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FINANCIAL SUMMARY
Year ended 31 December
OPERATING RESULTS
FROM CONTINUING OPERATIONS
REVENUE
EBITDA
Depreciation and amortisation
2020
$’000
RESTATED
2019
$’000
2018
$’000
2017
$’000
2016
$’000
8,749,675
5,816,979
4,112,802
4,058,779
3,833,222
625,447
342,407
(166,257)
(95,217)
215,283
(46,137)
176,668
(16,651)
179,776
(13,993)
Impairment and property revaluations through profit and loss
(90,700)
(244,925)
-
210
-
EBIT
Finance costs
PROFIT BEFORE TAX
Income tax expense
368,490
2,265
(88,384)
(65,569)
169,146
(40,744)
160,227
(24,598)
165,783
(24,378)
280,106
(63,304)
128,402
135,629
141,405
(88,575)
(17,176)
(30,906)
(37,456)
(35,879)
PROFIT FROM CONTINUING OPERATIONS
191,531
(80,480)
97,496
98,173
105,526
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
Financial assets at fair value through OCI
Other non-current assets
Other current assets
TOTAL ASSETS
OTHER STATISTICS
Shares on issue – ‘000
Number of shareholders
Total Debt (1)
(35,320)
(8,921)
(59,113)
(2,787)
-
-
-
(1,619)
(2,146)
(1,542)
147,290
(142,380)
95,877
96,027
103,984
57.6
25.0
100
(67.4)
25.3
100
2020
$’000
RESTATED
2019
$’000
50.1
36.5
100
50.3
36.0
100
55.4
35.0
100
2018
$’000
2017
$’000
2016
$’000
1,173,069
1,173,069
371,405
369,028
364,449
(580,200)
(560,126)
(124,306)
38,131
55,398
317,848
199,463
380,558
367,855
335,779
13,860
9,423
924,577
821,829
1,443,313
1,490,490
1,665,761
2,545,827
8,002
635,659
544,994
818,696
10,761
785,775
276,092
762,904
8,166
763,792
319,846
670,796
3,109,074
4,036,317
1,363,690
1,038,996
990,642
4,033,651
4,858,146
1,999,349
1,824,771
1,754,434
494,266
456,058
388,407
785,574
773,174
2,366
2,366
1,188,502
1,245,734
1,562,943
2,380,814
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
4,033,651
4,858,146
1,999,349
1,824,771
1,754,434
256,933
256,933
11,159
9,955
191,309
5,038
191,008
190,493
5,442
5,206
1,233,079
1,744,826
899,405
793,544
769,525
Net debt (total debt less bailment finance less cash) - $’000
129,263
314,867
310,264
238,523
266,035
Gearing ratio (debt/debt plus equity) – %
Gearing ratio (net debt/net debt plus total equity) – %
57.1
12.3
68.0
27.7
58.6
32.8
50.2
23.3
50.2
25.8
(1)
Bailment Finance
Bailment finance is a form of financing peculiar to the motor industry, which is provided by financiers on a vehicle by vehicle basis. It is short-term in nature, is generally secured
by the vehicle being financed and is principally represented on the borrower’s balance sheet as vehicle inventory with the liability reflected under current liabilities. Because of its
short-term nature, it is excluded from net debt and the corresponding gearing ratio.
CONTENTS
Company Profile
Eagers Automotive 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
Shareholder Information
Corporate Directory
4
8
10
11
12
32
33
40
108
109
114
116
ANNUAL GENERAL MEETING
Our Annual General Meeting will be held as a virtual
meeting via electronic means, at 9:00am (Brisbane time) on
Wednesday, 19 May 2021.
FINANCIAL CALENDAR
2020 financial year end
31 December 2020
Full year results announcement
24 February 2021
Final dividend announcement
24 February 2021
Final dividend record date
Final dividend payment date
Annual General Meeting
Half year end
Half year results announcement*
Interim dividend announcement*
1 April 2021
20 April 2021
19 May 2021
30 June 2021
August 2021
August 2021
Interim dividend record date*
September 2021
Interim dividend payment date*
October 2021
2021 financial year end
31 December 2021
*estimate only, subject to any changes notified to the ASX.
Eagers Automotive 2020 Annual Report | 3
Eagers Automotive 2020 Annual Report | 3
COMPANY
PROFILE
ABOUT US
Eagers Automotive Limited is the leading automotive retail group
in Australia and New Zealand, with a long and proud history of
more than 100 years.
GROWTH
Our sales revenue from continuing operations, which excludes
operations during the period either divested or held for sale,
has increased from $500 million in 2000 to $8.7 billion in 2020.
Our name was changed to Eagers Automotive Limited from
A.P. Eagers Limited in 2020 following our acquisition of the listed
Automotive Holdings Group Limited (AHG). This new name better
reflects our position in the automotive industry and recent growth,
whilst also maintaining a connection to our foundation.
We are a pure automotive retail group representing a diversified
portfolio of automotive brands across Australia and New Zealand.
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 in high profile, main road locations, with the balance
leased by us.
Our main operations are located in Brisbane, regional Queensland,
Adelaide, Darwin, Melbourne, Perth, Sydney, the Newcastle/Hunter
Valley region of New South Wales, Tasmania and Auckland.
DIVIDENDS AND EPS GROWTH
We have paid a dividend to our shareholders every year since
we listed on the Australian stock exchange in 1957.
We have a track record of delivering Earnings Per Share (EPS)
growth from acquisitions.
ORIGINS
Our origins trace back to 1913 when Edward Eager and his son,
Frederic, founded their family automotive business, E.G. Eager
& Son Ltd, which continues today as one of our wholly-owned
subsidiaries.
After establishing the first motor vehicle assembly plant in
Queensland in 1922, we 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 followed.
Our acquisition of AHG in 2019 cemented our position as the
leading automotive retail group in Australia and New Zealand.
Our operations expanded into the Northern Territory with the
acquisition of Bridge Toyota in 2005.
2008 saw our expansion to New South Wales with the
acquisition of Bill Buckle Auto Group in Sydney’s northern
beaches region. Northern Beaches Land Rover and Jaguar
were added to the Bill Buckle group in 2013.
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 South
Australia and Victoria.
Caloundra City Autos Group was acquired in
Queensland’s growing Sunshine Coast region in 2010.
Eblen Motors was acquired in 2011, Main North and
Unley Nissan and Renault were added in 2013, and
Reynella Subaru was acquired in 2014, 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 continued to
expand through the acquisition of Ian Boettcher
Motors in Ipswich and the Craig Black Group 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.
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.
In 2018 we completed the acquisition of Toowoomba
Motor Group (Mitsubishi and Kia), Metro Nissan (Brisbane)
and Southern Vales Nissan (Adelaide).
We acquired a strategic holding in AHG in 2012 which
provided indirect exposure to the West Australian market.
This investment grew to full ownership of AHG in 2019, bringing
significant operations in Perth, Sydney, Newcastle/Hunter
Valley, Brisbane, Melbourne and Auckland.
We are currently in the design phase for our automotive
retailing and mobility hub which will be set on over 90,000m2
of land in Brisbane Airport’s new $300 million Brisbane Auto
Mall, with the aim of providing a world-class automotive
retailing experience for our customers of the future.
FURTHER INFORMATION
Please visit www.eagersautomotive.com.au for further information about Eagers Automotive Limited.
4 | Eagers Automotive 2020 Annual Report 2020
Eagers Automotive 2020 Annual Report | 5
THE NEXT 100
Providing integrated mobility solutions for the next 100 years.
OPTIMISE
DEVELOP
GROW
ENGAGE OUR
CUSTOMERS,
EVERYWHERE
REDEFINE
OUR WORKFORCE
Online.
Our workforce:
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.
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.
6 | Eagers Automotive 2020 Annual Report 2020
OUR VALUES
We have adopted the following values, which express the standards and behaviours we expect of all
our team members. They guide our interactions with all stakeholders and bring our team together as
one aligned Eagers Automotive team.
Doing what we say we will do
Our reputation is the foundation on which our Company is built. It is
shaped by the way each of us behaves and acts every day. Others need
to be able to rely on us while we constantly strive to be better than ever
before. Regardless of success, we value humility and authenticity as
these are necessary for creating high levels of trust and transparency
across all parts of our business. Our success is directly linked to us doing
what we say we will do and optimising outcomes for all stakeholders.
Embracing the value and contribution
of all individuals in our team
Respect runs deep in our Company. Everyone matters. No one is more
or less important as an individual than anyone else, however we all have
different roles to play. Success is never achieved in isolation and we strive
to be a connected team, supporting each other and encouraging each
individual contribution to group goals. Everyone has safe passage to offer
their own view based on their unique experiences and background. We
learn together and we succeed as one.
Taking pride in our work and owning our contribution
We are a team focussed on continuous improvement in our behaviour,
our skills, our standards and our results. Each individual is empowered to
take ownership of their contribution to the team. We support pragmatic
thinking, authentic people who respectfully challenge themselves and
each other to do better every day.
Being flexible in our thinking and open to change
We constantly look for new and better ways to optimise outcomes for our
stakeholders. We encourage innovative thought to build better processes,
enhance efficiencies and improve results. While we strive to grow our
Company, we know that size can reduce agility, so we drive nimble action.
New ideas and shared learnings are important to help us maintain the
speed and agility of a market leader in our ever-changing industry.
Eagers Automotive 2020 Annual Report | 7
Community
Driven
What is the Eagers
Automotive Foundation?
Our commitment to community support for
over 100 years led to the establishment of
the Eagers Automotive Foundation in 2013.
The Foundation is a non-profit organisation committed
to supporting our communities and worthwhile causes by
engaging with our stakeholders and utilising our growing scale
to actively contribute in meaningful and sustainable ways.
1. Variety the Children’s Charity
1
To create a lasting spirit
of giving within the Eagers
Automotive network for those
in need in our community.
To engage the Eagers
Automotive network to drive
positive sustainable change
in our community.
Community Engagement
During 2020 we continued our long history of supporting
local communities and charities through various fund
raising activities conducted by both the Eagers Automotive
Foundation and the Eagers Automotive dealerships in New
South Wales, Northern Territory, Queensland, South Australia,
Tasmania, Victoria, Western Australia and New Zealand.
8 | Eagers Automotive 2020 Annual Report 2020
To encourage and support initiatives of
Eagers Automotive 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 Eagers
Automotive businesses and stakeholders
To deliver 100% of donations
to intended recipients
To operate with the highest
standards of integrity
2
5
3
4
6
2. Backpacks 4 SA Kids Christmas Wrapping 3. Lifeline WA 4. Royal Life Saving 5. National Tree Day 6. Breast Cancer Foundation
Our support for these communities and charities exceeded $900,000 in 2020. Numerous charities,
communities and worthwhile causes benefited from our dealerships’ initiatives during 2020 including:
New South Wales
Elouera Surf Life Saving Club . Royal
Flying Doctor Service . Hay Runners .
Convoy for Kids.
Northern Territory
St Vincent de Paul Society (Canberra
& Goulburn) Bushfire Disaster Appeal.
South Australia
Royal Society for the Blind . Living
Without Limits . Youth Opportunities
. Kick Start for Kids . Back Pack
for Kids. South Australia Bush
Fire Relief Charity . Autism SA.
Victoria
Variety the Children’s Charity . Bikes
for Kids.
Queensland
St. Vincent de Paul Society . Student
Care Welfare Organisation . Traction
Community . Fight 4 Balance . Beyond
Blue . Stand Tall 4 PTS Foundation .
Heart Kids . QMIR Berghofer Medical
Research Institute . Rize Up Australia .
Lifeline . Young Care . Chimera Legacy
Foundation . Resilient Authentic
Women . Smiling for Smiddy . Ronald
McDonald House (Townsville) . Rotary
Club of Townsville . Endeavour
Foundation.
Tasmania
St. Giles Society . Glenhaven Family
Care . Camp Quality . Launceston City
Mission . Kennerley Children’s Home .
Hobart City Mission . Cancer Council.
Western Australia
Dandelions WA . National Brest Cancer
Foundation . Lifeline . Royal Life
Saving . The Smith Family Appeal . The
Wirrpanda Foundation Cystic Fibrosis
. National Schools Tree Planting Day .
Oz Harvest . Perth Children’s Hospital
Foundation.
New Zealand
Takapuna Rocks . Harbour Hospice
. Westpac Rescue Helicopter . New
Zealand Make a Wish Foundation.
Eagers Automotive 2020 Annual Report | 9
BOARD OF
DIRECTORS
Timothy Boyd Crommelin
BCom, FSIA, FSLE
David Arthur Cowper
BCom, FCA
Chairman of Board
Member of Remuneration & Nomination
Committee
Member of Audit & Risk Committee
(until August 2020)
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.
Nicholas George Politis
AM, BCom
Director
Non-executive Director since May 2000.
Motor vehicle dealer. Executive Chairman
of WFM Motors Pty Ltd, Eagers Automotive
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
Member of Remuneration & Nomination
Committee
Non-executive Director since January
2010. Director and Chief Executive Officer
of WFM Motors Pty Ltd, Eagers Automotive
Limited’s largest shareholder. Director of a
substantial number of proprietary limited
companies. Significant management
experience in automotive, transport,
manufacturing and retail industries.
10 | Eagers Automotive 2020 Annual Report 2020
Director
Chairman of Audit & Risk 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.
Marcus John Birrell
Director
Member of Audit & Risk Committee
Independent, 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. Executive
responsibility for accounting, taxation,
internal audit, payroll and treasury
functions. Previous senior finance roles
with PricewaterhouseCoopers and Flight
Centre Travel Group Limited. Admitted as a
chartered accountant in 1997.
Gregory James Duncan
OAM, BEc, FCA
Director
Chairman of Remuneration
& Nomination Committee
Member of Audit & Risk Committee
(since August 2020)
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 Limited (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 Eagers
Automotive 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).
Martin Andrew Ward
BSc (Hons), FAICD
Director (retired 1 March 2021)
Managing Director & Chief Executive
Officer (retired 24 February 2021)
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.
EXECUTIVE MANAGEMENT
Keith Thomas Thornton
BEc
Denis Gerard Stark
LLB, BEc
Chief Executive Officer
General Counsel & Company Secretary
Commenced with the Company in July
2002. Responsible for Queensland and
Northern Territory operations from June
2007 to December 2016. Chief Operating
Officer – Cars from January 2017 to
February 2021. Chief Executive Officer since
24 February 2021. Licensed motor dealer.
Significant automotive 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).
Commenced with the Company in
January 2008. Responsible for overseeing
the company secretarial, legal, investor
relations and property administration
functions. Previous senior executive and
company secretarial experience with public
companies. Admitted as a solicitor in
Queensland in 1994 and Victoria in 1997.
Eagers Automotive 2020 Annual Report | 11
DIRECTORS’
REPORT
The Directors of Eagers Automotive Limited ABN 87 009 680 013 (the Company or Eagers) present their report together with the
consolidated financial report of the Company and its controlled entities (the Group), for the year ended 31 December 2020 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 10-11.
COMPANY SECRETARY
The Company Secretary and his qualifications and experience are detailed on page 11.
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:
Name
Board Meetings
Audit & Risk Committee
Meetings
Remuneration & Nomination
Committee Meetings
Attended
Held
Attended
Held
Attended
Held
T B Crommelin (1)(2)
N G Politis
M A Ward
D T Ryan (2)
D A Cowper (1)
M J Birrell (1)
S A Moore
G J Duncan (1)(2)
D S Blackhall
M V Prater (3)
16
14
16
16
16
16
14
16
16
13
16
16
16
16
16
16
16
16
16
15
(1) Audit & Risk Committee members
(2) Remuneration & Nomination Committee members
(3) Appointed as a Director on 3 February 2020
3
-
-
-
4
4
-
1
-
-
3
-
-
-
4
4
-
1
-
-
5
-
-
5
-
-
-
5
-
-
5
-
-
5
-
-
-
5
-
-
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.
12 | Eagers Automotive 2020 Annual Report 2020
FINANCIAL & OPERATIONAL REVIEW
Eagers Automotive Limited (ASX: APE) (“Eagers Automotive” or “the Company”), Australia’s leading automotive retail group,
today announced its results for the twelve months ended 31 December 2020 (FY20). The result is the first full year of trading for
the enlarged company following the transformative merger with AHG. On a continuing basis, the Company delivered Underlying
Operating Profit Before Tax1 of $209.4 million, up 108.6% on the prior corresponding period (pcp).
Like many sectors, the impact of the COVID-19 pandemic has been significant on the automotive retail industry, both on the
demand and supply chain side. According to Federal Chamber of Automotive Industry statistics, Australia’s new motor vehicle
sales decreased by 13.7% for the year ended to 31 December 2020. The Company’s response to the pandemic was swift, and in
many circumstances, pre-emptive, to right size operations, preserve cash and optimise liquidity.
Statutory Net Profit After Tax (including discontinued operations) for 2020 was $156.2 million as compared to a loss of $139.6
million in 2019. On a statutory basis (excluding discontinued operations), the Company recorded a Statutory Net Profit Before
Tax from continuing operations of $280.1 million for 2020 compared to a Net Loss Before Tax of $63.3 million in 2019, which
included significant items totalling $163.7 million before tax, primarily non-cash impairments to goodwill and assets – the result
of acquisition accounting. The 2020 statutory result included significant items totalling $70.7 million net income before tax,
predominately COVID-19 government wage subsidies and rent waivers totalling $143.3 million offset by non-cash impairments of
$90.7 million.
KEY FINANCIAL HIGHLIGHTS
Statutory Results – Continuing Operations
Revenue
EBITDAI
Statutory Profit Before Tax
Statutory Profit After Tax – Continuing Operations
Total Dividend per Share – cents
Full Year to
December 2020
Full Year to
December 2019 2
$ Million
$ Million
8,749.7
625.5
280.1
191.5
25.0
5,817.0
342.4
(63.3)
(80.5)
25.3
Statutory Results – Including Discontinued Operations
Statutory Profit After Tax – Including Discontinued Operations
156.2
(139.6)
Underlying Operating Results 1
Revenue 1
EBITDAI 1,3
Underlying Profit Before Tax 1
Underlying Profit After Tax 1
8,749.7
284.2
209.4
140.4
5,478.4
163.2
100.4
69.2
1 Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 21 (FY2020) and 32
(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 The comparative information has been restated as a result of finalisation of a business combination.
3 EBITDAI means earnings before interest, tax, depreciation, amortisation and impairment.
Eagers Automotive 2020 Annual Report | 13
DIRECTORS’
REPORT CONTINUED
Dividend
A fully franked final dividend of 25 cents per share (2019: 11.25
cents) has been approved for payment on 20 April 2021 to
shareholders who are registered on 1 April 2021 (Record Date).
As there was no interim dividend during the year under review,
the total dividend based on 2020 earnings is 25 cents per
share (2019: 25.25 cents) fully franked.
The final dividend reflects a payout ratio of 43% on the full
year Statutory Net Profit After Tax (including discontinued
operations) and 49% on the Underlying Operating Profit After
Tax 1. The payout is lower than our historic ratio, reflecting
the Board’s desire to ensure the company has the capacity
and flexibility to invest in restructuring and growth initiatives
balanced with its prudent approach to managing through the
uncertainty of the COVID-19 environment, including potential
for future Government enforced lockdowns.
The Company’s dividend reinvestment plan (DRP) will not
operate in relation to the final dividend.
Dividends paid to members during the year under review were
as follows:
Year ended 31 December
2020
$’000
2019
$’000
Final ordinary dividend for the year
ended 31 December 2019 of 11.25
cents (2018: 22.5 cents) per share
paid on 20 April 2020
Interim ordinary dividend for 2020 of
nil cents (2019: 14.0 cents) per share
28,905
43,045
-
35,035
28,905
78,080
External Environment
The impact of the COVID-19 pandemic has been significant
on the automotive retail industry new vehicle sale market,
both on the demand and supply chain side.
According to Federal Chamber of Automotive Industry
statistics, during the peak impact of COVID-19 restrictions,
new vehicle sales were down 48.5% in April, a record fall, and
35.3% in May, compounding a sustained period of challenging
market conditions for the industry. Those challenging months
were followed by a rebound in June, supported by an opening
of the economy and confidence in the Government stimulus
measures, with new vehicles sales marginally down 6.4%. The
extended lockdown in Victoria impacted national new vehicle
sales during the 3-months ended October 2020.
Importantly, in November the market recorded its first month
of growth on pcp, up 12.4%, ending 31 months of consecutive
decline on pcp. The momentum continued into December,
recording growth of 13.5% on pcp. Supply issues from the
shutdown and reduced production capacity of global
manufacturing operations during the pandemic understated
the strength in the market in the second half of 2020.
Despite the recovery, Australia’s new motor vehicle sales
decreased by 13.7% for the full year to 31 December 2020, with
new vehicle sales of 916,968 versus 1,062,867 in 2019.
The full year decline in new vehicle unit sales was reflected
across the Australian industry, with every state recording a
decline on pcp. The larger markets of Queensland, New South
Wales and Victoria, recorded sale declines on the pcp of 8.9%,
11.1% and 25.6% respectively, with Victoria heavily impacted
by the 3-month lockdown. Other markets also recording a
decline on the pcp included: South Australia down 10.6%,
Western Australia down 2.7%, Tasmania down 22.0%, and the
Northern Territory down 10.2%. The Australian Capital Territory
was the only market to record growth on the pcp, up 22.6%.
The decrease in new motor vehicles sales on pcp was
experienced across all buyer types, with private sales down
6.1%, business sales down 15.7%, Government sales down
15.7% and rental sales down 53.0%. Luxury vehicle segment
increased from 10.9% to 11.9% of total market share, finishing
6.0% down, with mixed performance across the brands.
While the role of plug-in hybrid and electric vehicles grew
17.1% 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 9.0%,
with decreases in light/medium duty trucks and heavy-duty
sales of 16.6% and 5.1% respectively.
Strategic Developments
Notwithstanding the external environment, the Company
remains firmly focused on its Next100 strategy which is aimed
at delivering a superior customer experience from a more
sustainable and productive cost base.
The optimisation of our business has accelerated out of
necessity due to the impacts of COVID-19 with significant
permanent cost reductions of approximately $100 million per
annum achieved within the period.
Despite the disruptions of COVID-19 during the period, the
Company made substantial progress in a number of key
areas including:
> Completion of the sale of the AHG Refrigerated Logistics
business on 29 June 2020 and execution of a binding
agreement for sale the Daimler truck operations and an
associated property, allowing the Company to focus on
and simplify its core automotive retailing business.
