividend for the
six months to 31 December 2018, compared to dividend income
of $13.9 million in the pcp. The impact was partially offset by
AP Eagers equity accounting its investment in AHG from 1 May
2019 and consolidating from 19 August 2019, the extraordinary
non-cash gain on reclassification of the investment in AHG
from equity to consolidation and the non-cash release of the
contingent consideration.
Segments 2
The Car Retail segment recorded a statutory loss before tax
from continuing operations of $114.1 million compared to a profit
of $91.0 million in 2018. Underlying1 Operating Profit before
tax was $93.7 million (excluding one-off items totalling $207.8
million), an increase compared to $85.4 million in 2018. The
increase is from AHG contributing $22.1 million underlying1
operating profit, with APE down $13.8 million (-16%) on pcp on a
standalone basis.
AP Eagers standalone underlying1 operational profit from
continuing business was lower across all regions except
for Tasmania. The decline is due to the effect of a lower new
vehicle market leading to reduced sales volumes generating
lower gross KPI income and associated F&I income, partially
mitigated by APE’s cost reduction strategies. The combined car
parts and service businesses continue to excel – flat on record
pcp performance in the context of declining new car sales.
The reduction in new car market also lead to a corresponding
increase in used car performance as new car buyers switched
to used and the supply / demand equation was rebalanced with a
corresponding lift in income.
AHG’s four month trading performance declined across all
regions on pcp, with QLD and VIC significantly underperforming.
EasyAuto123 and AMCAP recorded an improvement on pcp, with
EasyAuto123 in particular making material progress towards
break-even. It is expected that EasyAuto123 will be in consistent
profit by the first half of 2020.
1
Underlying operating results refers to continuing operations, adjusted for significant items and including removal of Kloster Motor Group’s (KMG)
contribution from 2019 and comparative financial information, outlined and reconciled to statutory results in the investor presentation on slides 35
(FY2019) and 36 (comparative financial information) of the Investor Presentation. Underlying operating figures are non-financial measures and have not
been subject to audit by the Company’s external auditors
2
Note: changes in fair value of property and investments are recognised as profit and loss adjustments for segment reporting purposes but are not
recorded in the Group’s Statutory Net Profit After Tax.
10
DIRECTORS’ REPORT CONTINUED Car Retailing statutory revenue from continuing operations
increased by 42.3% to $5,225.0 million. Underlying1 revenue
from Car Retailing continuing operations increased by 50.5% to
$4,885.6 million. The increase is from AHG contributing $1,674.9
million. Excluding AHG and on a like-for-like basis, underlying1
revenue decreased by 1.1% compared to the pcp, with the
decrease primarily attributable to declines in the Queensland,
New South Wales and South Australia markets. The Company’s
parts and service businesses continued to deliver strong trading
results, with new car sales impacted by the decline in national
new vehicle sales.
The National Truck division delivered a loss before tax from
continuing operations of $9.9 million compared to $10.4 million
profit for the pcp. Underlying1 Operating Profit before tax was
$7.8m (excluding impairment totalling $11.6 million), a decrease
of $3.1 million, reflecting softer trading conditions and a $1.3
million profit contribution from AHG, with APE down $4.4 million
on pcp on a standalone basis.
The value of the property portfolio decreased to $267 million
at 31 December 2019 compared with $332 million as at 31
December 2018. The sale of four properties at Newstead, QLD
during 2019 is a key step in the execution of AP Eagers’ ‘Next100’
future growth strategy, aligning with our move to the Brisbane
Auto Mall. The Company also divested a vacant property in
Victoria and purchased a property in the inner city suburb of
Albion, QLD to use as multi-franchise service centre as part of
our ‘Next100’ strategy. Finally, the Company redeveloped the
Southside Toyota showroom (QLD) and Buckles Toyota and VW
shared service centre (NSW).
The Property segment profit contribution of $23.3 million before
tax for 2019 was lower than the pcp of $28.0 million. Gains on
sale and revaluation of properties were $14.5 million, down $2.8
million on the pcp. Underlying1 Operating Profit Before Tax was
$8.9m (excluding gains on sale), down $1.9m on the pcp driven
by reduction on internal rental income from properties divested.
The Investment segment registered a profit before tax of
$139.6 million for 2019 compared to a loss of $171.1 million for
the pcp. The movement was due to an unrealised revaluation
gain on the AHG investment of $145.4 million. This reflected
an AHG closing share price of $2.40 per share on the date
the Company equity accounted its investment compared with
$1.56 as at 31 December 2018 with the gain taken to reserves,
plus an additional revaluation gain on the date the Company
consolidated our investment in AHG reflecting a share price of
$3.08 on 19 August 2019 taken to the income statement.
Financial Position
The Company’s financial position remains strong, with a
substantial property portfolio and asset base underpinning the
Company’s financial position.
Corporate debt (Term and Capital Loan Facility) net of cash on
hand increased to $315.8 million as at 31 December 2019, up
from $295.1 million at 31 December 2018. The increase was
due to refinancing AHG’s debt under APE’s debt facility, offset
by the repayment of APE’s existing debt utilising the proceeds
from asset sales. Total debt including vehicle bailment and lease
liabilities, net of cash on hand, is $2,790.3 million as compared
to $1,137.4 million as at 31 December 2018. The increase is due
to the floorplan and lease liabilities of $1,713.5 million relating to
AHG businesses.
Total inventory levels increased to $1,462.7 million at 31
December 2019, up from $690.2 million at 31 December 2018.
The increase is from AHG businesses contributing inventories
of $880.5 million. APE inventory was down on pcp, due to stock
management and divestment of KMG.
Net tangible assets were $1.02 per share as at 31 December
2019, as compared to $1.99 per share as at 30 June 2019 and
$1.68 per share at 31 December 2018, due to the dilutionary
effect of the share issuance for the acquisition of AHG and the
associated goodwill recognised, and divestment of property and
KMG’s business and assets.
The Company maintained a strong cash position with net cash
provided by operating activities increasing by $56.7 million
to $170.8 million in the twelve months to December 2019
(2018: $114.2 million). In addition to the strong cash flow from
operations, the increase was driven by five key items totalling
$64.9 million. Firstly, the contribution from AHG operating cash
inflows of $50.1 million. Secondly, tax payments decreased by
$4.0 million to $36.9 million in 2019, primarily driven by a large
balancing tax payment made in the first half of 2018 which arose
from a lower tax instalment rate in 2017. Thirdly, in 2019, the
Company utilised a used vehicle floorplan facility, which had a
favourable impact on operating cashflows. These favourable
movements were offset with the unfavourable impact of no AHG
dividend received (June 2018: $13.9 million), combined with a
decrease in insurance payments received of $10.8 million to $5.3
million in 2019 and the payment of $23.0 million of merger and
integration costs.
1
Underlying operating results refers to continuing operations, adjusted for significant items and including removal of Kloster Motor Group’s (KMG)
contribution from 2019 and comparative financial information, outlined and reconciled to statutory results in the investor presentation on slides 35
(FY2019) and 36 (comparative financial information) of the Investor Presentation. Underlying operating figures are non-financial measures and have not
been subject to audit by the Company’s external auditors
11
ANNUAL REPORT 2019 The balance sheet reflects a net current liability position of
$140.7 million, impacted by three key items:
>
>
>
Firstly, the application of the new lease standard resulted in
the recognition of a $171.7 million current lease liability as
at 31 December 2019, reflecting property rental charges for
the next 12 months. AHG’s represents $126.0 million of the
lease liability. This commitment was previously recorded off
balance sheet under the previous accounting standard.
Secondly, the sale of property and KMG business and
current assets resulted in a current tax liability, with the
proceeds used to pay down non-current term debt instead of
retained in cash.
Thirdly, the identification of AP Eager’s and AHG staff
underpayment impacted current liabilities, with the Group
recording a provisional estimate at 31 December 2019 for
underpayments from a six-year period.
Removing the impact of these items results in a net current
asset position for the Group. The group expects to continue to
generate significant cash inflows from operating to fund its
obligations and also has available debt capacity.
New Lease Standard
The Company’s financial position remains strong. The
application of the new lease standard (AASB 16), effective
from 1 January 2019, has resulted in significant changes to
the Company’s corporate debt and liquidity ratios, driven by
the first-time recognition of lease liabilities, and rent expense
on long term leases now being recognised as interest and
depreciation charges. The new standard does not impact
underlying shareholder value, cash flows, or the Company’s
bank covenants.
At 1 January 2019, AP Eager’s elected to adopt the full
retrospective method to account for the leases for the Company,
meaning the lease liability was discounted to the present value
of the lease at lease inception date with the movement since that
date to 1 January 2019 taken to the retained earnings. APE’s
lease liability and right of use asset at 31 December 2019 is
$270.5 million and $193.2 million respectively, with PBT reduced
by $1.0 million in 2019 as a result of the new standard.
AHG’s relative contribution to the impact of AASB 16 on the
Group is significant given the relative size and tenor of their
external leased property portfolio compared to AP Eagers’. In
addition, AP Eagers does not receive the benefit of applying the
full retrospective approach to the initial application of AASB
16. For the AHG leases acquired by AP Eagers as part of the
merger, the lease liability is determined on the basis that the
lease was executed on the business acquisition date, 19 August
2019. This has resulted in a recognition of a lease liability and
right of use asset at 31 December 2019 relating to AHG is $922.1
million and $819.9 million respectively, with PBT reduced by
$10.6 million for the four months ended 31 December 2019 as a
result of the new standard.
For continuing operations, the total impact of the new standard
on the 31 December 2019 consolidated financial report is the
recognition of a $1,192.6 million lease liability, a $1,013.1 million
right of use asset and a deferred tax asset $54.0 million, with
PBT reduced by $11.4 million in 2019.
Outlook
Following the merger with AHG, AP Eagers has the scale and
competitive advantage to withstand the challenging external
conditions and benefit from the accelerating industry transition.
The underlying core automotive result for January 2020
demonstrated strong profit growth on the prior corresponding
period, representing a good start to the year for the combined
group, particularly in the context of a 12.5% decline in the
national new vehicle market for the same month.
In the near term, AP Eagers is focused on delivering improved
operational performance through:
> Ongoing integration of AHG including realisation of its
targeted $30m in synergies ($24.2m achieved);
> Divestment of non-core assets to improve the statutory
result; and
> Effectively managing the exit of Holden / GM from the
Australian market.
In the short to medium term, the Group is focused on driving
EPS growth by prioritising the following initiatives:
>
Scaling our fixed price used car business;
> Unlocking value in its property including transitioning to the
Brisbane Airport Auto Mall to support enhanced customer
experience on a lower cost base;
>
Increasing F&I penetration rates toward levels present in US
and UK markets; and
> Restructuring, rationalisation and consolidation
opportunities.
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.
12
DIRECTORS’ REPORT CONTINUED ENVIRONMENTAL REGULATION
The Group’s property development and service centre operations are subject to various environmental regulations. Environmental
licences are held for particular underground petroleum storage tanks.
Planning approvals are required for property developments undertaken by the Group in relevant circumstances. Authorities are
provided with appropriate details and to the Directors’ knowledge developments during the year were undertaken in compliance with
planning requirements in all material respects.
Management works with regulatory authorities, where appropriate, to assist compliance with regulatory requirements. There were no
material adverse environmental issues during the year to the Directors’ knowledge.
REMUNERATION REPORT
1. Principles Used to Determine Remuneration
The board as a whole is responsible for recommending and reviewing the remuneration arrangements of non-executive Directors,
whilst the board (excluding executive Directors) 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 ($)
2019
(129.1)
(62.4)
36.5
10.24
RESTATED
2018
97.5
50.1
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
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
$100,000 per annum
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.
13
ANNUAL REPORT 2019 3. Executives’ Remuneration Framework
(a) Base Pay
Each executive is offered a competitive base pay to reflect the
market for a comparable role. Base pay is reviewed annually and
on promotion to ensure it remains competitive with the market.
It may be delivered as a combination of cash and superannuation
that the executive elects to salary sacrifice.
(b) Benefits
Executives receive benefits including the provision of fully
maintained motor vehicles, personal health and fitness
programs and, in the case of the Chief Executive Officer,
personal insurance. Retirement benefits are delivered under
superannuation funds providing accumulation benefits. No lump
sum defined benefits are provided.
(c) Short-term Performance Incentives
(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 or the Chief Executive Officer, nor
is it available to the Chief Operating Officer – Cars (as his
remuneration is commission based).
All short-term incentive payments and bonuses are determined
by the Chief Executive Officer in consultation with the Chairman
on a discretionary basis after considering individual and
Company achievements and performances.
(ii) Commission Structure
A commission incentive is included in the remuneration for
the Chief Operating Officer - 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.
(i) Performance Hurdles
Pre-determined performance hurdles for the relevant
performance period must be achieved or waived 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 for the performance period. This is the only
performance hurdle for the rights granted to the Chief
Financial Officer in February 2020 as a retention incentive.
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, except as noted
in this report. 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.
14
DIRECTORS’ REPORT CONTINUED (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 board retains discretion to waive hurdles in exceptional
circumstances where it is believed to be in the Company’s
best interests to do so.
The cost to the Company of Mr Ward’s participation in the EIP is
determined as follows:
>
>
There has been no increase to the average annual cost to the
Company of Mr Ward’s participation in the EIP since 2010.
If 100% of the performance rights and options are to vest
over the five year period 2015 to 2019 (requiring at least 10%
annual compound growth in diluted EPS for five years), the
recognised cost of the plan will average $850,000 per annum
being the fair value at grant date. However, accounting
standards require that the cost be recognised based on the
progressive recognition of each share option grant over its
expected vesting period, as shown in the remuneration table
on page 19, which results in a higher overall cost of the EIP
in the earlier years and a lower cost in later years. On the
assumption that all performance hurdles will be achieved
over the five year period, the total cost recognised in each
year will be as shown in the following graphs.
>
If no performance hurdles at all were to be achieved
over the five year period, then no performance rights or
options would vest and the plan would cost the Company
zero dollars.
> By way of comparison, if only 50% of the performance rights
and options by value were to vest each year over the five year
period (requiring 7% annual compound growth in diluted
EPS for five years), the cost of the plan would be on average
$425,000 per annum for 5 years.
Accounting accrual
Accounting accrual
6
3
2
2
2
1
,
1
8
4
9
4
0
9
4
8
8
5
5
1
s
’
0
0
0
$
1500
1200
900
600
300
0
Average annual cost
Average annual cost
0
5
8
0
5
8
0
5
8
0
5
8
0
5
8
1500
1200
s
’
0
0
0
$
900
600
300
0
0
2014
2015
2016
2017
2018
2019
2014
2015
2016
2017
2018
2019
Accounting accrual cost of CEO’s participation in
EIP – progressive recognition based, assuming all
performance hurdles are achieved.
Average annual cost of CEO’s participation in EIP,
assuming all performance hurdles are achieved.
15
ANNUAL REPORT 2019 (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 below.
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
4 Jul 2014
91,006
-
-
87,268
$4.87 452,127
91,006
$4.67 447,368
-
-
-
$0.91 31 Dec 2015
50,000
exercised
in 2016
-
-
$0.94 31 Dec 2016
$0.95 31 Dec 2017
4
4 Jul 2014
94,866
-
94,866
$4.48 420,792
-
-
$1.01 31 Dec 2018
5
4 Jul 2014
99,067
-
99,067
$4.29 416,666
-
-
$1.02 31 Dec 2019
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 vested
on 27 February 2020
All Performance
Rights and 1/3 of
Options vested
without re-testing.
2/3 of Options vested
on 27 February 2020
Vested without
re-testing
(1) Performance rights are automatically exercised upon vesting. 94,866 rights that were granted for 2018 were exercised during the year under review and these
were valued at $660,267 on the day of exercise.
(2) No options were exercised during the year under review.
16
DIRECTORS’ REPORT CONTINUED
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
5
4 Jul 2014
23,310
-
23,310
$4.29
98,039
-
-
$1.02 31 Dec 2019
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 vested
on 27 February 2020
All Performance
Rights and 1/3 of
Options vested
without re-testing.
2/3 of Options vested
on 27 February 2020
Vested without
re-testing
(1) Performance rights are automatically exercised upon vesting. 22,321 rights that were granted for 2018 were exercised during the year under review and these
were valued at $155,354 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
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
5
4 Jul 2014
2,913
-
2,913
$4.29
12,254
-
-
$1.02 31 Dec 2019
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 vested
on 27 February 2020
All Performance
Rights and 1/3 of
Options vested
without re-testing.
2/3 of Options vested
on 27 February 2020
Vested without
re-testing
(1) Performance rights are automatically exercised upon vesting. 2,790 rights that were granted for 2018 were exercised during the year under review and these
were valued at $19,418 on the day of exercise.
(*) 25,000 of 130,560 options granted to the General Counsel & Company Secretary on 27 March 2013 were exercised during the year under review at an exercise
price of $5.0375 and these were valued at $222,813 on the day of exercise. As previously reported, these options fully vested without re-testing at the end of
their initial performance periods, the last of which ended on 31 December 2017.
17
ANNUAL REPORT 2019
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 vested
on 27 February 2020
All Performance
Rights and 1/3 of
Options vested
without re-testing.
2/3 of Options vested
on 27 February 2020
5
6
7
8
12 Jun 2015
5,167
17 Feb 2020 30,000(3)
17 Feb 2020 35,000(3)
17 Feb 2020 35,000(3)
-
-
-
-
5,167
$7.74
25,000
-
-
-
$9.00
$9.00
$9.00
-
-
-
-
-
-
-
-
-
-
-
$1.60 31 Dec 2019
Vested without
re-testing
- 31 Dec 2019
Vested
- 31 Dec 2020
Unvested
- 31 Dec 2021
Unvested
(1) Performance rights are automatically exercised upon vesting. 4,975 rights that were granted for 2018 were exercised during the year under review and these
were valued at $34,626 on the day of exercise.
(2) No options were exercised during the year under review.
(3) These rights will convert to ordinary shares in March 2020 and remain subject to a trading restriction for five years and one month.
Further details of the performance rights and options granted under the EIP are specified in notes 38 and 39 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 to six 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.
18
DIRECTORS’ REPORT CONTINUED
6. Details of Remuneration
Key management personnel include Directors and executives who have authority and responsibility for planning, directing and
controlling the activities of the Group. Remuneration details of key management personnel are set out in the following tables.
Short-term benefits
Salary & fees
$
Bonus &
commission
$
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
1,210,000
85,000
85,000
100,000
85,000
6,055
6,055
-
-
-
-
-
-
-
-
-
-
628
9,500
-
110,128
140,548
25,000
849,986
2,225,534
628
628
628
628
52
52
-
8,075
8,075
9,500
8,075
575
575
-
-
-
-
-
-
-
-
93,703
93,703
110,128
93,703
6,682
6,682
-
-
38
-
-
-
-
-
-
500,001
2,177,111
150,000
150,000
51,892
195,684
20,767
90,142
385,062
1,107,722
48
1,235,048
3,847,985
250,005
938,710(4)
82,068
20,767
199,997
1,491,546
76
335,547
355,000(4)
585,551
1,293,710
36,014
118,082
19,319
40,086
25,000
770,879
49
224,996
2,262,426
2019
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
G J Duncan (5)
Non-executive Director
D S Blackhall (5)
Non-executive Director
M V Prater (6)
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 market prices, and where these are not available, the binomial tree methodology. A
pre-determined value of the portion of the rights and options attributable to the year under review has been expensed in the income statement in conformity
with AASB 2 and reflected in each recipient’s remuneration. In each year, performance rights and options vested under the EIP for the previous year. Vesting is
subject to the achievement of performance hurdles as previously detailed in this Remuneration Report.
(3) The share-based payment is based on progressive recognition of each award grant over its expected vesting period, which results in an increased cost in the
earlier years of the EIP and a reduced cost in later years on the assumption that all performance hurdles will be achieved over the five year period. For further
details, refer to commentary on page 15 under the heading “CEO’s Participation in EIP” of which the treatment of share plan expense is applicable to all key
management personnel.
