Annual2021ReportEagers Automotive LimitedABN 87 009 680 013 5 Year Financial Summary Year ended 31 December OPERATING RESULTS From continuing operations Revenue EBITDAI Depreciation and amortisation Impairment and property revaluations through profit and loss EBIT Finance costs Finance income Profit before tax Income tax expense Profit from continuing operations Group trading results Loss from discontinued operations Non-controlling interest in subsidiary Attributable profit after tax Operating statistics Basic earnings per share - cents Dividends per share - cents Dividend franking - % As at 31 December Funds employed Contributed equity Reserves Retained earnings Non-controlling interest in subsidiary Total equity Non-current liabilities Current liabilities Total liabilities Total funds employed Represented by Property plant and equipment Intangibles Financial assets at fair value through OCI Other non-current assets Property assets held for resale Other current assets Total assets Other statistics Shares on issue – ‘000 Number of shareholders Total Debt (1) Net debt (total debt less bailment finance less cash) - $’000 2021 $’000 2020 $’000 RESTATED 2019 $’000 2018 $’000 2017 $’000 8,663,462 8,749,675 5,816,979 4,112,802 4,058,779 651,642 (120,428) (5,156) 526,058 (79,619) 10,368 456,807 (118,070) 338,737 625,447 (166,257) (90,700) 368,490 (88,384) - 280,106 (88,575) 191,531 342,407 (95,217) (244,925) 2,265 (65,569) - (63,304) (17,176) (80,480) (8,000) (12,913) (35,320) (8,921) (59,113) (2,787) 317,824 147,290 (142,380) 125.2 42.5 100 57.6 25.0 100 (67.4) 25.3 100 215,283 (46,137) - 169,146 (40,744) - 128,402 (30,906) 97,496 - (1,619) 95,877 50.1 36.5 100 176,668 (16,651) 210 160,227 (24,598) - 135,629 (37,456) 98,173 - (2,146) 96,027 50.3 36.0 100 2021 $’000 2020 $’000 RESTATED 2019 $’000 2018 $’000 2017 $’000 1,173,069 1,173,069 (617,978) (580,200) 1,173,069 (560,126) 199,463 9,423 821,829 317,848 13,860 924,577 1,443,313 1,490,490 1,665,761 2,545,827 371,405 (124,306) 380,558 8,002 635,659 544,994 818,696 369,028 38,131 367,855 10,761 785,775 276,092 762,904 3,109,074 4,033,651 4,036,317 4,858,146 1,363,690 1,038,996 1,999,349 1,824,771 510,725 21,635 1,087,451 1,300,548 1,342,946 2,643,494 3,730,945 514,374 775,295 577 494,266 785,574 2,366 456,058 773,174 2,366 1,067,324 1,188,502 1,245,734 - - 388,407 313,325 149,774 269,905 - 1,562,943 2,380,814 877,938 4,033,651 4,858,146 1,999,349 18,670 1,354,705 3,730,945 361,121 309,414 288,033 22,600 - 843,603 1,824,771 256,933 10,767 1,056,611 128,409 256,933 11,159 256,933 9,955 1,233,079 1,744,826 129,263 314,867 191,309 5,038 899,405 310,264 191,008 5,442 793,544 238,523 Gearing ratio (debt/debt plus equity) – % Gearing ratio (net debt/net debt plus total equity) – % 49.3 10.6 57.1 12.3 68.0 27.7 58.6 32.8 50.2 23.3 (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 5 Year Financial Summary 2021 Highlights 2021 Financial Highlights Company Profile Where Do We Operate? Chairman's Letter Message from the CEO Outlook Our Next100 Our Values Eagers Automotive Foundation Sustainability Report Board of Directors Executive Management Directors’ Report Auditor’s Declaration of Independence Financial Statements 2021 Notes to and Forming Part of the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder Information Corporate Directory 2 4 5 6 7 8 10 12 13 14 16 18 36 37 38 56 58 64 135 136 141 143 Annual General Meeting Our Annual General Meeting will be held at 11:00am (Qld time) on Wednesday, 18 May 2022. It will be held as a "hybrid" meeting, giving sharholders an opportunity to attend either online or in person. Financial Calendar 2021 Financial Year End 31 December 2021 Full Year Results Announcement 24 February 2022 Final Dividend Announcement 24 February 2022 Final Dividend Record Date Final Dividend Payment Date Annual General Meeting* Half Year End Half Year Results Announcement* Interim Dividend Announcement* 1 April 2022 20 April 2022 18 May 2022 30 June 2022 August 2022 August 2022 Interim Dividend Record Date* September 2022 Interim Dividend Payment Date* October 2022 2022 Financial Year End 31 December 2022 *Estimate only, subject to any changes notified to the ASX. 3 T R O P E R L A U N N A 1 2 0 2 — I E V T O M O T U A S R E G A E 4 5 2021 Highlights Record full year result driven by simplified business leveraging scale, geographic diversity and favourable market conditions. Record Profit Delivered through disciplined execution, cost out program and strong market conditions Strong Balance Sheet Underpinned by substantial asset base and available liquidity Key drivers of our result Strong market conditions supported by greater productivity and a more efficient cost base. Robust Outlook Strong demand continues to outstrip supply with record order bank continuing to grow Strong Demand Property Consolidation Strategy Execution Continued progress against the 5 key pillars of our Next100 Strategy Greater Productivity Reduced Cost Base EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 4 5 2021 Financial Highlights Disciplined focus on cost base underpinning sustainable Return on Sales performance. Underlying Operating PBT1 Return on Sales (Underlying)1 $401.8m from $209.4m in 2020 4.6% from 2.4% in 2020 Statutory PAT $330.7m from $156.2m in 2020 Corporate Debt Net of Cash2 $128.4m from $129.3m as at 31 December 2020 Daimler Trucks Gain on Sale (Pre-tax) Total Dividend for 2021 $30.2m 70.9 cents per share from 25.0 cps in 2020 1 Underlying operating results refers to continuing operations outlined and reconciled to statutory results on slides 34 (FY2021) and 35 (comparative financial information) of the Investor Presentation released to the ASX on 24 February 2022. Underlying operating figures are non-financial measures and have not been subject to audit by the Company’s external auditors. 