>
Exceeding the original post-AHG merger synergy savings
of $30 million ahead of schedule, with further business-
wide efficiency gains to be realised as part of the group’s
ongoing optimisation efforts.
> Migration of legacy AHG dealerships into the Eagers
Automotive Financial Services operating model and
ongoing rollout of our toolbox of finance solutions
> Ongoing rebalance of the property portfolio post the
merger with AHG including the exit of a number of leased
locations and the acquisition of a number of strategic
sites, which were leased, during and subsequent to the
period.
>
Progressing our omni-channel strategy through the
launch integrated technology solutions, including online
financing solutions, delivering enhanced customer
experience on a lower cost base
1 Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 21 (FY2020) and 32
(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.
14 | Eagers Automotive 2020 Annual Report 2020
Financial Performance
Statutory revenue from continuing operations increased to
$8,749.7 million. This reflects the first full year of trading for the
enlarged company following the merger with AHG.
Earnings before interest, tax, depreciation, amortisation and
impairment (EBITDAI 3) from continuing operations increased
to $625.5 million in 2020 (2019: $342.4 million). Underlying 1
EBITDAI 3 increased to $284.2 million in 2020 (2019 4: $163.2 million).
Profit margins increased as indicated by the underlying 1 operating
EBITDAI/Revenue ratio of 3.2% (2019 2: 3.0%), and an increase in
underlying 1 operating NPBT/Sales ratio to 2.4% (2019 2: 1.8%). The
increase in margins was driven by our cost-out program in
response to COVID-19 and the impact of the pandemic on
supply chain dynamics in the second half of 2020.
Statutory borrowing costs from continuing operations
increased to $88.4 million. Underlying 1 borrowing costs
decreased by 2.7% to $35.1 million for 2020 (2019 4: $36.2
million). The decrease was predominately driven by the
Company’s bailment charges which have benefited from a
reduction in inventory and associated bailment levels and
underlying interest rates compared to the pcp. This was
partially offset by the first full year contribution from AHG.
Included within statutory borrowing costs is interest expense
recognised in accordance with AASB 16 Leases of $53.3
million, up from $27.5 million in the pcp predominantly due to
AHG’s full year contribution.
Statutory depreciation and amortisation charges from
continuing operations were $166.3 million for 2020 (2019: $95.2
million). Underlying 1 depreciation and amortisation charges
were $39.8 million for 2020 (2019 4: $26.6 million). The increase
is predominantly from the first full year contribution from
AHG. Included within the statutory depreciation expense is an
additional $126.5 million of depreciation expense recorded in
accordance with AASB 16 (up from $67.9 million in the pcp).
Segments
The Car Retail Segment delivered an Underlying 1 Operating
Profit before tax of $199.4 million, an increase of $105.7 million
compared to $93.7 million in 2019 4. The improved profit
performance reflects the first full year contribution from
AHG and strong trading performance for the second half
of 2020, benefitting from favourable margins from supply
chain dynamics and significant permanent cost reductions
in response to COVID-19. The increase is reflected across all
regions in Australia and New Zealand, except for Victoria which
was impacted by an additional three-month government
imposed lockdown beyond the initial nationwide restrictions.
Statutory profit before tax from continuing operations for the
Car Retail Segment was $272.7 million compared to a loss of
$114.1 million in 2019.
The statutory profit before tax was impacted by a number of
significant items. The first being government wage subsidies
totalling $123.7 million recognised for the period relating to
approximately 7,000 eligible employees across Australia
and New Zealand (representing approximately 82% of our
workforce). The Company also recorded $31.8 million in income
as a result of the agreement reached with General Motors
for compensation from their exit of Holden vehicles sales
in Australia and New Zealand by the end of 2020. Eagers
Automotive Holden dealerships will continue to operate
service outlets to support existing Holden customers with
warranty claims, spare parts, servicing and recalls for five
years. This was partially offset by impairment charges totalling
$80.7 million primarily relating to new car showroom leased
assets associated with Holden dealership operations.
Car Retailing statutory and underlying 1 revenue from
continuing operations was $7,776.5 million. The increase is due
to AHG’s contribution.
Although our EasyAuto123 business generated an overall loss
for 2020 as a result of losses sustained during the April and
May peak impact of COVID-19, the performance was improved
on 2019. Importantly, the business generated consecutive
profit for the final 7 months of 2020, driven by growth in all key
metrics, on a more efficient cost base and the benefits from
post-merger scale and integration into the wider business.
The Truck Segment delivered an Underlying 1 Operating Profit
before tax was $19.8 million, an increase compared to $7.8
million in 2019, reflecting AHG’s contribution, second half
trading performance and cost reductions. Statutory profit
before tax from continuing operations was $23.5 million
compared to a loss of $9.9 million in 2019. The statutory profit
before tax was impacted by Government wage subsidies
totalling $6.9 million recognised for the period.
The value of the property portfolio increased to $356.5 million
as at 31 December 2020 compared with $260.0 million at 30
June 2020 and $252.7 million as at 31 December 2019. The
increase is due to the ongoing rebalance of the property
portfolio post the merger with AHG including the acquisition
of a number of strategic sites, which were leased, offset by the
$10.0 million revaluation decrement in our property portfolio,
with the impairment attributable to strategically vacated non-
core property.
The Property segment recorded a statutory loss before tax of
$4.1 million for 2020 compared to a profit of $23.3 million in the
pcp. The movement was driven by revaluation of properties
and partially offset by gains on sale of non-core property.
Underlying 1 Operating Profit Before Tax was $4.0 million
(excluding impairment and gains on sale), down $4.9 million on
the pcp driven by reduction on internal rental income from a
number of properties divested during the first half of 2019.
Financial Position
Eagers Automotive is in a strong financial position
underpinned by a substantial property portfolio and asset
base, together with $683.2 million of available liquidity as at
31 December 2020. This liquidity position includes available
cash and undrawn commitments under our Corporate Debt
Facilities and Captive Financier Working Capital support.
Corporate debt (Term and Capital Loan Facility) net of cash
on hand decreased to $129.3 million at 31 December 2020,
down from $315.8 million at 31 December 2019. The Group
repaid all COVID-19 deferred payments at 31 December 2020
($95.1 million reported at 30 June 2020), with the exception of
$2m of rent deferrals repaid in February 2021. Corporate debt
was reduced in 2020 by $71.5 million.
1 Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 21 (FY2020) and 32
(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 The comparative information has been restated as a result of finalisation of a business combination.
3 EBITDAI means earnings before interest, tax, depreciation, amortisation and impairment.
4 Comparative underlying financial information in the appendix 4E commentary has been adjusted to remove the contribution of Kloster Motor Group,
divested in October 2019.
Eagers Automotive 2020 Annual Report | 15
DIRECTORS’
REPORT CONTINUED
Total debt including vehicle bailment and lease liabilities 5, net
of cash on hand, is $2,261.0 million as compared to $2,790.3
million as at 31 December 2019.
The Group’s leverage metrics are in a strong position, with the
gearing ratio at 0.29 times (2019: 1.19) and the capitalisation
ratio at 9.7% (2019: 25.4%), excluding discontinued operations,
vehicle bailment and lease liabilities.
Total inventory levels decreased to $1,025.8 million at 31
December 2020, down from $1,458.9 million at 31 December
2019. The decrease in inventory and associated floorplan is
due to a combination of global manufacturing shutdowns
impacting supply and management’s initiatives in response
to COVID-19. Eagers Automotive continues to maintain a
significant equity ownership in pre-owned vehicles.
The Company continued to focus on cash management,
with a strong cash position of $209.1 million at 31 December
2020 driven by operating cash flows of $527.9 million for the
twelve months to December 2020. The operating cash flows
were up $357.1 million on pcp (2019: $170.8 million) as a result of
converting underlying earnings to cash, and effective working
capital management, supported by management’s initiatives
to fortify cash in response to COVID-19, including but not
limited to the benefit of a reduced cost base and inventory
levels. Operating cash flows also include the benefit from
COVID-19 wage and rent subsidies, totalling $143.3 million.
All COVID-19 deferred payments on the balance sheet at 30
June 2020 have been repaid in the second half of the year,
with the exception of $2m of rent deferrals repaid in
February 2021.
The Company also secured additional working capital
facilities from Captive Financiers totalling $122.0 million during
the period, with $100.0 million undrawn at 31 December 2020,
and the voluntary termination of a $22.0 million facility during
period. The remaining undrawn facilities will terminate in
March 2021.
This strong cash position and undrawn debt has provided
the Company with a significant liquidity buffer to ensure the
Company is well positioned to withstand any further short
term and isolated impacts of COVID-19 and enable flexibility
to pursue new opportunities in accelerating Next100 strategy.
The balance sheet reflects a net current liability position of
$102.8 million, impacted by the application of the new lease
standard which results in the recognition of a $152.2 million
net current lease liability as at 31 December 2020 (2019:
$171.7 million), reflecting property rental charges for the next
12 months. This commitment was previously recorded off
balance sheet under the previous accounting standard.
Removing the impact of the new lease standard results
in a net current asset position for the Group. The Group
expects to continue to generate significant cash inflows
from operating activities to fund its obligations and also has
available debt capacity.
Outlook
Eagers Automotive has the scale and geographic diversity
to ensure it is well positioned to withstand short-term and
isolated challenges associated with the impacts of COVID-19.
The simplification of our business, through the divestment
of non-core operations, ensures the Company is focused
on core automotive retail operations, both franchised
automotive and fixed price pre-owned vehicles, and strongly
positioned to capitalise on favourable market dynamics.
Despite the ongoing uncertainty surrounding COVID-19,
the Company’s strong balance sheet and fortified liquidity
position provides an optimal platform to pursue further
growth opportunities as it accelerates execution of its
Next100 Strategy.
In the short to medium term, Eagers Automotive is focused on
delivering improved operational performance and driving EPS
growth through the following priorities:
> Continuing to rebalance our property portfolio through
the increased utilisation of owned property relative to
leased premises, enabling the delivery of an enhanced
customer experience on a substantially lower cost base;
> Continuing to drive a greater customer experience and
increases in productivity through the redesign of our
workforce;
> Driving growth in our fixed price pre-owned vehicle
business by delivering an enhanced customer experience,
productivity improvements and cost rationalisation, all of
which are underpinned by the development of our omni-
channel offering;
> Delivering optimised vehicle finance solutions through
our unique and industry leading financial services toolkit
which will enable the Company to capitalise on expected
tailwinds in 2021, providing the momentum to materially
improve penetration levels; and
>
Focusing on portfolio management and long-term
organic growth opportunities while remaining disciplined
with complementary reinvestment 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.
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.
5 Lease liabilities include liabilities associated with asset financing leases and property leases disclosed in accordance with AASB 16.
16 | Eagers Automotive 2020 Annual Report 2020
As a result, we will implement a new remuneration framework
in FY21, more closely aligned to the market and addressing
concerns that gave rise to the strike. Section 7 of this
Remuneration Report provides an overview of our response
to the concerns including prospective disclosure of our new
2021 remuneration framework. We have consulted with key
stakeholders, including investors and proxy advisors, on this
new framework and will provide a more detailed disclosure in
our 2021 Remuneration Report.
During FY20, we also undertook a review of the structure and
style of our Remuneration Report to improve overall disclosure
and readability. We believe this will improve transparency and
better showcase links between our performance during the
year and remuneration outcomes.
We look forward to welcoming your feedback at our AGM.
Yours sincerely,
Gregory Duncan
Chair of the Remuneration & Nomination Committee
CONTENTS OF REMUNERATION REPORT
1
Introduction and Key Management Personnel
2 Remuneration strategy and principles
3 Remuneration governance
4 FY20 business performance
5 Executive remuneration framework for FY20
6 Remuneration structure and outcomes for FY20
7 Response to ‘first strike’ and remuneration framework
changes
8 Executive contractual arrangements
9 Non-executive Director remuneration
10 Statutory disclosures
REMUNERATION REPORT
Dear Shareholders
On behalf of the Directors of Eagers Automotive Limited, I
am pleased to present the Remuneration Report for the year
ended 31 December 2020.
The past financial year presented many challenges for Eagers
and we are extremely proud of the way our people and
suppliers responded to the impact of COVID-19. The global
health and economic crisis initially resulted in drastically
reduced demand for vehicles in Australia and New Zealand,
with Eagers experiencing historically low sales figures. In
response to the immediate impact of COVID-19 on Eagers’
business, we took decisive action to implement cost reduction
initiatives including:
> all executive Key Management Personnel (KMP) voluntarily
reducing their fixed remuneration by 50% for two months
> all Non-executive Directors (NEDs) waiving 100% of their
fees for six months
> no Long-Term Incentive performance awards being
granted in FY20
As a result, overall remuneration for Directors and KMPs
during 2020 was down 23% on the prior year.
Eagers also took the difficult but necessary action to reduce
its workforce at the start of the pandemic, however access to
the Federal Government’s JobKeeper scheme and the New
Zealand wage subsidy scheme prevented further significant
redundancies including during the lockdown periods. As
restrictions eased and vehicle demand rebounded, the
retention of our skilled and experienced employees enabled
the Company to deliver exceptional shareholder and financial
performance during the remainder of 2020.
FY20 company performance and variable
remuneration outcomes
Despite the initial challenges during the lockdown periods,
Eagers delivered strong results for calendar year 2020,
against our key company objectives. We successfully
completed our integration of Automotive Holdings Group,
divested our refrigerated logistics business, restructured our
property portfolio and finance facilities, and achieved group
underlying operating profit before tax of $209 million (after
the exclusion of JobKeeper payments received) compared to
$100 million in the prior year.
Although Eagers produced a year of exceptional operational,
financial and share price performance, no LTI performance
awards were granted or vested to any KMP since our previous
Remuneration Report and no STI awards were paid to any
KMP (other than the contractual STI bonuses that were paid
to the CFO and Company Secretary as disclosed in section
6(b) of this report).
Our response to the FY19 Annual General Meeting (AGM)
strike and a new remuneration framework
for FY21
At the 2020 AGM, Eagers received a ‘first strike’ against
its Remuneration Report. In response to the strike and
acknowledging that there is now greater expectation on us
as an ASX200 company to have a remuneration framework
more closely aligned to market practice, we have undertaken
a comprehensive review of our remuneration framework.
Eagers Automotive 2020 Annual Report | 17
DIRECTORS’
REPORT CONTINUED
INTRODUCTION AND KEY MANAGEMENT PERSONNEL
1.
This report outlines the remuneration arrangements for the Company’s KMP, which include Directors and executives who have
authority and responsibility for planning, directing and controlling the activities of the Group.
The information provided in this report has been prepared in accordance with the requirements under the Corporations Act 2001
and Accounting Standards. This report forms part of the Directors’ Report and unless otherwise indicated the following sections
have been audited in accordance with section 308 (3c) of the Corporations Act 2001.
The KMP for FY20 were:
Name
Non-executive Directors (NEDs)
Tim Crommelin
Nick Politis
David Cowper
Daniel Ryan
Marcus Birrell
Gregory Duncan
David Blackhall
Michelle Prater
Position
Chair
Director
Director
Director
Director
Director
Director
Director
Term as KMP in FY20
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Part year –
3 February 2020 to 31 December 2020
Executive Directors & Executive KMP
Martin Ward
Sophie Moore
Other Executive KMP
Keith Thornton
Denis Stark
Managing Director & Chief Executive Officer Full year
Executive Director & Chief Financial Officer
Full year
Chief Operating Officer – Cars
General Counsel & Company Secretary
Full year
Full year
There have been no changes to KMP since the reporting date.
18 | Eagers Automotive 2020 Annual Report 2020
2. REMUNERATION STRATEGY AND PRINCIPLES
The Company’s remuneration strategy and principles, which guide our remuneration framework, are outlined below.
Our Remuneration Principles
Aligned to the
Next100 strategy
Linked to the achievement
of long-term financial and
non-financial objectives
Drive equity
ownership
Linked to long-term value
creation for shareholders
Simplicity
Easily explained to and
understood by internal and
external stakeholders
Flexibility
Enables the Board to apply
appropriate judgement
where in the interests of the
Company to do so, with the
rationale to be disclosed
transparently where
discretion is used
Our Remuneration Strategy
Remuneration packages are intended to reflect the individual’s duties and responsibilities, be competitive in
attracting and retaining quality talent and be aligned to shareholder interests.
3. REMUNERATION GOVERNANCE
The Company’s remuneration governance structure provides oversight of the Company’s remuneration practices and policies.
The following diagram illustrates the remuneration governance framework.
Board
The Board is responsible for approving the
remuneration arrangements for executive KMP
and NEDs, based on recommendations of the
Remuneration & Nomination Committee.
Remuneration & Nomination Committee
The Remuneration & Nomination Committee reviews and
makes recommendations to the Board regarding remuneration
arrangements for executive KMP and NEDs. These reviews take place
at least annually, taking into account relevant market conditions.
Management
The CEO, in consultation with the Chair of the
Remuneration & Nomination Committee, reviews the
performance of executive KMPs on an ongoing basis and
ensures the appropriateness of their reward framework.
Remuneration advisors
External advisors may be engaged
directly by the Board or by the
Remuneration & Nomination
Committee to provide advice or
information relating to KMP that is free
from the influence of management.
In FY20, KPMG was engaged as the
Company’s remuneration advisor
to assist with the remuneration
review and changes to the executive
remuneration framework and to
conduct benchmarking.
This did not involve providing any
remuneration recommendations as
defined by the Corporations Act 2001.
Eagers Automotive 2020 Annual Report | 19
DIRECTORS’
REPORT CONTINUED
4. FY20 BUSINESS PERFORMANCE
During FY20, despite a challenging external environment, the Company achieved strong growth in respect of key financial
and non-financial metrics, which has been reflected in our strong financial results and share price performance.
STATUTORY
NPAT
$156.2
MILLION
EARNINGS
PER SHARE
57.6
CENTS
DIVIDENDS
PER SHARE
25.0
CENTS
12-MONTH
TOTAL
SHAREHOLDER
RETURN
34%
The below graph showcases the creation of shareholder wealth over 2020, with the Company’s total shareholder return (TSR)
significantly outperforming the ASX200.
2020 12 Month Share Price Performance
n
r
u
t
e
r
l
r
e
d
o
h
e
r
a
h
s
l
a
t
o
T
Eagers Automotive
ASX200 Index
* Sourced from Thomson Reuters Eikon Refinitiv platform
The table below details Eagers’ performance against key financial and operational metrics for the five-year period ended
31 December 2020.
Name
Statutory net profit after tax (NPAT) ($ million)
Statutory Earnings per share (EPS) – basic (cents)
Dividend per share (cents)
Share Price at year end ($)
2020
156.2
57.6
25.0
13.29
2019 2
(139.6)
(67.4)
25.3
10.24
2018
97.5
50.1
36.5
6.00
2017
98.2
50.3
36.0
7.97
2016
105.5
55.4
35.0
9.22
20 | Eagers Automotive 2020 Annual Report 2020
5. EXECUTIVE REMUNERATION FRAMEWORK FOR FY20
Total Fixed Remuneration (TFR)
Short-Term Incentives (STI)
Long-Term Incentives (LTI)
• Each executive KMP
• CEO did not participate in any STI plan for
• Prior to FY20, executive KMP
received a competitive base
pay (plus superannuation) to
reflect the market for a
comparable role.
• Base pay is reviewed
annually and on promotion
to ensure it remains
competitive with the market.
• Benefits may include use of
motor vehicles, health
insurance, health and
fitness programs.
FY20.
• CFO and Company Secretary were eligible
for STI payments of up to 30% of their TFR
(STI Plan). These payments were determined
by reference to both Company and
individual achievements and performance
over the financial year.
participated in the Company’s
Executive Incentive Plan (EIP) which
operated as an LTI and was
delivered in a mix of performance
rights and options (LTI Plan). This
plan focussed on creation of
shareholder value by rewarding the
achievement of compound growth
in diluted Earnings Per Share (EPS).
• COO participated in a commission structure
which entitled him to a percentage of net
profit before tax of relevant business units.
This has a direct link to the Company’s
financial performance and is commonly
used for senior management in the
automotive industry.
• The LTI Plan ended at the end of
FY19 and was not renewed for
FY20.
• The LTI Plan did not operate for
any KMP in FY20.
• A new LTI Plan is being introduced
for FY21.
6. REMUNERATION STRUCTURE AND OUTCOMES FOR FY20
As reported in the business performance section of this Directors‘ Report, the Company delivered strong and consistent results
against key financial and non-financial metrics for FY20. The following are details of the FY20 remuneration structures and
outcomes awarded to executive KMP based on both Company and individual performance.
a) Total Fixed Remuneration (TFR) for FY20
TFR for KMP decreased in FY20 due to temporary pay reductions, which have since been removed.
During the peak of government-enforced COVID-19 restrictions across the Company’s business, our executive KMP voluntarily
offered to reduce their TFR by 50% commencing on 1 April 2020. This arrangement ceased on 1 June 2020, with their TFR reverting
to contractual amounts as it became clear that the Company had responded to meet the unprecedented challenges caused by
the COVID-19 pandemic and economic crisis.
b) STI Plan and performance outcomes for FY20
The STI Plan for FY20 is outlined below. A new STI framework is being introduced for FY21.
Design feature
Further detail
Eligibility
Instrument
CFO and GC&CS only.
Cash.
Performance period
1 year (1 January 2020 to 31 December 2020).
Maximum opportunity
30% of TFR.
Performance measures
STI payments were approved by the Board, through the Remuneration & Nomination Committee,
based on recommendations from the CEO, with reference to the Company’s financial and
non-financial performance, including strategic objectives, and also with reference to individual
performance.
•
Financial performance is determined with reference to the Company’s NPAT, EPS and share
price performance over the financial year.
• Non-financial performance is determined with reference to the achievement of strategic
objectives and individual performance, engagement and customer measures.
Discretion
The Board retained absolute discretion regarding the operation of the STI Plan, informed by
recommendations from the CEO and the Remuneration & Nomination Committee.