(4) Includes bonus for outstanding contribution in relation to merger with Automotive Holdings Group Ltd, and also a commission for Mr Thornton representing
a percentage of net profit before tax of relevant business units which is therefore based on measurable business performance and designed to improve
shareholder value. No commission is included for any key management personnel other than Mr Thornton.
(5) Mr Duncan and Mr Blackhall were appointed as non-executive Directors on 6 December 2019.
(6) Ms Prater was appointed as a non-executive Director on 3 February 2020.
19
ANNUAL REPORT 2019
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
50,045
448,221
21
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 15 under the heading “CEO’s Participation in EIP” of which the treatment of share plan expense is applicable to all key
management personnel.
(4) 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 7. Relevant Interest in the Company’s Shares Held by Key Management Personnel
2019
Directors
M A Ward
N G Politis
D T Ryan
T B Crommelin
D A Cowper
M J Birrell
S A Moore
G J Duncan (1)
D S Blackhall (1)
Executives
K T Thornton
D G Stark
1 January
2019
Dividend
Reinvestment
Plan
Executive
Incentive
Plan
Purchases
Sales
31 December
2019
2,389,661
69,503,581
-
392,286
15,053
2,000,000
11,647
242,775
17,500
470,531
145,816
75,188,850
-
-
-
-
-
-
-
-
-
-
-
-
94,866
-
-
-
-
-
4,975
-
-
88
32,935
1,200
-
-
-
-
41,667
5,556
-
-
-
-
-
-
-
-
-
2,484,615
69,536,516
1,200
392,286
15,053
2,000,000
16,622
284,442
23,056
22,321
27,790
149,952
-
-
1,652,275
100,000
-
100,000
392,852
173,606
76,891,077
(1) Mr Duncan and Mr Blackhall were appointed as non-executive Directors on 6 December 2019.
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
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
-
690,500
-
9,000
-
-
-
21,413
2,676
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
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
G J Duncan
D Blackhall
M V Prater
392,286
69,536,516
2,484,615
1,200
15,053
2,000,000
16,622
284,442
23,056
2,540,096
-
-
2,153,985
-
-
-
117,570
-
-
-
-
-
99,067
-
-
-
105,167
-
-
-
(1) Share options and performance rights vest only if performance hurdles are met or waived in accordance with the Executive Incentive Plan, as described in the
Remuneration Report.
21
ANNUAL REPORT 2019
SHARES UNDER OPTION
NON-AUDIT SERVICES
No options and 100,000 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.
No shares were issued as a result of the exercise of options or
performance rights during or since the year under review.
At the date of this report, there are 5,841,986 unissued shares
under option and no 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.
The Company may decide to employ its auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise or experience with the Group is important.
Details of the amounts paid or payable to the auditor for audit
and non-audit services provided to the Group during the year are
set out in Note 36 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, 27 February 2020
22
DIRECTORS’ REPORT CONTINUED 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
27 February 2020
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 2019, 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 Asia Pacific Limited and the Deloitte Network
23
ANNUAL REPORT 2019
THIS PAGE INTENTIONALLY LEFT BLANK
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
26
27
28
29
30
31
104
105
25
ANNUAL REPORT 2019 STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2019
Revenue
Other Gains
CONSOLIDATED
2019
$’000
RESTATED
2018
$’000
5,816,979
4,112,802
125,616
8,492
Notes
3
4
Share of net profits of associate
43(c)
407
77
Raw materials and consumables purchased
Employee benefits expense
Finance costs
Depreciation and amortisation expense
Impairment of non-current assets
Other expenses
(Loss)/Profit before tax
Income tax expense
(Loss)/Profit from continuing operations
Loss from discontinued operations
(Loss)/Profit for the year
Attributable to:
Owners of A.P. Eagers Limited
Non-controlling interests
5
5
5(b)
6
(4,827,210)
(3,400,165)
(480,219)
(330,622)
(65,569)
(95,217)
(244,925)
(293,166)
(40,744)
(46,137)
-
(175,301)
(63,304)
128,402
(17,176)
(80,480)
(30,906)
97,496
(48,644)
(129,124)
-
97,496
33(f)
31(b)
(131,913)
2,789
(129,124)
95,877
1,619
97,496
(Loss)/Earnings per share for profit attributable to the ordinary equity holders of the Company:
Basic (loss)/earnings per share
From continuing operations
From discontinued operation
Diluted (loss)/earnings per share
From continuing operations
From discontinued operation
41(a)
41(b)
The above Statement of Profit or Loss should be read in conjunction with the accompanying notes.
The comparative information has been restated as a result of the initial application of AASB 16 as disclosed in Note 1 (aa).
Cents
Cents
(62.4)
(39.4)
(23.0)
(62.4)
(39.4)
(23.0)
50.1
50.1
-
49.8
49.8
-
26
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
(Loss)/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
Exchange differences on translation of foreign operations
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 fair value through other comprehensive income
Income tax (expense)/benefit
Total other comprehensive income/(loss) for the year
Total comprehensive loss for the year
Total comprehensive income/(loss) attributable to:
Owners of the parent
Non-controlling interests
Notes
31(a)
31(a)
31(a)
31(a)
31(a)
31(a)
31(a)
CONSOLIDATED
2019
$’000
RESTATED
2018
$’000
(129,124)
97,496
36
(11)
1,153
1,178
13,769
(4,131)
80,331
103
(31)
-
72
11,266
(3,380)
(181,400)
(21,544)
30,059
68,425
69,603
(143,455)
(143,383)
(59,521)
(45,887)
(62,310)
2,789
(47,506)
1,619
(59,521)
(45,887)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
The comparative information has been restated as a result of the initial application of AASB 16 as disclosed in Note 1(aa).
27
ANNUAL REPORT 2019 STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Assets classified as held for sale
Property sale receivable
Total current assets
Non-current assets
Other loans receivable
Financial assets at fair value through other comprehensive income
Investments in associates
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non-current assets
Right-of-use 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
Deferred revenue
Lease liabilities
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Borrowings
Deferred revenue
Provisions
Other
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
Notes
8
9
10
11
12
13
14
16
17
18
15(a)
CONSOLIDATED
RESTATED
31 December
2018
$’000
RESTATED
1 January
2018
$’000
2019
$’000
94,172
310,155
1,462,675
23,214
1,890,216
507,155
-
2,397,371
30,893
2,366
16,806
475,415
758,737
167,531
13,030
1,013,101
2,477,879
4,875,250
18,868
156,286
690,167
12,617
877,938
-
-
877,938
8,303
149,774
12,077
388,407
313,325
26,766
-
222,759
10,827
161,807
652,652
11,172
836,458
-
7,145
843,603
10,600
288,033
12,000
361,121
309,414
5,073
-
231,903
1,121,411
1,999,349
1,218,144
2,061,747
19
371,447
145,917
153,103
21(a)
22
23
24(a)
15(a)
25(a)
27
26
28
15(a)
30
31(a)
31(b)
33(f)
-
35
20
1,310,153
571,615
545,200
25,224
107,146
43,739
171,675
2,029,384
508,666
2,538,050
381,885
43,804
50,017
-
1,020,882
1,496,588
4,034,638
840,612
1,173,069
(551,813)
209,933
831,189
9,423
840,612
2,190
48,481
5,862
44,596
13,221
46,041
5,319
39,380
818,696
802,284
-
-
818,696
802,284
312,614
248,344
-
5,052
19,422
207,906
544,994
-
6,106
19,369
217,009
490,828
1,363,690
1,293,112
635,659
768,635
371,405
(124,306)
380,558
627,657
8,002
635,659
369,028
38,131
350,715
757,874
10,761
768,635
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
The comparative information has been restated as a result of the initial application of AASB 16 as disclosed in Note 1(aa).
28
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated entity 2019
Notes
Asset
revaluation
reserve
$’000
Issued
capital
$’000
Foreign
currency
translation
reserve
$’000
Share- based
payments
reserve
$’000
Hedging
reserve
$’000
Investment
revaluation
reserve
$’000
Business
combination
reserve
$’000
Retained
earnings
$’000
Attributable
to owners of
the parent
$’000
Non-
controlling
interests
$’000
Total
$’000
33(a)
-
801,664
1,173,069
-
-
28,312
-
-
1,153
Restated balance at
1 January 2019
Loss 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
Payments received from
employees for exercised
shares
Income tax on items taken to
or transferred directly from
equity
Issue of ordinary shares as
purchase consideration on
acquisition
Dividends provided for or paid
Purchase of shares for
non-controlling interests
Recognition of NCI on
acquisition
Balance at 31 December 2019
Consolidated entity 2018
Restated balance at
1 January 2018
Adjustment on adoption of
AASB 16 (net of tax)
Restated total equity at the
beginning of the financial year
Restated 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 acquired by employee
share trust
Shares issued pursuant to
staff share plan
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
371,405
-
-
56,820
-
9,638
31(a)
-
-
-
-
-
-
33(a)
344,509
-
457,155
9,638
(38,146)
-
-
-
-
-
-
-
369,028
52,728
-
-
369,028
-
-
-
-
-
-
-
31(c)
(iv)
30
31(a)
2,377
-
-
-
2,377
52,728
-
7,886
7,886
(3,794)
-
-
-
-
-
-
-
-
Restated balance at
31 December 2018
371,405
56,820
-
-
1,153
1,153
-
(25)
-
25
25
-
(49,628)
-
-
(131,473)
-
58,787
-
380,558
- (131,913)
-
-
627,657
(131,913)
69,603
8,002
635,659
2,789 (129,124)
69,603
-
-
-
58,787
-
- (131,913)
39,368
-
(62,310)
1,222
2,789
-
(59,521)
1,222
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,598)
1,906
4,890
7,567
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,598)
1,906
4,890
7,567
-
-
-
-
(2,598)
1,906
4,890
7,567
-
(78,080)
344,509
(78,080)
-
(1,368)
344,509
(79,448)
- (470,729)
-
(13,574)
13,574
-
-
11,765
(37,863)
-
-
- (470,729)
(470,729)
(72,686)
-
(78,080)
209,933
-
264,620
831,189
(13,574)
(1,368)
9,423
(13,574)
263,252
840,612
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(97)
(34,368)
19,868
-
(97)
-
72
72
-
-
-
(34,368)
-
-
19,868
-
(151,341)
-
-
(151,341)
-
-
-
-
-
-
-
-
-
391
-
(13,965)
(2,377)
-
4,664
(3,973)
(15,260)
-
-
-
-
-
-
-
-
(25)
(49,628)
(131,473)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
367,855
775,014
10,761
785,775
(17,140)
(17,140)
-
(17,140)
350,715
95,877
-
757,874
95,877
(143,383)
10,761
1,619
-
768,635
97,496
(143,383)
95,877
3,794
(47,506)
-
1,619
-
(45,887)
-
-
(69,828)
391
(69,828)
-
(2,041)
391
(71,869)
-
-
-
-
(13,965)
-
-
-
-
(13,965)
-
(2,337)
(2,337)
4,664
-
4,664
-
(69,828)
(3,973)
(82,711)
-
(4,378)
(3,973)
(87,089)
380,558
627,657
8,002
635,659
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
The comparative information has been restated as a result of the initial application of AASB 16 as disclosed in Note 1 (aa).
29
ANNUAL REPORT 2019 STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Receipts from insurance claims
Interest and other costs of finance paid
Income taxes paid
Dividends received
Interest received
CONSOLIDATED
2019
$’000
RESTATED
2018
$’000
Notes
7,166,300
4,495,529
(6,891,865)
(4,329,850)
5,324
(73,588)
(36,860)
100
1,385
16,139
(40,744)
(40,983)
13,868
196
Net cash provided by operating activities
42
170,796
114,155
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
Payments for shares in other corporations
Net cash provided by/(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
Repayment of lease liabilities
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
63,903
(72,687)
64,366
177,673
-
233,255
4,890
65,798
(2,598)
(247,039)
734
(78,080)
(288)
(64,801)
(321,384)
82,667
18,868
101,535
(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)
(25,166)
(41,206)
8,041
10,827
18,868
31(a)
31(a)
7
8
30
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
31 DECEMBER 2019
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 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 27th of February 2020.
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.
Going Concern
The financial statements have been prepared on the basis
that the Group is a going concern, able to realise assets in the
ordinary course of business and settle liabilities as and when
they fall due. The Group had net current liabilities of $141 million
at the 31 December 2019 which is primarily due to the impact
of AASB16 leasing standard. The Group generates strong
operating cashflows and has available facilities of $96 million at
31 December 2019 on which it can draw down.
(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.
31
ANNUAL REPORT 2019 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(b) Basis of consolidation continued
When the Company has less than a majority of the voting rights
of an investee, it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct the
relevant activities of the investee unilaterally.
The Company considers all relevant facts and circumstances
in assessing whether or not the Company’s voting rights in an
investee are sufficient to give it power, including:
>
>
>
>
the size of the Company’s holding of voting rights relative to
the size and dispersion of holdings of the other vote holders;
potential voting rights held by the Company, other vote
holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the
Company has, or does not have, the current ability to direct
the relevant activities at the time that decisions need to be
made, including voting patterns at previous shareholders’
meetings.
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
accounting standards). 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.
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 2019 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.
The Group continues to use the equity method when an
investment in an associate becomes an investment in a
joint venture or an investment in a joint venture becomes an
investment in an associate. There is no remeasurement to fair
value upon such changes in ownership interests.
When the Group reduces its ownership interest in an associate
but the Group continues to use the equity method, the Group
reclassifies to profit or loss the 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 the Group increases its ownership interest such that an
existing associate becomes a subsidiary, the Group remeasures
its previously held interest at its acquisition-date fair value
and recognises the resulting gain or loss in profit or loss. The
acquisition of the investment in the subsidiary is recognised in
accordance with Note 1(h).
When a Group entity transacts with an associate of the Group,
profits and losses resulting from the transactions with the
associate are recognised in the Group’s consolidated financial
statements only to the extent of interests in the associate that
are not related to the Group.
(c) Operating segments
Operating segments are identified based on internal reports that
are regularly reviewed by the entity’s chief operating decision
maker in order to allocate resources to the segment and assess
its performance.
The Group has four operating segments being (i) Car Retail
(ii) Truck Retail (iii) Property (iv) Investments. Currently the
segment of “Other” is not required.
(d) Revenue
(i) Sales revenue
Revenue from the 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
straight-line basis over the lease term.
(iv) Finance and Insurance Income
The Group acts as an agent in the sale of vehicle finance and
insurance products. The revenue (i.e. commission 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.
(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 2019 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 1997. Automotive Holdings
Group Limited and its wholly owned Australian entities became
part of the A.P. Eagers Limited tax consolidated group on 24
October 2019. 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. For
completeness we note that Automotive Holdings Group Limited
and its wholly-owned Australian entities become parties to the
A.P. Eagers Tax Funding Agreement on 24 October 2019. 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
The Group as a lessee
The Group assesses whether a contract is or contains a lease,
at inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets. For these leases, the Group
recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in
which economic benefits from the leased assets are consumed.
34
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 Unless the Group is reasonably certain to obtain ownership of
the leased asset at the end of the lease term, the recognised
right-of-use assets are depreciated on a straight-line basis over
the shorter of its estimated useful life and the lease term.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under AASB 137 Provisions, Contingent Liabilities
and Contingent Assets. The costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
The right-of-use assets are presented as a separate line in the
consolidated statement of financial position.
Right-of-use assets are subject to impairment in accordance
with AASB 136 Impairment of Assets. Any identified impairment
loss is accounted for in line with our accounting policy for
‘Property, plant and equipment’.
(iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption
to its short-term leases of Property, Machinery/Equipment
and Motor Vehicles (i.e., those leases that have a lease of 12
months or less from the commencement date and do not
contain a purchase option). It also applies the low-value assets
recognition exemption to leases that are considered of low value.
Lease payments on short-term leases and leases of low-value
assets are recognised as an expense on a straight-line basis
over the lease term.
(iv) Sale and Leaseback transactions
Where the Group enters into a sale and leaseback transaction,
the Group firstly applies the requirements of AASB 15 Revenue
from Contracts with Customers to determine whether control
has passed, and whether the transfer is accounted for as a
sale. Further, when the Group enters into a sale and leaseback
transaction and the fair value of the consideration for the sale
of the property does not equal the fair value of the asset, or the
payments for the lease are not at market rates, the following
adjustments are made to measure the sale proceeds at fair value:
(i)
any below market terms are accounted for as a prepayment
of lease payments; and
(ii) any above market terms are accounted for as additional
financing provided by the buyer-lessor to the Group.
(i) Lease Liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments
include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to
be paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties
for terminating a lease, if the lease term reflects the Group
exercising the option to terminate. The variable lease payments
that do not depend on an index or a rate are recognised as
an expense in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is
not readily determinable. The incremental borrowing rate is
defined as the rate of interest that the lessee would have to pay
to borrow over a similar term and with a similar security over
the funds necessary to obtain an asset of a similar value to the
right-of-use asset in a similar economic environment.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease
liabilities is remeasured whenever:
>
>
>
The lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case
the lease liabilities are remeasured by discounting the
revised lease payments using a revised discount rate;
The lease payments change due to changes in an index or
rate or a change in expected payment under guaranteed
residual value, in which case the lease liability is
remeasured by discounting the revised lease payments
using the initial discount rate (unless the lease payments
change is due to a change in a floating interest rate, in which
case a revised discount rate is used); and
A lease contract is modified and the lease modification is
not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
(ii) Right-of-use assets
The Group recognises right-of-use assets at cost at the
commencement date of the lease (i.e. the date the underlying
asset is available for use).
The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any
lease incentives received. Right-of-use assets are subsequently
measured at cost, less any accumulated depreciation and
impairment losses, and are adjusted for any remeasurement of
lease liabilities.
35
ANNUAL REPORT 2019 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(g) Leases continued
(v) Significant judgement in determining the lease term of contracts
with renewal options
The Group determines the lease term as the non-cancellable
term of the lease, together with periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of its property leases
to lease the asset for additional terms. The Group applies
judgement in evaluating whether it is reasonably certain to
exercise the option to renew. That is, it considers all relevant
factors that create an economic incentive for it to exercise the
renewal. After the commencement date, the Group reassess
the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to
exercise (or not to exercise) the option to renew (e.g., a change in
business strategy).
(vi) Incremental Borrowing Rate
The Group has determined its incremental borrowing rate
by considering the interest rate on their financing facility and
applying, where considered necessary, adjustments to align this
with an asset specific rate. The adjustments consider the term
of the agreement, security of asset and the funds necessary
to obtain the asset of a similar value in a similar economic
environment. Significant judgement is required to assess and
apply these adjustments.
The application of the incremental borrowing rate impacts
the initial valuation of the lease liability and associated
interest expense.
(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 acquisition unless, in rare
circumstances, it can be demonstrated that the published price
at the date of acquisition 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.
Where the business combination is achieved in stages, the
Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference
between the fair value and the previous carrying amount is
recognised in the profit or loss.
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(q)). 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 independent cash inflows (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)).
36
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (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.
(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 fair value through other comprehensive income
(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.
(ii) 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.
37
ANNUAL REPORT 2019 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(m) Investments and other financial assets continued
(iii) 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.
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)).
38
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 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.
(o) Customer relationships
Customer relationships acquired in a business combination
where management believes there are contracted relationships
in place that generate repeat transactions which creates future
economic benefits and are amortised on a straight-line basis
over the period of their expected benefit, being their finite
useful life of five years. Customer relationships are made up of
fleet customer arrangements in place for the new vehicle and
servicing business.
(p) 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.
(q) 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
acquired and liabilities assumed of the acquired subsidiary,
associate or business at the date of acquisition. Goodwill
on acquisition of subsidiaries and businesses is included in
intangible assets. Goodwill on acquisition of associates is
included in investment in associates. Goodwill acquired in
business combinations is not amortised. Instead, goodwill is
tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired,
and is carried at cost less accumulated impairment losses. An
impairment loss for goodwill is recognised immediately in profit
or loss and is not reversed in a subsequent period. Gains and
losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing (refer Note 17(a)).
(r) 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.
(s) 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.
(t) 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.
(u) 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.
(v) Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and long service
leave, when it is probable that settlement will be required and
they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits
are measured at their nominal values using the remuneration
rate expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits
are measured as the present value of the estimated future cash
outflows to be made by the Group in respect of services provided
by employees up to reporting date.