Eagers Automotive 2020 Annual Report | 21
DIRECTORS’
REPORT CONTINUED
6. REMUNERATION STRUCTURE AND OUTCOMES FOR FY20 CONTINUED
The CFO and GC&CS received 100% of their STI Plan awards for FY20 following assessment by the CEO and the Board, through
the Remuneration & Nomination Committee. Whilst the exercise of downwards discretion by the Board was considered due
to COVID-19, ultimately, no reduction to payments was applied based on a holistic review of the Company’s financial and
non-financial performance and also the individual’s performance during the year. The Company’s performance included the
successful merger and integration with AHG, completion of the divestment of the refrigerated logistics business, conditional sale
of the Daimler Truck Division, successful restructuring of the Company’s property portfolio and finance facilities, urgent proactive
and successful response to the numerous issues arising from the global economic and health crisis. The individual performance
in these areas was also considered, as were the individual’s contributions to ensuring the Company’s long-term success post-
COVID-19. In these circumstances, payment of the full STI awards was determined to be appropriate, particularly in light of the
Company’s record 2020 operational and financial performance (even after excluding the JobKeeper payments received).
It is also noted that the STI Plan awards account for only 28% of total KMP remuneration for FY20. Significantly, total KMP
remuneration decreased by 23% for FY20, even though record statutory profit, record underlying profit and record EPS were
delivered for shareholders, with management successfully responding to the many challenges arising from the global pandemic
and economic crisis during a period of great uncertainty.
CFO
GC&CS
% of Maximum STI
awarded
100%
100%
STI paid
$150,000
$105,000
c) Commission structure and performance outcomes for FY20
The COO’s commission structure for FY20 is outlined below. A new plan is being implemented for 2021.
Design feature
Eligibility
Instrument
Further detail
COO only.
Cash.
Performance period
1 year (1 January 2020 to 31 December 2020).
Opportunity
Name
COO
The commission amount was set as a percentage of net profit before tax of the
relevant business units. This award, whilst uncapped, had a direct link to Company
financial performance and is a structure commonly found for senior operations
executives in the automotive industry, where fixed remuneration is set relatively low
and variable remuneration forms a larger proportion of the remuneration mix.
Percentage of NPBT
A percentage of the national cars division
total net profit before tax
Total Commission ($)
$1,082,316
d) LTI Plan for FY20
FY19 was the final year of the operation of the LTI Plan. The LTI Plan did not operate for FY20. No LTI awards vested for FY20
and no new LTI grants were made in FY20. A new remuneration framework, including a new LTI plan, is being introduced for FY21,
with detailed disclosure to be provided in the 2021 Remuneration Report. This will reflect an approach more aligned with ASX200
market practice, as referred to in section 5 of this report.
e) Retention Grant in FY20
As reported in last year’s Remuneration Report, this one-off equity retention grant was awarded in early 2020 to recognise the
CFO’s importance to the ongoing success of the Company, particularly given her role in the acquisition and ongoing integration of
AHG. Whilst no performance conditions were applicable to the retention grant, the Board had sought to balance the expectations
of external stakeholders and the need to retain key talent in the longer term by ensuring the grant was delivered wholly in equity
and subject to continued employment and a disposal restriction. More detail on the grant is provided in the following table.
No further equity retention grants were made in FY20.
22 | Eagers Automotive 2020 Annual Report 2020
Design feature
Eligibility
Instrument
Vesting period
Restriction period
Opportunity
Allocation methodology
Vesting conditions
Further detail
CFO only.
Restricted Shares.
•
•
•
30% vested immediately on grant.
35% vested on 31 December 2020.
35% will vest on 31 December 2021.
All vested shares are subject to a disposal restriction until April 2025 or cessation of
employment.
$1,019,664.
Face value.
Continued employment until the vesting date.
RESPONSE TO ‘FIRST STRIKE’ AND REMUNERATION FRAMEWORK CHANGES
7.
A comprehensive review of the executive remuneration framework has been undertaken in response to the ‘first strike’ received
at our 2020 Annual General Meeting. The Board has engaged with shareholders, proxy advisors and other stakeholders to better
understand their concerns and has also obtained independent external advice on our remuneration framework. As a result, many
changes have been made to the remuneration framework, as detailed below, to better align it with ASX200 market practice, while
maintaining a strong pay-for-performance culture.
Changes to Remuneration Framework
STI
• Greater disclosure in relation to the achievement of STI Plan performance measures is included in this
Remuneration Report.
• The Board did not award any one-off bonuses for FY20 above contractual arrangements.
• A new remuneration framework is being implemented for FY21.
• The STI Plan for FY21 will be assessed against both financial and non-financial performance hurdles and will be
awarded in a mix of cash and equity.
• Additional disclosure on the new STI framework and performance hurdles will be included in the Remuneration
Report for FY21.
LTI
• There was no LTI plan for KMP for FY20.
• A new LTI plan for FY21 will be introduced with a performance period of 4 years and awarded wholly in equity.
• The new LTI plan will include appropriate change-in-control and claw-back provisions in line with market practice
• Clear LTI performance hurdles are being set for FY21, assessed wholly against financial measure/s with graduated
vesting.
• No re-testing of LTI performance hurdles was undertaken for FY20 and there will not be any re-testing under the
new remuneration framework for FY21.
OTHER
• This Remuneration Report includes improved transparency and disclosure in relation to the remuneration
framework and structures.
• No equity retention grants have been made since the one-off grant to the CFO in early FY20 which was disclosed
in our previous Remuneration Report for FY19.
Eagers Automotive 2020 Annual Report | 23
DIRECTORS’
REPORT CONTINUED
8. EXECUTIVE CONTRACTUAL ARRANGEMENTS
Executive KMP are employed under common employment agreements. Any termination benefits would be subject to compliance
with the limits set by the Corporations Act 2001.
The table below details the contractual terms for executive KMP:
Name
Duration of service
agreement
Notice period by
employee
Notice period
by company
Payments upon termination
Martin Ward (MD & CEO)
Ongoing
Sophie Moore (CFO)
Ongoing
Keith Thornton (COO)
Ongoing
Denis Stark (GC&CS)
Ongoing
6 months
3 months
6 months
3 months
6 months
3 months
6 months
3 months
One times base pay
At the Board’s discretion
At the Board’s discretion
At the Board’s discretion
9.
NON-EXECUTIVE DIRECTOR REMUNERATION
The objectives of the Company’s policy regarding NED fees are:
>
to preserve the independence of NEDs by not providing them with any performance-related remuneration. NEDs do not
participate in schemes designed for the remuneration of executives, equity schemes, incentive programmes or retirement
allowance programmes, nor do they receive performance-based bonuses.
to be market competitive with regard to NED fees, which are reviewed annually.
>
NED fees are limited to a maximum aggregate amount approved by shareholders, with the current limit of $1,000,000 per annum
having been approved at the 2020 Annual General Meeting. NEDs received reduced fees in FY20. As a result of the impact of
COVID-19 (as per the Company’s ASX announcement in March 2020), all fees for NEDs were forgone for 6 months between April
and September 2020. This fee reduction ceased in October 2020.
Without the fee reductions taken, NED fees for FY20 would have been as reflected in the below table (exclusive of
superannuation). All NEDs receive a single fee based on their position, without any extra fees payable for sitting on Committees.
Role
Fees
Chair of the Board
$100,000 per annum
Chair of the Audit & Risk Committee
$100,000 per annum
Other NEDs
$85,000 per annum
Given the Remuneration & Nomination Committee was established during FY20, the Chair of this Committee continued to only
receive his NED base fee for the full year.
24 | Eagers Automotive 2020 Annual Report 2020
10. STATUTORY DISCLOSURES
Statutory remuneration disclosures are prepared in accordance with the Corporations Act 2001 and Australian Accounting
Standards and include share-based payments expensed during the financial year, calculated in accordance with AASB 2 Share
based payments.
a) Statutory remuneration disclosures of executive KMP in 2020 and 2019
Table 1 – Statutory table of executive KMP remuneration
Short-term benefits
Post Employment Benefits
Share-based
Payments
Executive
KMP
Year Salary & fees
($)
Bonus &
commission
($)
Non-
monetary
& other
benefits
($) 1
Martin Ward
Sophie Moore
Keith Thornton
Denis Stark
Total
2020
2019
2020
2019
2020
2019
2020
2019
1,109,144
1,210,000
-
-
155,798
140,548
458,333
150,000
24,880
500,001
150,000
275,000
1,082,316 3
51,892
119,812
250,005
938,710
82,068
320,833
105,000
335,547
355,000
15,217
36,014
2020
2,163,310
1,337,316
315,707
2019
2,295,553
1,443,710
310,522
Superannuation
($)
Other post-
employment
benefits ($)
Performance
Rights &
Options ($) 2
Total ($)
25,000
25,000
21,348
20,767
21,348
20,767
21,348
19,319
89,044
85,853
-
-
-
-
-
-
-
-
-
-
-
1,289,942
849,986
2,225,534
407,914
1,062,475
385,062
1,107,721
-
1,498,476
199,997
1,491,546
-
462,398
25,000
770,879
407,914
4,313,291
1,460,045
5,595,680
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 were valued using market prices, and where these were not available, the binomial tree methodology. A pre-determined
value of the portion of the rights and options attributable to the relevant year has been expensed in the income statement for that year in conformity with AASB 2
and reflected in the recipient’s remuneration. Vesting of the awards was subject to the achievement of hurdles as previously detailed in this Remuneration Report.
3
Includes commission 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 other key management personnel.
Eagers Automotive 2020 Annual Report | 25
DIRECTORS’
REPORT CONTINUED
10. STATUTORY DISCLOSURES CONTINUED
b) Statutory remuneration of NEDs in 2020 and 2019
Table 2 – Statutory table of NED remuneration
NED
Tim Crommelin
Nick Politis
Daniel Ryan
David Cowper
Marcus Birrell
Greg Duncan
David Blackhall
Michelle Prater
Total
Year
Base fees ($)
Other
benefits ($)
Superannuation ($)
Total ($)
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
50,000
100,000
42,500
85,000
42,500
85,000
50,000
100,000
42,500
85,000
42,500
6,055
42,500
6,055
35,417
-
347,917
467,110
519
628
519
628
519
628
519
628
519
628
519
52
519
52
475
-
4,750
9,500
4,038
8,075
4,038
8,075
4,750
9,500
4,038
8,075
4,038
575
4,038
575
3,365
-
55,269
110,128
47,057
93,703
47,057
93,703
55,269
110,128
47,057
93,703
47,057
6,682
47,057
6,682
39,257
-
4,108
3,244
33,055
385,080
44,375
514,729
c) Performance Rights and Options of Key Management Personnel
The following are details of all performance rights and options which were granted to KMP over unissued ordinary shares in the
Company in or before the year under review. A performance right is a right to acquire a share at a nil exercise price upon the
achievement of performance hurdles. An option is a right to acquire a share upon payment of an exercise price and achievement
of performance hurdles.
No rights or options were granted to, lapsed or were exercised by KMP during or after the year under review, except as
detailed below.
(1) Movement in the Performance Rights of KMP
Table 3 – Grants and vesting of Performance Rights in 2020 in accordance with the EIP
Name
Martin Ward
Opening
balance
Performance
Rights granted
Performance
Rights Vested
Performance
Rights lapsed
Closing
balance
99,067
nil
99,067
Sophie Moore
5,167
100,000 (1)
5,167
Keith Thornton
Denis Stark
23,310
2,913
nil
nil
23,310
2,913
(1) These rights converted to ordinary shares in March 2020 and remain subject to a trading restriction as described in section 6(e) of this Remuneration Report.
26 | Eagers Automotive 2020 Annual Report 2020
nil
nil
nil
nil
nil
nil
nil
nil
(2) Movement in the Options of KMP
Table 4 – Grants and exercise of Options in 2020 in accordance with the EIP
Name
Martin Ward
Sophie Moore
Keith Thornton
Denis Stark
Opening
balance
2,153,985
117,570
518,583
170,380
Options granted Options exercised
Options lapsed
nil
nil
nil
nil
nil
nil
nil
105,560 (2)
nil
nil
nil
nil
Closing
balance (1)
2,153,985
117,570
518,583
64,820
(1) All options have vested and were exercisable at the end of the reporting period.
(2) These options were granted on 27 March 2013 and had vested by end of 2017. They were exercised on 6 March 2020 at an exercise price of $5.0375 and were valued
at $2.8525 per option on the day of exercise.
(3) Performance Rights and Options granted to KMP
Table 5 – Details of share-based payments (Performance Rights and Options) relating to the EIP
Chief Executive Officer
Performance Rights
Options
Tranche
No.
1
2
3
Grant
Date
4 July
2014
4 July
2014
4 July
2014
No.
granted
No.
lapsed
No
exercised
(1)
Fair
value
No.
granted
No.
lapsed
No.
exercised
Fair
value
End of 1st
performance
period
91,006
nil
91,006
$4.67
447,368
nil
nil
$0.95
31 Dec 2017
94,866
nil
94,866
$4.48
420,792
nil
nil
$1.01
31 Dec 2018
99,067
nil
99,067
$4.29
416,666
nil
nil
$1.02
31 Dec 2019
Status
All Performance
Rights and 1/3 of
Options vested in
February 2018. 2/3
of Options vested in
February 2020
All Performance
Rights and 1/3 of
Options vested in
February 2019. 2/3
of Options vested in
February 2020
Vested in February
2020
(1) Performance rights are automatically exercised upon vesting. 99,067 rights that were granted for 2019 were exercised on 27 February 2020 and were valued at $9.01
per right on the day of exercise.
Eagers Automotive 2020 Annual Report | 27
DIRECTORS’
REPORT CONTINUED
10. STATUTORY DISCLOSURES CONTINUED
Chief Operating Officer - Cars
Performance Rights
Options
No.
granted
No.
lapsed
No.
exercised (1)
Fair
value
No.
granted
No.
lapsed
No.
exercised
Fair
value
End of 1st
performance
period
21,413
nil
21,413
$4.67
105,263
nil
nil
$0.95
31 Dec 2017
22,321
nil
22,321
$4.48
99,009
nil
nil
$1.01
31 Dec 2018
23,310
nil
23,310
$4.29
98,039
nil
nil
$1.02
31 Dec 2019
Tranche
No.
1
2
3
Grant
Date
4 July
2014
4 July
2014
4 July
2014
Status
All Performance
Rights and 1/3 of
Options vested in
February 2018. 2/3
of Options vested
in February 2020
All Performance
Rights and 1/3 of
Options vested in
February 2019. 2/3
of Options vested
in February 2020
Vested in February
2020
(1) Performance rights are automatically exercised upon vesting. 23,310 rights that were granted for 2019 were exercised on 27 February 2020 and were valued at $9.01
per right on the day of exercise.
General Counsel & Company Secretary
Performance Rights
Options
Tranche
No.
Grant
Date
No.
granted
No.
lapsed
No.
exercised(1)
Fair
value
No.
granted
No.
lapsed
No.
exercised
Fair
value
End of 1st
performance
period
1
2
3
4 July
2014
4 July
2014
4 July
2014
2,676
nil
2,676
$4.67
13,157
nil
nil
$0.95
31 Dec 2017
2,790
nil
2,790
$4.48
12,376
nil
nil
$1.01
31 Dec 2018
2,913
nil
2,913
$4.29
12,254
nil
nil
$1.02
31 Dec 2019
Status
All Performance
Rights and 1/3 of
Options vested in
February 2018. 2/3
of Options vested in
February 2020
All Performance
Rights and 1/3 of
Options vested in
February 2019. 2/3
of Options vested in
February 2020
Vested on 27
February 2020
(1) Performance rights are automatically exercised upon vesting. 2,913 rights that were granted for 2019 were exercised on 27 February 2020 and were valued at
$9.01 per right on the day of exercise.
28 | Eagers Automotive 2020 Annual Report 2020
12
June
2015
12
June
2015
12
June
2015
17 Feb
2020
17 Feb
2020
17 Feb
2020
1
2
3
4
5
6
Chief Financial Officer
Performance Rights
Options
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
4,796
nil
4,796
$8.34
26,143
nil
nil $1.53
31 Dec 2017
Status
All Performance Rights
and 1/3 of Options vested
in February 2018. 2/3 of
Options vested on 27
February 2020
All Performance Rights
and 1/3 of Options vested
in February 2019. 2/3 of
Options vested in
February 2020
4,975
5,167
30,000(2)
35,000(2)
35,000(2)
nil
nil
nil
nil
nil
4,975
$8.04
25,316
5,167
$7.74
25,000
nil
$9.00
nil
$9.00
nil
$9.00
nil
nil
nil
nil
nil
nil
nil
nil
nil $1.58
31 Dec 2018
nil $1.60
31 Dec 2019
Vested in February 2020
nil
n/a
31 Dec 2019
Vested in February 2020
nil
n/a
31 Dec 2020
Vested in December 2020
nil
n/a
31 Dec 2021
Unvested
(1) Performance rights are automatically exercised upon vesting. 5,167 rights that were granted for 2019 were exercised on 27 February 2020 and were valued at $9.01 per
right on the day of exercise.
(2) These rights converted to ordinary shares in March 2020 and remain subject to a trading restriction as described in section 6(e) of this Report.
Further details of the performance rights and options granted under the EIP are specified in notes 38 and 39 to the consolidated
financial report.
(d) Relevant Interest in the Company’s Shares Held by KMP
Table 6 – Shareholdings of KMP
Name
NEDs
Tim Crommelin
Nick Politis
Daniel Ryan
David Cowper
Marcus Birrell
Greg Duncan
David Blackhall
Michelle Prater(1)
Year
Opening balance as at
1 January
Received from EIP
Purchases
Sales
Closing balance as at
31 December
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
392,286
392,286
69,536,516
69,503,581
1,200
nil
15,053
15,053
2,000,000
2,000,000
284,442
242,775
23,056
17,500
2,540,096
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
n/a
n/a
46,000
nil
368,805
32,935
nil
1,200
nil
nil
nil
nil
15,558
41,667
5,000
5,556
nil
n/a
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
n/a
438,286
392,286
69,905,321
69,536,516
1,200
1,200
15,053
15,053
2,000,000
2,000,000
300,000
284,442
28,056
23,056
2,540,096
n/a
(1) Ms Prater was appointed as a non-executive Director on 3 February 2021.
Eagers Automotive 2020 Annual Report | 29
DIRECTORS’
REPORT CONTINUED
10. STATUTORY DISCLOSURES CONTINUED
Name
Executive KMP
Martin Ward
Sophie Moore
Keith Thornton
Denis Stark
Year
Opening balance as at
1 January
Received from EIP
Purchases
Sales
Closing balance as at
31 December
2020
2019
2020
2019
2020
2019
2020
2019
2,484,615
2,389,661
16,622
11,647
392,852
470,531
173,606
145,816
99,067
94,866
105,167
4,975
23,310
22,321
108,473
27,790
nil
88
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
150,000
100,000
130,560
nil
2,583,682
2,484,615
121,789
16,622
266,162
392,852
151,519
173,606
(e) Hedging of shares of unvested equity awards
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 equity
award or shares that are subject to trading restrictions, without the Chair’s approval. Any breach will result in the forfeiture or
lapsing of the unvested equity awards or additional performance hurdles or trading restrictions being imposed, at the Board’s
discretion.
(f) KMP transactions
There were no related party transactions with KMP during the reporting period requiring disclosure in this report.
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:
Name
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 S Blackhall
M V Prater
Ordinary Shares
Share Options
Performance Rights
438,286
69,905,321
2,583,682
1,200
15,053
2,000,000
121,789
300,000
28,056
2,540,096
-
-
2,153,985
-
-
-
117,570
-
-
-
-
-
-
-
-
-
-
-
-
-
30 | Eagers Automotive 2020 Annual Report 2020
ROUNDING OF AMOUNTS TO NEAREST
THOUSAND DOLLARS
The Company is of a kind referred to in Class Order
98/100 issued by the Australian Securities & Investments
Commission, relating to the “rounding off” of amounts in
the Directors’ report and financial report. Amounts in the
Directors’ report and financial report have been rounded
off to the nearest thousand dollars in accordance with that
Class Order.
This report is made in accordance with a resolution of the
Directors.
Martin Ward
Director
Brisbane, 24 February 2021
SHARES UNDER OPTION
No options and 100,000 performance rights were granted by
the Company over unissued fully paid ordinary shares during
the year under review. No options or rights have been granted
since the end of the year under review.
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 3,822,816 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.
NON-AUDIT SERVICES
A copy of the auditor’s Independence Declaration as required
under section 307C of the Corporations Act 2001 is attached
and forms part of this report.
The Company may decide to employ its auditor on
assignments additional to their statutory audit duties where
the auditor’s expertise or experience with the Group is
important.
Details of the amounts paid or payable to the auditor for
audit and non-audit services provided to the Group during
the year are set out in note 36 to the consolidated financial
report.
In accordance with advice received from the Audit & Risk
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.
Eagers Automotive 2020 Annual Report | 31
AUDITOR’S DECLARATION
OF INDEPENDENCE
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 23, Riverside Centre
123 Eagle Street
Brisbane, QLD, 4000
Australia
Tel: +61 7 3308 7000
www.deloitte.com.au
The Board of Directors
Eagers Automotive Limited
5 Edmund Street
Newstead, QLD 4006
24 February 2021
Dear Board Members
Auditor’s Independence Declaration to Eagers Automotive 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 Eagers Automotive.
As lead audit partner for the audit of the financial report of Eagers Automotive for the year ended 31 December
2020, 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 faithfully
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 organisation
32 | Eagers Automotive 2020 Annual Report 2020
ANNUAL REPORT 2020
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
34
35
36
37
39
40
108
109
Eagers Automotive 2020 Annual Report | 33
STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2020
Revenue
Other gains
CONSOLIDATED
2020
$’000
Restated
2019
$’000
8,749,675
5,816,979
48,900
125,616
Notes
4
5
Share of net profits of associate
44(b)
3,758
407
Raw materials and consumables purchased
Employee benefits expense
Finance costs
Depreciation and amortisation expense
Impairment of non-current assets
Other expenses
Profit/(Loss) before tax
Income tax expense
Profit/(Loss) from continuing operations
Loss from discontinued operations
Profit/(Loss) for the year
Attributable to:
Owners of Eagers Automotive Limited
Non-controlling interests
Earnings/(Loss) per share for profit attributable to the ordinary
equity holders of the Company:
Basic Earnings/(Loss) per share
From continuing operations
From discontinued operation
Diluted Earnings/(Loss) per share
From continuing operations
From discontinued operation
6(a)
6(a)
6(a)
6(b)
7
33(d)
33(f)
31(b)
41(a)
41(b)
(7,179,720)
(4,827,210)
(613,158)
(88,384)
(166,257)
(480,219)
(65,569)
(95,217)
(90,700)
(244,925)
(384,008)
280,106
(88,575)
191,531
(35,320)
156,211
(293,166)
(63,304)
(17,176)
(80,480)
(59,113)
(139,593)
147,290
(142,380)
8,921
156,211
2,787
(139,593)
Cents
Cents
57.6
71.4
(13.8)
57.3
71.0
(13.7)
(67.4)
(39.4)
(28.0)
(67.4)
(39.4)
(28.0)
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
finalisation of a business combination.
34 | Eagers Automotive 2020 Annual Report 2020
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
Profit/(Loss) 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
Notes
31(a)
31(a)
31(a)
31(a)
31(a)
31(a)
31(a)
CONSOLIDATED
2020
$’000
Restated
2019
$’000
156,211
(139,593)
-
-
51
51
6,459
(1,937)
-
-
4,522
4,573
36
(11)
1,153
1,178
13,769
(4,131)
80,331
(21,544)
68,425
69,603
Total comprehensive Profit/(Loss) for the year
160,784
(69,990)
Total comprehensive Profit/(Loss) attributable to:
Owners of Eagers Automotive Limited
Non-controlling interests
151,863
8,921
160,784
(72,779)
2,789
(69,990)
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 finalisation of a business combination.
Eagers Automotive 2020 Annual Report | 35
STATEMENT OF
FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Finance lease receivable
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
Other non-current receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non-current assets
Right-of-use assets
Finance lease receivable
Total non-current assets
Total assets
Current liabilities
Trade and other payables
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
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
The comparative information has been restated as a result of finalisation of a business combination.
36 | Eagers Automotive 2020 Annual Report 2020
CONSOLIDATED
2020
$’000
Restated
31 December 2019
$’000
Notes
9
10
11
12
17
13
14
15
13
18
19
20
16(a)(i)
17
21
22(a)
23
24
25
16(a)(i)
28
27
16(a)(i)
30
31(a)
31(b)
33(f)
209,092
268,863
1,025,781
31,898
27,309
1,562,943
-
1,562,943
23,148
2,366
1,561
2,851
494,266
785,574
162,005
9,837
801,129
187,971
2,470,708
4,033,651
436,372
878,149
16,381
131,372
23,965
179,522
1,665,761
-
1,665,761
304,513
20,906
26,497
1,091,397
1,443,313
3,109,074
924,577
1,173,069
(580,200)
317,848
910,717
13,860
924,577
94,172
309,523
1,458,927
23,214
-
1,885,836
494,978
2,380,814
30,893
2,366
16,806
-
456,058
773,174
176,505
13,030
1,008,500
-
2,477,332
4,858,146
377,387
1,310,153
25,224
126,146
26,576
171,675
2,037,161
508,666
2,545,827
381,885
50,113
37,610
1,020,882
1,490,490
4,036,317
821,829
1,173,069
(560,126)
199,463
812,406
9,423
821,829
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Consolidated
entity
Notes
Issued
capital
$’000
Asset
revaluation
reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
Share-
based
payments
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
Balance at 1
January 2020
Profit for the year
Other
comprehensive
income
Total
comprehensive
income for
the year
Transactions
with owners in
their capacity as
owners:
Shares acquired
by employee
share trust
Share based
payments
expense
Payments
received from
employees for
exercised options
Income tax on
items taken to
or transferred
directly from
equity
Dividends
provided for
or paid
Balance at 31
December 2020
31(a)
31(a)
31(b)
1,173,069
28,312
1,153
(37,863)
(72,686)
(479,042)
199,463
812,406
9,423 821,829
-
-
-
-
-
-
-
-
-
-
-
4,522
4,522
-
-
-
-
-
-
-
-
51
51
-
-
-
-
-
-
-
-
-
-
-
(31,497)
408
8,610
(2,168)
-
(24,647)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
147,290
147,290
8,921
156,211
-
4,573
-
4,573
147,290
151,863
8,921
160,784
-
-
-
-
-
-
-
-
(31,497)
-
(31,497)
408
-
408
8,610
-
8,610
(2,168)
-
(2,168)
(28,905)
(28,905)
(4,484)
(33,389)
(28,905)
(53,552)
(4,484)
(58,036)
1,173,069
32,834
1,204
(62,510)
(72,686)
(479,042)
317,848
910,717
13,860 924,577
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 finalisation of business combination.
Eagers Automotive 2020 Annual Report | 37
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Issued
capital
$’000
Asset
revaluation
reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
Hedging
reserve
$’000
Share-
based
payments
reserve
$’000
Investment
revaluation
reserve
$’000
Business
Combination
Reserve
$’000
Retained
earnings
$’000
Attributable
to owners of
the parent
$’000
Non-con-
trolling
interests
$’000
Total
equity
$’000
371,405
56,820
(25)
(49,628)
(131,473)
Consolidated entity
Restated balance at
1 January 2019
Loss for the year
Adjustment on
finalisation of business
combination
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
31(a)
Dividends provided for
or paid
Shares acquired by
employee share trust 31(a)
Payments received
from employees for
exercised options
Income tax on items
taken to or transferred
directly from equity
Purchase of shares for
non-controlling
interests
Issue of ordinary
shares as purchase
consideration on
acquisition
Recognition of NCI on
acquisition
Adjustments on
finalisation of business
combination
-
-
-
-
-
-
-
-
-
-
-
457,155
344,509
-
-
801,664
-
-
-
-
-
-
-
9,638
1,153
9,638
1,153
(38,146)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,787
-
-
-
-
-
380,557
627,656
8,002 635,658
(131,913)
(131,913)
2,789 (129,124)
(10,469)
(10,469)
- (10,469)
(142,382)
(142,382)
2,789 (139,593)
-
69,603
- 69,603
58,787
- (142,382)
(72,779)
2,789 (69,990)
-
-
-
-
-
-
-
-
-
-
-
-
39,368
1,222
-
1,222
-
-
-
-
-
(470,729)
-
-
(8,313)
-
1,906
-
1,906
(78,080)
(78,080)
(1,368) (79,448)
-
-
-
-
-
-
-
(2,598)
-
(2,598)
4,890
-
4,890
7,567
-
7,567
(13,574)
13,574
-
344,509
- 344,509
-
(13,574)
(13,574)
(8,313)
-
(8,313)
(479,042)
(78,080)
256,307
(1,368) 254,939
-
-
-
-
-
-
1,906
-
(2,598)
4,890
7,567
-
-
-
-
11,765
-
-
-
25
25
-
-
-
-
-
-
-
-
-
-
-
-
Restated balance at
31 December 2019
1,173,069
28,312
1,153
(37,863)
(72,686)
(479,042)
199,463
812,406
9,423 821,829
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 finalisation of business combination.
38 | Eagers Automotive 2020 Annual Report 2020
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Receipts from Government
Receipts from insurance claims
Interest and other costs of finance paid
Income taxes paid
Dividends received
Interest received
Notes
3
44(b)
CONSOLIDATED
2020
$’000
2019
$’000
9,924,255
7,166,300
(9,360,074)
(6,891,865)
133,780
4,276
(96,723)
(84,281)
4,629
2,025
-
5,324
(73,588)
(36,860)
100
1,385
Net cash provided by operating activities
42
527,887
170,796
Cash flows from investing activities
Payments for acquisition of businesses - net of cash acquired
33(b)
Payments for property, plant and equipment (1)
Proceeds from sale of businesses
Proceeds from sale of property, plant and equipment
Proceeds from return of capital
Net cash provided by/(used in) investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Payments for shares acquired by the trust
Proceeds from borrowings (1)
Repayment of borrowings
Transactions with non-controlling interests
Dividends paid to members of Eagers Automotive 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
31(a)
31(a)
8
9
(16,741)
(42,246)
7,747
6,568
15,236
63,903
(72,687)
64,366
177,673
-
(29,436)
233,255
8,610
(31,497)
108,699
4,890
(2,598)
65,798
(284,483)
(247,039)
-
(28,905)
(3,096)
(160,222)
734
(78,080)
(288)
(64,801)
(390,894)
(321,384)
107,557
101,535
209,092
82,667
18,868
101,535
(1) During the period Eagers Automotive Limited acquired Land and Buildings of which $104 million was directly funded through Capital Loan facilities obtained by the
Group. Refer to Note 18 for Property, plant and equipment and Note 43 for further information on movement in borrowings.
The above Statement of Cash Flows is presented in accordance with AASB 5 Non-Current Assets Held for Sale and Discontinued Operations. Refer to Note 33(f) for
further information on Refrigerated Logistics
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Eagers Automotive 2020 Annual Report | 39
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS
31 DECEMBER 2020
1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(a) General information and basis of preparation
The financial report covers the Group (consolidated entity) of
Eagers Automotive Limited (“the Company” and “the Group”)
and its subsidiaries (consolidated financial statements).
Eagers Automotive 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 Presentation of Financial
Statements.
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 Share-based Payment and measurements that have
some similarities to fair value but are not fair value, such as
net realisable value in AASB 102 Inventories 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.
40 | Eagers Automotive 2020 Annual Report 2020
Functional and presentation currency
The functional and presentation currency of the Group is the
Australian Dollar.
The financial statements were authorised for issue by the
Directors on the 24th of February 2021.
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. Like many organisations, the Group operated in
a challenging environment during April and May of 2020 as
a result of the unfolding COVID-19 pandemic. As outlined in
Note 3, the Directors took proactive steps to preserve cash,
right size the business and optimise liquidity at the onset
of the COVID-19 health crisis in Australia and New Zealand
in order to ensure the Group can navigate its duration.
These initiatives and strong trading activity since June 2020
alongside the easing of Government restrictions, resulted in
the Group generating positive net cash flows from operating
activities of $527.9 million (2019: $170.8 million). As a result, at
31 December 2020 the Group is in a strong liquidity position,
with corporate debt net of cash at $129.3 million (2019: $315.8
million) and total available liquidity of $683.2 million (cash in
bank of $209.1 million and undrawn facilities of $474.2 million)
(2019: $190.1 million, comprising $94.2 million cash in bank and
undrawn facilities of $95.8 million).
The Group had net current liabilities of $102.8 million
at the balance sheet date (2019: $165.0 million) which is
predominately due to the recognition of current lease
liabilities net of current finance lease receivables of $152.2
million (2019: $171.7 million) reflecting property rental charges
for the next 12 months.
The Group has prepared a detailed cash flow forecast for
the next 12 months which has been stress tested. The Group
notes that it was compliant with all debt covenants as at 31
December 2020, and based on forecasts and stress testing
performed, is expected to remain covenant compliant for the
foreseeable future.
In the early stages of COVID-19, given the uncertainty at
that time, the Group proactively secured Covenant waivers
in respect of 30 June 2020 and 31 December 2020 for debt
related covenants other than the capitalisation ratio. The
Group also elected to defer Australian Tax Office (ATO) related
BAS, FBT and income tax payments through to 30 June
2020, as well as payroll tax payments where available within
respective states. The total amount deferred at 30 June
2020 was approximately $85 million. Subsequent to 30 June
2020, as a result of the Group’s strong trading performance
and operating cash flows in the second half of the year, and
due to increased visibility over the impact of COVID-19 on
the economy and the Government’s response, the Group
proactively cancelled the covenant waivers with respect to 31
December 2020 and repaid all deferrals.
Based on the strength of the Group’s balance sheet and
its cashflow modelling the Directors are of the view that the
Group will be able to settle all obligations as they fall due for
a period of 12 months following this report. The Directors are
therefore of the opinion that the preparation of the financial
statements as a going concern is appropriate.
(b) Basis of consolidation
The consolidated financial statements incorporate the
financial statements of Eagers Automotive Limited and
entities (including structured entities) controlled by the
Company and its subsidiaries. Control is achieved when the
Company:
>
>
has power over the investee;
is exposed, or has rights, to variable returns from its
involvement with the investee; and
has the ability to use its power to affect its returns.
>
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed
above.
When the Company has less than a majority of the voting
rights of an investee, it has power over the investee when the
voting rights are sufficient to give it the practical ability to
direct the relevant activities of the investee unilaterally.
The Company considers all relevant facts and circumstances
in assessing whether or not the Company’s voting rights in an
investee are sufficient to give it power, including:
>
>
>
>
the size of the Company’s holding of voting rights relative
to the size and dispersion of holdings of the other vote
holders;
potential voting rights held by the Company, other vote
holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that
the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions
need to be made, including voting patterns at previous
shareholders’ meetings.
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.
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
Eagers Automotive 2020 Annual Report | 41
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONTINUED
(b) Basis of consolidation continued
(ii) Investments in associates continued
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(j).
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.
42 | Eagers Automotive 2020 Annual Report 2020
(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) Warranties revenue
The Group sells extended warranties beyond those provided
by the manufacturer, which further protects the customer
for repairs and defects in the vehicle over a specified period.
Under AASB 15, warranties are considered to be a distinct
service as they are both regularly supplied by the Group
to customers on a stand-alone basis and are available to
customers from other providers in the market. As a result,
where vehicles are being sold with an extended warranty
included, a portion of the vehicle sale price is required to be
allocated to the warranty based on the stand-alone selling
price of those services. Revenue relating to the warranties is
recognised over time, while the transaction price allocated to
these services is recognised as a contract liability at the time
of the initial sales transaction and is released on a straight-
line basis over the period of the service.
(iv) Rental income
Rental income from operating leases is recognised on a
straightline basis over the lease term.
(v) 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.
(vi) Interest revenue
Interest revenue is recognised on a time proportional basis,
taking into account the effective interest rates applicable to
the financial assets.
(vii) 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.
(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) Government grants
During the year, Eagers Automotive Limited received the
Government wage subsidy for Australia, known as JobKeeper,
and New Zealand, known as the Government Wage Subsidy.
Eagers Automotive Limited have reported this income
as a reduction to the associated employee costs in the
Condensed Consolidated Statement of Profit or Loss. Refer
to Note 6 for further details.
Government grants are recognised where there is a
reasonable assurance that the grant will be received and all
attached conditions complied with. When the grant relates
to an expense item, it is recognised as a reduction of the
expense to which it relates.
(g) Taxes
Eagers Automotive 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 Eagers Automotive
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, Eagers Automotive 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 Eagers
Automotive Tax Funding Agreement. For completeness we
note that Automotive Holdings Group Limited and its wholly-
owned Australian entities become parties to the Eagers
Automotive 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.
(h) 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
Eagers Automotive 2020 Annual Report | 43
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONTINUED
(h) Leases continued
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.
(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
44 | Eagers Automotive 2020 Annual Report 2020
depreciation and impairment losses, and are adjusted for any
remeasurement of lease liabilities.
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)
(ii)
any below market terms are accounted for as a
prepayment of lease payments; and
any above market terms are accounted for as additional
financing provided by the buyer-lessor to the Group.
(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.
The Group as a lessor
Sub-lease arrangements
When the Group is an intermediate lessor, it accounts for the
head lease and the sub-lease as two separate contracts.
The sub-lease is classified as a finance or operating lease
by reference to the right-of-use asset arising from the head
lease. As a result of the sub-leasing arrangements entered
into during the period, the Group has recognised a current
finance lease receivable of $27.3 million, and a non current
finance lease receivable of $188.0 million.
Amounts due from lessees under finance leases are
recognised as receivables at the amount of the Group’s net
investment in the leases. Finance lease income is allocated to
accounting periods so as to reflect a constant periodic rate of
return of the Group’s net investment outstanding in respect of
the leases.
(i) Buybacks
If the sale of the vehicle is combined with a residual value
commitment (i.e. buyback arrangements), and the control has
not been transferred (i.e. the repurchase price is not higher
than the assessed fair market value), the Group recognises
the sales transaction as an operating lease transaction.
The revenue and expense are recognised over the residual
value commitment period in the income statement. Assets
under operating leases, a residual value provision, and
deferred lease income are recognised in the balance sheet.
The asset is depreciated over the commitment period and
the deferred lease income is recognised as revenue over the
same period. The residual value provision amount remains
unchanged until the end of the commitment period. If the
vehicle is returned at the end of the commitment period, the
residual value provision is paid to the customer and the vehicle
is reclassified from assets under operating lease to inventory.
(j) 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(s)). 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.
(k) 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(p)). Where an impairment
loss subsequently reverses, the carrying amount of the asset
(CGU) is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would
have been determined had no impairment losses been
recognised for the asset (CGU) in prior years. A reversal of an
impairment loss is recognised in profit or loss immediately,
unless the relevant asset is carried at fair value, in which case,
the reversal of the impairment loss is treated as a revaluation
increase (refer Note 1(p)).
(l) 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
Eagers Automotive 2020 Annual Report | 45
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONTINUED
(l) Cash and cash equivalents continued
value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the Statement of Financial
Position.
(m) 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.
(n) 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.
(o) 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 timeframe 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 (FVPL), 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 (OCI), 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
46 | Eagers Automotive 2020 Annual Report 2020
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
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.
(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 and other
receivables, finance lease receivables and other loans
receivable, the Group applies the simplified approach
permitted by AASB 9, which requires expected lifetime losses
to be recognised from initial recognition of these financial
assets. 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.
(p) Property, plant and equipment
Land and buildings are shown at fair value, based on annual
assessment by the Directors supported by periodic valuations
by external independent valuers, less subsequent depreciation
for buildings. Revaluations are made with sufficient regularity
to ensure that the carrying amount does not differ materially
from that which would be determined using fair value at
the end of the reporting 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:
Plant & equipment
> Buildings
>
>
The asset’s residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance date.
Leasehold improvements
5 - 30 years
3 - 10 years
40 years
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(k)).
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.
(q) 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.
(r) 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.
Eagers Automotive 2020 Annual Report | 47
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONTINUED
(s) 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 19(a)).
(t) 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.
(u) 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.
(v) 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.
(w) 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.
48 | Eagers Automotive 2020 Annual Report 2020
(x) 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.
(y) Dividends
Provision is made for the amount of any dividend declared
on or before the end of the year but not distributed at
balance date.
(z) 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
Diluted earnings per share is calculated as net profit
attributable to members of the parent, adjusted for:
> Costs of servicing equity (other than dividends);
>
The after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have been
recognised as expenses; and
> Other non-discretionary changes in revenues or expenses
during the period that would result from the dilution
of potential ordinary shares, divided by the weighted
average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
The practical expedient applies only to rent concessions
occurring as a direct consequence of COVID-19 and only if all
of the following conditions are met:
(i) The change in lease payments results in revised consideration
for the lease that is substantially the same as, or less than,
the consideration for the lease immediately preceding the
change;
(ii) Any reduction in lease payments affects only payments
originally due on or before 30 June 2021 (a rent concession
would meet this condition if it results in reduced lease
payments on or before 30 June 2021 and increased lease
payments that extend beyond 30 June 2021); and
(iii) There is no substantive change to other terms and conditions
of the lease.
Impact on accounting for changes in lease payments
applying the exemption
The Group has applied the practical expedient retrospectively
to all rent concessions that meet the conditions in AASB
16.46B. There was no impact on prior period figures which
would have required an adjustment to opening retained
earnings.
The Group has benefited from a waiver of lease payments
on leased land and buildings. The waiver of lease payments
of $9.5 million has been accounted for as a negative variable
lease payment in profit or loss.
The standards in issue but not yet effective, and do not
have a material impact on the Group, are as follows:
> AASB 2014-10 Amendments to Australian Accounting
Standards - Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture, AASB 2015-
10 Amendments to Australian Accounting Standards -
Effective Date of Amendments to AASB 10 and AASB 128
and AASB 2017-5 Amendments to Australian Accounting
Standards - Effective Date of Amendments to AASB 10
and AASB 128 and Editorial Corrections
AASB 2020-1 Amendments to Australian Accounting
Standards - Classification of Liabilities as Current or Non-
Current and AASB 2020-6 Amendments to Australian
Accounting Standards - Classification of Liabilities as
Current or Non-current - Deferral of Effective Date
AASB 2020-3 Amendments to Australian Accounting
Standards - Annual Improvements 2018-2020 and
Other Amendments
>
>
(aa) 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.
(ab) Rounding of amounts
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in
the financial report. Amounts in the financial report have
been rounded off in accordance with that instrument to the
nearest thousand dollars, or in certain cases, to the nearest
dollar.
(ac) New or revised standards and
interpretations that are first effective
in the current reporting period
New and revised Standards and amendments thereof and
Interpretations effective for the current year that are relevant
to the Group, but have not had a material impact, are:
> AASB 2018-6 Amendments to Australian Accounting
Standards - Definition of a Business
> AASB 2018-7 Amendments to Australian Accounting
Standards - Definition of Material
The following new accounting standard has been applied for
the first time for the annual reporting period commencing 1
January 2020:
AASB 2020-4 Amendments to Australian Accounting
Standards - COVID-19-Related Rent Concessions
In the current year, the Directors have elected to apply AASB
2020-4 Amendments to Australian Accounting Standards -
COVID-19 Related Rent Concessions before its mandatory
application date. AASB 2020-4 amends AASB 16 Leases and
is effective for annual periods that begin on or after 1 June
2020, and may be applied to periods before that date.
The amendments introduce a practical expedient into AASB
16. The practical expedient permits a lessee to elect not to
assess whether a COVID-19-related rent concession is a lease
modification. A lessee that makes this election does account
for any change in lease payments resulting from the COVID-
19-related rent concession the same way it would account for
the change applying AASB 16 if the change were not a lease
modification.
Eagers Automotive 2020 Annual Report | 49
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
2
CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS
(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)
On 19 August 2019, Eagers Automotive Limited acquired
62.53% of Automotive Holdings Group Limited (AHG) for a
total consideration of $617.4 million. At 31 December 2019, the
fair value of the assets acquired and liabilities assumed were
recognised on a provisional basis. During the period, the fair
value of assets acquired and the liabilities assumed has been
finalised and the impact on the financial statements has
been summarised in Note 33(c). The Goodwill of $676.8 million
represents the residual value of the purchase price over the
fair value of the identifiable assets acquired and liabilities
assumed.
(ii) The fair value of assets and liabilities acquired in
business combinations other than the acquisition
of AHG
Other acquisitions made by the Group have required some
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
$778.7m (2019: $764.3m) 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 in respect of goodwill and other
assets can be found in Note 19.
(iv) Recoverability of Right-of-use assets and other non-
current assets
The Group assessed the recoverability of the Right-of-use
assets and other non-current assets associated with Holden
sites and restructuring activities related to its leased property
portfolio. In applying the standard, the directors have made
certain assumptions and judgements in relation to the
determination of the recoverable amount for these assets.