The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of equity
instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if any,
is recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to
the share-based payments reserve.
Contributions are made by the Group to defined contribution
employee superannuation funds and are charged as expenses
when incurred.
39
ANNUAL REPORT 2019 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(w) Dividends
(z) Rounding of amounts
Provision is made for the amount of any dividend declared on or
before the end of the year but not distributed at balance date.
(x) 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.
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
>
>
the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares
by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and
excluding treasury shares.
(ii) Diluted earnings per share
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.
(aa) 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
2019, which have not had any material impacts:
> AASB 2017-6 Amendments to Australian Accounting Standards
- Prepayment Features with Negative Compensation
> AASB 2017-7 Amendments to Australian Accounting Standards
- Long-term Interest in Associates and Joint Ventures
> AASB 2018-1 Amendments to Australian Accounting Standards
- Annual Improvements 2015-2017 Cycle
Diluted earnings per share is calculated as net profit attributable
to members of the parent, adjusted for:
> AASB 2018-2 Amendments to Australian Accounting
Standards - Plan Amendment, Curtailment or Settlement
> 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.
(y) Non-current assets held for sale
Non-current assets and disposal groups are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use.
This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for
immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for
recognition as a completed sale within one year from the date of
classification.
Non-current assets (and disposal groups) classified as held
for sale are measured at the lower of their previous carrying
amount and fair value less costs to sell. Where non-current
assets are sold above the lower of their previous carrying
amounts and fair value less costs to sell, this gain is recognised
in profit or loss when the sale is recognised.
> AASB 2018-3 Amendments to Australian Accounting
Standards - Reduced Disclosure Requirements
>
Interpretation 23 Uncertainty over Income Tax Treatments
and AASB 2017-4 Amendments to Australian Accounting
Standards - Uncertainty over Income Tax Treatments
The Group has applied the following standards for the first time
for the annual reporting period commencing 1 January 2019:
> AASB 16 - Leases (AASB 16)
The impact of adopting this standard has been assessed below.
1.1 Application of new and revised accounting standards
1.1.1 AASB 16 Leases
In the current year, the Group has applied AASB 16 Leases
(“AASB 16”) for the first time.
AASB 16 supersedes AASB 117 Leases (“AASB 117”).
The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and
requires lessees to account for most leases under a single on-
balance sheet model.
AASB 16 introduces new or amended requirements with respect
to lease accounting. It introduces significant changes to lessee
accounting by removing the distinction between operating and
finance leases and requiring the recognition of a right-of-use
asset and a lease liability at commencement for all leases,
except for short-term leases and leases of low value assets.
In contrast to lessee accounting, the requirements for lessor
accounting have remain largely unchanged. The impact of
the adoption of AASB 16 on the Group’s consolidated financial
statements is described below.
40
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 The Group adopted AASB 16 using the full retrospective
method of adoption. AASB 16 has been applied for the first
time on 1 January 2019 with retrospective restatement from
1 January 2018.
Impact of the new definition of a lease
The Group elected to use the transition practical expedient
allowing the standard to be applied only to contracts that were
previously identified as leases, applying AASB 117 at the date
of initial application. Therefore, the definition of a lease in
accordance with AASB 117 and Interpretation 4 Determining
whether an Arrangement contains a Lease will continue to
be applied for those leases entered into or modified before
1 January 2019.
The Group has also elected to use the recognition exemptions
for lease contracts that, at the commencement date, have a
lease term of 12 months or less and do not contain a purchase
option (‘short term leases’), and the lease contracts for which
the underlying asset is of low value (‘low-value assets’).
The change to the definition of a lease mainly relates to the
concept of control. AASB 16 determines whether a contract
contains a lease on the basis of whether the customer has the
right to control the use of an identified asset for a period of time
in exchange for consideration.
Impact on lessee accounting
Former operating leases
AASB 16 changes how the Group accounts for leases previously
classified as operating leases under AASB 117, which were off-
balance sheet.
For short-term leases (lease term of 12 months or less) and
leases of low value asset (such as personal computers and
office furniture), the Group has opted to recognise a lease
expense on a straight-line basis as permitted by AASB 16. This
expense is presented within other expenses in the consolidated
statement of profit or loss, and cash flows associated with these
leases are presented in payments to suppliers and employees in
operating cashflows.
Former finance leases
The main difference between AASB 16 and AASB 117 with
respect to assets formerly held under a finance lease is the
measurement of residual value guarantees provided by the
lessee to a lessor. AASB 16 requires that the Group recognises
as part of its lease liability only the amount expected to be
payable under a residual value guarantee, rather than the
maximum amount guaranteed as required by AASB 117.
This change did not have a material effect on the Group’s
consolidated financial statements.
Impact on lessor accounting
Lessor accounting under AASB 16 is substantially unchanged
from AASB 117. Lessors will continue to classify leases as
either operating or finance leases using similar principles as
AASB 117. However, AASB 16 has changed and expanded the
disclosures required, in particular regarding how a lessor
manages the risks arising from its residual interest in leased
assets. The Group is not party to any material lease agreements
as lessor, and therefore implementation of AASB 16 has not
resulted in any required changes to the financial statements and
its disclosures.
Applying AASB 16, for all leases (except as noted below), the
Group:
Financial impact of the initial application of AASB 16
The Group holds the following types of leases
(i)
recognises right-of-use assets and lease liabilities in
the consolidated statement of financial position, initially
measured at the present value of future lease payments;
(1) Property Leases
(2) Machinery/Equipment Leases
(3) Motor Vehicle Leases
The Group has determined that the impact of applying AASB 16
is immaterial for Motor Vehicle Leases, and therefore the only
transition adjustments made to the Groups financial statements
and its disclosures relate to Property and Equipment Leases.
(ii) recognises depreciation of right-of-use assets and interest
on lease liabilities in the consolidated statement of profit or
loss; and
(iii) separates the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within operating activities) in the consolidated
statement of cash flows.
Lease incentives (e.g. free rent period) are recognised as part of
the measurement of the right-of-use assets and lease liabilities
whereas under AASB 117 they resulted in the recognition of
a lease incentive liability, amortised as a reduction of rental
expense on a straight-line basis.
Under AASB 16, right-of-use assets are tested for impairment in
accordance with AASB 136 Impairment of Assets. This replaces
the previous requirement to recognise a provision for onerous
lease contracts.
41
ANNUAL REPORT 2019 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Financial impact of the initial application of AASB 16 continued
As the Group have elected to use the full retrospective method, comparatives have been restated to adjust for the impact of AASB 16.
The tables below show the impact of AASB 16 on the originally reported balances:
Consolidated Statement of Profit or Loss
For the year ended 31 December 2018
Depreciation and amortisation expense
Finance costs
Aggregated other expenses
Income tax expense
Profit after income tax
Earnings per share for profit attributable to the ordinary equity holders
of the Company:
Basic earnings per share
Diluted earnings per share (cents)
As originally
presented
$’000
Adjustments
arising from
AASB 16
$’000
(15,641)
(26,530)
(214,681)
(32,556)
(30,496)
(14,214)
39,381
1,650
Restated
$’000
(46,137)
(40,744)
(175,300)
(30,906)
101,175
(3,679)
97,496
52.0
51.7
(1.9)
(1.9)
50.1
49.8
(1)
(1)
(1)
(1)
(2)
(2)
(1) AASB 16 changed the amount and presentation of lease related expenses. Under AASB 117, operating lease expenses were presented as operating expenses,
whereas AASB 16 splits the lease expenses into depreciation of the right of use assets recognised and finance costs on lease liabilities. This has driven a
decrease in the operating lease expense and increased in depreciation and finance costs.
(2) The adjusted profit has led to a marginal change in the Group’s basic and diluted earnings per share.
Consolidated Statement of Financial Position
As at 31 December 2018
As at 1 January 2018
As originally
presented
$’000
Adjustments
arising from
AASB 16
$’000
-
17,844
1,767,668
222,759
8,922
231,681
As originally
presented
$’000
Adjustments
arising from
AASB 16
$’000
-
-
1,824,771
231,903
5,073
236,976
Restated
$’000
222,759
26,766
1,999,349
Restated
$’000
231,903
5,073
2,061,747
-
44,596
44,596
-
39,380
39,380
-
-
1,111,190
207,906
-
252,502
207,906
-
1,363,692
-
2,273
1,038,996
217,009
(2,273)
254,116
217,009
-
1,293,112
656,478
(20,820)
635,659
785,775
(17,140)
768,635
401,377
656,478
(20,820)
(20,820)
380,558
635,659
367,855
785,775
(17,140)
(17,140)
350,715
768,635
(1)
(2)
(1)
(1)
(2)
(3)
Non-current assets
Right-of-use assets
Deferred tax assets
Total assets
Current liabilities
Lease liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity
Retained earnings
Total equity
(1) AASB 16 has led to recognised amounts for right of use assets and lease liabilities on the face of the balance sheet representing the Group’s portfolio of leased
assets made up by property and equipment utilised by the Group.
(2) Adjustments under AASB 16 are subject to tax effect accounting and therefore the net deferred tax position has been impacted.
(3) Given the Group applied the full retrospective method of transitioning to AASB 16, retained earnings has been adjusted on 1st January 2018 of $17.1 million to
reflect a decrease in equity. At 31 December 2018, the retained earnings adjustment has increased by a further $3.6 million to $20.8 million. The difference
represents the 2018 profit and loss impact of the new standard.
42
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Cash flows from operating activities
Payments to suppliers and employees
Interest and other costs of finance paid
Net cash provided by operating activities
Cash flows from financing activities
Repayment of lease liabilities
Net cash used in financing activities
As originally
presented
$’000
Adjustments
arising from
AASB 16
$’000
Restated
$’000
(1)
(1)
(1)
(4,369,230)
39,380
(4,329,850)
(26,530)
88,989
(16,040)
(14,214)
25,166
(25,166)
(25,166)
(40,744)
114,155
(25,166)
(41,206)
(1) Lease payments are now classified within financing activities which were previously operating cash flows. This has led to an increase in cash flows from
operating activities and an increase in net cash outflows from financing activities.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Balance at 1 January 2018
Profit after tax for the period
As originally
presented
$’000
367,855
99,556
Adjustments
arising from
AASB 16
$’000
(17,140)
(3,679)
Restated
$’000
350,715
49,276
Closing balance 31 December 2018
401,377
(20,819)
380,558
43
ANNUAL REPORT 2019
2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
(ii) Fair value of assets and liabilities acquired in business
combinations other than the acquisition of AHG
Other 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. 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.
(iii) Recoverability of goodwill and other intangibles with indefinite
useful lives
Goodwill and other intangibles with indefinite useful lives
of $749,752,000 (2018: $313,325,000) 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 discount rates based on the current cost of capital. Fair
value less costs of disposal is assessed by the Directors based
on their knowledge of the industry and any recent market
transactions. The above figures therefore reflect the estimates
of the recoverable amounts post any impairment recognised
during the year. Further information on the impairment test and
impairments recognised in respect of goodwill and other assets
can be found in Note 17(a).
(iv) Leases
The Group adopted AASB 16 Leases from the 1 January 2019
(see Note 1(aa)). On application the Group has recognised right
of use assets and lease liabilities in the consolidated statement
of financial position and depreciation of right of use assets and
interest on lease liabilities in the consolidated statement of
profit or loss. Material right of use assets and lease liabilities
have also been recognised on acquisition of AHG (see note 33(a)).
In applying the standard the directors have made certain
assumptions and judgements including but not limited to the
appropriate discount rate on incremental borrowing rates and
likely exercise of the renewal options. See Note 1(g).
(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)
Acquisition of Automotive Holdings Group (AHG) and provisional
fair values
The Group completed the acquisition of Automotive Holdings
Group Limited (AHG Limited) via an all scrip offer during the
year ended 31 December 2019. On the 19 August 2019 AP Eagers
declared a relevant interest of 62.5% in the shares of AHG. On
the 16 September 2019 (the Offer close date) the Group held an
interest of 91.11%. The Group went on to purchase the remaining
shares it did not own by 24 October 2019.
The acquisition of AHG falls under the scope of AASB 3 Business
Combinations. Accounting for acquisitions of businesses is
complex and requires judgements and/or estimates to be made
in determining a number matters including but not limited to:
(i) the date on which the Group achieved control over AHG;
(ii) which identifiable assets and liabilities were acquired as
part of the transaction including consideration of intangible
assets and contingencies not previously recognised in AHG’s
books;
(iii) fair values to be attributed to the identifiable assets and
liabilities assumed .
The determination of fair values requires the use of various
valuation techniques depending on the nature of the asset or
liability under consideration and often require assumptions and
estimates to be made. Assumptions required may include but
not be limited to: revenue growth rates, cash flows, margins
and customer retention rates and weighted average cost of
capital (e.g. for intangibles), replacement cost, residual values
and useful economic lives as well as physical technological
and functional obsolescence (e.g. for tangible fixed assets). In
addition to some of the judgements and estimates required in
relation to leases noted in Note 2(iv) below, judgements have
also been made as to whether any “off market” leases exist.
Overarching this, due to the proximity of acquisition to Group’s
year end, various balances have been accounted for in the
Statement of Financial position on a provisional basis as at 31
December 2019. See Note 33(a).
44
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (v) Staff underpayment provision/liability
(viii) 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.
(ix) 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.
On 17 December 2019, AP Eagers announced on the Australian
Stock Exchange that it had self reported the underpayment
of employees to Fair Work. AP Eagers engaged independent
experts to undertake an assessment of AP Eagers’ payroll to
determine the extent to which past and present employees
had been impacted. Following the assessment, AP Eagers has
determined that approximately 6,200 employees have been
impacted over a seven-year period. The total payment shortfall
equates to approx $4.5 million plus interest charges.
AP Eagers has commenced a review of AHG’s payments to
employees following its acquisition of the business in August
2019. AP Eagers has recorded a provisional contingency on
acquisition of AHG based on preliminary procedures performed
and insights gained in assessing its self reported underpayment
at AP Eagers and certain findings at AHG. The provision
has been captured as part of the provisional purchase price
allocation process, with a provision raised on acquisition with a
corresponding adjustment against goodwill. Given the proximity
of the acquisition to 31 December 2019, AP Eagers management
has had to a make a number of judgements and estimates in
relation to assessing this provision. See Note 33(a).
(vi) Fair value estimation of land and buildings
Land and buildings (including construction in progress) with
a carrying value of $267,197,000 (2018: $331,674,000) are
carried at fair value. Fair value inherently involves estimates
and judgements to be made. The Directors determine the fair
value of land and buildings at least annually and if required in
contemplation of sale. The Directors’ assessment is supported
by formal independent valuations conducted periodically but at
least every three years. Further information on the fair value
estimation of land and buildings can be found in Note 16.
(vii) Deferred Tax Asset
As set out in Note 18 the Group has recorded a provisional
deferred tax asset of $167,531,000 (2018: $26,800,000) at 31
December 2019. 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
sufficient profits available in the future (refer to Note 18).
45
ANNUAL REPORT 2019 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 2019
for Continuing Operations
Retailing
$’000
Property
$’000
Investments
$’000
Total
$’000
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
New Zealand
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
3,533,450
1,148,797
682,358
417,451
33,804
5,815,860
5,398,409
417,451
5,815,860
5,639,298
176,562
-
-
-
-
1,054
1,054
1,054
-
1,054
-
-
-
-
65
65
65
-
65
3,533,450
1,148,797
682,358
417,451
34,923
5,816,979
5,399,528
417,451
5,816,979
1,054
65
5,640,417
176,562
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
46
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019
4 OTHER GAINS
Gain on disposal of non-financial assets
Gain on remeasurement of previously held equity accounting investment in AHG
Derecognition of contingent consideration
Reversal of impairment of land and buildings
Gains on disposal of properties
Gain on disposal of businesses
CONSOLIDATED
2019
$’000
6,715
65,061
19,674
-
14,457
19,709
125,616
2018
$’000
-
-
-
2,433
3,554
2,505
8,492
47
ANNUAL REPORT 2019 5 EXPENSES
(a) Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Leasehold improvements
Right-of-use asset depreciation
Total depreciation
Amortisation
Brand names
Total amortisation
Total Depreciation and Amortisation
Finance costs
Vehicle bailment
Interest on lease liabilities
Other
Total finance expense
Superannuation
Provision expenses
Inventory
Allowance for expected credit losses
Share-based payments
Business acquisition costs
Business restructuring costs
(b) Impairment of non-current assets
Impairment of goodwill
Impairment of right-of-use Asset
Impairment of fixed Assets
Amount attributable to discontinued operations (refer to Note 33(d))
48
Note
16
16
16
15(a)
17
CONSOLIDATED
2019
$’000
RESTATED
2018
$’000
3,344
22,270
1,695
67,908
95,217
3,679
9,867
2,056
30,496
46,098
-
-
39
39
95,217
46,137
24,603
27,475
13,491
65,569
14,631
14,214
11,899
40,744
49,100
29,119
4,256
114
4,370
1,906
12,520
4,442
209,238
32,800
2,887
244,925
34,267
3,159
188
3,347
391
680
-
-
-
-
-
-
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019
6
INCOME TAX
(a) Income tax expense
Current income tax expense
Deferred income tax expense/(benefit)
Deferred income tax expense/(benefit) included in income tax expense comprises:
In respect of the current year
Closing balance
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
(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% (2018 - 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non current asset impairment
Derecognition of carry forward losses
Non deductible accounting adjustments
Non assessable accounting gain on derecognition of contingent consideration
Effect of different tax rates of subsidiaries operating in other jurisdictions
Non deductible capital expenditure
Non-taxable dividends
Non allowable expenses
Property (revaluation) / impairment
Non assessable accounting gain on remeasurement of previously held equity interest in AHG
Application of current year capital losses against current year capital gains
Sundry items
Income tax expense
CONSOLIDATED
Note
2019
$’000
2018
$’000
58,059
(40,883)
17,176
(40,883)
(40,883)
29,888
1,018
30,906
1,018
1,018
18
(63,304)
128,402
(18,991)
38,521
62,915
3,113
(3,336)
(5,902)
(40)
2,366
(2,460)
759
-
(19,518)
(264)
(1,466)
17,176
-
-
-
-
-
173
(4,161)
532
(730)
-
(2,760)
(669)
30,906
(c) Tax (expense)/benefit relating to items of other comprehensive income
Aggregate deferred tax arising in the reporting period and recognised in other comprehensive
income
(25,686)
26,648
49
ANNUAL REPORT 2019 7 DIVIDENDS
(a) Ordinary dividends fully franked based on tax paid @ 30%
Final dividend for the year ended 31 December 2018 of 22.5 cents per share (2017: 22.5 cents)
paid on 18 April 2019
Interim dividend of 14.0 cents (2018: 14.0 cents) per share paid on 17 October 2019
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 2019 and 2018 were as follows:
Paid in cash
(b) Dividends not recognised at year end
CONSOLIDATED
2019
$’000
2018
$’000
43,045
35,035
78,080
43,045
26,783
69,828
78,080
69,828
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 20 April 2020 out of the retained profits at 31 December
2019 but not recognised as a liability at year end is:
57,810
43,045
(c) Franked dividends
The final dividend recommended after 31 December 2019 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 2019.
Franking credits available for subsequent reporting periods based on a tax rate of 30.0% (2018: 30.0%)
312,042
181,877
The above amounts represent the balances of the franking account as at the end of the financial year, adjusted for:
(a) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and
(b) 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
(24,776)
(18,448)
8 CURRENT ASSETS – CASH AND CASH EQUIVALENTS
Current assets
Cash at bank and on hand
Short term deposits
Cash flows of discontinued operations
Total cash and cash equivalents
94,170
18,868
2
94,172
7,363
101,535
-
18,868
-
18,868
The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows.
50
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 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 2019 is detailed below:
Not past due
Past due 0-30 days
Past due 31 days plus
Total
CONSOLIDATED
2019
$’000
2018
$’000
314,411
158,950
(4,256)
(2,664)
310,155
156,286
CONSOLIDATED
2019
2018
Gross
$’000
Provision
$’000
265,983
30,232
18,196
314,411
2,403
171
1,682
4,256
Gross
$’000
147,220
6,837
4,893
158,950
Provision
$’000
2,004
171
489
2,664
Included in the Group’s trade receivables balance are debtors with a net carrying amount of $46,575,000 (2018: $11,070,000) 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 63 days (2018: 62 days).
(b) Movement in expected credit losses
Opening balance
Additional provisions
Addition due to acquisitions
Amounts written off during the year
Closing balance
CONSOLIDATED
2019
$’000
2,664
653
1,214
(275)
4,256
2018
$’000
2,622
188
-
(146)
2,664
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.
51
ANNUAL REPORT 2019 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
CONSOLIDATED
2019
$’000
2018
$’000
1,077,479
519,795
(31,525)
(8,022)
1,045,954
511,773
287,923
(21,112)
266,811
160,396
(10,486)
149,910
110,379
(5,209)
105,170
75,653
(2,429)
73,224
1,462,675
690,167
Prepayments and deposits
23,214
12,617
12 NON-CURRENT ASSETS – RECEIVABLES
Other loans receivable
30,893
8,303
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)
Shares in an unlisted company - AHG Property Syndicate No. 1 Unit Trust (3)
-
588
1,778
2,366
149,186
588
-
149,774
(1) The Directors 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 2019 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.
(3) The Directors have assessed the fair value of the investment as at 31 December 2019 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.
52
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 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 2019 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
Carrying
Amount
31/12/19
$’000
-
Carrying
Amount
31/12/18
$’000
149,186
Valuation Technique
Key Input
Quoted bid prices in an
active market.
Quoted bid prices in an active market.
2,366
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 - Vehicle Parts (WA) Pty Ltd
Shares in associate - DealerMotive Limited
Shares in associate - Mazda Parts
CONSOLIDATED
2019
$’000
-
1,127
15,629
50
16,806
2018
$’000
1,620
-
10,457
-
12,077
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting
(refer Note 43).
Reconciliation of the carrying amount of investment in associate is set out in Note 43(b).
53
ANNUAL REPORT 2019 CONSOLIDATED
2019
$’000
2018
$’000
999,822
13,279
222,759
-
1,013,101
222,759
Property
$’000
Equipment
$’000
Total
$’000
222,759
(58)
2,808
-
-
-
222,759
(58)
2,808
887,253
14,091
901,344
(13,044)
(67,096)
(32,800)
-
(812)
-
(13,044)
(67,908)
(32,800)
999,822
13,279
1,013,101
231,903
3,745
17,607
(30,496)
222,759
-
-
-
-
-
231,903
3,745
17,607
(30,496)
222,759
15 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
(a) Leases
(i) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Property
Equipment
CONSOLIDATED ENTITY
Year ended 31 December 2019
Opening net book amount
Exchange differences
Rent Reviews
Additions
Disposals/Transfers
Depreciation/amortisation charge
Impairment loss
Closing net book amount
CONSOLIDATED ENTITY
Year ended 31 December 2018
Opening net book amount
Rent Reviews
Additions
Depreciation/amortisation charge
Closing net book amount
54
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 Lease liabilities
Current
Non-current
(ii) Maturity Analysis of contracted undiscounted cashflows
Maturity Analysis
Not later than one year
Later than 1 year and not later than 5 years
Later than 5 years
Total
(iii) Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
Properties
Equipment
Interest expense (included in finance cost)
Expense relating to short-term leases (included in other expenses)
CONSOLIDATED
2019
$’000
RESTATED
2018
$’000
Notes
171,675
1,020,882
1,192,557
44,596
207,906
252,502
171,675
627,756
674,365
1,473,796
44,596
148,445
119,587
312,628
5
5
67,096
812
67,908
27,475
2,064
30,496
-
30,496
14,214
1,432
In addition to the above lease payments is a 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.
(iv) The Group’s leasing activities and how these are accounted for
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by
the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the
lease year so as to produce a constant periodic rate of interest on the remaining balance of the liability for each year. The right-of-use
asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value
of the following lease payments:
>
>
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate
55
ANNUAL REPORT 2019 15 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES CONTINUED
(a) Leases continued
(iv) The Group’s leasing activities and how these are accounted for continued
>
>
>
amounts expected to be payable by the lessee under residual value guarantees
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group’s
incremental borrowing rate.
Right-of-use assets are measured at cost comprising the following:
>
>
>
>
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date, less any lease incentives received
any initial direct costs, and
restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small
items of office furniture.
(v) Extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Group. These terms are
used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are
exercisable only by the Group and not by the respective lessor.
Critical judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise
an extension option, or not exercise a termination option. The assessment is reviewed if a significant event or a significant change in
circumstances occurs which affects this assessment.
16 NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings - at fair value
Directors’ valuation
Land
Buildings
Total land and buildings
Construction in progress - at cost
Construction in progress
Leasehold improvements
At cost
Accumulated depreciation
Total leasehold improvements
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
2019
$’000
2018
$’000
176,031
76,713
252,744
220,304
107,018
327,322
14,453
4,352
100,566
(60,363)
40,203
326,519
(158,504)
168,015
22,874
(9,020)
13,854
96,033
(53,154)
42,879
Total property, plant and equipment
475,415
388,407
56
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 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 2019 valuations were made by the Directors based on their assessment of prevailing market
conditions and supported by fair value information received from independent expert property valuers on certain properties and the
Group’s own market activities and market knowledge.
Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at 31 December 2019 are as follows:
Unobservable inputs used in determination of fair values
Class of
Assets &
Liabilities
Level 3
Car – HBU
Alternate
Use
Level 3
Car
Dealership
Carrying
Amount
31/12/19
$’000
Carrying
Amount
31/12/18
$’000
Valuation
Technique
46,055
74,821 Direct
comparison
Key Input
Input
External
valuations
Price
/sqm land
179,294
210,566 Summation
method,
income
capitalisation
and direct
comparison
External
valuations
industry
benchmarks
Capitali-
sation rate
Average
6.5%
Average /
Range
2019
Average /
Range
2018
Average
$3,054
/sqm
Range
$1,239 -
$5,064
/sqm
Average
$2,261
/sqm
Range
$1,240 -
$3,990
/sqm
Average
7.2%
Range
4.9% - 9.3%
Range
3.3% - 12.3%
Other Key
Information
Land size
Net rent
/ sqm
Land
Net rent
/sqm
GBA
Range
(weighted
average)
2019
Range
(weighted
average)
2018
Average
3,005 sqm
Average
5,516 sqm
Range
2,015 -
4,853 sqm
Range
2,015 -
18,070 sqm
Average
$94/sqm
Average
$98/sqm
Range
$28 - $330
/sqm
Range
$25 - $297
/sqm
Average
$209/sqm
Average
$211/sqm
Range
$93 -
$1,662
/sqm
Range
$106 -
$1,573
/sqm
Level 3
Truck
Dealership
20,233
24,778 Direct
comparison
External
valuations
Price
/sqm land
Price
/sqm GBA
Average
$415
/sqm
Average
$443
/sqm
Land size
Average
24,353 sqm
Average
18,641 sqm
Range
$278 - $538
/sqm
Range
$282 - $596
/sqm
Range
23,006 -
25,700 sqm
Range
7,218 -
25,700 sqm
Net rent
/sqm land
Average
$29/sqm
Range
$18 - $39
/sqm
Capitali-
sation rate
Average
6.9%
Average
$22/sqm
Range
$17 - $27
/sqm
Average
4.9%
Range
6.4% - 7.2%
Range
4.4% - 6.2%
Level 3
Other
Logistics
7,162
17,157 Income
capitalisation
method
supported by
market
comparison
Total
252,744
327,322
External
valuations
Capitali-
sation rate
Average
6.7%
Average
5.6%
Net rent
/sqm GBA
Average
$191/sqm
Average
$109/sqm
Range
7.8% - 8.0%
Range
3.9% - 7.9%
Range
$144 - $215
/sqm
Range
$79 - $179
/sqm
There were no transfers between levels in the year.
Explanation of asset classes: Car - Higher 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.
57
ANNUAL REPORT 2019 16 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 $134,562,000 (2018: $146,186,000). If freehold
buildings were carried at historical cost, its current carrying value (after depreciation) would be $76,713,000 (2018: $107,018,000).
Non-current assets pledged as security
Refer to Note 25 for information on non-current assets pledged as security by the Group.
Reconciliations
Reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the year is set out below:
Consolidated 2019
Opening net book amount
Transfers
Exchange differences
Additions
Revaluation gain recognised in asset
revaluation reserve
Freehold
land
$’000
220,304
-
-
18,945
13,769
Freehold
buildings
$’000
107,018
Construction
in progress
$’000
4,352
5,042
(16,260)
-
182
-
6
-
Disposals/Transfers
(76,987)
(32,185)
(4,215)
Depreciation/amortisation charge
Impairment loss
-
-
(3,344)
-
-
-
Leasehold
improve-
ments
$’000
13,854
10,722
143
Plant and
equipment
$’000
Total
$’000
42,879
388,407
496
85
-
234
30,570
24,163
159,933
233,793
-
(4,097)
(1,695)
(2,887)
-
13,769
(13,108)
(130,592)
(22,270)
(27,309)
-
(2,887)
Carrying amount at end of year
176,031
76,713
14,453
40,203
168,015
475,415
Consolidated 2018
Opening net book amount
199,489
106,860
Additions
Disposals/Transfers
Revaluation gain recognised in asset
revaluation reserve
Revaluation recognised in profit and loss
14,018
(6,902)
11,266
2,433
4,929
(1,092)
-
-
Depreciation/amortisation charge
-
(3,679)
223
5,200
(1,071)
-
-
-
Carrying amount at end of year
220,304
107,018
4,352
16,909
4,253
(5,252)
-
-
(2,056)
13,854
37,640
16,619
(1,513)
-
-
(9,867)
42,879
361,121
45,019
(15,830)
11,266
2,433
(15,602)
388,407
58
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019
17 NON-CURRENT ASSETS – INTANGIBLES
Goodwill
Trade marks/brand names
Customer Relationships
Movement - Goodwill
Balance at the beginning of the financial year
Additional amounts recognised:
Acquired through business combinations during the year (Note 33(a) and (b))
Less: Impairment during the year
Less: Disposal of businesses
Balance at the end of the financial year
Movement - Trade marks/brand names
Balance at the beginning of the financial year
Amortisation of brand names
Acquired through business combinations during the year (Note 33(a))
Balance at the end of the financial year
Movement - Customer Relationships
Acquired through business combinations during the year (Note 33(a))
Balance at the end of the financial year
CONSOLIDATED
2019
$’000
742,787
6,965
8,985
2018
$’000
306,783
6,542
-
758,737
313,325
306,783
302,833
670,495
(209,238)
(25,253)
742,787
3,950
-
-
306,783
6,542
-
423
6,965
8,985
8,985
6,581
(39)
-
6,542
-
-
(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. Prior to the acquisition of AHG, the
Group had 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.
Subsequent to the acquisition of AHG, the number of CGU’s within the Car Retailing segment has expanded to eight, grouped by the
operating regions (QLD & NT, NSW, VIC & TAS, SA, WA, NZ), National Used and Finance. APE’s existing CGU’s remained unchanged,
with the lowest level for which there are independent cash inflows determined to be on an operating region or State basis. The
acquisition of AHG brought two further regions into the Group, being WA and NZ. AHG also has a National Used and Finance business
which APE has determined as separate CGU’s.
The Trucks segment remains as one CGU.
AHG’s Refrigerated Logistics business has been classified as a Non-Current Asset Held for Sale immediately upon acquisition. No
Goodwill was allocated to this CGU on acquisition based on the estimated fair value of the business at that date (refer to Note 32).
59
ANNUAL REPORT 2019 17 NON-CURRENT ASSETS – INTANGIBLES CONTINUED
(a) Impairment tests for goodwill continued
A segment-level summary of the goodwill allocation is presented as follows:
Car retailing operations:
Goodwill
Trade marks/brand names
Customer Relationships
Truck retailing operations:
Goodwill
Trade marks/brand names
CONSOLIDATED
2019
$’000
2018
$’000
705,055
5,915
8,985
298,633
5,492
-
719,955
304,125
37,732
1,050
38,782
8,150
1,050
9,200
758,737
313,325
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 arm’s 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. With the exception of the National Used
CGU, the value in use assessment is conducted using a discounted cash flow (DCF) methodology requiring the Directors to estimate the
discounted future cash flows expected to arise from the cash generating units. The recoverable amount for the National Used CGU was
determined based on the Directors’ estimate of the fair value less costs of disposal.
The DCF models adopted by Directors were based on the CGUs last twelve months performance, forecast for 5 years with a growth rate
ranging from 0% to 1.5% and a terminal growth rate of 1.5% applied to year 5. The forecast growth rate and terminal growth rate have
been based on consideration of historical performance and expected future operating conditions and growth rates are not deemed to
exceed the long term average growth rate for the industry. A pre-tax discount rate of 11.3% (2018: 11.0%) was applied to the cashflows.
Downside 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.
Car Retailing Operations
Impairment testing identified that the carrying value of the VIC & TAS, WA and National Used CGUs exceeded their recoverable amount.
A $197.6 million impairment expense was recognised in the current period against goodwill in respect of goodwill allocated to those
CGUs; VIC & TAS ($83.3 million), WA ($104.0 million) and National Used ($10.3 million). An impairment loss of $2.9 million and $33.3
million was additionally recorded against certain property, plant and equipment and right-of-use assets respectively in the National
Used CGU and Finance CGU, refer to Note 5. The total impairment expense of $234.1 million in the Car Retailing segment reflects
challenging trading conditions and was impacted by a higher fair value of consideration on acquisition compared to the fair value of
consideration on the date of the offer, driven by a significant increase in AHG’s share price subsequent to the original offer.
For the Car Retailing operations, the Directors believe that any reasonable change in the key assumptions on which the recoverable
amount is based may cause the carrying amount to exceed the recoverable amount for the CGUs impaired in 2019 may result in further
impairment.
The Directors believe that there is sufficient headroom on the other CGUs to absorb reasonable changes in key assumptions subject to
the below.
60
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 Management are still assessing the impact on the Car Retailing segment and its CGUs of General Motors announcement on 18
February 2020 to wind down Holden vehicle sales in Australia and New Zealand by 2021, whilst maintaining Holden service outlets to
support existing Holden customers with warranty claims, spare parts, servicing and recalls for ten years. Given the proximity of the
announcement to the release of the 31 December 2019 financial statements and the uncertainty of any compensation arrangements,
management is not able to reliably determine the financial impact or reasonably adjust our key assumptions (refer to Note 37).
Notwithstanding, should the compensation arrangements offered by General Motors and other future mitigating initiatives undertaken
by the Group, such as substitution of other franchises into affected dealerships, not sufficiently replace the cash flows assumed in the
appropriate time frame, then it is possible that additional impairment could result in the Car Retailing segment.
Truck Retailing Operations
Impairment testing identified the carrying value of the National Trucks CGU exceeded the recoverable amount. An $11.6 million
impairment expense was recognised in the current period against goodwill, refer to Note 5. The impairment loss in the Truck Retailing
segment is as a result of challenging trading conditions. For the Truck operations, the Directors also believe that any reasonable
change in the key assumptions on which the recoverable amount is based may cause the carrying amount to exceed the recoverable
amount of the segment and may result in further impairment.
(b) Impairment charge
The Directors’ assessment in 2019 determined that goodwill was impaired in the Car and Truck Retailing segments to the extent of
$197.6m (2018: $nil) and $11.6 million (2018: $nil) respectively. Additionally, an impairment loss of $2.9 million (2018: $nil) and $33.3
million (2018: $nil) was recorded against certain property, plant and equipment and right-of-use assets respectively, resulting in a total
impairment loss for the year of $244.9 million, refer to Note 5.
61
ANNUAL REPORT 2019 18 NON-CURRENT ASSETS - DEFERRED TAX ASSETS
Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Book versus tax carrying value of plant and equipment
Leases
Deferred Income
Blackhole Costs
Inventory valuation
Prepayments
Tax losses
Provisions
Expected credit losses
Employee benefits
Other
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 2019
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
Deferred tax recognised through a business combination
Deferred tax assets relating to business combinations
Deferred tax assets relating to PPA adjustments
Closing balance at 31 December 2019
6(a)
31(a)
31(a)
31(a)
31(a)
Notes
CONSOLIDATED
2019
$’000
167,531
2018
$’000
26,766
32,279
53,954
6,687
3,890
5,722
(1,659)
17,332
1,187
33,018
11,598
12,064
176,072
(257)
(17,190)
-
8,906
(8,541)
26,766
40,883
(161)
(21,544)
(4,131)
(11)
7,567
69,516
48,646
167,531
754
8,922
-
-
(6,274)
(1,931)
-
808
15,889
-
5,456
23,624
21,434
(20,763)
10
2,461
3,142
5,073
(1,018)
(78)
30,059
(3,380)
(31)
(3,973)
114
-
26,766
(i) Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they
relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. The following is
the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Deferred tax liabilities
Deferred tax assets
Net deferred tax asset
(19,106)
186,637
167,531
(28,968)
55,734
26,766
(ii) At the reporting date, the Group has unused revenue tax losses of $57.5 million (2018: $ nil) available for offset against future profits. A deferred tax asset has
been recognised in respect of $17.3 million (2018: $ nil) of such losses. No deferred tax asset has been recognised in respect of capital losses of $27.8 million
(2018: $ nil) as it is not considered probable that there will be future capital gains available. Other losses may be carried forward indefinitely.
62
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 19 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.
20 DERIVATIVE FINANCIAL INSTRUMENTS
Current liabilities
Interest rate swap contracts - cash flow hedges
Total current derivative financial instrument liabilities
Total non-current derivative financial instrument liabilities
CONSOLIDATED
2019
$’000
2018
$’000
166,760
204,687
371,447
66,853
79,064
145,917
-
-
-
-
35
35
-
35
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 32).
Bailment finance of the Group currently bears an average variable interest rate at 31 December 2019 of 3.06% (2018: 4.43%). 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 0% (2018: 6%) 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 $nil (2018:
$35,000) 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 2019 are as follows:
Class of
Financial Assets and Liabilities
Level 2 Cash flow hedges –
Interest rate swaps
Unobservable inputs used in determination of fair values
Carrying
Amount
31/12/19
$’000
Carrying
Amount
31/12/18
$’000
Valuation
Technique
Key Input
-
35 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.
63
ANNUAL REPORT 2019
21 CURRENT LIABILITIES - BORROWINGS - BAILMENT AND OTHER CURRENT LOANS
Bailment finance
Bank loans
Capital loan
(i) Bailment finance
CONSOLIDATED
2019
$’000
2018
$’000
1,281,947
570,273
26,000
2,206
1,310,153
-
1,342
571,615
Bailment finance is provided on a vehicle by vehicle basis by various finance providers at an average interest rate of 3.06% p.a.
applicable at 31 December 2019 (2018: 4.43%). 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 32.
(iii) Fair value disclosures
Details of the Group’s fair value of interest bearing liabilities is set out in Note 32.
(iv) Security
Details of the security relating to each of the secured liabilities and further information on bank loans is set out in Note 25.
22 CURRENT LIABILITIES – CURRENT TAX LIABILITIES
Income tax
25,224
2,190
23 CURRENT LIABILITIES – PROVISIONS
Annual Leave
Long Service Leave
24 CURRENT LIABILITIES – OTHER CURRENT LIABILITIES
Current liabilities - Deferred revenue
Deferred revenue
56,603
50,543
107,146
24,287
24,194
48,481
43,739
5,862
Deferred revenue relates to recognition of revenue in accordance with the performance obligations in certain Warranty and
Buyback contracts.
64
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 25 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)
CONSOLIDATED
2019
$’000
306,313
75,572
381,885
2018
$’000
235,700
76,914
312,614
332,313
77,778
1,281,947
1,692,038
235,700
78,256
570,273
884,229
(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 32 for maturities.