Further information on impairments recognised in respect
to Right-of-use assets and other non-current assets can be
found in Note 19(a).
(v) New and demonstrator vehicle write down to net
realisable value
In determining the amount of write-downs for new and
demonstrator vehicle inventory, management has made
judgements based on the expected net realisable value of
inventory. Historic experience and current knowledge of the
products have been used in determining any write-downs to
net realisable value. Refer to Note 11.
(vi) Used vehicle write down to net realisable value
In determining the amount of write-downs required for used
vehicle inventory, management has, in consultation with
published used vehicle valuations, made judgements based
on the expected net realisable value of that inventory. Historic
experience, current knowledge of the products and the
valuations from an independent used car publication has
been used in determining any write-downs to net realisable
value. Refer to Note 11.
(vii) Leases
The Group adopted AASB 16 Leases from 1 January 2019.
On application, the Group has recognised right-of-use
assets and lease liabilities in the consolidated Statement
of Financial Position and the 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 were recognised on the acquisition of AHG.
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.
(viii) Sale of Daimler Truck Operations and Property
The Group executed an agreement for the sale of its
Daimler truck business to Velocity Vehicle Group (“VVG”),
announced on the Australian Stock Exchange on the 14th
December 2020. The Group also agreed to commercial
terms for the sale of the Milperra property, the location
of the Stillwell Trucks operation, to VVG as part of the
transaction. Following consideration of the requirements of
AASB 5 Non-Current Assets Held for Sale and Discontinued
Operations, the Directors determined that, based on the
facts and circumstances of the sale agreement, including the
conditions precedent stipulated, the definition of a disposal
group held-for-sale has not been met at the reporting date
have considered the requirements of AASB 5. Therefore, the
associated assets and liabilities have not been reclassified to
non-current assets held-for-sale as at 31 December 2020.
50 | Eagers Automotive 2020 Annual Report 2020
(ix) Staff underpayment provision/liability
On 17 December 2019, Eagers Automotive Limited announced
on the Australian Stock Exchange that it had self-reported
the underpayment of employees to Fair Work. Eagers
Automotive Limited engaged independent experts to assess
Eagers Automotive Limited’s payroll to determine the extent
to which past and present employees had been impacted.
Following the assessment, Eagers Automotive Limited had
determined that approximately 6,200 employees had been
impacted over seven years. The total payment shortfall
equates to approximately $4.5 million plus interest charges.
All remediation payments were processed during the period
and Fair Work has finalised its investigation and assessment
of this matter.
Eagers Automotive Limited is progressing its review of
AHG’s payments to employees following its acquisition of
the business in August 2019. Eagers Automotive Limited
had recorded a provisional contingency on the acquisition
of AHG based on preliminary procedures performed and
insights gained in assessing its self-reported underpayment
at Eagers Automotive Limited and certain findings at AHG. A
provisional estimate of the exposure was captured as part of
the purchase price allocation process, with a corresponding
adjustment against goodwill recognised. Eagers Automotive
Limited management had to make a number of judgements
and estimates in relation to assessing this exposure.
During the year, Eagers Automotive Limited has engaged
independent experts to undertake a similar assessment as
outlined above for the legacy AHG’s payroll to determine
the extent to which past and present employees had been
impacted. The assessment to date has resulted in an
additional liability of $4.0 million being recorded during the
year ended 31 December 2020 over and above the original
estimate recorded as part of the acquisition to the Statement
of Profit or Loss. The review remains ongoing at the reporting
date.
(x) Fair value estimation of land and buildings
Land and buildings with a carrying value of $356.5 million
(2019: $252.7 million) 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 18.
(xi) Deferred Tax Asset
As set out in Note 20 the Group has recorded a deferred tax
asset of $162 million (2019: $176.5 million) at 31 December 2020.
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 20).
3
CORONAVIRUS GLOBAL PANDEMIC AND
THE RELATED GOVERNMENT MANDATED
RESTRICTIONS (COVID-19)
The financial position and performance of the Group was
particularly affected by the impact of the COVID-19 pandemic
during the year and required a multifaceted response by the
Group, taking the following actions to manage liquidity and
risk:
> Reduced our headcount, which in turn reduced our
fixed monthly cost base by approximately $6 million at
30 June 2020, reduced executive and Board salaries
and implemented a temporary rostering arrangement
in April and May 2020 to reflect activity levels across
our dealerships during the peak impact. All staff were
reinstated to full pay and rostering alongside the easing
of restrictions and outside of subsequent lockdowns.
>
Engaged with our landlords to secure rent waivers and
deferrals through to 30 June 2020. The total amount
deferred and waived at 30 June 2020 was approximately
$7.3 million and $9.5 million respectively. The majority of
deferred rent was repaid at 31 December 2020, and the
balance by February 2021.
> Accessed the Australian and New Zealand Government’s
wage subsidy program for eligible employees, with
total subsidies of $134 million received through to 30
September 2020.
> Secured available tax concessions and deferrals from
Federal and State Government authorities, including
the deferral of ATO related BAS, FBT and income tax
payments through to 30 June 2020, as well as payroll tax
payments where available within respective states. The
total amount deferred at 30 June 2020 was $87.8 million,
all of which has been repaid at 31 December 2020.
>
Implemented a number of operational initiatives and
other cash management strategies.
The Group also prudently engaged with our OEM captive and
syndicated debt financiers to manage any continued impact
of COVID-19 on liquidity and risk, at 30 June 2020 securing:
(i) Short term working capital facilities totalling $122 million.
(ii) Financial Covenants waivers (other than the capitalisation
ratio) in respect of 30 June 2020 and 31 December
2020 dates.
(iii) Extension of the termination date of a tranche of corporate
debt by a further 12 months to December 2021.
Subsequent to 30 June 2020, as a result of the Group’s strong
trading performance and operating cash flows in the second
half of the year, and due to increased visibility over the
impact of COVID-19 on the economy and the Government’s
response, the Group proactively terminated a $22 million
tranche of OEM captive short term working capital facilities
and cancelled the covenant waivers with respect to 31
December 2020 by mutual consent with its lenders.
Eagers Automotive 2020 Annual Report | 51
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
4 REVENUE
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Consolidated Revenue for the year ended 31 December 2020 from
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
Total revenue from external customers
4,973,458
2,078,945
1,008,382
584,035
103,052
8,747,872
8,163,837
584,035
8,747,872
8,282,687
465,185
8,747,872
-
-
-
-
1,803
1,803
1,803
-
1,803
1,803
-
1,803
-
-
-
-
-
-
-
-
-
-
-
-
4,973,458
2,078,945
1,008,382
584,035
104,855
8,749,675
8,165,640
584,035
8,749,675
8,284,490
465,185
8,749,675
Consolidated Revenue for the year ended 31 December 2019 from
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
3,533,450
1,148,797
682,358
417,451
33,804
5,815,860
5,398,409
417,451
5,815,860
-
-
-
-
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
5,639,298
1,054
65
5,640,417
176,562
176,562
Total revenue from external customers
5,815,860
1,054
65
5,816,979
52 | Eagers Automotive 2020 Annual Report 2020
5 OTHER GAINS
(Loss)/Gain on disposal of non-financial assets
Waived rent
Gain on remeasurement of previously held equity accounting investment in AHG
Derecognition of contingent consideration
Gains on disposal of properties
Gain on disposal of businesses
Brand restructure compensation
Gain on divestment of associate
Notes
3
33(d)
CONSOLIDATED
2019
$’000
6,715
-
65,061
19,674
14,457
19,709
-
-
2020
$’000
(567)
9,477
-
-
1,962
5,417
31,751
860
48,900
125,616
Eagers Automotive 2020 Annual Report | 53
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
6 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
Customer contracts
Total amortisation
Total Depreciation and Amortisation
Finance costs
Vehicle bailment
Interest on lease liabilities
Other
Total finance expense
Superannuation
Provision expenses
Allowance for expected credit losses
Employee benefits expense
Employee benefits expense - gross
Employee benefits expense recognised in cost of sales - gross
Government grants offset against employee benefits expense
Government grants offset against employee benefits expense recognised in cost of sales
Total employee benefits expense
Share-based payments
Business acquisition and divestment costs
Business restructuring and integration costs
(b) Impairment of non-current assets
Impairment of land and buildings
Impairment of goodwill
Impairment of right-of-use Asset
Impairment of fixed Assets
Amount attributable to discontinued operations (refer to note 33(d))
54 | Eagers Automotive 2020 Annual Report 2020
Notes
18
18
18
16(a)(ii)
19
Notes
Notes
CONSOLIDATED
2020
$’000
Restated
2019
$’000
3,402
36,563
5,087
119,151
164,203
2,054
2,054
166,257
22,219
53,324
12,841
88,384
3,344
22,270
1,695
67,908
95,217
-
-
95,217
24,603
27,475
13,491
65,569
56,806
49,100
1,386
1,386
2020
$’000
706,129
116,339
(92,971)
(40,813)
1,285
1,285
2019
$’000
480,219
90,247
-
-
688,684
570,466
408
1,789
1,689
2020
$’000
9,996
-
73,150
7,554
90,700
-
1,906
12,520
4,442
Restated
2019
$’000
-
209,238
32,800
2,887
244,925
44,736
7
INCOME TAX
(a) Income tax expense
Current income tax expense
Deferred income tax expense/(benefit)
Notes
CONSOLIDATED
2020
$’000
73,192
15,383
88,575
Restated
2019
$’000
60,551
(43,375)
17,176
Deferred income tax expense/(benefit) included in income tax expense comprises:
In respect of the current year
20
15,383
(43,375)
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
280,106
(63,304)
Tax at the Australian tax rate of 30.0% (2019 - 30.0%)
84,032
(18,991)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non current asset impairment
Non-taxable income
Non deductible capital expenditure
Non-taxable dividends
Non allowable expenses
Property (revaluation) / impairment
Application of current year capital losses against current year capital gains
Sundry items
Income tax expense
-
(1,781)
-
(6,503)
559
2,999
-
9,269
88,575
62,915
(25,420)
(970)
(2,460)
759
-
(264)
1,607
17,176
(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
(1,937)
(25,686)
Eagers Automotive 2020 Annual Report | 55
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
8 DIVIDENDS
(a) Ordinary dividends fully franked based on tax paid @ 30%
Final dividend for the year ended 31 December 2019 of 11.25 cents per share (2018: 22.5 cents) paid on 16th April
2020
Nil interim dividend paid in 2020 (2019: 14.0 cents)
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 2020 and 2019 were as follows:
Paid in cash
(b) Dividends not recognised at year end
In addition to the above dividends, since year end the Directors have recommended the payment of a final
dividend of 25 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 2021 out of the retained profits at 31 December 2020 but not
recognised as a liability at year end is:
CONSOLIDATED
2020
$’000
2019
$’000
28,905
43,045
-
28,905
35,035
78,080
28,905
78,080
64,233
57,810
(c) Franked dividends
The final dividend recommended after 31 December 2020 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 2020.
Franking credits available for subsequent reporting periods based on a tax rate of 30.0% (2019: 30.0%)
388,995
312,042
The above amounts represent the balances of the franking account as at the end of the financial year,
adjusted for:
(a ) franking credits that will arise from the payment of the current tax liability
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date,
and
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
Impact on franking credits of dividends not recognised
(27,528)
(24,776)
On 27 February 2020, the Directors recommended the payment of a final dividend of 25 cents per share, to be paid in April 2020.
Subsequently, given the uncertainty of the duration and impact of COVID-19 pandemic, the Directors decided to reduce the
amount of the dividend announced on 27 February 2020 from 22.5 cents per share to 11.25 cents per share.
9 CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Current assets
Cash at bank and on hand
Short term deposits
Restricted Cash
Cash flows of discontinued operations
Total cash and cash equivalents
CONSOLIDATED
2020
$’000
2019
$’000
207,334
94,170
1,455
303
209,092
-
2
-
94,172
7,363
209,092
101,535
The above figures are reconciled to cash at the end of the financial year as shown in the Statement of Cash Flows.
56 | Eagers Automotive 2020 Annual Report 2020
10 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Trade and other receivables
Allowance for expected credit losses
CONSOLIDATED
2020
$’000
274,502
(5,639)
268,863
Restated
2019
$’000
314,411
(4,888)
309,523
(a) The ageing of trade receivables at 31 December 2020 is detailed below:
Not past due
Past due 0-30 days
Past due 31 days plus
Total
CONSOLIDATED
2020
2019
Gross
$’000
Provision
$’000
Restated
Gross
$’000
Restated
Provision
$’000
252,371
4,560
265,983
15,124
7,007
378
701
274,502
5,639
30,232
18,196
314,411
3,035
171
1,682
4,888
Included in the Group’s trade receivables balance are debtors with a net carrying amount of $21,052,000 (2019: $46,575,000)
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 (2019: 63 days).
(b) Movement in expected credit losses
Opening balance
Additional loss allowance
Addition due to acquisitions
Amounts written off during the year
Closing balance
4,888
1,386
-
(635)
5,639
2,664
1,285
1,214
(275)
4,888
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.
Eagers Automotive 2020 Annual Report | 57
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
11 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
CONSOLIDATED
2020
$’000
Restated
2019
$’000
705,824
1,078,688
(16,748)
689,076
216,472
(16,714)
199,758
148,094
(11,147)
136,947
(31,525)
1,047,163
285,953
(21,112)
264,841
157,409
(10,486)
146,923
Total inventories
1,025,781
1,458,927
12 CURRENT ASSETS – OTHER CURRENT ASSETS
Prepayments and deposits
31,898
23,214
13 NON-CURRENT ASSETS – RECEIVABLES
Other loans receivable
Other non-current receivables
23,148
2,851
25,999
30,893
-
30,893
58 | Eagers Automotive 2020 Annual Report 2020
14 NON-CURRENT ASSETS – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Financial assets at fair value through other comprehensive income
Shares in an unlisted company - Dealercell Holdings Pty Limited (1)
Shares in an unlisted company - AHG Property Syndicate No. 1 Unit Trust (2)
CONSOLIDATED
2020
$’000
2019
$’000
588
1,778
2,366
588
1,778
2,366
(1) The Directors have assessed the fair value of the investment as at 31 December 2020 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.
(2) The Directors have assessed the fair value of the investment as at 31 December 2020 is materially consistent with its cost of acquisition. This is a level 3 fair value
measurement asset being derived from inputs other than quoted prices that are unobservable from the asset either directly or indirectly.
Valuation of Financial assets at fair value through other comprehensive income
Details of the Group’s assets held at fair value through other comprehensive income and information about the fair value
hierarchy as at 31 December 2020 are as follows:
Class of Financial Assets and Liabilities
Unobservable inputs used in determination of fair values
Carrying
Amount
31/12/20
$'000
Carrying
Amount
31/12/19
$'000 Valuation Technique
Key Input
Level 3 Financial assets at fair value
through other comprehensive income
- Unlisted
2,366
2,366
Net asset assessment and
available bid prices from
equity participants
Pre tax operating margin taking into account
managements' experience and knowledge of
market conditions and financial position. Market
information based on available bid prices
There were no transfers between levels in the year.
15 NON-CURRENT ASSETS – INVESTMENTS IN ASSOCIATES
Shares in associate - Vehicle Parts (WA) Pty Ltd
Shares in associate - DealerMotive Limited
Shares in associate - Mazda Parts
CONSOLIDATED
2020
$’000
1,233
-
328
1,561
2019
$’000
1,127
15,629
50
16,806
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting
(refer Note 44).
Reconciliation of the carrying amount of investment in associate is set out in Note 44(b).
Eagers Automotive 2020 Annual Report | 59
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
16 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 2020
Opening net book amount
Additions
Disposals
Depreciation charge
Impairment loss
Rent Reviews
Adjustments to lease terms
Closing net book amount
Consolidated entity
Year ended 31 December 2019
Opening net book amount
Exchange differences
Additions through business combination (1)
Additions
Disposals
Depreciation charge
Impairment loss
Rent Reviews
Closing net book amount
CONSOLIDATED
2020
$'000
801,129
-
Restated
2019
$'000
995,691
12,809
801,129
1,008,500
Note
Property
$’000
Equipment
$’000
Total
$’000
6(b)
995,691
11,220
(68,407)
(119,093)
(73,150)
48,823
6,045
801,129
12,809
1,008,500
-
(12,751)
(58)
-
-
-
-
11,220
(81,158)
(119,151)
(73,150)
48,823
6,045
801,129
Note
Property
$’000
Equipment
$’000
Total
$’000
222,759
(58)
855,566
27,556
(13,044)
(67,096)
(32,800)
2,808
995,691
-
-
13,621
-
-
(812)
-
-
222,759
(58)
869,187
27,556
(13,044)
(67,908)
(32,800)
2,808
12,809
1,008,500
(1) Additions through business combination have been restated following the finalisation of a business combination. Refer to Note 33(c) for further details.
Lease liabilities
Current
Non-current
60 | Eagers Automotive 2020 Annual Report 2020
CONSOLIDATED
2020
$'000
2019
$'000
179,522
171,675
1,091,397
1,020,882
1,270,919
1,192,557
(ii) 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
Buildings
Equipment
Interest expense
Expense relating to short-term leases
Notes
6(a)
6(a)
CONSOLIDATED
2020
$'000
119,093
58
119,151
2020
$'000
53,324
2,146
2019
$'000
67,096
812
67,908
2019
$'000
27,475
2,064
In addition to the above lease payments is a minimum lease payment of $44.7 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 2021. 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.
(iii) 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 undiscounted lease payments
Less: Present value adjustment
Present value of lease payments
CONSOLIDATED
2020
$'000
2019
$'000
179,522
665,413
742,344
1,587,279
(316,360)
1,270,919
171,675
627,756
674,365
1,473,796
(281,239)
1,192,557
Eagers Automotive 2020 Annual Report | 61
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
17 FINANCE LEASE RECEIVABLES
Amounts receivable under finance leases
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
Total undiscounted lease payments
Less: Unearned finance income
Present value of lease payments receivable
Current
Non-current
Total Finance lease receivable
CONSOLIDATED
2020
$’000
27,309
27,969
27,479
26,060
21,547
147,016
277,380
(62,100)
215,280
27,309
187,971
215,280
2019
$’000
-
-
-
-
-
-
-
-
-
-
-
-
During the year, the finance lease receivables increase was driven by a number of sublease arrangements being entered into
associated with the following divestments:
1. Refrigerated Logistics
2. Browns Plains Mazda
3. Browns Plains Group
All subleases are back-to-back arrangements, and as such there is no residual value risk. The Group is not exposed to foreign
currency risk as a result of the lease arrangement, as all leases are denominated in Australian Dollars.
The back-to-back subleases have terms between 3 and 15 years. Leases include a clause to enable upward revision of the rental
charge on an annual basis according to prevailing market conditions.
The directors of the Company estimate the loss allowance on finance lease receivables at the end of the reporting period at an
amount equal to lifetime ECL. None of the finance lease receivables at the end of the reporting period is past due, and taking into
account the historical default experience and the future prospects of the industries in which the lessees operate, together with
the value of collateral held over these finance lease receivables (see note 26), the expected credit loss associated with the finance
lease receivable balance is immaterial. As such, no expected credit loss allowance was recorded in the current year in respect of
finance lease receivables.
62 | Eagers Automotive 2020 Annual Report 2020
18 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
Total property, plant and equipment
CONSOLIDATED
2020
$'000
Restated
2019
$'000
202,384
154,079
356,463
176,031
76,713
252,744
7,405
14,453
43,793
(4,319)
39,474
141,514
(50,590)
90,924
494,266
71,467
(10,616)
60,851
185,529
(57,519)
128,010
456,058
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 2020 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.
Eagers Automotive 2020 Annual Report | 63
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
18 NON-CURRENTS ASSETS - PROPERTY, PLANT & EQUIPMENT CONTINUED
Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at 31 December 2020
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
31/12/20
$'000
Carrying
Amount
31/12/19
$'000
Valuation
Technique
46,140
46,055 Direct
comparison
Key Input
Input
External
valuations
Price/sqm
land
Average /
Range
2020
Average /
Range
2019
Average
$3,071/
sqm
Average
$3,054/
sqm
Range
$1,234 -
$5,065/
sqm
Range
$1,239 -
$5,064/
sqm
Other Key
Information
Land size
Range
(weighted
avg) 2020
Average
3,005 sqm
Range
(weighted
avg) 2019
Average
3,005 sqm
Range
2,015
- 4,853
sqm
Range
2,015
- 4,853
sqm
283,222
179,294 Summation
method,
income
capitalisation
and direct
comparison
External
valuations
industry
benchmarks
Capitalisation
rate
Average
6.4%
Average
6.5%
Net rent /
sqm Land
Average
$115/sqm
Average
$94/sqm
Range
5.4% -
9.5%
Range
4.9% -
9.3%
Range $47
- $330/
sqm
Range $28
- $330/
sqm
Net rent /sqm
GBA
Average
$255/sqm
Average
$209/sqm
Range
$107
- $1,730/
sqm
Range $93
- $1,662/
sqm
Level 3
Truck
Dealership
20,039
20,233 Direct
comparison
External
valuations
Price/sqm
land Price/
sqm GBA
Average
$411/sqm
Average
$415/sqm
Land size
Average
24,353 sqm
Range
$276
- $532/
sqm
Range
$278
- $538/
sqm
Range
23,006
- 25,700
sqm
Net rent/sqm
land
Average
$29/sqm
Average
24,353
sqm
Range
23,006
- 25,700
sqm
Average
$29/sqm
Range $17
- $39/sqm
Range $18
- $39/sqm
Capitalisation
rate
Average
6.9%
Average
6.9%
Range
6.3%
- 7.2%
Range
6.4%
- 7.2%
Level 3
Other
Logistics
7,062
7,162 Income
capitalisation
method
supported by
market
comparison
Total
356,463
252,744
External
valuations
Capitalisation
Rate
Average
6.8%
Average
6.7%
Net rent /sqm
GBA
Average
$129/sqm
Average
$191/sqm
Range
7.8% -
8.5%
Range
7.8% -
8.0%
Range
$143
- $215/sqm
Range
$144
- $215/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.
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 $165,799,000 (2019: $134,562,000). If freehold
buildings were carried at historical cost, its current carrying value (after depreciation) would be $154,079,000 (2019: $76,713,000).
64 | Eagers Automotive 2020 Annual Report 2020
Non-current assets pledged as security
Refer to Note 26 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 2020
Opening net book amount
Exchange differences
Transfers
Additions
Revaluation gain recognised in asset revaluation reserve
Revaluation recognised in profit and loss
Disposals
Depreciation charge
Impairment loss
Freehold
Land
$’000
Buildings
$’000
Construction
in progress
$’000
Leasehold
improvements
$’000
Plant and
equipment
$’000
Total
$’000
176,031
76,713
14,453
60,851
128,010
456,058
-
6
32,450
6,459
(9,996)
(2,566)
-
-
-
10,268
73,428
-
-
(2,928)
(3,402)
-
6
(15,380)
8,326
-
-
-
-
-
320
4,943
2,232
-
-
206
163
532
-
30,210
146,646
-
-
6,459
(9,996)
(21,220)
(26,113)
(52,827)
(5,087)
(2,565)
39,474
(36,563)
(45,052)
(4,989)
(7,554)
90,924
494,266
Carrying amount at end of year
202,384
154,079
7,405
During the period Eagers Automotive Limited acquired Land and Buildings of which $104 million was directly funded through
Capital Loan facilities obtained by the group. Refer to Note 43 for further information on movement in borrowings. Other non cash
movements include circa $20 million of Plant and Equipment (buy backs) transferred to inventory and other immaterial items.
Freehold
Land
$’000
Buildings
$’000
Construction
in progress
$’000
Leasehold
improvements
$’000
Plant and
equipment
$’000
Total
$’000
Consolidated 2019
Opening net book amount
Adjustment for change in accounting policy
Exchange differences
Additions through business combination (1)
Additions
Revaluation gain recognised in asset revaluation reserve
Disposals
Depreciation charge
Impairment loss
220,304
107,018
-
-
-
18,945
13,769
5,042
-
-
182
-
4,352
(16,260)
6
10,987
19,583
-
(76,987)
(32,185)
(4,215)
-
-
(3,344)
-
-
-
Carrying amount at end of year
176,031
76,713
14,453
13,854
10,722
143
39,066
5,745
-
(4,097)
(1,695)
(2,887)
60,851
42,879
388,407
496
85
-
234
84,061
134,114
35,867
80,322
-
13,769
(13,108)
(130,592)
(22,270)
(27,309)
-
(2,887)
128,010
456,058
(1) Additions through business combination have been restated following the finalisation of a business combination. Refer to Note 33(c) for further details.
Eagers Automotive 2020 Annual Report | 65
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
19 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(c) and (d))
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
Acquired through business combinations during the year (Note 33(d))
Balance at the end of the financial year
Movement - Customer Relationships
Balance at the beginning of the financial year
Acquired through business combinations during the year (Note 33(d))
Amortisation charge
Balance at the end of the financial year
CONSOLIDATED
Restated
2019
$’000
757,301
6,965
8,908
773,174
2020
$'000
771,755
6,965
6,854
785,574
757,301
306,783
15,500
-
(1,046)
771,755
6,965
-
6,965
8,908
-
(2,054)
6,854
685,009
(209,238)
(25,253)
757,301
6,542
423
6,965
-
8,908
-
8,908
(a) Impairment tests for goodwill
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (CGU), or groups
of CGUs, that are expected to benefit from the synergies of the combinations. Each unit or group of units to which goodwill is
allocated represents the lowest level at which goodwill is monitored for internal management purposes.
The Group has eight groups of CGUs in the Car retailing segment, grouped by the operating regions (QLD & NT, NSW, VIC & TAS,
SA, WA, NZ), National Used and Finance, with the lowest level for which there are independent cash flows determined to be on an
operating region or State basis. The Group has one CGU for the national Trucks segment.
AHG’s Refrigerated Logistics business was divested on 29 June 2020. No goodwill was allocated to this CGU on acquisition of AHG
based on the estimated fair value of the business at the date.
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 the
balance date. If relevant, this fair value assessment less costs of disposal is conducted by the Directors based on their extensive
knowledge of the car and truck retailing industry including the current market conditions prevailing in the industry. The value-in-
use assessment is conducted using a discounted cash flow (DCF) methodology requiring the Directors to estimate the future cash
flows expected to arise from the CGU’s and then applying a discount rate to calculate the present value.
The DCF model adopted by the Directors utilises cash flow forecasts derived from the 2021 financial budgets approved by the
Board, with a 1.5% growth rate (2019: ranging from 0% to 1.5%) applied thereafter for the period to year 5 and as a terminal growth
rate (2019: 1.5%). The budgets reflect current market dynamics, as well as the cost, liquidity and operational initiatives undertaken
in response to COVID-19. The forecast growth rate and terminal growth rate have been based on consideration of historical
performance and the expected future operating conditions. The terminal growth rate is not deemed to exceed the long-term
average growth rate for the industry and generally accepted future CPI rate. A post-tax discount rate of 7.0% was applied to the
cashflows, incorporating the impact of the new lease standard (AASB 16) on the Group’s cost of debt.
Consideration of COVID-19 and the associated impacts on the automotive retail industry and the wider economy
The Group believes that the assumptions underpinning the DCF calculations used to evaluate the recoverability of goodwill and
intangible assets have been adjusted to reflect reasonable estimates of the impact of COVID-19 and the risks associated with
estimated cash flows. Whilst there is no impairment concerning any of the CGU’s at 31 December 2020, the Directors acknowledge
that there is a heightened level of uncertainty around key assumptions in the current environment. This has the potential to
impact the value-in-use assessment moving forward and potentially the carrying value of the respective goodwill and intangible
assets.
66 | Eagers Automotive 2020 Annual Report 2020
Sensitivity analysis performed
The Group has performed sensitivity analysis of the reasonably possible changes in the assumptions used in the model, including
reducing growth rates from 1.5% to 0% applied for the period to year 5, whilst holding terminal growth at 1.5%. Further, the Group
has sensitised the discount rate from 7.0% to 7.5%. Under each of these independent scenarios, no impairment was identified.
Property, leasehold improvements and right-of-use assets
Following the Directors review of specific non-current assets in respect of Holden dealerships, in respect of leasehold
improvements and property plant and equipment, and Right-of-use assets, the Group has recorded a combined impaired of
$60.2 million, represented by $4.6 million and $55.6 million respectively in the current period.
Following a review of the fair value of the property portfolio, leasehold improvements and Right-of-use assets in respect of leased
properties, the Group has recorded a combined impairment of $30.6 million, represented by $10.0 million, $3.0 million and $17.6
million respectively in the current period.
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
2020
$'000
730,077
5,915
6,854
Restated
2019
$'000
716,123
5,915
8,908
742,846
730,946
41,678
1,050
42,728
785,574
41,178
1,050
42,228
773,174
Eagers Automotive 2020 Annual Report | 67
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
20 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
Inventory valuation
Prepayments
Tax losses
Provisions
Expected credit losses
Employee benefits
Other
Sundry items
CONSOLIDATED
Notes
2020
$’000
Restated
2019
$’000
162,005
176,505
15,036
72,919
12,372
212
(1,737)
-
1,688
36,786
10,371
26,839
11,346
55,334
7,818
6,255
(1,659)
17,332
1,187
33,018
35,420
18,995
Total amounts recognised in profit or loss
174,486
185,046
Amounts recognised directly in equity
Revaluation of financial assets at fair value through other comprehensive income
Revaluation of property, plant and equipment
Share options trust
Total amounts recognised directly in equity
The deferred tax expense included in income tax expense in respect temporary differences resulted
from the following movements:
Opening balance at 1 January 2020
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 2020
-
(17,190)
4,709
(12,481)
176,505
(15,383)
-
-
(1,937)
-
2,168
652
-
(257)
(17,190)
8,906
(8,541)
26,766
43,375
(161)
(21,544)
(4,131)
(11)
7,567
69,516
55,128
162,005
176,505
7(a)
31(a)
31(a)
31(a)
31(a)
(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
(18,927)
180,932
162,005
(19,107)
195,612
176,505
68 | Eagers Automotive 2020 Annual Report 2020
At the reporting date, the Group has no unused revenue tax losses (2019: $57.5 million) available for offset against future profits.
No deferred tax asset has been recognised in respect of capital losses of $160.9 million (2019: $27.8 million) as it is not considered
probable that there will be future capital gains available to utilise the capital losses. The capital losses may be carried forward
indefinitely.
21 CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade and other payables
Trade payables (1)
Other payables
CONSOLIDATED
2020
$’000
Restated
2019
$’000
144,988
291,384
436,372
171,291
206,096
377,387
(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.
22 CURRENT LIABILITIES - BORROWINGS - BAILMENT AND OTHER CURRENT LOANS
(a) Bailment finance and other current loans
Bailment finance
Bank loans
Capital loan
CONSOLIDATED
2020
$’000
2019
$’000
844,307
1,281,947
26,000
7,842
878,149
26,000
2,206
1,310,153
(i) Bailment finance
Bailment finance is provided on a vehicle by vehicle basis by various finance providers at an average interest rate of 3.64% p.a.
applicable at 31 December 2020 (2019: 3.06%). 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 26.
23 CURRENT LIABILITIES – CURRENT TAX LIABILITIES
Income tax
24 CURRENT LIABILITIES – PROVISIONS
Annual Leave
Long Service Leave
Buyback provision
16,381
25,224
CONSOLIDATED
2020
$’000
62,977
51,279
17,116
131,372
Restated
2019
$’000
56,603
50,543
19,000
126,146
Eagers Automotive 2020 Annual Report | 69
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
25 CURRENT LIABILITIES – OTHER CURRENT LIABILITIES
Deferred revenue
CONSOLIDATED
2020
$’000
23,965
2019
$’000
26,576
Deferred revenue relates to recognition of revenue in accordance with the performance obligations in certain Warranty and
Buyback contracts.
26 NON-CURRENT LIABILITIES – BORROWINGS (SECURED)
Term facility
Capital loan
Secured liabilities
Total secured liabilities (current and non-current) are:
Term facility (i)
Capital loan (ii)
Bailment finance (iii)
CONSOLIDATED
2020
$’000
111,500
193,013
304,513
2019
$’000
306,313
75,572
381,885
137,500
200,855
844,307
332,313
77,778
1,281,947
1,182,662
1,692,038
(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 11.
Refer to Note 32 for maturities.
Assets pledged as security
The carrying amounts of assets pledged as security are:
Non-current assets pledged as security
Freehold land and buildings - first mortgage
Other non-current assets
Current assets pledged as security
Inventories
Other current assets
Total assets pledged as security
70 | Eagers Automotive 2020 Annual Report 2020
CONSOLIDATED
2020
$’000
Restated
2019
$’000
349,625
970,529
844,307
380,280
265,089
752,458
1,281,947
688,817
2,544,741
2,988,311
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)
Capital loan
Bailment finance
Bank guarantees
CONSOLIDATED
2020
$’000
2019
$’000
367,600
130,000
314,930
398,000
31,500
76,914
1,808,588
1,452,374
60,918
61,453
2,682,036
2,020,241
137,500
200,855
844,307
50,417
332,125
76,914
1,281,946
53,841
1,233,079
1,744,826
230,100
130,000
114,075
964,281
10,501
1,448,957
65,875
31,500
-
170,428
7,612
275,415
(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.
27 NON-CURRENT LIABILITIES - PROVISIONS
Long Service Leave
Other provisions
CONSOLIDATED
2020
$’000
8,574
17,923
26,497
Restated
2019
$’000
6,234
31,376
37,610
Other provisions balance held at reporting date relates to certain buyback arrangements within the Group.
28 NON-CURRENT LIABILITIES - DEFERRED REVENUE
Deferred revenue
20,906
50,113
Deferred revenue relates to recognition of revenue in accordance with the performance obligations in certain Warranty and
Buyback contracts.
Eagers Automotive 2020 Annual Report | 71
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
29 SEGMENT INFORMATION
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.
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.
(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 and Automotive Holdings Group Limited.
Geographic Information
The Group operates in two principal geographic locations, being Australia and New Zealand.
72 | Eagers Automotive 2020 Annual Report 2020
(e) Segment results
Segment reporting 2020
Sales to external customers
Inter-segment sales
TOTAL SALES REVENUE
SEGMENT RESULT
Operating profit before interest
External interest expense allocation
OPERATING CONTRIBUTION
Share of net profit of equity accounted investments
Business acquisition and divestment costs
Impairment of non-current assets
Property revaluation
Profit on sale of property/businesses & rent waivers
Business integration costs
Government wage subsidies
Brand restructure compensation
SEGMENT PROFIT
Unallocated corporate expenses
PROFIT BEFORE TAX
Income tax expense
NET PROFIT
Property
$’000
Investments
$’000
Eliminations
$’000
Consolidated
$’000
Car
Retailing
$’000
Truck
Retailing
$’000
7,776,540
971,332
-
-
7,776,540
971,332
256,780
(71,468)
185,312
970
(612)
(80,704)
-
13,996
(1,689)
26,391
(9,059)
17,332
-
(1,177)
-
-
441
-
123,669
6,899
31,751
-
1,803
14,903
16,706
11,830
(7,857)
3,973
-
-
-
(9,996)
1,962
-
-
-
-
-
-
-
-
-
2,788
-
-
-
860
-
-
-
272,693
23,495
(4,061)
3,648
-
8,749,675
(14,903)
(14,903)
-
8,749,675
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
295,001
(88,384)
206,617
3,758
(1,789)
(80,704)
(9,996)
17,259
(1,689)
130,568
31,751
295,775
(15,669)
280,106
(88,575)
191,531
(166,257)
4,033,651
3,109,074
924,577
Depreciation and amortisation
(131,435)
(31,402)
(3,420)
ASSETS
Segment assets
LIABILITIES
Segment liabilities
NET ASSETS
3,283,011
403,274
347,366
2,506,415
381,804
220,855
776,596
21,470
126,511
-
-
-
-
Eagers Automotive 2020 Annual Report | 73
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
29 SEGMENT INFORMATION CONTINUED
(e) Segment results continued
Segment reporting 2019
Sales to external customers
Inter-segment sales
Total sales revenue
SEGMENT RESULT
Operating profit before interest
External interest expense allocation
OPERATING CONTRIBUTION
Investment revaluation
Profit on sale of property/businesses & rent waivers
Business integration costs
Derecognition of contingent consideration
Business restructuring costs
SEGMENT PROFIT
Unallocated corporate expenses
PROFIT BEFORE TAX
Income tax expense
NET PROFIT
Share of net profit of equity accounted investments
Business acquisition and divestment costs
-
(8,617)
-
-
Impairment of non-current assets
(233,323)
(11,602)
Car
Retailing
$’000
Truck
Retailing
$’000
Property
$’000
Investments
$’000
Eliminations
$’000
Consolidated
$’000
5,224,977
590,751
1,054
-
-
20,869
5,224,977
590,751
21,923
138,613
10,253
(47,618)
(8,520)
90,995
1,733
15,874
(6,996)
8,878
-
5,816,979
(20,869)
-
(20,869)
5,816,979
197
-
197
197
(2,435)
(2,238)
339
(3,903)
-
-
-
-
-
-
-
-
-
-
-
14,457
-
-
-
-
23,250
(4,442)
19,674
(1,667)
-
-
-
-
-
145,392
(80,331)
-
-
-
-
-
-
-
-
(114,130)
(9,869)
23,335
139,590
(80,331)
Depreciation and amortisation
68,756
23,098
3,363
-
ASSETS
Segment assets
LIABILITIES
Segment liabilities
NET ASSETS
3,633,310
466,026
252,568
11,264
2,972,684
458,082
96,884
-
660,626
7,944
155,684
11,264
-
-
-
-
74 | Eagers Automotive 2020 Annual Report 2020
164,937
(65,569)
99,368
339
(12,520)
(244,925)
65,061
37,707
(4,442)
19,674
(1,667)
(41,405)
(21,899)
(63,304)
(17,176)
(80,480)
95,217
4,363,168
3,527,650
835,518
30 CONTRIBUTED EQUITY
(a) Paid up capital
Ordinary shares - Fully paid
CONSOLIDATED
2020
$’000
2019
$’000
1,173,069
1,173,069
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 2,274,938 shares, which are reported in share capital (2019: 164,204).
(b) Movements in ordinary share capital
Date
Details
01-Jan-2020
Opening balance
31-Dec-2020
Closing balance
01-Jan-2019
Opening balance
26-Aug-2019
Issue of shares to AHG shareholders
30-Aug-2019
Issue of shares to AHG shareholders
05-Sep-2019
Issue of shares to AHG shareholders
11-Sep-2019
Issue of shares to AHG shareholders
17-Sep-2019
Issue of shares to AHG shareholders
23-Sep-2019
Issue of shares to AHG shareholders
24-Oct-2019
Issue of shares to AHG shareholders
Number of
shares
256,933,106
256,933,106
191,309,301
33,334,047
5,110,248
2,242,568
4,632,943
5,242,610
8,392,874
6,668,515
Issue price
-
-
-
$11.44
$12.37
$13.30
$13.40
$13.21
$13.55
$12.33
$'000
1,173,069
1,173,069
371,405
381,342
63,214
29,826
62,081
69,255
113,723
82,223
31-Dec-2019
Closing balance
256,933,106
-
1,173,069
Eagers Automotive 2020 Annual Report | 75
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
31 RESERVES AND RETAINED EARNINGS
(a) Reserves:
Asset revaluation reserve
Share-based payments reserve
Foreign currency translation reserve
Business combination reserve
Investment revaluation reserve
Movements:
Asset revaluation reserve:
Balance at beginning of the financial year
Revaluation surplus during the year - gross
Deferred tax
Transfer to retained earnings relating to properties sold
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
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
Foreign currency translation reserve:
Balance at beginning of the financial year
Other Comprehensive Income
Currency translation differences arising during the year
Balance at the end of the financial year
76 | Eagers Automotive 2020 Annual Report 2020
Note
18
20
31(b)
20
20
20
CONSOLIDATED
2020
$’000
32,834
(62,510)
1,204
(479,042)
(72,686)
(580,200)
28,312
6,459
(1,937)
-
32,834
-
-
-
-
Restated
2019
$’000
28,312
(37,863)
1,153
(479,042)
(72,686)
(560,126)
56,820
13,769
(4,131)
(38,146)
28,312
(25)
36
(11)
-
(37,863)
(49,628)
(2,168)
8,610
(31,497)
408
7,567
4,890
(2,598)
1,906
(62,510)
(37,863)
(72,686)
-
-
(72,686)
(479,042)
-
(479,042)
1,153
51
-
1,204
(131,473)
80,331
(21,544)
(72,686)
-
(479,042)
(479,042)
-
-
1,153
1,153
(b) Retained earnings
Retained profits at the beginning of the financial year
Net (loss)/profit for the year
Adjustment on finalisation of business combination
Less: NCI Share
Transfer from asset revaluation reserve on sale of properties
Dividends provided for or paid
Retained profits at the end of the financial year
(c) Nature and purpose of other reserves
Note
8
CONSOLIDATED
2020
$’000
199,463
156,211
-
(8,921)
-
(28,905)
317,848
Restated
2019
$’000
380,557
(129,124)
(10,469)
(2,789)
39,368
(78,080)
199,463
(i) Property, plant and equipment revaluation reserve
The property, plant and equipment revaluation reserve is used to record increments and decrements on the revaluation of non-
current assets as described in Note 1(p).
(ii) Hedging reserve
The hedging reserve contains the effective portion of interest rate hedge arrangements incurred as at the reporting date.
(iii) 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.
Business Combination Reserve
The reserve is used to recognise difference between the value of consideration paid to acquire the non-controlling interest, the
carrying value of the non-controlling interest and the value of shares acquired.
Eagers Automotive 2020 Annual Report | 77
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
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 and Risk Committee
(the 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 and Risk 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.
78 | Eagers Automotive 2020 Annual Report 2020
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, receivables,
finance lease receivables and other loans receivable), 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 effected by
the net current liability position at 31 December 2020, 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 26.
MARKET RISK
Market risk is the risk that changes in market prices, such as
interest rates, will affect the consolidated entity’s income
or the value of its holdings of financial instruments. The
objective of market risk management is to manage and
monitor market risk exposures within acceptable parameters,
whilst optimising the return on risk.
(i) Interest rate risk
The Group’s policy is to keep between 0% and 50% of its
borrowings at fixed rates of interest. As at 31 December 2020,
53.2% (2019: 12%) of the Group’s borrowings were at a fixed
rate of interest (excluding bailment interest).
The consolidated entity classifies interest rate swaps as cash
flow hedges.
(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 $5.9 million (2019: $4.3 million) 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.
All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash
flow hedges in order to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. The interest
rate swaps and the interest payments on the loan occur simultaneously and the amount deferred in equity is recognised in profit
or loss over the loan period.
CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position.
There were no changes in the consolidated entity’s approach to capital management during the period.
CREDIT RISK
(i) Exposure to Credit Risk
The carrying amount of financial assets (as per Notes 10 and 13) 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 10.
CONSOLIDATED
2020
$’000
274,502
(5,639)
Restated
2019
$’000
314,411
(4,888)
268,863
309,523
(iii) Fair values & Exposures to Credit & Liquidity Risk
Detailed in the following table, the Directors consider that the carrying amounts of financial assets and financial liabilities
recorded in the financial statements approximate their fair value.
Financial assets
Trade and other receivables net of expected credit losses
Cash and cash equivalents
Other non-current receivables
Financial liabilities
Bills payable and fully drawn advances
Capital loan
Vehicle bailment
Trade and other payables
268,863
209,092
25,999
309,523
94,172
30,893
503,954
434,588
137,500
200,855
332,313
77,778
844,307
1,281,947
436,372
377,387
1,619,034
2,069,425
Eagers Automotive 2020 Annual Report | 79
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
32 FINANCIAL INSTRUMENTS CONTINUED
(iii) Fair values & Exposures to Credit & Liquidity Risk continued
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.
Maturity profile
The below table provides a maturity profile for t he Group’s financial instruments that are exposed to interest rate risk at balance
date. The amounts disclosed in the table are gross contractual undiscounted cash flows (principal and interest) required to settle
the respective liabilities. The interest rate is based on the rate applicable as at the end of the financial period.