65
ANNUAL REPORT 2019 25 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
Drawn at balance date
Term facility
Capital loan
Bailment finance
Bank guarantees
Undrawn at balance date
Term facility
Working capital facility (includes bank overdraft)
Bailment finance
Bank guarantees
CONSOLIDATED
2019
$’000
2018
$’000
265,089
771,815
1,281,947
688,817
329,674
540,214
570,273
146,765
3,007,668
1,586,926
398,000
290,000
31,500
76,914
1,452,374
61,453
25,000
78,256
767,469
27,018
2,020,241
1,187,743
332,125
76,914
1,281,946
53,841
1,744,826
65,875
31,500
170,428
7,612
275,415
235,700
78,256
570,273
15,176
899,405
54,300
25,000
197,196
11,842
288,338
(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.
66
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 26 NON-CURRENT LIABILITIES - PROVISIONS
Long Service Leave
Other provisions
CONSOLIDATED
2019
$’000
6,234
43,783
50,017
2018
$’000
5,052
-
5,052
Other provisions balance held at reporting date relates to certain buyback arrangements within the Group.
27 NON-CURRENT LIABILITIES - DEFERRED REVENUE
Deferred revenue
43,804
-
Deferred revenue relates to recognition of revenue in accordance with the performance obligations in certain Warranty and Buyback
contracts.
28 NON-CURRENT LIABILITIES - OTHER NON-CURRENT LIABILITIES
Other (contingent consideration)
-
19,422
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 business did not achieve the earnings performance targets for 2018 and 2019, therefore the contingent consideration
has been released as an extraordinary gain in the financial year ended 31 December 2019, refer to Note 4. The associated goodwill
balance was reviewed for impairment within the VIC & TAS CGU, refer to Note 17(a).
67
ANNUAL REPORT 2019 29 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 Groups investments in DealerMotive
Limited, Automotive Holdings Group Limited and Dealercell
Holdings Pty Limited.
Geographic Information
The Group operates in two principal geographic locations, being
Australia and New Zealand.
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.
68
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (e) Segment results
Segment reporting 2019
Car Retailing
$’000
Truck
Retailing
$’000
Property
$’000
Investments
$’000
Eliminations
$’000
Consolidated
$’000
-
5,816,979
(20,869)
-
(20,869)
5,816,979
(20,869)
5,816,979
Sales to external customers
5,224,977
590,751
Inter-segment sales
Total sales revenue
TOTAL REVENUE
-
5,224,977
5,224,977
-
590,751
590,751
SEGMENT RESULT
Operating profit before interest
External interest expense allocation
OPERATING CONTRIBUTION
Share of net profit of equity accounted
investments
Business acquisition costs
138,613
(47,618)
90,995
-
(8,617)
10,253
(8,520)
1,733
-
-
Impairment of Non-Current Assets
(233,323)
(11,602)
Investment revaluation
Profit on sale of property/businesses
Business Integration Costs
Closure & Restructure Costs
Derecognition of contingent
consideration
-
23,250
(4,442)
(1,667)
19,674
-
-
-
-
-
1,054
20,869
21,923
21,923
15,874
(6,996)
8,878
-
-
-
-
14,457
-
-
-
197
-
197
197
197
(2,435)
(2,238)
339
(3,903)
-
-
-
-
-
-
-
145,392
(80,331)
-
-
-
-
-
-
-
-
SEGMENT PROFIT
(114,130)
(9,869)
23,335
139,590
(80,331)
Unallocated corporate expenses
PROFIT BEFORE TAX
Income tax expense
NET PROFIT
Depreciation and amortisation
(68,756)
(23,098)
(3,363)
-
ASSETS
Segment assets
LIABILITIES
Segment liabilities
NET ASSETS
3,641,683
462,580
252,568
11,264
2,971,009
458,082
670,674
4,498
96,884
155,684
-
11,264
-
-
-
-
164,937
(65,569)
99,368
339
(12,520)
(244,925)
65,061
37,707
(4,442)
(1,667)
19,674
(41,405)
(21,899)
(63,304)
(17,176)
(80,480)
(95,217)
4,368,095
3,525,975
842,120
69
ANNUAL REPORT 2019
29 SEGMENT INFORMATION CONTINUED
(e) Segment results continued
Segment reporting 2018 Restated
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)
-
-
161,025
(40,744)
120,281
77
(680)
-
2,433
6,023
318
13,231
(2,792)
10,439
-
-
-
-
-
-
10,439
28,043
(171,136)
170,134
128,452
116,048
(27,183)
88,865
-
(680)
-
-
2,469
318
90,972
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
(50)
128,402
(30,906)
97,496
(46,137)
1,999,349
1,363,690
635,659
-
-
-
-
Depreciation and amortisation
(39,388)
(3,070)
(3,679)
-
ASSETS
Segment assets
LIABILITIES
Segment liabilities
NET ASSETS
1,370,505
137,636
310,131
181,077
953,060
417,445
127,226
10,410
159,785
150,346
123,619
57,458
70
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 30 CONTRIBUTED EQUITY
(a) Paid up capital
Ordinary shares - Fully paid
CONSOLIDATED
2019
$’000
2018
$’000
1,173,069
371,405
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.
At the reporting date, the Employee Share Trust held 164,204 shares, which are reported in share capital (2018: 1,026,077).
(b) Movements in ordinary share capital
Date
01-Jan-2019
26-Aug-2019
30-Aug-2019
05-Sep-2019
11-Sep-2019
17-Sep-2019
23-Sep-2019
24-Oct-2019
31-Dec-2019
01-Jan-2018
10-Jan-2018
31-Dec-2018
Details
Opening balance
Issue of shares to AHG shareholders
Issue of shares to AHG shareholders
Issue of shares to AHG shareholders
Issue of shares to AHG shareholders
Issue of shares to AHG shareholders
Issue of shares to AHG shareholders
Issue of shares to AHG shareholders
Closing balance
Opening balance
Number
of shares
191,309,301
33,334,047
5,110,248
2,242,568
4,632,943
5,242,610
8,392,874
6,668,515
256,933,106
191,008,478
Issue price
-
$11.44
$12.37
$13.30
$13.40
$13.21
$13.55
$12.33
-
-
Issue of shares to staff under share incentive schemes
300,823
$7.90
$’000
371,405
381,342
63,214
29,826
62,081
69,255
113,723
82,223
1,173,069
369,028
2,377
Closing balance
191,309,301
-
371,405
71
ANNUAL REPORT 2019 31 RESERVES AND RETAINED EARNINGS
(a) Reserves:
Property, plant and equipment revaluation reserve
Hedging reserve - cash flow hedge
Share-based payments reserve
Foreign currency translation reserve
Business combination 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
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
Gain/(Loss) on revaluation of financial assets held at fair value through
other comprehensive income
Deferred tax
Balance at the end of the financial year
Business combination reserve
Balance at beginning of the financial year
Movement during the period
Balance at the end of the financial year
72
Notes
CONSOLIDATED
2019
$’000
28,312
-
2018
$’000
56,820
(25)
(37,862)
(49,628)
1,153
(470,729)
(72,687)
(551,813)
-
-
(131,473)
(124,306)
16
31(b)
18
18
18
18
56,820
13,769
(38,146)
(4,131)
28,312
(25)
36
(11)
-
52,728
11,266
(3,794)
(3,380)
56,820
(97)
103
(31)
(25)
(49,628)
(34,368)
7,567
4,890
(2,598)
1,906
-
(37,863)
(3,973)
4,664
(13,965)
391
(2,377)
(49,628)
(131,473)
19,868
80,331
(21,544)
(72,686)
(181,400)
30,059
(131,473)
-
(470,729)
(470,729)
-
-
-
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 Foreign currency translation reserve
Balance at beginning of the financial year
Currency translation differences arising during the year
Balance at the end of the financial year
(b) Retained earnings
Retained profits at the beginning of the financial year
Net (loss)/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
Notes
7
2019
$’000
-
1,153
1,153
380,558
(129,124)
(2,789)
39,368
(78,080)
209,933
2018
$’000
-
-
-
350,715
97,496
(1,619)
3,794
(69,828)
380,558
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.
(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 38 and 39.
73
ANNUAL REPORT 2019 32 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.
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
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’s ability to manage liquidity risk is not affected by
the net current liability position at 31 December 2019, which is
impacted by the recognition of a current liability equivalent to the
present value of the lease payments under the remaining term of
each lease in accordance with AASB 16. The cash commitments in
relation to each lease remain unchanged. Management are of the
view that the Group will continue to generate sufficient operating
cash flows to meeting its financial obligations as they fall due.
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 25.
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.
74
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (i)
Interest rate risk
The Group’s policy is to keep between 0% and 50% of its borrowings at fixed rates of interest. As at 31 December 2019, 12% (2018: 21%)
of the Group’s borrowings were at a fixed rate of interest (excluding bailment finance).
The consolidated entity classifies interest rate swaps as cash flow hedges.
The net fair value of the swaps at 31 December 2019 was $0 (2018: $35,000 liability), with the movement being recognised in equity for
the consolidated entity.
(ii) Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout
the reporting period. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management and
represents management’s assessment of the possible change in interest rates.
At reporting date, if interest rates had been 50 basis points higher or lower and all other variable were held constant, the Group’s net
profit after tax would increase/decrease by $4,290,000 (2018: $4,421,000) per annum. This is mainly due to the Group’s exposures to
interest rates on its variable rate borrowings.
(iii) Interest rate swap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts
calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the cash flow exposures on the issued
variable rate debt held. The fair value of interest rate swaps at the reporting date is determined by discounting future cash flows using
the curves at reporting date and the credit risk inherent in the contract, and are disclosed below. The average interest rate is based on
the outstanding balances at the start of the financial period.
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
Average contracted
fixed interest rate
Notional
principal amount
2019
%
-%
-%
2018
%
2.38%
2.38%
2019
$’000
-
-
2018
$’000
15,000
15,000
Fair value
2019
$’000
2018
$’000
-
-
(35)
(35)
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.
75
ANNUAL REPORT 2019
32 FINANCIAL INSTRUMENTS CONTINUED
CREDIT RISK
(i) Exposure to Credit Risk
The carrying amount of financial assets (as per Notes 9 and 12) represents the maximum credit exposure. The maximum exposure to
credit risk as 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
2019
$’000
2018
$’000
345,304
167,253
(4,256)
(2,664)
341,048
164,589
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
341,048
94,172
435,220
332,313
77,778
1,281,947
371,447
-
164,589
18,868
183,457
235,700
79,598
570,273
145,917
35
2,063,485
1,031,523
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.
76
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (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.
At 31 December 2019
INTEREST BEARING
Floating rate
Financial assets
Cash and cash equivalents
Average interest rate
Financial liabilities
Less than
1 year
$’000
94,172
.50%
Vehicle bailment (current)
1,281,947
36,596
1,875
1,320,418
3.20%
Fully drawn advances
Capital loan (Non-current)
Average interest rate
Fixed rate
Financial liabilities
Capital loan (Non-current)
Average interest rate
2,375
4.34%
NON INTEREST BEARING
Financial assets
Trade debtors
Financial liabilities
341,048
Trade and other payables
371,447
1 - 2 years
$’000
2 - 3 years
$’000
3 - 4 years
$’000
4 - 5 years
$’000
5+ years
$’000
Total
$’000
-
-
-
9,786
2,211
11,997
4.05%
-
-
-
9,786
7,053
16,839
4.05%
-
-
-
221,598
2,038
223,636
3.87%
-
-
-
97,652
2,038
99,690
3.92%
-
-
-
15,560
24,713
94,172
1,281,947
390,978
39,928
40,273
1,712,853
4.06%
2,187
2,187
49,958
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,707
341,048
371,447
77
ANNUAL REPORT 2019 32 FINANCIAL INSTRUMENTS CONTINUED
Maturity profile continued
Less than
1 year
$’000
18,868
1.81%
595,851
10,631
181
2,011
608,674
4.13%
At 31 December 2018
INTEREST BEARING
Floating rate
Financial assets
Cash and cash equivalents
Average interest rate
Financial liabilities
Vehicle bailment (current)
Fully drawn advances
Fully drawn advances (1)
Capital loan (Non-current)
Average interest rate
Fixed rate
Financial liabilities
1 - 2 years
$’000
2 - 3 years
$’000
3 - 4 years
$’000
4 - 5 years
$’000
5+ years
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
-
-
10,631
197,705
52,219
50,957
-
2,346
12,977
3.61%
-
2,346
200,051
3.51%
-
7,168
59,387
3.67%
-
2,151
53,108
3.98%
-
-
-
-
-
26,791
26,791
4.71%
-
-
-
-
18,868
595,851
322,143
181
42,813
960,988
58,785
164,589
145,919
Capital loan (Non-current)
Average interest rate
1,957
3.84%
NON INTEREST BEARING
Financial assets
Trade debtors
Financial liabilities
164,589
Trade and other payables
145,919
1,957
1,957
1,957
50,957
-
-
-
-
-
-
-
-
-
-
-
-
(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.
78
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 33 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
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
EQUITY HOLDING
2019
%
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
90
100
100
100
100
100
100
100
100
100
80
100
80
80
100
80
100
100
100
100
100
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
79
ANNUAL REPORT 2019 33 INVESTMENTS IN SUBSIDIARIES CONTINUED
Name of entity
MB VIC Pty Ltd
Carzoos Pty Ltd
Crampton Automotive Pty Ltd
Motors Group (Glen Waverley) Pty Ltd
Port City Autos Pty Ltd
Adverpro Pty Ltd
Cheap Cars QLD Pty Ltd
Eurocars (SA) Pty Ltd
Finmo Pty Ltd
360 Finance Pty Ltd
360 Financial Services Australia Pty Ltd
360 Insurance Services Pty Ltd
ACN 132 712 111 Pty Ltd
ACM Autos Holdings Pty Ltd
ACM Autos Pty Ltd
ACM Liverpool Pty Ltd
AHG 1 Pty Ltd
AHG Automotive Mining and Industrial Solutions Pty Ltd
AHG Coatings Pty Ltd
AHG Finance 2005 Pty Ltd
AHG Finance Pty Ltd
AHG Franchised Automotive Pty Ltd
AHG International Pty Ltd
AHG Management Company Pty Ltd
AHG Newcastle Pty Ltd
AHG Property Pty Ltd
AHG Services (NSW) Pty Ltd
AHG Services (QLD) Pty Ltd
AHG Services (VIC) Pty Ltd
AHG Services (WA) Pty Ltd
AHG Trade Parts Pty Ltd
AHG Training Pty Ltd
AHG WA (2015) Pty Ltd
AHGCL 2016 Pty Ltd
AHGSW 2018 Pty Ltd
Auckland Auto Collection Limited
AUT 6. Pty Ltd
Automotive Holdings Group (Queensland) Pty Ltd
Automotive Holdings Group (Victoria) Pty Ltd
Automotive Holdings Group Limited
Big Rock 2005 Pty Ltd
Big Rock Pty Ltd
Bradstreet Motors Holdings Pty Ltd
Bradstreet Motors Pty Limited
Cardiff Car City Holdings Pty Ltd
Cardiff Car City Pty Limited
Carlin Auction Services (NSW) Pty Ltd
Carlin Auction Services (QLD) Pty Ltd
Carlins Automotive Auctioneers (WA) Pty Ltd
80
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
EQUITY HOLDING
2019
%
2018
%
100
100
100
80
100
100
100
100
100
100
100
100
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
80
100
80
100
80
100
100
100
100
100
100
100
80
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 Name of entity
Carlins Automotive Auctioneers Pty Ltd
Carlins Corporate Vehicle Services Pty Ltd
Carlins Group Holdings Pty Ltd
Carsplus Australia Pty Ltd
Castle Hill Autos No. 1 Pty Ltd
Castlegate Enterprises Pty Ltd
CFD (2012) Pty Ltd
Chellingworth Pty Ltd
City Auto (2016) Holdings Pty Ltd
City Auto (2016) Pty Ltd
City Motors (1981) Pty Ltd
Doncaster Auto (2016) Pty Ltd
Drive A While Pty Ltd
Dual Autos Pty Ltd
Duncan Autos 2005 Pty Ltd
Duncan Autos Pty Ltd
Easy Auto 123 Pty Ltd
Essendon Auto (2017) Pty Ltd
Falconet Pty Ltd
Ferntree Gully Autos Holdings Pty Ltd
Ferntree Gully Autos Pty Ltd
Geraldine Nominees Pty Ltd
Giant Autos (1997) Pty Ltd
Giant Autos Pty Ltd
Grand Autos 2005 Pty Ltd
Highland Autos Pty Ltd
Highland Kackell Pty Ltd
HM (2015) Holdings Pty Ltd
HM (2015) Pty Ltd
Janasen Pty Ltd
Janetto Holdings Pty Ltd
JAT Refrigerated Road Services Pty Ltd
Kingspoint Pty Ltd
Knox Auto (2016) Pty Ltd
Laverton Auto (2016) Pty Ltd
Lionteam Pty Ltd
LWC International Limited
LWC Limited
Maitland City Motor Group Holdings Pty Ltd
Maitland City Motor Group Pty Ltd
Matchacar Pty Ltd
MBSA Motors Pty Ltd
MCM Autos Pty Ltd
MCM Sutherland Pty Ltd
Melbourne City Autos (2012) Pty Ltd
Melville Autos 2005 Pty Ltd
Melville Autos Pty Ltd
Mornington Auto Group (2012) Pty Ltd
EQUITY HOLDING
2019
%
2018
%
100
100
53
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
80
80
100
80
100
100
100
100
100
100
100
100
100
100
80
100
100
100
80
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
81
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
ANNUAL REPORT 2019 33 INVESTMENTS IN SUBSIDIARIES CONTINUED
Name of entity
Newcastle Commercial Vehicles Pty Ltd
North City (1981) Pty Ltd
North City 2005 Pty Ltd
Northside Autos 2005 Pty Ltd
Northside Nissan (1986) Pty Ltd
Northwest (WA) Pty Ltd
Novated Direct Pty Ltd
NSW Vehicle Wholesale Pty Ltd
Nuford Ford Pty Ltd
OPM (2012) Holdings Pty Ltd
OPM (2012) Pty Ltd
Osborne Park Autos Pty Ltd
Penrith Auto (2016) Pty Ltd
Perth Auto Alliance Pty Ltd
PT (2013) Pty Ltd
Rand Transport (1986) Pty Ltd
Rand Transport Pty Ltd
Rent Two Buy Pty Ltd
Sabalan Holdings Pty Ltd
Sabalan Pty Ltd
Scott's Refrigerated Freightways Pty Ltd
Shemapel 2005 Pty Ltd
Skipper Trucks Pty Ltd
Southeast Automotive Group Pty Ltd
Southern Automotive Group Pty Ltd
Southside Autos (1981) Pty Ltd
Southside Autos 2005 Pty Ltd
Southwest Automotive Group Pty Ltd
SWGT Pty Ltd
Total Autos (1990) Pty Ltd
Total Autos 2005 Pty Ltd
VMS Pty Ltd
Vehicle Storage & Engineering Pty Ltd
WA Trucks Pty Ltd
Widevalley Pty Ltd
Zupp Holdings Pty Ltd
Zupps Aspley Pty Ltd
Zupps Gold Coast Pty Ltd
Zupps Mt Gravatt Pty Ltd
Zupps Parts Pty Ltd
Zupps Southside Pty Ltd
Submo Pty Ltd
APE Cars Mgmt Pty Ltd
Webster Trucks Mgmt Pty Ltd
EQUITY HOLDING
2019
%
2018
%
100
100
100
100
100
100
100
100
100
80
100
100
100
100
99
100
100
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
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 or New Zealand.
82
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 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
Business Combination Reserve
Investment revaluation reserve
Share based payments reserve
Financial performance
Profit for the year
Other comprehensive income
2019
$’000
2018
$’000
1,104
634,831
635,935
-
72,827
72,827
-
426,334
426,334
6,480
64,866
71,346
1,173,069
(55,410)
371,405
134,428
1,683
(474,258)
(48,326)
(33,650)
563,108
1,683
-
(107,112)
(45,416)
354,988
(148,944)
81,707
58,787
(151,341)
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 2019. 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.
AHG became a wholly-owned subsidiary of A.P. Eagers on or about on 24 October 2019 (Acquisition) pursuant to a compulsory
acquisition by A.P. Eagers of all of the remaining shares in AHG that were not already owned by A.P. Eagers following the close of A.P.