Contractual maturities of financial assets and liabilities
1 - 2 years
$’000
2 - 3 years
$’000
3 - 4 years
$’000
4 - 5 years
$’000
5+ years
$’000
Total
$’000
-
-
-
-
1,791
1,791
1.79%
10,316
3.17%
-
-
-
-
-
-
1,791
1,791
1.86%
29,610
3.17%
-
-
-
-
-
-
14,565
14,565
1.71%
209,092
844,307
470,915
23,520
1,338,742
202,451
328,584
3.17%
23,148
294,862
-
436,372
At 31 December 2020
INTEREST BEARING
Floating rate
Financial assets
Cash and cash equivalents
Average interest rate
Financial liabilities
Vehicle bailment (current)
Fully drawn advances
Capital loan (Non-current)
Average interest rate
Fixed rate
Financial liabilities
Capital loan (Non-current)
Average interest rate
NON INTEREST BEARING
Financial assets
Trade debtors
Financial liabilities
Less than
1 year
$’000
209,092
.10%
844,307
32,114
1,791
878,212
2.32%
-
-
-
247,206
1,791
248,997
2.21%
-
-
-
191,595
1,791
193,386
2.35%
12,429
3.17%
12,429
3.17%
61,349
3.17%
271,714
-
-
-
-
Trade and other payables
436,372
80 | Eagers Automotive 2020 Annual Report 2020
1 - 2 years
$’000
2 - 3 years
$’000
3 - 4 years
$’000
4 - 5 years
$’000
5+ years
$’000
Total
$’000
At 31 December 2019
INTEREST BEARING
Floating rate
Financial assets
Cash and cash equivalents
Average interest rate
Financial liabilities
Vehicle bailment (current)
Fully drawn advances
Capital loan (Non-current)
Less than
1 year
$’000
94,172
.50%
1,281,947
36,596
1,875
1,320,418
Average interest rate
3.20%
4.05%
-
-
-
9,786
2,211
11,997
-
-
-
9,786
7,053
16,839
4.05%
-
-
-
221,598
2,038
223,636
3.87%
2,375
4.34%
2,187
4.34%
2,187
4.34%
49,958
4.34%
Fixed rate
Financial liabilities
Capital loan (Non-current)
Average interest rate
NON INTEREST BEARING
Financial assets
Trade debtors
Financial liabilities
-
-
-
97,652
2,038
99,690
3.92%
-
-
-
-
-
-
-
15,560
24,713
40,273
4.06%
94,172
1,281,947
390,978
39,928
1,712,853
$23
-
-
56,707
$17
30,893
340,416
-
377,387
Trade and other payables
377,387
309,523
-
-
-
-
-
-
(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.
Eagers Automotive 2020 Annual Report | 81
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
33 INVESTMENTS IN SUBSIDIARIES
Deed of Cross Guarantee
Name of Entity
Eagers Automotive Limited
360 Finance Pty Ltd
360 Financial Services Australia Pty Ltd
360 Insurance Services 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
ACN 132 712 111 Pty Ltd
Adtrans Australia Pty Ltd
Adtrans Automotive Group Pty Ltd
Adtrans Corporate Pty Ltd
Adtrans Group Limited
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
82 | Eagers Automotive 2020 Annual Report 2020
Equity Holding
Member of
DOCG
Membership
Group
Opt In/Out
2020% 2019% 2020
2019
2020
2019
2020
2019
100
100
100
100
100
100
100
100
100
100
80
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
100
100
100
100
100
100
100
100
100
100
100
100
80
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
100
100
Y
Y
Y
Y
Y
Y
Y
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
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
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
Y
Y
Y
Y
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
N/A
N/A
N/A
N/A
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
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
C
C
C
C
Opt In
Opt Out
Opt In
Equity Holding
Member of
DOCG
Membership
Group
Opt In/Out
2020% 2019% 2020
2019
2020
2019
2020
Name of Entity
AHG WA (2015) Pty Ltd
AHGCL 2016 Pty Ltd
AHGSW 2018 Pty Ltd
AP Townsville Pty Ltd
APE Cars Mgmt Pty Ltd
Associated Finance Pty Limited
Auckland Auto Collection Limited
Austral Pty Ltd
AUT 6. Pty Ltd
Auto Ad Pty Ltd
Automotive Holdings Group (Queensland) Pty Ltd
Automotive Holdings Group (Victoria) Pty Ltd
Automotive Holdings Group Limited
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 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 (S.A) Pty Ltd
100
100
100
100
100
100
100
100
100
100
100
100
100
80
80
100
100
100
100
100
80
80
80
80
80
53
53
53
100
100
100
100
100
100
100
100
100
100
100
100
100
80
80
100
100
100
100
100
80
80
80
80
80
53
53
-
Carlins Automotive Auctioneers (WA) Pty Ltd
100
100
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
53
53
53
100
100
100
100
100
100
100
100
53
53
53
100
100
100
100
100
100
100
100
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
N
N
N
N
N
N
N
N
N
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
N
N
N
N
N
N
-
N
N
N
N
Y
Y
Y
Y
Y
Y
Y
Y
C
C
C
C
C
C
C
C
C
C
C
C
N/A
N/A
C
C
C
C
C
C
C
C
C
C
C
C
EC
EC
N/A
N/A
C
C
C
C
C
EC
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
C
C
C
C
C
C
C
C
C
C
C
C
C
EC
N/A
N/A
N/A
N/A
N/A
N/A
-
N/A
N/A
N/A
N/A
C
C
C
C
C
C
C
C
2019
Opt In
Opt In
Opt In
Opt In
Eagers Automotive 2020 Annual Report | 83
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
33 INVESTMENTS IN SUBSIDIARIES CONTINUED
Deed of Cross Guarantee continued
Name of Entity
2020% 2019% 2020
2019
2020
2019
2020
2019
Equity Holding
Member of
DOCG
Membership
Group
Opt In/Out
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
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
84 | Eagers Automotive 2020 Annual Report 2020
80
80
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
80
80
100
100
100
100
99
80
80
80
80
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
80
80
100
100
100
100
90
80
80
100
100
80
80
80
100
100
100
-
100
-
100
100
80
80
80
100
100
100
100
100
100
100
100
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
Y
Y
Y
N
N
Y
N
N
Y
Y
Y
Y
N
Y
N
Y
Y
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
Y
Y
Y
N
N
Y
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
N/A
N/A
N/A
N/A
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
EC
EC
C
C
C
C
C
C
C
C
C
C
C
C
N/A
N/A
N/A
N/A
C
C
C
C
EC
N/A
N/A
C
N/A
N/A
EC
C
C
C
N/A
C
N/A
C
C
C
C
C
C
EC
N/A
N/A
C
N/A
N/A
EC
C
C
C
C
C
C
C
C
Opt Out
Opt In
Opt In
Opt In
Opt In
Opt In
Opt Out
Opt In
Opt Out
Opt In
Name of Entity
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
Rand Transport (1986) Pty Ltd
Rand Transport Pty Ltd
Rent Two Buy Pty Ltd
RL Sublessor Pty Ltd
Sabalan Holdings Pty Ltd
Equity Holding
Member of
DOCG
Membership
Group
Opt In/Out
2020% 2019% 2020
2019
2020
2019
2020
2019
100
100
100
80
80
100
100
100
80
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
80
80
100
100
100
100
100
99
-
-
100
100
80
100
100
100
80
80
100
100
100
80
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
80
80
100
100
100
100
100
99
100
100
100
-
80
Y
N
N
N
N
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
Y
Y
Y
N
N
N
Y
N
N
Y
N
N
N
N
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
Y
Y
Y
N
Y
Y
Y
N
N
C
N/A
N/A
N/A
N/A
C
C
C
C
N/A
N/A
N/A
N/A
C
C
C
N/A
N/A
C
C
C
C
C
C
C
C
C
C
C
C
EC
EC
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
N/A
N/A
N/A
N/A
C
C
C
C
C
N/A
N/A
N/A
C
N/A
N/A
C
C
C
C
C
N/A
C
C
C
N/A
N/A
Opt In
Opt In
Opt In
Opt In
Opt Out
Opt Out
Opt In
Opt Out
Eagers Automotive 2020 Annual Report | 85
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
33 INVESTMENTS IN SUBSIDIARIES CONTINUED
Deed of Cross Guarantee continued
Name of Entity
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 Ltd
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
C - Member of the Closed Group
EC - Member of the Extended Closed Group
Equity Holding
Member of
DOCG
Membership
Group
Opt In/Out
2020% 2019% 2020
2019
2020
2019
2020
2019
80
-
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
80
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
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
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
N/A
N/A
C
C
N/A
C
C
C
EC
EC
Opt Out
Opt In
Opt In
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
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
C
Opt In
Opt In
All subsidiaries that are either directly controlled by Eagers Automotive Limited, or are wholly owned within the Group, have
ordinary class of shares and are incorporated in Australia or New Zealand.
All entities noted as members of the Deed of Cross Guarantee (DOCG) above, were parties to a Deed of Cross Guarantee with
Eagers Automotive 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 2020. Under the DOCG each
of these companies guarantee the debts of the other named companies.
86 | Eagers Automotive 2020 Annual Report 2020
(a) Members of the Closed Group
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
2020 is set out below:
Deed of Cross Guarantee
Statement of Profit or Loss
Profit/(Loss) before tax from continuing operations
Addback: AASB16 Closed Group adjustment
Profit/(Loss) before tax from continuing operations
Income tax expense from continuing operations
Profit/(loss) for the period from continuing operations
(Loss) for the period from discontinued operations
Profit/(Loss) for the year
Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Finance lease receivable
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
Finance lease receivable
Right-of-use assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
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
2020
$’000
2019
$’000
198,694
(83,854)
553
199,247
(67,687)
131,560
-
-
(83,854)
(10,525)
(94,379)
(48,644)
131,560
(143,023)
172,663
235,378
82,478
268,918
813,512
1,280,699
29,820
27,309
20,573
-
1,278,682
1,652,668
-
507,155
1,278,682
2,159,823
23,148
588
1,233
474,122
667,283
147,219
9,837
187,971
718,161
30,893
2,366
16,756
439,910
725,404
158,874
13,030
-
896,143
2,229,562
2,283,376
3,508,243
4,443,199
326,232
680,536
24,235
112,306
15,864
164,104
330,767
1,147,462
28,655
92,384
40,180
154,918
1,323,277
1,794,366
-
508,666
1,323,277
2,303,032
Eagers Automotive 2020 Annual Report | 87
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
33 INVESTMENTS IN SUBSIDIARIES CONTINUED
Deed of Cross Guarantee
Non-current liabilities
Borrowings
Deferred revenue
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
2020
$’000
2019
$’000
304,513
20,906
24,264
1,014,753
381,869
43,804
43,529
913,014
1,364,436
1,382,216
2,687,713
3,685,248
820,530
757,951
1,173,069
1,156,938
(599,431)
(602,362)
246,892
820,530
-
820,530
193,952
748,528
9,423
757,951
(b) Members of the Extended Closed Group
Entities that are parties to the Deed of Cross Guarantee and controlled by Eagers Automotive 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 Eagers Automotive Limited, after eliminating all transactions between parties to the
deed of cross guarantee, at 31 December 2020 is set out below:
Deed of Cross Guarantee
Statement of Profit or Loss
Profit/(Loss) before tax from continuing operations
Addback: AASB16 Closed Group adjustment
Profit/(Loss) before tax from continuing operations
Income tax expense from continuing operations
Profit/(loss) for the period from continuing operations
(Loss) for the period from discontinued operations
Profit/(Loss) for the year
Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Finance lease receivable
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
88 | Eagers Automotive 2020 Annual Report 2020
2020
$’000
2019
$’000
252,610
(83,854)
328
252,938
(73,484)
179,454
-
-
(83,854)
(10,525)
(94,379)
(48,644)
179,454
(143,023)
173,360
245,710
82,738
280,246
862,063
1,334,656
30,016
27,309
1,338,458
-
21,031
-
1,718,671
507,155
1,338,458
2,225,826
23,148
588
1,233
30,893
2,366
16,756
Deed of Cross Guarantee
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non-current assets
Finance lease receivable
Right-of-use assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
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
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
2020
$’000
477,058
700,616
149,049
9,837
187,971
2019
$’000
442,717
758,737
161,005
13,030
-
736,978
918,057
2,286,478
2,343,561
3,624,936
4,569,387
314,441
726,228
21,600
116,919
16,517
167,992
335,294
1,195,021
25,466
96,803
40,759
158,812
1,363,697
1,852,155
-
508,666
1,363,697
2,360,821
304,513
20,906
24,264
381,869
43,804
44,227
1,029,540
934,043
1,379,223
1,403,943
2,742,920
3,764,764
882,016
804,623
1,173,069
1,173,069
(580,201)
281,430
874,298
7,718
(583,131)
205,262
795,200
9,423
882,016
804,623
All 100% owned subsidiaries were parties to a deed of cross guarantee with Eagers Automotive Limited pursuant to Australian
Securities and Investments Commission (ASIC) Corporations (Wholly-owned Companies) Instrument 2016/785 which has been
lodged with and approved by ASIC as at 31 December 2020. 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 Eagers Automotive on or about on 24 October 2019 (Acquisition) pursuant to a
compulsory acquisition by Eagers Automotive of all of the remaining shares in AHG that were not already owned by Eagers
Automotive following the close of Eagers Automotive’ 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 Eagers
Eagers Automotive 2020 Annual Report | 89
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
33 INVESTMENTS IN SUBSIDIARIES CONTINUED
Automotive 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) Eagers Automotive 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 Eagers Automotive 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; and
(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.
All subsidiaries that are either directly controlled by Eagers Automotive Limited, or are wholly owned within the Group, have
ordinary class of shares and are incorporated in Australia or New Zealand.
Information relating to Eagers Automotive Limited (‘the parent entity’)
CONSOLIDATED
2020
$’000
Restated
2019
$’000
-
637,655
637,655
13,883
-
13,883
1,104
616,165
617,269
-
58,945
58,945
1,173,069
38,898
1,173,069
(55,410)
1,683
1,683
(479,042)
(479,042)
(48,326)
(62,510)
623,772
(48,326)
(33,650)
558,324
85,373
(148,944)
-
85,373
58,787
(90,157)
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
Total comprehensive income
Refer Notes 34(a) and 34(b) in respect of guarantees entered into by the parent entity in relation to debts of its subsidiaries.
90 | Eagers Automotive 2020 Annual Report 2020
(c) Acquisition of AHG
On 19 August 2019, Eagers Automotive Limited acquired 62.53% of AHG Limited for a total consideration of $617.4 million. At 31
December 2019, the fair value of the assets acquired and liabilities assumed were recognised on a provisional basis. During the
period, the fair value of assets acquired and the liabilities acquired has been finalised and the effect of the financial statements
has been summarised below. The goodwill of $676.8 million represents the residual value on the purchase price over the fair value
of the identifiable assets and liabilities.
The movement in relation to the fair value adjustments reflect the finalisation of the fair value of property, plant and equipment,
right-of-use assets, inventories and contingent liabilities. Relevant balances as at 31 December 2019 have been restated as a
consequence.
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
Provisional fair
value at
31 December 2019
$’000
Measurement
period
adjustments
$’000
Final fair value at
31 December
2019*
$’000
344,509
295,131
(13,574)
626,066
36,199
662,265
-
-
(8,708)
(8,708)
23,222
14,514
344,509
295,131
(22,282)
617,358
59,421
676,779
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
Provisional fair
value at
31 December 2019
$’000
Measurement
period
adjustments
$’000
Final fair value at
31 December
2019*
$’000
66,745
202,611
911,984
13,924
117,156
155,906
873,787
41,839
571,548
-
(632)
(4,143)
-
8,974
(21,792)
(4,600)
-
-
66,745
201,979
907,841
13,924
126,130
134,114
869,187
41,839
571,548
2,955,500
(22,193)
2,933,307
247,045
936,381
1,268,365
549,317
3,001,108
(45,608)
9,409
9,409
3,813
-
(2,861)
-
952
(23,145)
(77)
(77)
250,858
936,381
1,265,504
549,317
3,002,060
(68,753)
9,332
9,332
Total identified liabilities acquired at fair value
(36,199)
(23,222)
(59,421)
Eagers Automotive 2020 Annual Report | 91
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
33 INVESTMENTS IN SUBSIDIARIES CONTINUED
(d) Acquisition of other businesses
The Group acquired the following business during the 2020 year as detailed below:
Year
2020
2020
2020
Name of business
Toyota Albion
Daimler Trucks Somerton
Indooroopilly Honda
Date of acquisition
Principal activity
Proportion acquired
31 January 2020
Motor Dealership
31 July 2020
Motor Dealership
12 November 2020
Motor Dealership
100%
100%
100%
The acquired businesses did not contribute materially to the consolidated profit before tax or consolidated revenue for the period.
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
Receivables, prepayments
Inventory
Property, plant and equipment
Creditors, borrowings and provisions
Net assets acquired
Acquisition cost
Goodwill on acquisition (i)
Toyota Albion
$’000
14,932
14,932
Daimler
Trucks
Somerton
$’000
1,698
1,698
Indooroopilly
Honda
$’000
2020
Total
Consolidated
$’000
111
111
16,741
16,741
2020
$’000
111
2,249
168
(1,287)
1,241
16,741
15,500
(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
Cash consideration on acquisition
Net cash flow on acquisition of business
2020
$’000
16,741
16,741
92 | Eagers Automotive 2020 Annual Report 2020
(e) Acquisition of businesses in prior year
The Group acquired the following business during the 2019 year, which have been finalised in 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
Right-of-use assets
Property, plant and equipment
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
12,468
1,509
(12,468)
(1,411)
2,339
8,651
6,312
(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.
(f) Business disposal and discontinued operations
The Group sold the following business during the 2020 year as detailed below:
Year
2020
2020
2020
2020
2020
2020
2020
2020
2020
Name of business
Frankston Mitsubishi and Kia (1)
Bunbury Trucks (1)
Refrigerated Logistics (2)
Stillwell Kia (1)
Knox Mitsubishi (1)
Date of sale
16 March 2020
15 May 2020
29 June 2020
3 July 2020
8 July 2020
Principal activity
Motor Vehicle Dealership
Motor Dealership
Other Logistics
Motor Dealership
Motor Dealership
Caloundra City Autos (1)
16 October 2020
Motor Vehicle Dealership
Zupps Beaudesert (1)
6 November 2020
Motor Vehicle Dealership
Zupps Browns Plains (1)
12 November 2020
Motor Vehicle Dealership
Browns Plains Mazda (1)
13 November 2020
Motor Vehicle Dealership
Proportion
disposed
100%
100%
100%
100%
100%
100%
100%
100%
100%
Eagers Automotive 2020 Annual Report | 93
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
33 INVESTMENTS IN SUBSIDIARIES CONTINUED
(f) Business disposal and discontinued operations continued
(1) 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
CONSOLIDATED
2020
$'000
425
5,052
2,013
1,046
(6,206)
2,330
7,747
5,417
(2) Refrigerated Logistics
On the 29th June 2020, Eagers Automotive Limited divested Refrigerated Logistics (RL), a business acquired as part of the
acquisition of AHG Limited in 2019 and immediately classified as an asset Held for Sale, see Note 33(c). The Buyer, Anchorage
Capital Partners, acquired the business on a debt-free basis, with the sale proceeds at completion directed to the repayment
of the finance leases and hire purchase liabilities associated with RL. The loss from discontinued operations reported in the
Statement of Profit or Loss represents a combination of RL trading losses for the period ended 30 June 2020 and the loss realised
on divestment of the business.
As part of the divestment, Eagers Automotive Limited entered into a number of back-to-back sublease arrangements for
property leases with the buyer. These right of use assets and lease liabilities of the head leases were reclassified from Assets
Held for Sale to its relevant account balances in the statement of financial position. Eagers Automotive Limited have applied the
relevant accounting standard, AASB 16, and accounts for the sublease arrangements as finance leases. The accounting policy
applied has been detailed in Note 1.
Accounting Treatment of Refrigerated Logistics
RL has been classified as a discontinued operation within the Statement of Profit or Loss, on the basis that it was classified as
held for sale on acquisition of AHG (see Note 33(c)) and was a subsidiary acquired exclusively with a view to resell. Therefore, the
Group elected to apply the reduced disclosure in accordance with AASB 5 Non Current Assets Held for Sale and Discontinued
Operations. The Group recorded a net loss of $35.3 million in relation to RL for the period up to its disposal on 29 June 2020 (loss
from discontinued operations in 2019: $59.0 million, comprising impairment and operational losses).
Further, in accordance with AASB 5, a single cash flow statement combining operating, financing and investing cash flows from
both continuing and discontinuing operations has been reported. Given Eagers Automotive satisfies the criteria to be classified as
held for sale on acquisition, Eagers Automotive Limited is not required to disclose the net cash flows attributable to the operating,
investing and financing activities separately in the notes.
94 | Eagers Automotive 2020 Annual Report 2020
(g) Disposal of businesses in prior year
The Group sold the following business during the 2019 year as detailed below:
Year
Name of business
2019
2019
2019
Austral Motor Group
Kloster Motor Group
Mornington Auto Group
Date of sale
Principal activity
Proportion disposed
May 2019
Motor Dealership
October 2019
Motor Dealership
December 2019
Motor Dealership
100%
100%
100%
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
CONSOLIDATED
2019
$'000
18,623
71,913
3,784
25,253
(74,327)
45,246
64,954
19,708
(h) Details of non-wholly owned subsidiaries
The table below shows details of non-wholly owned subsidiaries of the Group. The Group have reviewed its subsidiaries that have
non-controlling interests and note that they are not material to the reporting entity.
Profit allocated to
non-controlling interests
Accumulated
non-controlling interests
Individually immaterial subsidiaries with non-controlling interest
2020
$’000
8,921
2019
$’000
2,789
Movement - Non-Controlling Interest
Balance at the beginning of the financial year
Profit for the year
Acquisition of non-controlling interest
Payment of dividend
Disposal of non-controlling interest
Balance as at the end of the financial year
2020
$’000
13,860
2020
$’000
9,423
8,921
-
(4,484)
-
13,860
2019
$’000
9,423
CONSOLIDATED
2019
$’000
8,002
2,789
13,574
(1,368)
(13,574)
9,423
Eagers Automotive 2020 Annual Report | 95
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
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 2020 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
Eagers Automotive 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 2020. 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 $3,095,192,000 (2019: $3,947,518,000).
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:
Non-audit services
CONSOLIDATED
2020
$'000
2,263
2019
$'000
3,885
1,315
1,376
-
500
1,308
2,623
974
2,850
(i) Non audit services include $1,143,000 of integration support services performed for the Group relating to the acquisition of AHG. This is in addition to $162,000 in Tax
Compliance Services and $3,000 for Compliance Assurance Services.