Eagers’ off-market takeover bid for AHG on 16 September 2019.
Under ASIC Instrument 20-0106 (Instrument), Automotive Holdings Group Limited (AHG), the directors of AHG and AP Eagers
were granted relief from compliance with certain provisions of the Corporations Act. The effect of this Instrument Is that subject to
certain conditions.
83
ANNUAL REPORT 2019 33 INVESTMENTS IN SUBSIDIARIES CONTINUED
(a) AHG is not required to:
>
>
>
prepare a separate audited financial report and directors’
report; or
report to its member under section 314 of the Corporations
Act; or
send a report to its member in accordance with a request
under subsection 316(1) of the Corporations Act, in relation
to the financial year ended 31 December 2019;
(b) the directors of AHG do not have to comply with:
>
>
the requirement under section 317 of the Corporations Act to
lay reports before the AGM of AHG following the year ended
31 December 2019;
a requirement (if any) in relation to the appointment of an
auditor following any casual vacancy occurring before 31
March 2020;
(c) AP Eagers does not have to comply with subsection 292(1)
of the Corporations Act in relation to the year ended 31
December 2019 to the extent that any non-compliance
would result merely from AP Eagers preparing financial
reports that includes notes that have been prepared for the
purposes of compliance with the Instrument and section
of 6 of ASIC Corporations (Wholly-owned Companies)
Instrument 2016/785;
(d) AHG does not have to comply with a requirement (if any) to
appoint an auditor of AHG at its AGM for the 2020 calendar
year.
Refer Notes 34(a) and 34(b) in respect of guarantees entered into
by the parent entity in relation to debts of its subsidiaries.
(a) Acquisition of AHG
AHG is a diversified automotive retailing and logistics group with
operations in Western Australia, New South Wales, Queensland,
Victoria and New Zealand. AHG currently operates three main
business divisions: automotive retailing; refrigerated logistics
and other logistics. The acquisition combines the two highly
complementary businesses of AP Eagers and AHG to create
Australia’s leading automotive retail group.
At 31 December 2018 the Group owned over 20% of the voting
power of Automotive Holdings Group Limited (“AHG Limited”).
The Directors rebutted the presumption of exercising significant
influence at that date on the basis that the Group had no
representation on the Board of Directors of AHG Limited, no
material transactions with AHG Limited, and no participation
in policy-making decisions. As a result, and in line with our
election made on application of AASB 9, the investment in AHG
Limited was accounted for as an asset held at fair value through
other comprehensive income (FVOCI).
On 5 April 2019, AP Eagers offered to acquire all of the ordinary
shares in AHG that AP Eagers did not already own. The original
offer was structured as an all-scrip offer of 1 AP Eagers Share
for every 3.8 AHG Shares owned. Following negotiations
between representatives from AP Eagers and AHG, the offer
was subsequently varied to 1 AP Eagers Share for every 3.6
AHG Shares owned. The varied offer was announced on 8 May
2019 with the AHG Board unanimously recommending AHG
Shareholders accept APE’s improved offer.
At that time, the directors reassessed the ability of the Group to
influence the operating and financial policies of its investee, AHG
Limited, during the period to 30 June 2019. On the basis of all the
relevant facts and circumstances, the directors have concluded
that evidence of significant influence existed from 1 May 2019.
Therefore, in line with AASB 128 Investments in Associates and
Joint Ventures, APE’s 28.84% investment in AHG Limited was
accounted for as an investment in associate from that date.
A non-cash fair value adjustment of $58,787,000 (after tax) was
recognised on reclassification from FVOCI to an investment in
associate as a result of remeasuring the fair value at the date
of reclassification. The increase in fair value is recognised as a
permanent reserve balance.
APE recognised our share of AHG’s profit after tax for the period
1 May to 19 August 2019, with a total contribution of $0.6 million
to APE’s 2019 profit or loss.
Acquisition during the period - reclassification
from FVOCI to an investment in associate
Share of investees’ net profit recognised in the
financial period
Equity accounted investment in associate
immediately before control obtained
Fair value of equity accounted investment on
date control was obtained
Total profit recognised upon remeasurement
of equity accounted investment on date
control was obtained.
$’000
229,518
554
230,072
295,133
65,061
The offer was subject to a number of conditions, including
regulatory approval from the Australian Competition and
Consumer Commission (ACCC). AP Eagers applied to the ACCC
to obtain merger authorisation for the acquisition of AHG and the
ACCC granted authorisation for AP Eagers merger with AHG on
16 August 2019.
AHG shareholders had the ability to accept the offer (either via
outright acceptance or via an acceptance facility for sophisticated
investors) from the date of announcement of the offer. However,
the acceptance of the offer did not represent a binding contract
for the sale of shares until the offer was declared free of
conditions. Once the bid is declared free of conditions and upon
processing of the acceptance instructions, APE obtains power of
attorney relating for the voting rights for each share acceptance,
otherwise referred to as a ‘relevant interest’.
84
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 On 16 August 2019, the bid was declared free of conditions and
AP Eagers received acceptances from AHG shareholders such
that APE held a relevant interest of 44.59% in AHG.
On 19 August 2019, APE had received acceptance instructions
resulting in APE having a relevant interest of 62.53% in AHG,
providing the Group power to control AHG’s via its voting rights.
From 19 August 2019 AP Eagers proceeded to issue shares in
exchange for the AHG shares held by AHG shareholders who
had accepted the offer. The issue of shares required a number of
days to satisfy the administrative requirements.
A non-cash gain on reclassification was recognised on
derecognition of the equity accounted investment and
commencement of consolidation accounting. The gain was due
to the fact the equity accounted investment, carried at $2.40 per
share, was disposed of for a fair value of $3.08 per share on the
date of consolidation.
On 16 September 2019 (offer close date), AP Eagers had
acquired an additional 28.58% relevant interest in AHG, which
was represented by AHG shareholders who had accepted the
offer and received AP Eagers shares, or AHG shareholders
who had accepted the offer but were yet to be issued AP Eagers
shares. On 16 September 2019 AP Eager’s ownership increased
to 91.11%. Subsequent to this date, AP Eagers exercised their
right in accordance with the Corporations Act 2001 (Cth) as
a shareholder who held at least 90% of the shares in AHG
to compulsorily acquire the remaining shares. Under the
compulsory acquisition process, AP Eagers obtained 100%
ownership of the shares on issue in AHG on 24 October 2019.
AP Eagers elected to recognise the non-controlling interest
as the proportionate share in AHG’s identifiable net assets
acquired, resulting in a non-controlling interest of $13.6 million
being recognised at 19 August 2019.
Subsequent to the date control was obtained, a progressive
buyout of non-controlling interests was undertaken, resulting in
APE owning 100% of AHG shares at year end.
The financial report includes the result of AHG for the four-
month period from acquisition date. The acquisitions contributed
revenue of $1.8 billion and a loss before tax of $37.6 million to
the consolidated continued operations result.
The Group incurred acquisition related costs of $8.1 million on
legal and advisory fees and stamp duty costs. These costs have
been included in ‘acquisition costs’ in the Statement of Profit or
Loss, and in ‘operating cash flows’ in the Statement of Cash Flows.
On consolidation, the investment in AHG and pre-acquisition
equity balances have been eliminated with a preliminary
goodwill of $662.3 million recognised. Due to the proximity
of the acquisition to the financial year end, the accounting for
the AHG acquisition will remain provisionally determined at 31
December 2019 with the determination of the fair value of the
acquired identifiable assets and liabilities to be finalised during
the measurement period ending 18 August 2020, as allowed by
AASB 3 Business Combinations.
85
ANNUAL REPORT 2019 33 INVESTMENTS IN SUBSIDIARIES CONTINUED
On date of control, 19th August 2019, the Goodwill arising from the acquisition is detailed below:
Purchase consideration - Ordinary shares issued to obtain controlling interest
Previously held equity investment, at fair value
Non-controlling interest
Less: Net identified liabilities acquired at fair value
Goodwill arising on acquisition
The provisional fair values of the identifiable assets and liabilities as at the date of acquisition were:
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Deferred tax assets
Property, plant and equipment
Right of use assets
Other assets
Assets classified as held for sale
Total Assets
Trade and other payables
Lease liabilities
Other liabilities
Liabilities directly associated with assets classified as held for sale
Total Liabilities
Total identified tangible liabilities acquired at fair value
Intangible assets recognised on acquisition
Total identified liabilities acquired at fair value
$’000
344,509
295,131
(13,574)
626,066
36,199
662,265
$’000
66,745
202,611
911,984
13,924
128,570
155,906
873,787
41,839
571,548
2,966,914
247,045
936,381
1,279,779
549,317
3,012,522
(45,608)
9,409
(36,199)
Goodwill represents the value of the workforce of AHG, in addition to the car and truck dealership network and any premium from
synergies and future growth opportunities that cannot be recognised separately. Goodwill has been allocated across the combined
Group’s cash generating units (refer note 17).
At reporting date, accounting for the acquisition of AHG remains provisional. Work is ongoing in respect of a number of balances,
including but not limited to the following:
1. Fair value of property, plant and equipment (including buy back arrangements);
2. Right-of-use assets; and
3. Contingent liabilities.
86
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (b) Acquisition of other businesses
The Group acquired the following business during the 2019 year as detailed below:
Year
2019
Name of business
Adelaide BMW
Date of acquisition
Principal activity
Proportion
acquired
April 2019
Motor Dealership
100%
During 2019 the acquired businesses contributed revenue of $61,515,000 and a profit before tax of $429,000 to the consolidated result.
If the acquisition had occurred on 1 January 2019, the consolidated revenue and the consolidated profit before tax of the acquired
businesses would have been approximately $92,273,000 and $644,000 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
Right-of-use assets
Lease liabilities
Creditors, borrowings and provisions
Net assets acquired
Acquisition cost
Goodwill on acquisition (i)
Adelaide
BMW
$’000
8,651
8,651
2019
$’000
4
74
2,163
1,509
12,468
(12,468)
(1,411)
2,339
8,651
6,312
(i)
Goodwill arose on 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.
(c) Acquisition of businesses in prior year
The Group acquired the following business during the 2018 year, which have been finalised in the 2019 year, as detailed below:
Year
2018
2018
2018
Name of business
Southern Vales Nissan
Metro Nissan
Toowoomba Motor Group
Date of acquisition
Principal activity
June 2018
Motor Dealership
August 2018
Motor Dealership
October 2018
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.
87
ANNUAL REPORT 2019 33 INVESTMENTS IN SUBSIDIARIES CONTINUED
Allocation of purchase consideration
The purchase price of the businesses acquired has been allocated as follows:
Southern
Vales Nissan
$’000
Metro Nissan
$’000
Toowoomba
Motor Group
$’000
2018
Total
Consolidated
$’000
Cash consideration
Contingent consideration
Total purchase consideration
1,901
-
1,901
1,395
-
1,395
1,613
19
1,632
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)
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 business
(4,909)
(4,909)
88
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (d) Business disposal and discontinued operations
The Group sold the following business during the 2019 year as detailed below:
Year
2019
2019
2019
Name of business
Austral Motor Group
Kloster Motor Group
Mornington Auto Group
(i) Net Assets and Liabilities disposed of
Net assets disposed of
Receivables, Prepayments
Inventory
Property, plant and equipment
Intangible assets
Creditors, borrowings and provisions
Net assets disposed
Total consideration received (100% Cash)
Gain on sale
(ii) Kloster Motor Group
Date of sale
Principal activity
May 2019
Motor Dealership
October 2019
Motor Dealership
December 2019
Motor Dealership
Proportion
disposed
100%
100%
100%
CONSOLIDATED
2019
$’000
18,623
71,913
3,784
25,253
(74,327)
45,246
64,954
19,708
On 5 July 2019, AP Eagers Limited announced the proposal to divest Kloster Motor Group to assist in securing regulatory authorisation
for AP Eagers’ merger with Automotive Holdings Group Limited. Binding sale agreements for Kloster Motor Group were executed
with Tony White Group on 10 September 2019 and the sale subsequently completed on 31 October 2019 along with the sale of freehold
properties related to Kloster Motor Group.
Further information regarding the financial performance is presented below for the ten months ended 31 October 2019 and the year
ended 31 December 2018.
Revenue from contracts with customers
Expenses
Profit before income tax
Income tax expense
Profit after income tax from Kloster Motor Group
Refrigerated Logistics
2019
$’000
2018
$’000
339,354
423,544
(333,392)
(415,495)
5,962
(831)
5,131
8,049
(2,229)
5,820
Refrigerated Logistics (RL) is classified as a discontinued operation in the statement of profit and loss, on the basis that it was classified
as held for sale on acquisition of AHG and is a subsidiary acquired exclusively with a view to resale. Therefore, the Group has elected to
apply the reduced disclosure in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations. RL recorded
a loss after tax of $14.4 million post acquisition. In addition, the Group recognised an impairment loss of $34.3 million (refer note 5)
representing a reassessment of the Group’s best estimate of market value following a formal sale process post acquisition.
89
ANNUAL REPORT 2019 33 INVESTMENTS IN SUBSIDIARIES CONTINUED
(e) Disposal of businesses in prior year
The Group sold the following business during the 2018 year as detailed below:
Year
2018
2018
2018
Name of business
Surfers City Holden
Austral Volvo
Eagers Kia
Date of sale
Principal activity
June 2018
June 2018
Motor Dealership
Motor Dealership
August 2018
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
(f) 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.
Individually immaterial subsidiaries with non-controlling interest
Profit allocated to
non-controlling interests
Accumulated
non-controlling interests
2019
$’000
2,789
2018
$’000
1,619
2019
$’000
9,423
2018
$’000
8,002
CONSOLIDATED
2019
$’000
8,002
2,789
12,651
-
(1,368)
(12,651)
9,423
2018
$’000
10,761
1,619
-
(2,337)
(2,041)
-
8,002
Movement - Non-Controlling Interest
Balance at the beginning of the financial year
Profit for the year
Acquisition of non-controlling interest
Payment / (Repayment) for shares
Payment of dividend
Disposal of non-controlling interest
Balance as at the end of the financial year
90
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 34 CONTINGENT LIABILITIES
(a) Parent entity
Unsecured guarantees, indemnities and undertakings have been given by the parent entity in the normal course of business in respect
of financial and trade arrangements entered into by its subsidiaries. It is not anticipated that the parent entity will become liable for any
amount in respect thereof. At 31 December 2019 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 2019. 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
$3,947,518,000 (2018: $1,031,832,000).
35 COMMITMENTS FOR EXPENDITURE
(a) Capital Commitments
Capital expenditure for land, buildings, plant and equipment contracted for at the end of the reporting period but not recognised as
liabilities is as follows:
Within one year
36 REMUNERATION OF AUDITOR
Amounts received or due and receivable by Deloitte Touche Tohmatsu (“Deloitte”) for:
- Audit or review of the financial report of the parent entity and any other entity in the
consolidated entity
Amounts received or due and receivable by BDO Audit (WA) Pty Ltd for:
- Audit and other assurance services
Amounts received or due and receivable by related entities of Deloitte for:
- Other services in relation to the parent entity and any other entity in the consolidated entity
CONSOLIDATED
2019
$’000
3,885
2018
$’000
5,292
1,376
500
974
2,850
816
-
90
906
(i)
Non audit services include $57,500 of Other Assurance Services (Investigating Accountants reports) and $504,000 of Advisory Services (integration support
services) performed for the Group in relation to the acquisition of AHG in addition to $80,000 for tax compliance services. The balance also includes $294,000
billed in respect of non-audit work performed for AHG prior to acquisition but billed thereafter.
37 SUBSEQUENT EVENTS
On 18 February 2020, General Motors announced its intentions to wind down Holden vehicle sales in Australia and New Zealand by
2021, whilst maintaining Holden service outlets to support existing Holden customers with warranty claims, spare parts, servicing and
recalls for ten years. Given the proximity of the announcement to the release of the 31 December 2019 financial statements, and the
uncertainty surrounding exactly how General Motors compensation arrangements will impact the Group management is not able to
reliably estimate the financial impact on the Group’s operations and state of affairs.
91
ANNUAL REPORT 2019 38 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
G J Duncan
D S Blackhall
M V Prater
D G Stark
K T Thornton
Managing Director and Chief Executive Officer
Director and Chief Financial Officer
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (non-executive), appointed 6 December 2019
Director (non-executive), appointed 6 December 2019
Director (non-executive), appointed 3 February 2020
General Counsel & Company Secretary
Chief Operating Officer - Cars
(ii) Executives
(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
2019
$’000
4,520
130
1,446
6,096
2018
$’000
3,903
120
262
4,285
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 38(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 40.
92
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 (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
No rights or options were forfeited or expired during the year. A total of 136,717 rights were issued and nil options exercised during the year.
As a result of the application of discretion by the Board, all of the performance rights options relating to the 31 December 2019
performance period have vested. Furthermore, the Board has used its discretion to vest all remaining tranches of performance rights
and options relating to the 2017 and 2018 performance periods.
The value of the performance rights and options expensed during the year was $1,224,986, with a cumulative expense being recognised
at 31 December 2019 of $6,557,247 (2018: $5,332,261).
93
ANNUAL REPORT 2019 38 KEY MANAGEMENT PERSONNEL CONTINUED
(f) Share Based Payments continued
Plan J: EPS Performance Rights and Options - Key Executive
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 6,218 performance rights were issued and no
options exercised during the year.
As a result of the application of discretion by the Board, all of the performance rights options relating to the 31 December 2019
performance period have vested. Furthermore, the Board has used its discretion to vest all remaining tranches of performance rights
and options relating to the 2017 and 2018 performance periods.
The value of the performance rights and options expensed during the year was $99,985 with a cumulative expense being recognised as
at 31 December 2019 of $449,959 (2018: $349,974).
94
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 Plan L: Executive incentive plan - Grant of performance rights - Key Executive
The Group commenced a new performance rights compensation scheme for a specific executive officer in 2020. The fair value of these
performance rights is calculated on grant date and recognised over the period to vesting. The performance rights are automatically
exercised and converted to vested restricted shares on the Conversion Date, being the date that is one week after release of the
Company’s full-year financial results. The vesting of the performance rights granted is based on continued employment at the relevant
vesting dates. The fair value was estimated by taking the market price of the company’s shares on the grant date less the present value
of expected dividends that will not be received during the period.
Performance Rights
Award date 17 February 2020
Vesting date
Share price at grant date
Expected life
Risk free interest rate
Dividend yield
31/12/19
$9.00
0.0 years
0.81%
4.056%
31/12/20
$9.00
0.87 years
0.81%
4.056%
31/12/21
$9.00
1.87 years
0.75%
4.056%
The number of performance rights granted under the plan is as follows:
Performance Rights
Number
30,000
35,000
35,000
Grant Date
17/02/20
17/02/20
17/02/20
End Performance Period
31/12/19
31/12/20
31/12/21
Fair Value at Grant Date
$9.00
$9.00
$9.00
No performance rights were forfeited or expired during the year. No performance rights were issued during the year.
The value of the performance rights expensed during the year was $305,069 with a cumulative expense being recognised as at 31
December 2019 of $305,069 (2018: $Nil).
95
ANNUAL REPORT 2019 39 OTHER SHARE BASED PAYMENTS
Recognised share-based payments expenses
Refer Note 31(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
No options were forfeited or expired during the year. A total of 970,810 options were exercised during the year.
No costs of the share plan were expensed during 2019 (2018: $Nil). The share plan was fully expensed by the end of 2017 with a
cumulative expense recognised of $3,607,822.
96
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 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 14,402 performance rights were issued during the year.
As a result of the application of discretion by the Board, all of the performance rights options relating to the 31 December 2019
performance period have vested. Furthermore, the Board has used its discretion to vest all remaining tranches of performance rights
and options relating to the 2017 and 2018 performance periods.
The value of the performance rights and options expensed during the year was $139,990, with a cumulative expense being recognised
as at 31 December 2019 of $749,281 (2018: $609,291).
97
ANNUAL REPORT 2019 39 OTHER SHARE BASED PAYMENTS CONTINUED
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
No rights or options were forfeited or expired during the year. No performance rights or 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 2019 (2018: $Nil), with a cumulative expense being recognised of $512,134.