37 SUBSEQUENT EVENTS
In January 2021, the Group completed the acquisition of four properties under two separate asset purchase agreements. The
Group acquired a portfolio of three properties in WA for $30.3 million, and a site located in Castle Hill, NSW for $76.3 million.
No other matter or circumstance has occurred subsequent to year end that has significantly affected, or may significantly affect,
the operations of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent
financial years.
96 | Eagers Automotive 2020 Annual Report 2020
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 Eagers Automotive 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.
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.
CONSOLIDATED
2020
$'000
4,168
122
408
4,698
2019
$'000
4,520
130
1,460
6,110
Eagers Automotive 2020 Annual Report | 97
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
38 KEY MANAGEMENT PERSONNEL CONTINUED
(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-16
04-Jul-21
$ 5.47
$ 5.47
31-Mar-17
04-Jul-21
$ 5.47
31-Mar-18
31-Mar-19
31-Mar-20
04-Jul-21
30-Sep-22
30-Sep-22
$ 5.47
$ 5.47
$ 5.47
2.7 years
3.7 years
4.7 years
5.7 years
25%
2.63%
4.2%
25%
2.79%
4.2%
25%
2.96%
4.2%
25%
3.13%
4.2%
31-Mar-17
04-Jul-21
$ 5.47
$ 5.47
31-Mar-18
31-Mar-19
31-Mar-20
04-Jul-21
30-Sep-22
30-Sep-22
$ 5.47
$ 5.47
$ 5.47
$ 5.47
$ 5.47
$ 5.47
4.4 years
4.9 years
5.4 years
5.9 years
7.0 years
25%
2.90%
4.2%
25%
2.98%
4.2%
25%
3.06%
4.2%
25%
3.24%
4.2%
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
End Performance Period
Expiry Date
Fair Value at Grant Date
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
04-Jul-21
04-Jul-21
04-Jul-21
30-Sep-22
30-Sep-22
$ 5.08
$ 4.87
$ 4.67
$ 4.48
$ 4.29
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
04-Jul-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
04-Jul-21
04-Jul-21
04-Jul-21
30-Sep-22
30-Sep-22
$ 0.91
$ 0.94
$ 0.95
$ 1.01
$ 1.02
No performance rights or options were forfeited or expired during the year. A total of 142,772 rights were issued in respect of the
2019 performance year and 64,820 options exercised during the year.
No costs of the share plan were expensed during 2020 (2019: $1,224,986). The share plan was fully expensed by the end of 2019,
with a cumulative expense being recognised of $6,557,247.
98 | Eagers Automotive 2020 Annual Report 2020
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
31-Mar-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
Share price at grant date
$9.25
$9.25
$9.25
$9.25
$9.25
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
0.8 years
1.8 years
2.8 years
3.8 years
4.8 years
24%
1.98%
3.7%
24%
1.99%
3.7%
24%
2.06%
3.7%
24%
2.18%
3.7%
24%
2.33%
3.7%
31-Mar-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
$9.25
3.9 years
4.4 years
4.9 years
5.5 years
6.1 years
24%
2.19%
3.7%
24%
2.27%
3.7%
24%
2.35%
3.7%
24%
2.46%
3.7%
24%
2.54%
3.7%
Two specific executives have been granted 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
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
2,783
5,780
5,995
6,218
6,458
Performance Options
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
$8.98
$8.65
$8.34
$8.04
$7.74
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
17,605
33,783
32,678
31,645
31,250
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
12-Jun-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
12-Jun-22
12-Jun-22
12-Jun-22
30-Sep-22
30-Sep-22
$1.42
$1.48
$1.53
$1.58
$1.60
No performance rights or options were forfeited or expired during the year. A total of 6,458 rights were issued in respect of the 2019
performance year and no options exercised during the year.
No costs of the share plan were expensed during 2020 (2019: $99,985). The share plan was fully expensed by the end of 2019, with a
cumulative expense being recognised of $449,959.
Eagers Automotive 2020 Annual Report | 99
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
38 KEY MANAGEMENT PERSONNEL CONTINUED
(f) Share Based Payments continued
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
31/12/20
$9.00
31/12/21
$9.00
0.0 years
0.87 years
1.87 years
0.81%
4.056%
0.81%
4.056%
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
End Performance Period
Fair Value at Grant Date
17/02/20
17/02/20
17/02/20
31/12/19
31/12/20
31/12/21
$9.00
$9.00
$9.00
No performance rights were forfeited or expired during the year. A total of 30,000 rights were issued during the year in respect of
the 2019 performance year.
The value of the performance rights expensed during the year was $407,914, with a cumulative expense being recognised at 31
December 2020 of $712,983 (2019: $305,069).
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-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
$ 4.84
$ 5.04
$ 4.84
$ 5.04
$ 4.84
$ 5.04
$ 4.84
$ 5.04
$ 4.84
$ 5.04
4.5 years
4.5 years
5.0 years
5.5 years
6.0 years
30%
3.08%
4.20%
30%
3.08%
4.20%
30%
3.13%
4.20%
30%
3.17%
4.20%
30%
3.22%
4.20%
100 | Eagers Automotive 2020 Annual Report 2020
Specific executives have been granted options under the EPS share incentive plan (Plan F). The modified grant date method
(AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the options at grant date
and the probability of the EPS targets being achieved and vesting occurring. The number of options granted under the plan is as
follows:
Performance Options
Number
951,950
951,950
911,510
892,840
883,750
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
27-Mar-13
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
31-Mar-20
$ 0.93
$ 0.93
$ 0.96
$ 0.98
$ 0.99
A total of 365,580 were forfeited or expired during the year. A total of 1,638,770 options were exercised during the year.
No costs of the share plan were expensed during 2020 (2019: $Nil). The share plan was fully expensed by the end of 2017 with a
cumulative expense recognised of $3,607,822.
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
31-Mar-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
21-Jan-22
21-Jan-22
21-Jan-22
30-Sep-22
30-Sep-22
Share price at grant date
$5.85
$5.85
$5.85
$5.85
$5.85
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
1.2 years
2.2 years
3.2 years
4.2 years
5.2 years
22%
2.20%
4.4%
22%
2.12%
4.4%
22%
2.11%
4.4%
22%
2.15%
4.4%
22%
2.22%
4.4%
31-Mar-16
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
21-Jan-22
21-Jan-22
21-Jan-22
30-Sep-22
30-Sep-22
$5.85
$5.65
$5.85
$5.65
$5.85
$5.65
$5.85
$5.65
$5.85
$5.65
4.1 years
4.6 years
5.1 years
5.9 years
6.4 years
22%
2.15%
4.4%
22%
2.18%
4.4%
22%
2.21%
4.4%
22%
2.28%
4.4%
22%
2.33%
4.4%
Eagers Automotive 2020 Annual Report | 101
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
39 OTHER SHARE BASED PAYMENTS CONTINUED
Plan H: EPS Performance Rights and Options – Key Executives continued
Four specific executives have been granted rights and options under the EPS share incentive plan (Plan H). The modified grant
date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the rights and
options at grant date and the probability of the EPS targets being achieved and vesting occurring. The number of rights and
options granted under the plan is as follows:
Performance Rights
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
14,412
15,065
15,746
16,459
17,202
Performance Options
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
$5.55
$5.31
$5.08
$4.86
$4.65
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
95,235
93,020
93,020
91,953
93,020
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
21-Jan-15
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
21-Jan-22
12-Feb-22
12-Feb-22
12-Feb-22
30-Sep-22
$0.84
$0.86
$0.86
$0.87
$0.86
No performance rights or options were forfeited or expired during the year. A total of 15,052 performance rights were issued during
the year in respect of the 2019 performance year.
No costs of the share plan were expensed during 2020 (2019: $139,990). The share plan was fully expensed by the end of 2019, with
a cumulative expense being recognised of $749,281.
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
102 | Eagers Automotive 2020 Annual Report 2020
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$9.75
$9.75
$9.75
$9.75
1.0 year
2.0 years
3.0 years
4.0 years
27%
1.95%
3.8%
27%
1.88%
3.8%
27%
1.90%
3.8%
27%
1.98%
3.8%
31-Mar-17
31-Mar-18
31-Mar-19
31-Mar-20
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$9.75
$10.34
$9.75
$10.34
$9.75
$10.34
$9.75
$10.34
4.5 years
5.0 years
5.5 years
6.0 years
27%
2.03%
3.8%
27%
2.08%
3.8%
27%
2.13%
3.8%
27%
2.18%
3.8%
One specific executive has been granted rights and options under the EPS share incentive plan (Plan K). The modified grant date
method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the rights and options
at grant date and the probability of the EPS targets being achieved and vesting occurring. The number of rights and options
granted under the plan is as follows:
Performance Rights
Number
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
7,987
8,296
8,620
8,960
Performance Options
Number
48,076
46,012
44,910
43,859
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$9.39
$9.04
$8.70
$8.37
Grant Date
End Performance Period
Expiry Date
Fair Value at Grant Date
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
31-Dec-16
31-Dec-17
31-Dec-18
31-Dec-19
31-Mar-24
31-Mar-24
31-Mar-24
31-Mar-24
$1.56
$1.63
$1.67
$1.71
No performance rights or options were forfeited or expired during the year. A total of 25,876 rights were issued and no options were
exercised during the year in respect of the 2019 performance year.
No costs of the share plan were expensed during 2020 (2019: $149,994). The share plan was fully expensed by the end of 2019, with
a cumulative expense being recognised of $599,980.
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 $456,669 (2019: $85,314) and purchases of $976,540 (2019: $71,337) during the
last 12 months, are primarily the sale and purchase of spare parts, accessories and motor vehicles, and are carried out under terms
and conditions no more favourable than those which it is reasonable to expect would have applied if the transactions were at
arm’s length.
(ii) Mr M Birrell is a Director and owner of a number of properties leased by subsidiaries of Eagers Automotive Limited. The lease
transactions of $1,870,034 (2019: $3,820,621) 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. In respect of those properties, the Group paid
and was subsequently reimbursed for repairs and maintenance totalling $175,584.80 for which Mr M Birrell’s related party was liable.
Furthermore, during the twelve months ended 31 December 2020, Mr M Birrell purchased stock with a value of $251,746 (2019: $580,096)
from one of the subsidiaries and sold goods and services of $nil (2019: $170,830). 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 $204,241 (2019: $210,071), 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.
Eagers Automotive 2020 Annual Report | 103
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
40 RELATED PARTIES CONTINUED
Wholly-owned Group
The parent entity of the wholly-owned Group is Eagers Automotive Limited. Information relating to the wholly-owned Group is set
out in Note 33.
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:
Profit/(Loss) for the year
Less: attributable to non-controlling interest
Profit attributable to the ordinary equity holders of the Company used in calculating basic earnings per share
Diluted earnings per share
Profit/(Loss) for the year attributable to share holders of the parent
Profit/(Loss) attributable to the ordinary equity holders of the Company used in calculating diluted earnings
per share
Weighted average number of ordinary shares outstanding during the year
Shares deemed to be issued for no consideration in respect of employee options (1)
CONSOLIDATED
2020
Cents
Restated
2019
Cents
57.6
71.4
(13.8)
57.3
71.0
(13.7)
(67.4)
(39.4)
(28.0)
(67.4)
(39.4)
(28.0)
CONSOLIDATED
2020
$’000
2019
$’000
156,212
(8,921)
147,291
(142,380)
(2,787)
(145,167)
147,291
(145,167)
147,291
(145,167)
2020
Number
2019
Number
255,840,110
211,306,958
1,315,694
2,728,331
Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted
earnings per share
257,155,804
214,035,289
(1) 329,818 performance options representing potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary
shares for the purposes of diluted earnings per share.
(2) In 2019, the options of 2,728,331 are considered to be anti-dilutive due to the prior period loss.
104 | Eagers Automotive 2020 Annual Report 2020
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)/Loss on disposal of non-financial assets
Gain on sale of property, plant & equipment
Employee share scheme expense
Rent Waivers
Profit on sale of business
(Increase)/decrease in assets -
Receivables
Inventories
Prepayments
Contract Assets
Increase/(decrease) in liabilities -
Creditors (including bailment finance)
Provisions
Taxes payable
Net cash inflow from operating activities
Notes
6(a)
6(b)
5
5
5
CONSOLIDATED
2020
$’000
Restated
2019
$’000
156,211
(139,593)
166,257
90,700
-
-
(3,758)
(860)
(1,395)
408
(9,477)
(5,417)
40,660
433,146
(8,678)
31,905
109,061
290,141
(65,061)
(19,674)
(407)
(6,715)
(14,457)
1,906
-
(19,709)
57,521
169,718
(1,779)
-
(347,084)
(231,422)
(5,888)
(8,843)
527,887
(11,301)
52,567
170,796
Eagers Automotive 2020 Annual Report | 105
NOTES TO AND FORMING PART
OF THE FINANCIAL STATEMENTS CONTINUED
31 DECEMBER 2020
43 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
The below table represents the cash and non-cash movements in financing activities for 2020:
1 January
2020
$’000
Financing
cashflows
$’000
Acquisition
of
subsidiary
$’000
Termination
of leases
$’000
Fair value
adjustments/
rent reviews
$’000
Property
acquisitions
$’000
New leases
$’000
Other
changes (i)
$’000
31
December
2020
$’000
Term facility
332,313
(194,625)
Capital loan
77,778
18,840
Lease
liabilities
1,192,557
(160,222)
Total
1,602,648
(336,007)
-
-
-
-
-
-
-
-
-
104,237
-
-
(188)
137,500
-
200,855
(84,366)
48,823
-
220,422
53,705
1,270,919
(84,366)
48,823
104,237
220,422
53,517
1,609,274
(i) Other changes includes interest charged in relation to financing activities.
The below table represents the cash and non-cash movements in financing activities for 2019:
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
1 January
2019
$’000
Financing
cashflows
$’000
Acquisition
of
subsidiary
$’000
Termination
of leases
$’000
Fair value
adjustments/
rent reviews
$’000
Property
acquisitions
$’000
New leases
$’000
Other
changes (i)
$’000
31
December
2019
$’000
Term facility
235,700
(179,899)
280,538
Capital loan
78,256
(1,342)
-
Lease
liabilities
Total
252,502
(64,801)
936,381
566,458
(246,042)
1,216,919
-
-
-
-
-
-
-
-
-
-
(4,026)
332,313
864
77,778
27,556
40,919
1,192,557
27,556
37,757
1,602,648
-
-
-
(i) Other changes includes interest charged in relation to financing activities.
106 | Eagers Automotive 2020 Annual Report 2020
44 INVESTMENTS IN ASSOCIATES
(a) Carrying amounts
Investments in associate are accounted for in the consolidated financial statements using the equity method of accounting.
Information relating to the associate is set out below:
Name of company
Unlisted securities
DealerMotive Limited
Vehicle Parts (WA) Pty Ltd
Mazda Parts
OWNERSHIP INTEREST
CONSOLIDATED
2020
%
-
50.00
16.67
2019
%
2020
$’000
2019
$’000
39.37
50.00
16.67
-
1,233
328
1,561
15,629
1,127
50
16,806
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.
In December 2019, eBay announced the acquisition of Cox Automotive Media Solutions, which includes Carsguide.com.au and
Autotrader.com.au, from Cox Automotive Australia (CAA). The transaction was completed in Q2 2020 with CAA recording a gain on
sale in 2020.
Following the completion of the transaction, Cox Automotive US and Dealermotive (DM) entered into an agreement for DM to exit
their investment in CAA via the sale of their CCA shareholding directly to Cox Automotive US.
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
Dividends received during the year
Equity accounted investments acquired
Disposal of Investment
Carrying amount at the end of the financial year
CONSOLIDATED
2020
$’000
16,806
3,758
(4,629)
-
(14,374)
1,561
2019
$’000
12,077
407
-
4,322
-
16,806
(c) Share of associate profit
Based on the last published results for the 12 months to 30 June 2020 plus unaudited results up to 31 December 2020.
Profit from ordinary activities after income tax
3,758
407
(d) Reporting date of associates
The associates reporting dates are 30 June annually.
Eagers Automotive 2020 Annual Report | 107
DIRECTORS’
DECLARATION
The Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to
believe that the Company will be able to pay its debts as and
when they become due and payable;
(b) in the Directors’ opinion, the attached financial statements
and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards
and giving a true and fair view of the financial position and
performance of the consolidated entity; and
(c) in the Directors’ opinion, the attached financial statements
are in compliance with International Financial Reporting
Standards as stated in Note 1(a) to the financial statements;
and
(d) the directors have been given the declarations required by
s.295A of the Corporations Act 2001
At the date of this declaration, the company is within the
class of companies affected by ASIC Corporations (Wholly
owned Companies) Instrument 2016/785. The nature of the
deed of cross guarantee is such that each company which is
party to the deed guarantees to each creditor payment in full
of any debt in accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to
believe that the company and the companies to which the
ASIC Corporation Instrument applies, as detailed in Note 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.
Signed in accordance with a resolution of the Directors made
pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Brisbane,
24th February 2021
108 | Eagers Automotive 2020 Annual Report 2020
INDEPENDENT AUDITOR’S
REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 23, Riverside Centre
123 Eagle Street
Brisbane, QLD, 4000
Australia
Tel: +61 7 3308 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Eagers Automotive Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Eagers Automotive Limited (the “Company”) and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 31 December 2020, the
consolidated income statement, 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 other
explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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 organisation
Eagers Automotive 2020 Annual Report | 109
INDEPENDENT AUDITOR’S
REPORT CONTINUED
Key Audit Matter
Recoverability of Goodwill and other
intangibles with indefinite lives
How the scope of our audit responded to the Key Audit
Matter
In conjunction with our valuation specialists, our
procedures included, but were not limited to:
As disclosed in Notes 2a (iii) and 19, the Group
has recognised goodwill and other intangible
assets with indefinite lives with a carrying value
of $778.7 million at 31 December 2020.
The assessment of the recoverable amount of
goodwill and other intangible assets allocated to
the CGUs or groups of CGUs requires
management to exercise significant judgement,
including:
·
·
the identification 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:
o the cash flow forecasts;
o future growth rates;
o terminal growth factors; and
o discount rates.
·
·
·
·
·
·
Obtaining an understanding of the processes that
management undertook in identifying the CGUs or
groups of CGUs to which goodwill is allocated and
preparing the valuation models for recoverable
amounts.
Testing the design and implementation of identified
manual controls.
Challenging the Group’s assumptions and estimates
used to determine the recoverable amount,
including:
o the basis of cash flows for the CGUs or
groups of CGUs and agreeing inputs in the
cash flow models to Board approved
budgets and supporting data;
o growth rates and terminal growth rates
against relevant external data; and
o 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 19 to the financial statements.
Recoverability of non-current assets
Our procedures included, but were not limited to:
As disclosed in Notes 2a (iv) and 19(a)
management has undertaken an assessment of
the recoverability of certain non-current assets
including property, leasehold improvements and
right-of-use assets associated with Holden and
other leased sites where restructuring activities
have been undertaken.
impairment assessment of these assets
The
require management to exercise judgment in:
·
·
assessing whether an indicator of
impairment exists; and
the determination of the recoverable
amount.
·
·
·
·
Obtaining an understanding of the processes that
management undertook in identifying non-current
assets with indicators of impairment and assessing
their recoverable amounts.
Testing the design and implementation of identified
manual controls.
Assessing and challenging:
o the accuracy and completeness of the
identified assets and their carrying values;
and
o the methodology adopted by Management
in calculating the impairment.
Assessing the appropriateness of the disclosures in
2a (iv) and 19(a) to the financial statements.
110 | Eagers Automotive 2020 Annual Report 2020
Key Audit Matter
Recoverability of inventory measured at net
realisable value
As disclosed in Notes 2a (v), (vi) and 11,
management have recognised write-downs on
the Group’s new, demonstrator and used vehicle
and truck inventory to determine the net
realisable value (“NRV”) at 31 December 2020.
The assessment of the write-down to cost
required to estimate the NRV of inventory
requires the management to exercise judgement
based on the age, condition and brand of the
vehicle or truck and historic sales outcomes.
How the scope of our audit responded to the Key Audit
Matter
Our procedures included, but were not limited to:
·
·
·
·
·
Developing an understanding of management’s
processes and judgements applied in estimating the
NRV of new, demonstrator and used vehicles and
trucks.
Testing the design and implementation of identified
manual controls.
Validating the aging and cost, on a sample basis, of
new, demonstrator and used vehicle and truck
inventory at year-end as key inputs into
management’s calculation of the write down to
NRV.
Evaluating management’s judgements in estimating
NRV by:
o comparing the carrying value of vehicles to
post year-end sales;
o evaluating the carrying value of vehicle and
inventory to external third-party valuation
data; and
o a comparison to historical sales data.
Assessing the appropriateness of the disclosures in
Notes 2a (v), (vi) and 11 to the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the Directors' Report,
which we obtained prior to the date of this auditor's report, and also includes the following information which
will be included in the annual report (but does not include the financial report and our auditor's report thereon):
the Company Profile, the 5 Year Financial Summary and the Eagers Automotive 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 Eagers Automotive 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.
Eagers Automotive 2020 Annual Report | 111
INDEPENDENT AUDITOR’S
REPORT CONTINUED
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
·
·
·
·
·
·
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the Group’s audit. We remain solely responsible for our
audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
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, actions taken to eliminate threats or safeguards
applied.
112 | Eagers Automotive 2020 Annual Report 2020
Eagers Automotive 2020 Annual Report | 113
From the matters communicated with the directors, we determine those matters that were of most significancein the audit of the financial report of the current period and are therefore the key audit matters. We describethese matters in our auditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.Report on the Remuneration ReportOpinion on the Remuneration ReportWe have audited the Remuneration Report included in pages 17 to 30 of the Directors’ Report for the year ended31 December 2020.In our opinion, the Remuneration Report of Eagers Automotive Limited, for the year ended 31 December 2020,complies with section 300A of theCorporations Act 2001.ResponsibilitiesThe directors of the Company are responsible for the preparation and presentation of the Remuneration Reportin accordance with section 300A of theCorporations Act 2001. Our responsibility is to express an opinion on theRemuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.DELOITTE TOUCHE TOHMATSUStephen TarlingPartnerChartered AccountantsBrisbane, 24 February 2021 SHAREHOLDER INFORMATION
AS AT 26 MARCH 2021
EQUITY SECURITIES
The company’s quoted securities consist of 256,933,106 ordinary fully paid shares (ASX:APE).
TOP 20 HOLDERS OF ORDINARY SHARES
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