98
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 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 application of discretion by the Board, all of the performance rights options relating to the 31 December 2019
performance period have vested. Furthermore, the Board has used its discretion to vest all remaining tranches of performance rights
and options relating to the 2017 and 2018 performance periods.
The value of the performance rights and options expensed during the year was $149,994 with a cumulative expense being recognised as
at 31 December 2019 of $449,986 (2018: $395,511).
99
ANNUAL REPORT 2019 40 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 $85,314 (2018: $92,174) and purchases of $71,337 (2018: $159,382) 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) M Birrell is a director and owner of a number of properties leased by subsidiaries of A. P. Eagers. The lease transactions of
$3,820,621 (2018: $4,441,343) 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 2019, Mr M Birrell purchased stock with a value of $580,096 (2018:
$484,888) from one of the subsidiaries and sold goods and services of $170,830 (2018: $Nil). 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
arms 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 $210,071 (2018: $204,164), 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.
(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 33.
100
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019
41 EARNINGS PER SHARE
(a) Basic earnings per share
From continuing operations attributable to the ordinary equity holders of the company
From continuing operations
From discontinued operation
(b) Diluted earnings per share
From continuing operations attributable to the ordinary equity holders of the company
From continuing operations
From discontinued operation
(c) Reconciliation of earnings used in calculating earnings per share
Basic earnings per share
Profit attributable to the ordinary equity holders of the Company used in calculating basic and diluted
earnings per share:
(Loss)/profit for the year
Less: attributable to non-controlling interest
CONSOLIDATED
2019
Cents
2018
Cents
(62.4)
(39.4)
(23.0)
(62.4)
(39.4)
(23.0)
50.1
50.1
-
49.8
49.8
-
CONSOLIDATED
2019
$’000
2018
$’000
(129,124)
(2,789)
97,496
(1,619)
Profit attributable to the ordinary equity holders of the Company used in calculating basic earnings per
share
(131,913)
95,877
Diluted earnings per share
(Loss)/Profit for the year attributable to share holders of the parent
Loss from discontinued operations
(Loss)/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)
(131,913)
(48,644)
95,877
-
(180,557)
95,877
2019
Number
2018
Number
211,306,958
191,301,059
2,728,331
1,387,987
Weighted average number of ordinary shares outstanding during the year used in the calculation of
diluted earnings per share
214,035,289
192,689,046
(1) 182,857 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.
(2) In 2019, the options of 2,728,331 are considered to be anti-dilutive due to the current period loss.
101
ANNUAL REPORT 2019 42 RECONCILIATION OF NET PROFIT AFTER TAX TO THE NET CASH INFLOWS FROM OPERATIONS
Net profit after tax
Depreciation and amortisation
Impairment of non-current assets
Gain on reclassification of investment in AHG
Gain on contingent consideration release
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
Impact of AASB 16
(Gain)/Loss on disposal of non-financial assets
(Increase)/decrease in assets -
Receivables
Inventories
Prepayments
Increase/(decrease) in liabilities -
Creditors (including bailment finance)
Provisions
Taxes payable
Net cash inflow from operating activities
43 INVESTMENTS IN ASSOCIATES
(a) Carrying amounts
Notes
5
CONSOLIDATED
2019
$’000
(129,124)
109,061
279,672
(65,061)
(19,674)
(407)
(14,457)
1,906
(19,709)
-
-
(6,715)
57,521
169,718
(1,779)
(231,422)
(11,301)
52,567
170,796
RESTATED
2018
$’000
97,496
46,137
-
-
-
(77)
(3,554)
391
(2,573)
7,145
(2,433)
-
5,522
(37,516)
(1,445)
15,275
2,047
(12,260)
114,155
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
Vehicle Parts (WA) Pty Ltd
Mazda Parts
AHG Limited(1)
(1) Refer to Note 33(a) for the acquisition of AHG Limited.
OWNERSHIP INTEREST
CONSOLIDATED
2019
%
-
39.37
50.00
16.67
-
2018
%
20.65
25.50
-
-
28.87
2019
$’000
-
15,629
1,127
50
-
2018
$’000
1,620
10,457
-
-
-
16,806
12,077
102
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED31 DECEMBER 2019 Norna Limited (formerly MTQ Insurance Servers Limited)
In 2014 MTQ Insurance Services Limited changed its name to Norna Limited. On 29 August 2014 MTA Insurance Limited (a wholly owned
subsidiary of Norna Limited) was sold to AAI Limited. Settlement took place in instalments, the final of which was realised in 2019.
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.
Vehicle Parts (WA) Pty Ltd
Vehicle Parts (WA) Pty Ltd provides warehousing and distribution of automotive parts and accessories for Subaru in Western Australia.
(b) Movement in the carrying amounts of investment in associate
Carrying amount at the beginning of the financial year
Equity share of profit from ordinary activities after income tax
Equity accounted investments acquired
Carrying amount at the end of the financial year
CONSOLIDATED
2019
$’000
12,077
407
4,322
16,806
2018
$’000
12,000
77
-
12,077
(c) Share of associate profit
Based on the last published results for the 12 months to 30 June 2019 plus unaudited results up to 31 December 2019.
Profit from ordinary activities after income tax
407
77
(d) Reporting date of associates
The associates reporting dates are 30 June annually.
103
ANNUAL REPORT 2019 DIRECTORS’ DECLARATION
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 33
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.
On behalf of the Directors
Martin Ward
Director
Brisbane,
27th February 2020
104
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 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated 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)
(ii)
giving a true and fair view of the Group's financial position as at 31 December 2019 and of its
financial performance for the year then ended; and
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 Asia Pacific Limited and the Deloitte Network.
105
ANNUAL REPORT 2019
106
INDEPENDENT AUDITOR’S REPORT CONTINUED Key Audit Matter How the scope of our audit responded to the Key Audit Matter Acquisition of Automotive Holdings Group and associated provisional fair values of acquired balances As disclosed in Notes 2a (i) and 33a, A.P. Eagers Limited ("A.P. Eagers" or the "Group") completed the acquisition of Automotive Holdings Group ("AHG") during the year ended 31 December 2019 following an all scrip offer which closed on 16 September 2019. The Group declared a relevant interest of 62.5% in AHG on 19 August 2019, going on to acquire 100% of the shares in AHG through a compulsory acquisition on 24 October 2019. Accounting for material Business Combinations is complex and requires management to make a number of judgements and estimates as disclosed in Note 2a (i), including but not limited to: • the determination of the date of acquisition; and • the identification of and fair values attributed to the separately identifiable assets and liabilities acquired, including intangible assets. Our procedures performed, which involved our valuations specialists, included, but were not limited to: • Obtaining a copy of the all-scrip offer and relevant agreements to understand the terms and conditions of the offer and evaluating management's application of the relevant accounting standards, including: • the appropriateness of the acquisition date; and • the fair value of the purchase consideration. • Obtaining an understanding of and assessing the external experts draft report by reading the report, evaluating its scope and holding discussions with the expert. • Assessing the competence and objectivity of the expert and challenging the appropriateness of the identification of and valuation methodologies and key judgements adopted in determining fair values of customer relationships, brands other intangible and tangible assets. • Assessing the process applied by management in assigning fair values to property plant and equipment, inventory, lease liabilities and right-of-use assets. • Assessing the methodology used in allocating the calculated goodwill to the Group's identified cash-generating units ("CGUs"). • Assessing the appropriateness of the disclosures in Notes 2a (i) and 33a to the financial statements. 107
Key Audit Matter How the scope of our audit responded to the Key Audit Matter Carrying value of goodwill As disclosed in Notes 2a (iii) and 17, the Group has recognised goodwill with a carrying value of $743 million at 31 December 2019, after recognising impairment losses of $209 million during the year. The assessment of the recoverable amount of goodwill and other assets allocated to the CGUs or groups of CGUs requires management to exercise significant judgement, including: • the determination of and allocation of goodwill to the CGUs or groups of CGUs; and • the determination of the following key assumptions used in the calculation of the recoverable amount of each CGU or groups of CGUs: • the cash flow forecasts; • future growth rates; • terminal growth factors; and • discount rates. Our procedures performed, which involved our valuations specialists, included, but were not limited to: • Obtaining an understanding of the processes that management and the directors undertook in determining the CGUs or groups of CGUs and preparing the valuation models for recoverable amounts. • Evaluating management's identification of CGUs. • Assessing and challenging: • the basis of cash flows for the CGUs and agreeing inputs in the cashflow models to supporting data; • CGU growth rates and terminal growth rates against relevant external data; and • the discount rates applied by comparing the rates used to the range of discount rates calculated by our internal valuation specialists. • Performing sensitivity analysis on key assumptions. • Testing the mathematical accuracy and integrity of the cash flow models. • Assessing the appropriateness of the disclosures in Notes 2a (iii) and 17 to the financial statements. Key Audit Matter How the scope of our audit responded to the Key Audit Matter First-year adoption of AASB 16 Leases As disclosed in Notes 1aa, 2a (iv) and 15, the Group has applied AASB 16 Leases ("AASB 16") from 1 January 2019. The adoption has had a material impact on the Group's financial statements, with right-of-use assets and lease liabilities recognised for the first time, equal to $1 billion and $1.2 billion respectively, refer to Note 15. In applying AASB 16, management is required to make certain assumptions and judgements, including the following: • determining whether contractual arrangements constitute a lease under the standard; • determining the appropriate discount rate to be applied in the calculation of right-of-use-assets and lease liabilities; and • the likelihood of exercise of any renewal options. Our procedures performed, which involved our valuations specialists, included, but were not limited to: • Assessing the appropriateness of key assumptions applied in calculating the lease liability and right-of-use assets, including discount rates and the expected lease period. • Verifying the accuracy of the underlying lease data in calculations by agreeing a sample of leases to the original contract or other supporting information. • Assessing the mechanical accuracy of the AASB 16 calculations for each lease sampled through recalculation of the expected lease liability and right of use asset. • Assessing the accuracy of the related interest and depreciation expense. • Assessing the appropriateness of the disclosures in Notes 1aa, 2a (iv) and 15 to the financial statements. ANNUAL REPORT 2019 108
INDEPENDENT AUDITOR’S REPORT CONTINUED 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. 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. 109
•Conclude on the appropriateness of the directors' use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related to eventsor 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'sreport to the related disclosures in the financial report or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.•Evaluate the overall presentation, structure and content of the financial report, including thedisclosures, and whether the financial report represents the underlying transactions and eventsin a manner that achieves fair presentation.•Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the financial report. We areresponsible for the direction, supervision and performance of the Group's audit. We remain solelyresponsible 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. 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 13 to 21 of the Directors' Report for the year ended 31 December 2019. In our opinion, the Remuneration Report of A.P. Eagers Limited, for the year ended 31 December 2019, 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, 27 February 2020 ANNUAL REPORT 2019 ADDITION TO
NOTE 33
INVESTMENTS
IN SUBSIDIARIES
THIS INFORMATION IS NON AUDITED AND IS
PROVIDED FOR THE PURPOSES OF THE USERS
OF THE FINANCIAL STATEMENTS.
110
ADDITION TO NOTE 33 INVESTMENTS IN SUBSIDIARIES CONTINUED ADDITION TO NOTE 33
INVESTMENTS IN SUBSIDIARIES
EQUITY HOLDING Member of DOCG
Membership
Group
Opt In/Out
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
2019
%
100
80
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
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
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
2019
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
2018
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
2019
C
EC
C
C
C
C
C
C
C
C
C
C
C
C
C
C
NA
NA
NA
NA
C
C
C
C
C
C
C
C
EC
C
C
C
C
C
C
C
C
C
EC
C
EC
EC
C
EC
C
C
C
C
C
C
C
C
2018
C
EC
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
EC
C
C
C
C
C
C
C
C
C
EC
C
EC
EC
C
EC
C
C
C
C
C
C
C
C
2019
2018
Ref
1
1
1
1
Opt In
Opt Out
Opt In
Opt Out
111
ANNUAL REPORT 2019 EQUITY HOLDING Member of DOCG
Membership
Group
Opt In/Out
Name of entity
Motors Group (Glen Waverley) Pty Ltd
Port City Autos Pty Ltd
Adverpro Pty Ltd
Cheap Cars QLD Pty Ltd
Eurocars (SA) Pty Ltd
Finmo Pty Ltd
360 Finance Pty Ltd
360 Financial Services Australia Pty Ltd
360 Insurance Services Pty Ltd
ACN 132 712 111 Pty Ltd
ACM Autos Holdings Pty Ltd
ACM Autos Pty Ltd
ACM Liverpool Pty Ltd
AHG 1 Pty Ltd
AHG Automotive Mining and Industrial
Solutions Pty Ltd
AHG Coatings Pty Ltd
AHG Finance 2005 Pty Ltd
AHG Finance Pty Ltd
AHG Franchised Automotive Pty Ltd
AHG International Pty Ltd
AHG Management Company Pty Ltd
AHG Newcastle Pty Ltd
AHG Property Pty Ltd
AHG Services (NSW) Pty Ltd
AHG Services (QLD) Pty Ltd
AHG Services (VIC) Pty Ltd
AHG Services (WA) Pty Ltd
AHG Trade Parts Pty Ltd
AHG Training Pty Ltd
AHG WA (2015) Pty Ltd
AHGCL 2016 Pty Ltd
AHGSW 2018 Pty Ltd
Auckland Auto Collection Limited
AUT 6. Pty Ltd
Automotive Holdings Group (Queensland) Pty
Ltd
Automotive Holdings Group (Victoria) Pty Ltd
Automotive Holdings Group Limited
Big Rock 2005 Pty Ltd
Big Rock Pty Ltd
Bradstreet Motors Holdings Pty Ltd
Bradstreet Motors Pty Limited
Cardiff Car City Holdings Pty Ltd
Cardiff Car City Pty Limited
Carlin Auction Services (NSW) Pty Ltd
Carlin Auction Services (QLD) Pty Ltd
Carlins Automotive Auctioneers (WA) Pty Ltd
Carlins Automotive Auctioneers Pty Ltd
Carlins Corporate Vehicle Services Pty Ltd
Carlins Group Holdings Pty Ltd
Carsplus Australia Pty Ltd
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
2019
%
80
100
100
100
100
100
100
100
100
100
80
100
100
100
2018
%
80
100
100
100
100
100
-
-
-
-
-
-
-
-
2019
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
2018
Y
Y
Y
Y
Y
Y
N
N
N
N
N
N
N
N
2019
EC
C
C
C
C
C
C
C
C
C
NA
NA
C
C
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
80
100
80
100
100
100
100
100
100
53
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
Y
N
N
N
N
N
N
N
N
N
N
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
NA
C
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
C
2018
EC
C
C
C
C
C
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
112
2019
2018
Ref
Opt Out
Opt In
Opt In
Opt In
Opt In
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
ADDITION TO NOTE 33 INVESTMENTS IN SUBSIDIARIES CONTINUED EQUITY HOLDING Member of DOCG
Membership
Group
Opt In/Out
Name of entity
Castle Hill Autos No. 1 Pty Ltd
Castlegate Enterprises Pty Ltd
CFD (2012) Pty Ltd
Chellingworth Pty Ltd
City Auto (2016) Holdings Pty Ltd
City Auto (2016) Pty Ltd
City Motors (1981) Pty Ltd
Doncaster Auto (2016) Pty Ltd
Drive A While Pty Ltd
Dual Autos Pty Ltd
Duncan Autos 2005 Pty Ltd
Duncan Autos Pty Ltd
Easy Auto 123 Pty Ltd
Essendon Auto (2017) Pty Ltd
Falconet Pty Ltd
Ferntree Gully Autos Holdings Pty Ltd
Ferntree Gully Autos Pty Ltd
Geraldine Nominees Pty Ltd
Giant Autos (1997) Pty Ltd
Giant Autos Pty Ltd
Grand Autos 2005 Pty Ltd
Highland Autos Pty Ltd
Highland Kackell Pty Ltd
HM (2015) Holdings Pty Ltd
HM (2015) Pty Ltd
Janasen Pty Ltd
Janetto Holdings Pty Ltd
JAT Refrigerated Road Services Pty Ltd
Kingspoint Pty Ltd
Knox Auto (2016) Pty Ltd
Laverton Auto (2016) Pty Ltd
Lionteam Pty Ltd
LWC International Limited
LWC Limited
Maitland City Motor Group Holdings Pty Ltd
Maitland City Motor Group Pty Ltd
Matchacar Pty Ltd
MBSA Motors Pty Ltd
MCM Autos Pty Ltd
MCM Sutherland Pty Ltd
Melbourne City Autos (2012) Pty Ltd
Melville Autos 2005 Pty Ltd
Melville Autos Pty Ltd
Mornington Auto Group (2012) Pty Ltd
Newcastle Commercial Vehicles Pty Ltd
North City (1981) Pty Ltd
North City 2005 Pty Ltd
Northside Autos 2005 Pty Ltd
Northside Nissan (1986) Pty Ltd
Northwest (WA) Pty Ltd
Novated Direct Pty Ltd
NSW Vehicle Wholesale Pty Ltd
2019
%
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
80
80
100
80
100
100
100
100
100
100
100
100
100
100
80
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
2018
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2019
Y
Y
Y
Y
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
Y
N
N
Y
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
2018
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
2019
C
C
C
C
NA
NA
C
C
C
C
C
C
C
C
C
NA
NA
C
C
C
NA
NA
C
NA
NA
C
C
C
C
C
C
C
C
C
NA
NA
C
C
NA
C
C
C
C
C
C
C
C
C
C
C
C
C
2018
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
2019
Opt In
2018
Opt In
Opt In
Opt In
Opt In
Opt In
Opt In
Opt In
Opt In
Opt In
Opt In
Ref
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
113
ANNUAL REPORT 2019 Name of entity
Nuford Ford Pty Ltd
OPM (2012) Holdings Pty Ltd
OPM (2012) Pty Ltd
Osborne Park Autos Pty Ltd
Penrith Auto (2016) Pty Ltd
Perth Auto Alliance Pty Ltd
PT (2013) Pty Ltd
Rand Transport (1986) Pty Ltd
Rand Transport Pty Ltd
Rent Two Buy Pty Ltd
Sabalan Holdings Pty Ltd
Sabalan Pty Ltd
Scott’s Refrigerated Freightways Pty Ltd
Shemapel 2005 Pty Ltd
Skipper Trucks Pty Ltd
Southeast Automotive Group Pty Ltd
Southern Automotive Group Pty Ltd
Southside Autos (1981) Pty Ltd
Southside Autos 2005 Pty Ltd
Southwest Automotive Group Pty Ltd
SWGT Pty Ltd
Total Autos (1990) Pty Ltd
Total Autos 2005 Pty Ltd
VMS Pty Ltd
Vehicle Storage & Engineering Pty Ltd
WA Trucks Pty Ltd
Widevalley Pty Ltd
Zupp Holdings Pty Ltd
Zupps Aspley Pty Ltd
Zupps Gold Coast Pty Ltd
Zupps Mt Gravatt Pty Ltd
Zupps Parts Pty Ltd
Zupps Southside Pty Ltd
Submo Pty Ltd
APE Cars Mgmt Pty Ltd
Webster Trucks Mgmt Pty Ltd
EQUITY HOLDING Member of DOCG
Membership
Group
Opt In/Out
2019
%
100
80
100
100
100
100
99
100
100
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
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
2018
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2019
Y
N
N
Y
Y
Y
N
Y
Y
Y
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
2018
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
2019
C
NA
NA
C
C
C
NA
C
C
C
NA
NA
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
2018
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
2019
2018
Opt In
Opt In
Opt In
Opt In
Opt In
Opt In
Ref
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1 - Entities disposed of during the year, with the disposal lodged with ASIC on 12 November 2019.
2 – Entities added by an assumption deed to the deed of cross guarantee, lodged with ASIC on 20 December 2019.
C – Member of the Closed Group
EC – Member of the Extended Closed Group
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 or New Zealand.
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 2019. 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.
114
ADDITION TO NOTE 33 INVESTMENTS IN SUBSIDIARIES CONTINUED A consolidated statement of profits or loss and statement of financial position, comprising the Company and entities which are
members of the Closed Group, after eliminating all transactions between parties to the deed of cross guarantee, at 31 December 2019
is set out below:
Deed of Cross Guarantee
Statement of Profit or Loss
(Loss) / Profit before tax from continuing operations
Income tax expense from continuing operations
(Loss) / Profit / (loss) for the period from continuing operations
2019
$’000
2018
$’000
*Restated
(83,854)
(10,525)
(94,379)
116,990
(27,621)
89,368
(Loss) / Profit for the period from discontinued operations
(48,644)
-
(Loss)/Profit for the year
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Assets classified as held for sale
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
Other non-current assets
Right-of-use assets
Total non-current assets
Total assets
(143,023)
89,368
82,478
268,918
1,280,699
20,573
1,652,667
507,155
0
19,062
145,951
623,537
11,981
800,530
-
-
2,159,822
800,530
30,893
2,366
16,756
439,910
725,404
158,874
13,030
896,143
8,303
149,774
12,077
385,452
279,992
24,847
-
197,426
2,283,376
1,057,871
4,443,198
1,858,401
115
ANNUAL REPORT 2019 2019
$’000
2018
$’000
*Restated
330,767
134,373
0
35
1,147,462
514,267
28,655
92,384
40,180
154,918
5,519
48,481
5,278
40,559
1,794,366
748,513
508,666
-
2,303,032
748,513
381,869
312,614
43,804
43,529
-
913,014
1,382,216
-
313
18,823
183,752
515,501
3,685,248
1,264,014
757,950
594,387
1,156,938
355,274
(602,362)
(143,536)
188,584
743,160
9,423
752,583
372,647
584,384
8,002
592,386
Deed of Cross Guarantee
Current liabilities
Trade and other payables
Derivative financial instruments
Borrowings - bailment and other current loans
Current tax liabilities
Provisions
Deferred revenue
Lease liabilities
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Borrowings
Deferred revenue
Provisions
Other
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
116
ADDITION TO NOTE 33 INVESTMENTS IN SUBSIDIARIES CONTINUED Entities that are parties to the deed of cross guarantee and controlled by A.P. Eagers Limited
A consolidated statement of profit or loss and statement of financial position, comprising the entities that are parties to the deed
of cross guarantee and controlled by A.P. Eagers Limited, after eliminating all transactions between parties to the deed of cross
guarantee, at 31 December 2019 is set out below:
Deed of Cross Guarantee
Statement of Profit or Loss
(Loss) / Profit before tax from continuing operations
Income tax expense from continuing operations
(Loss) / Profit / (loss) for the period from continuing operations
2019
$’000
2018
$’000
*Restated
(83,854)
(10,525)
(94,379)
116,990
(27,621)
89,368
(Loss) / Profit for the period from discontinued operations
(48,644)
-
(Loss)/Profit for the year
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Assets classified as held for sale
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
Other non-current assets
Right-of-use assets
Total non-current assets
Total assets
(143,023)
89,368
82,738
280,246
1,334,656
21,031
1,718,671
507,155
18,868
156,286
690,167
12,617
877,938
-
2,225,826
877,938
30,893
2,366
16,756
442,717
758,737
161,005
13,030
918,057
8,303
149,774
12,077
388,407
313,325
26,766
-
222,759
2,343,561
1,121,411
4,569,387
1,999,349
117
ANNUAL REPORT 2019 2019
$’000
2018
$’000
*Restated
335,294
145,917
-
35
1,195,021
571,615
25,466
96,803
40,759
158,812
2,190
48,481
5,862
44,596
1,852,154
818,696
508,666
-
2,360,820
818,696
381,869
312,614
43,804
44,227
-
934,043
1,403,943
-
5,052
19,422
207,906
544,994
3,764,763
1,363,690
804,624
635,659
1,173,069
371,405
(583,131)
(124,306)
205,263
795,201
9,423
380,558
627,657
8,002
804,624
635,659
Deed of Cross Guarantee
Current liabilities
Trade and other payables
Derivative financial instruments
Borrowings - bailment and other current loans
Current tax liabilities
Provisions
Deferred revenue
Lease liabilities
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Borrowings
Deferred revenue
Provisions
Other
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
118
ADDITION TO NOTE 33 INVESTMENTS IN SUBSIDIARIES CONTINUED AHG became a wholly-owned subsidiary of A.P. Eagers on or about on 24 October 2019 (Acquisition) pursuant to a compulsory
acquisition by A.P. Eagers of all of the remaining shares in AHG that were not already owned by A.P. Eagers following the close of A.P.
Eagers’ off-market takeover bid for AHG on 16 September 2019.
Under ASIC Instrument 20-0106 (Instrument), Automotive Holdings Group Limited (AHG), the directors of AHG and AP Eagers
were granted relief from compliance with certain provisions of the Corporations Act. The effect of this Instrument Is that subject to
certain conditions.
(a) AHG is not required to:
> Prepare a separate audited financial report and directors’ report; or
> Report to its member under section 314 of the Corporations Act; or
>
Send a report to its member in accordance with a request under subsection 316(1) of the Corporations Act, in relation to the
financial year ended 31 December 2019;
(b) The directors of AHG do not have to comply with:
>
The requirement under section 317 of the Corporations Act to lay reports before the AGM of AHG following the year ended 31
December 2019;
> A requirement (if any) in relation to the appointment of an auditor following any casual vacancy occurring before 31 March 2020;
(c) AP Eagers does not have to comply with subsection 292(1) of the Corporations Act in relation to the year ended 31 December 2019
to the extent that any non-compliance would result merely from AP Eagers preparing financial reports that includes notes that
have been prepared for the purposes of compliance with the Instrument and section of 6 of ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785;
(d) AHG does not have to comply with a requirement (if any) to appoint an auditor of AHG at its AGM for the 2020 calendar year.
Refer Notes 34(a) and 34(b) in respect of guarantees entered into by the parent entity in relation to debts of its subsidiaries.
119
ANNUAL REPORT 2019
SHAREHOLDER INFORMATION
AS AT 27 MARCH 2020
EQUITY SECURITIES
The company’s quoted securities consist of 256,933,106 ordinary fully paid shares (ASX: APE).
TOP 20 HOLDERS OF ORDINARY SHARES
WFM Motors Pty Ltd
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
Jove Pty Ltd
Milton Corporation Limited
Alan Piper Investments (No1) Pty Ltd
Patterson Cheney Investments Pty Ltd
Argo Investments Limited
UBS Nominees Pty Ltd
National Nominees Limited
Berne No 132 Nominees Pty Ltd <315738 A/C>
BNP Paribas Nominees Pty Ltd
Four Leaf Family Pty Ltd
LG McGrath Investments Pty Ltd
Birrell Investments Pty Ltd
Diane Colman
Pulo Rd Pty Ltd
Hegford Pty Ltd
BNP Paribas Noms Pty Ltd
No. of Shares
% of Issued Shares
69,710,146
22,980,870
15,210,624
14,103,709
12,396,588
6,795,986
6,406,250
6,348,239
6,083,588
5,462,223
3,546,691
2,444,101
2,381,651
2,076,776
2,028,362
2,000,000
1,881,710
1,746,935
1,371,652
1,208,331
27.13
8.94
5.92
5.49
4.82
2.65
2.49
2.47
2.37
2.13
1.38
1.28
0.93
0.81
0.79
0.78
0.73
0.68
0.53
0.47
120
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
4,769
3,668
849
873
129
10,288
1,108 shareholders hold less than a marketable parcel of 171 shares at $2.94 per share.
Substantial Shareholders*
Notice Date
No. of
Shares*
WFM Motors Pty Ltd
23 Sept 2019
69,536,516
Vernon Charles Wheatley/Jove Pty Ltd 17 Nov 2019
15,356,763
* As disclosed in substantial holding notices received by the company.
Performance Rights and Options
No performance rights, no unvested options and 3,822,816 vested options are on issue to twelve holders pursuant to the Executive
Incentive Plan. Vesting was subject to the achievement or waiver of pre-determined performance hurdles, as described in the Directors’
Report. The options do not have any dividend or voting rights.
Employee Incentive Scheme
266,274 shares were purchased on-market during the reporting period for the purposes of our employee incentive scheme at an
average price of $9.99 per share.
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/.
121
ANNUAL REPORT 2019 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
Greg Duncan, Non-executive Director
David Blackhall, Non-executive Director
Michelle Prater, Non-executive Director
COMPANY SECRETARY
Denis Stark, General Counsel & Company Secretary
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
122
CONTROLLED ENTITIES
360 Finance Pty Ltd
360 Financial Services Australia Pty Ltd
360 Insurance Services Pty Ltd
A.C.N. 132 712 111 Pty Ltd
A.P. Ford Pty Ltd
A.P. Group Ltd
A.P. Motors (No.1) Pty Ltd
A.P. Motors (No.2) Pty Ltd
A.P. Motors (No.3) Pty Ltd
A.P. Motors Pty Ltd
ACM Autos Holdings Pty Ltd
ACM Autos Pty Ltd
ACM Liverpool Pty Ltd
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
AHG 1 Pty Ltd
AHG Automotive Mining and Industrial
Solutions Pty Ltd
AHG Coatings Pty Ltd
AHG Finance 2005 Pty Ltd
AHG Finance Pty Ltd
AHG Franchised Automotive Pty Ltd
AHG International Pty Ltd
AHG Management Company Pty Ltd
AHG Newcastle Pty Ltd
AHG Property Pty Ltd
AHG Services (NSW) Pty Ltd
AHG Services (Qld) Pty Ltd
AHG Services (Vic) Pty Ltd
AHG Services (WA) Pty Ltd
AHG Trade Parts Pty Ltd
AHG Training Pty Ltd
AHG WA (2015) Pty Ltd
AHGCL 2016 Pty Ltd
AHGSW 2018 Pty Ltd
AP Eagers Foundation Ltd
AP Eagers Ltd
AP Townsville Pty Ltd
APE Cars Mgmt Pty Ltd
Associated Finance Pty Ltd
Auckland Auto Collection Limited
Austral Pty Ltd
AUT 6. Pty Ltd
Auto Ad Pty Ltd
ACN 160 714 189
ACN 162 034 004
ACN 167 262 393
ACN 132 712 111
ACN 010 602 383
ACN 010 030 994
ACN 010 585 234
ACN 010 585 243
ACN 010 585 252
ACN 010 579 996
ACN 621 081 552
ACN 121 604 082
ACN 121 604 055
ACN 008 278 171
ACN 007 866 917
ACN 056 340 928
ACN 008 129 477
ACN 127 369 260
ACN 106 764 327
ACN 151 699 651
ACN 008 264 935
ACN 074 561 514
ACN 612 630 618
ACN 116 779 198
ACN 162 034 111
ACN 609 750 558
ACN 112 854 387
ACN 064 015 676
ACN 128 362 185
ACN 147 802 211
ACN 147 802 337
ACN 600 832 755
ACN 131 182 968
ACN 132 055 728
ACN 132 055 737
ACN 145 856 328
ACN 132 055 700
ACN 609 816 257
ACN 159 538 226
ACN 603 598 750
ACN 615 618 678
ACN 626 195 668
ACN 612 890 883
ACN 009 680 013
ACN 600 279 927
ACN 632 136 906
ACN 009 677 678
NZBN 939375
ACN 009 662 202
ACN 008 985 886
ACN 605 815 021
Automotive Holdings Group (Qld) Pty Ltd
Automotive Holdings Group (Vic) Pty Ltd
Automotive Holdings Group Ltd
BASW Pty Ltd
Big Rock 2005 Pty Ltd
Big Rock 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
Bradstreet Motors Holdings Pty Ltd
Bradstreet Motors Pty Ltd
Cardiff Car City Holdings Pty Ltd
Cardiff Car City Pty Ltd
Carlin Auction Services (NSW) Pty Ltd
Carlin Auction Services (Qld) Pty Ltd
Carlins Automotive Auctioneers (WA) Pty Ltd
Carlins Automotive Auctioneers Pty Ltd
Carlins Corporate Vehicle Services Pty Ltd
Carlins Group Holdings Pty Ltd
Carsplus Australia Pty Ltd
Carzoos Pty Ltd
Castle Hill Autos No. 1 Pty Ltd
Castlegate Enterprises Pty Ltd
CFD (2012) Pty Ltd
CH Auto Pty Ltd
Cheap Cars Qld Pty Ltd
Chellingworth Pty Ltd
City Auto (2016) Holdings Pty Ltd
City Auto (2016) Pty Ltd
City Automotive Group Pty Ltd
City Motors (1981) Pty Ltd
Crampton Automotive Pty Ltd
Doncaster Auto (2016) Pty Ltd
Drive A While Pty Ltd
Dual Autos Pty Ltd
Duncan Autos 2005 Pty Ltd
Duncan Autos Pty Ltd
E.G. Eager & Son Pty Ltd
Eagers Finance Pty Ltd
Eagers Md Pty Ltd
Eagers Nominees Pty Ltd
Eagers Retail Pty Ltd
Easy Auto 123 Pty Ltd
Essendon Auto (2017) Pty Ltd
Eurocars (Sa) Pty Ltd
Falconet Pty Ltd
Ferntree Gully Autos Holdings Pty Ltd
Ferntree Gully Autos Pty Ltd
FINMO Pty Ltd
Geraldine Nominees Pty Ltd
ACN 127 499 683
ACN 158 935 249
ACN 111 470 038
ACN 601 452 199
ACN 112 854 403
ACN 008 968 867
ACN 000 388 054
ACN 062 951 106
ACN 000 871 910
ACN 135 015 191
ACN 099 480 903
ACN 602 181 386
ACN 061 172 183
ACN 602 181 751
ACN 062 072 299
ACN 069 462 148
ACN 064 349 480
ACN 121 606 826
ACN 069 430 182
ACN 079 203 839
ACN 619 469 966
ACN 082 428 279
ACN 608 791 911
ACN 148 096 244
ACN 088 414 715
ACN 158 508 233
ACN 600 297 783
ACN 616 472 729
ACN 112 854 467
ACN 611 922 993
ACN 611 928 968
ACN 067 985 602
ACN 008 973 402
ACN 057 283 253
ACN 611 321 638
ACN 168 250 128
ACN 113 068 830
ACN 112 854 485
ACN 093 664 192
ACN 009 658 306
ACN 009 721 288
ACN 009 727 753
ACN 009 723 488
ACN 009 662 211
ACN 148 136 314
ACN 616 989 596
ACN 114 124 346
ACN 008 936 409
ACN 613 081 208
ACN 145 562 401
ACN 621 801 054
ACN 009 062 015
123
ANNUAL REPORT 2019 CORPORATE DIRECTORY CONTINUED
Rand Transport (1986) Pty Ltd
Rand Transport Pty Ltd
Rent Two Buy Pty Ltd
RL Sublessor Pty Ltd
Sabalan Holdings Pty Ltd
Sabalan Pty Ltd
Scott’s Refrigerated Freightways Pty Ltd
Shemapel 2005 Pty Ltd
Skipper Trucks Pty Ltd
South West Queensland Motors Pty Ltd
Southeast Automotive Group Pty Ltd
Southern Automotive Group Pty Ltd
Southside Autos (1981) Pty Ltd
Southside Autos 2005 Pty Ltd
Southwest Automotive Group Pty Ltd
Stillwell Trucks Pty Ltd
Submo Pty Ltd
SWGT Pty Ltd
Total Autos (1990) Pty Ltd
Total Autos 2005 Pty Ltd
Vehicle Storage & Engineering Pty Ltd
VMS Pty Ltd
WA Trucks Pty Ltd
Webster Trucks Mgmt Pty Lt
Western Equipment Rentals Pty Ltd
Whitehorse Trucks Pty Ltd
Widevalley Pty Ltd
WS Motors Pty Ltd
Zupp Holdings Pty Ltd
Zupps Aspley Pty Ltd
Zupps Gold Coast Pty Ltd
Zupps Mt Gravatt Pty Ltd
Zupps Parts Pty Ltd
Zupps Southside Pty Ltd
ACN 009 180 983
ACN 112 854 912
ACN 165 880 562
ACN 639 689 320
ACN 602 181 117
ACN 002 698 188
ACN 162 034 326
ACN 112 854 412
ACN 112 854 430
ACN 600 279 589
ACN 103 071 290
ACN 103 181 237
ACN 008 968 821
ACN 112 854 369
ACN 096 279 480
ACN 008 014 720
ACN 637 015 457
ACN 098 706 051
ACN 009 162 387
ACN 112 854 896
ACN 121 604 242
ACN 121 604 037
ACN 112 854 341
ACN 632 136 899
ACN 131 269 184
ACN 116 437 702
ACN 065 389 120
ACN 608 791 804
ACN 009 824 462
ACN 009 900 298
ACN 009 681 261
ACN 009 695 694
ACN 009 842 648
ACN 009 839 187
Giant Autos (1997) Pty Ltd
Giant Autos Pty Ltd
Graham Cornes Motors Pty Ltd
Grand Autos 2005 Pty Ltd
Highland Autos Pty Ltd
Highland Kackell Pty Ltd
HM (2015) Holdings Pty Ltd
HM (2015) Pty Ltd
Ib Md Pty Ltd
IB Motors Pty Ltd
Janasen Pty Ltd
Janetto Holdings Pty Ltd
Jat Refrigerated Road Services Pty Ltd
Kingspoint Pty Ltd
Knox Auto (2016) Pty Ltd
Laverton Auto (2016) Pty Ltd
Leaseline & General Finance Pty Ltd
Lionteam Pty Ltd
LWC International Limited
LWC Limited
Maitland City Motor Group Holdings Pty Ltd
Maitland City Motor Group Pty Ltd
Matchacar Pty Ltd
MB Vic Pty Ltd
MBSA Motors Pty Ltd
MCM Autos Pty Ltd
MCM Sutherland Pty Ltd
Melbourne City Autos (2012) Pty Ltd
Melbourne Truck and Bus Centre Pty Ltd
Melville Autos 2005 Pty Ltd
Melville Autos Pty Ltd
Mornington Auto Group (2012) Pty Ltd
Motors Group (Glen Waverley) Pty Ltd
Motors Tas Pty Ltd
Newcastle Commercial Vehicles Pty Ltd
North City (1981) Pty Ltd
North City 2005 Pty Ltd
Northside Autos 2005 Pty Ltd
Northside Nissan (1986) Pty Ltd
Northwest (WA) Pty Ltd
Novated Direct Pty Ltd
NSW Vehicle Wholesale Pty Ltd
Nuford Ford Pty Ltd
Nundah Motors Pty Ltd
OPM (2012) Holdings Pty Ltd
OPM (2012) Pty Ltd
Osborne Park Autos Pty Ltd
Penrith Auto (2016) Pty Ltd
Perth Auto Alliance Pty Ltd
Port City Autos Pty Ltd
Precision Automotive Technology Pty Ltd
PT (2013) Pty Ltd
ACN 078 830 770
ACN 112 854 832
ACN 008 123 993
ACN 112 854 878
ACN 121 604 297
ACN 121 805 785
ACN 605 790 065
ACN 605 791 142
ACN 169 210 173
ACN 169 209 607
ACN 009 388 621
ACN 104 649 505
ACN 148 136 270
ACN 104 766 565
ACN 610 193 845
ACN 611 487 211
ACN 010 131 361
ACN 112 854 458
NZBN 3361910
NZBN 1861124
ACN 602 179 000
ACN 112 526 431
ACN 609 773 873
ACN 608 791 877
ACN 132 711 892
ACN 121 606 862
ACN 121 606 808
ACN 150 616 747
ACN 143 202 699
ACN 112 854 421
ACN 107 617 774
ACN 150 616 890
ACN 164 997 228
ACN 608 791 680
ACN 157 829 626
ACN 008 974 061
ACN 113 532 077
ACN 112 854 805
ACN 008 974 070
ACN 158 935 294
ACN 164 980 705
ACN 140 971 259
ACN 112 854 449
ACN 009 681 556
ACN 623 139 177
ACN 158 377 452
ACN 112 854 476
ACN 611 323 150
ACN 089 353 346
ACN 160 315 579
ACN 163 233 207
ACN 162 030 015
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