2 At 31 December 2021. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 66 7 Company Profile 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 and Townsville. 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. 2021 2021 saw strategic acquisitions of Toowoomba Ford and multi- franchised dealerships in Cardiff and Maitland. We have also continued to invest in new automotive retail formats, such as AutoMall West in Indooroopilly Shopping Centre in West Brisbane, which will provide a more tailored, flexible, convenient experience for customers. We are now also 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. About us Origins Eagers Automotive Limited is the leading automotive retail group in Australia and New Zealand, with a long and proud history of 109 years. 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. 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. 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 2021. Our operations expanded into the Northern Territory with the acquisition of Bridge Toyota in 2005. In 2010, we acquired the publicly listed Adtrans Group Limited, being South Australia’s premier car retailer. This was our direct entry into South Australia. 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. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 66 7 Where do we Operate? National footprint and breadth of brand representation capitalising on strong market conditions in Australia and New Zealand. NT & WA market size: ~10% of national market QLD & SA & TAS market size: ~30% of national market NSW & VIC market size: ~60% of national market Very strong presence Strong presence Growth opportunities Eagers brand representation covers 96% of new vehicle sales in Australia in 2021. State Queensland Western Australia South Australia Tasmania Northern Territory New South Wales Victoria Australian Capital Territory Australian Market New Zealand Market Eagers Market Share 11.4% 20.2% 15.0% 11.3% 27.8% 9.4% 5.4% - 10.2% 4.5% EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 8 9 Chairman's Letter Tim Crommelin Our balance sheet and financial position remain very strong, with significant available liquidity, providing the capacity and flexibility to support disciplined reinvestment. Dear shareholders, 2021 was both challenging and rewarding for Eagers Automotive. As with much of the retail sector, the COVID-19 pandemic continued to pose significant challenges for the automotive retail industry during the year. Our business operations were adversly affected by the pandemic's continued economic impact, including as a result of government-mandated lockdowns in New South Wales, Victoria and Auckland, New Zealand, as well as border closures and supply chain disruption. The health and safety of our people, our customers and our local communities remains our first priority. We have consistently demonstrated our ability to adapt quickly to evolving public health requirements, while continuing to operate safely and provide excellent customer service, despite the challenges associated with the pandemic. Under the leadership of our Chief Executive Officer, Keith Thornton, who has taken to the role seamlessly since commencing in February 2021, the Company has continued to execute its strategy with discipline, delivering a record financial performance for the year. Our record statutory profit before tax from continuing operations of $456.8 million in 2021 was up from $280.1 million in 2020, while our underlying operating profit before tax of $401.8 million was up from $209.4 million in 2020. Our balance sheet and financial position remain very strong, with significant available liquidity, providing the capacity and flexibility to support disciplined reinvestment. We believe this will drive returns to shareholders in future years. We are delighted to continue our long history of rewarding shareholders, with a fully franked final dividend for 2021 of 42.5 cents per share. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 8 9 We are delighted to continue our long history of rewarding shareholders, with a fully franked final dividend for 2021 of 42.5 cents per share. The final dividend, combined with our ordinary interim dividend and our special dividend relating to the strategic divestment of the Daimler Trucks business, takes the total dividends for the full year to 70.9 cents per share, up from 25.0 cents per share for the previous year. Keith provides further details about the Company’s 2021 performance, strategic initiatives and outlook on the following pages, whilst I note that we have continued to experience strong demand in all regions during early 2022 and are well-positioned for the future. The pandemic, together with heightened focus on climate change, has accelerated the global consciousness of Environmental, Social and Governance (ESG) matters. ESG risks and opportunities remain a priority for us as we continue efforts to reduce our impact on the environment, enhance our business as a place to work and support our communities. We are pleased to include our first Sustainability Report in this Annual Report. On behalf of the Board, I would like to acknowledge Keith and the management team for their leadership navigating the Company through significant external disruption. Thank you to all of our employees – your hard work and dedication in a challenging environment allowed the Company to continue to achieve outstanding results in 2021. I would also like to thank my fellow Directors for their valuable contribution and counsel throughout the year. In particular, I acknowledge and thank David Cowper who is intending to retire as a Director at our Annual General Meeting this year. David has been an extremely dedicated, industrious and loyal servant of the Company since his initial appointment to the Board in July 2012, including in the vital role of Chairman of our Audit & Risk Committee. David’s efforts have been tireless and his contribution to the Company has been enormous. Finally, thank you to all of our shareholders for your ongoing support. We are excited about the year ahead and look forward to continuing to deliver for shareholders in the long term. Yours faithfully, Tim Crommelin Chairman EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 10 11 Message from the CEO Keith Thornton Dear shareholders, As I said at the time of my appointment in February 2021, it is an immense privilege to be Chief Executive Officer of Eagers Automotive and I am now pleased to be able to report on my first year in the role. The last 12 months have presented Eagers Automotive with some of the most unique challenges and market dynamics of my near 20 years with the Company. Yet the transformative steps we have taken in recent years and the strong focus on operational performance from our team have positioned the Company to perform strongly regardless of the external environment. Operating environment Despite the myriad of challenges presented by COVID-19, our team has continued to deliver for customers, OEM partners and shareholders. Our overall scale and geographic diversity have enabled Eagers Automotive to capitalise on the new vehicle market recovery across all regions while also mitigating the impacts of localised COVID-19 restrictions. During 2021, we experienced government-mandated lockdowns in New South Wales, in both our Sydney and Newcastle regions, as well as in Victoria and Auckland, as a result of the pandemic. In total 114 trading days were impacted and restricted more than 35% of the Company at any one time. While this was indeed challenging, the experience we had gained from business interruptions during the initial on-set of COVID-19 in 2020 allowed us to quickly adjust during 2021. Our local teams were able to provide safe and convenient solutions for our customers through online-enabled ‘click and collect’ sales combined with contactless delivery and service options. While the lockdowns impacted trading in sections of our service and parts operations and resulted in the deferral of some new and used vehicle sales and deliveries, our order book has remained exceptionally strong with demand for new and used vehicles remaining robust across the country. Although customer activity, workforces and supply chains were interrupted by the pandemic during 2021, new car orders materially outstripped new car deliveries in every month of the year, creating a record order book for us and the industry at large. Geographically, our two largest markets of Queensland and Western Australia were largely unaffected by lockdowns, experiencing particularly strong trading conditions throughout 2021. Financial performance Despite the COVID-19-related disruptions, we delivered a record financial performance, maintaining a relentless focus on executing our Next100 Strategy while remaining disciplined in our daily operational management of the business to capitalise on favourable market dynamics. Consolidated revenue from continuing operations for the full year was $8.7 billion, marginally down on the prior period due to the divestment of our Daimler Trucks business in April 2021. However, on a statutory basis our record profit before tax from continuing operations of $456.8 million, up from $280.1 million in the previous year, equated to a statutory after- tax profit of $330.7 million, up from $156.2 million in the previous year. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 10 11 Outlook Despite ongoing supply chain constraints and temporary disruption to logistics and resourcing in early 2022 as a result of the Omicron outbreak, unusually strong demand has continued across all of our operating regions while the impact from lockdowns has become increasingly muted. Our strong balance sheet and fortified liquidity position provide the flexibility and capacity to continue the active transformation of our business. We believe that as we anticipate and respond to the evolution of the automotive retail industry, we are best positioned to capitalise on accretive consolidation within the industry. We plan on further investment in organic growth initiatives as we continue to review strategically complementary acquisition opportunities. Our aim is to accelerate execution of our Next100 Strategy. Thank you I would like to thank each and every customer we served in 2021. Your support is greatly appreciated and never taken for granted. We will continue to work hard to support you and repay your custom while striving to deliver on our internal mantra of ‘we can help you with that’. I would like to acknowledge all 7,345 members of our team – your dedication and commitment have been instrumental to the delivery of our strong results in 2021. Thank you to the Board and my predecessor Martin Ward for your advice and support throughout the year. I look forward to continuing to work together in 2022 as we build on the legacy of strong growth and financial management. To each OEM partner, we are proud to represent your brand. Our position as your retail partner is a privilege and responsibility we take very seriously. We will continue to focus on being a preferred partner for your business. To our banks and finance partners, our landlords large and small, and all our other business suppliers, we thank you for your overwhelming support during what has continued to be a challenging time for business. And finally, to our valued shareholders, we thank you for your ongoing support. We are very excited for what the future holds. Yours faithfully, Keith Thornton Chief Executive Officer We delivered a record financial performance, maintaining a relentless focus on executing our Next100 Strategy Our simplified business model, and the benefits of our restructuring, rationalisation and cost-out initiatives, contributed to an underlying operating profit before tax of $401.8 million for the full year, a significant increase on the $209.4 million recorded in 2020. A structural reduction in our on-going cost base enabled us to achieve a return on sales of 4.6% on an underlying basis. Strategic progress – Next100 Throughout 2021, our team continued its focus on executing our Next100 Strategy and actively pursuing aligned opportunities to deliver growth in shareholder returns. We continued to pro-actively manage our dealership portfolio with strategic acquisitions of Toowoomba Ford and multi-franchised dealership groups in Cardiff and Maitland, in addition to the Daimler Trucks divestment. We further rebalanced our property portfolio through the acquisition of 10 strategic sites valued at $168.7 million, taking the total value of the portfolio to $432.5 million at the end of 2021, excluding assets held for resale, compared to $356.5 million at the end of 2020. In conjunction with our strategic property acquisitions, we continued to invest in new automotive retail formats, such as AutoMall West located at Indooroopilly Shopping Centre in west Brisbane. This new retail format will provide a more tailored, flexible and convenient experience for our customers while leveraging economies of scale to enable a more economically sustainable retail footprint for the longer term. To develop an automall concept in this way and of this size, supported by a significant number of major OEM partners, is a truly globally unique initiative in our industry and another example of how Eagers Automotive is committed to leading innovation in retail solutions for our partners. Our national, fixed-price pre-owned vehicle business, easyauto123, continues to grow profitably as it benefits from being fully integrated into our business, our investment in the ‘your car, your way’ integrated online buying, selling and financing options for customers, and our disciplined approach to cost management. During the year, we opened new easyauto123 sites in Sydney, Townsville and multiple locations in Auckland. We have continued to redesign our workforce and workspace in response to changing customer habits as we extended our measured investment in proprietary technology to optimise workforce productivity and improve customer experience. We also remain committed to delivering optimised financial solutions for our customers. Despite the impact of COVID-19 on automotive retail finance, we continued to outperform industry benchmarks while originating more than $2 billion of loans during the year. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 1212 Outlook Discipled focus on accelerating our Next100 Strategy. easyauto123 Growth Creating shareholder value through profitable growth of the easyauto123 business Finance Penetration Leveraging Point of Sale (POS) advantage, technology investments & a favourable credit market to continue finance penetration growth Property Continue restructuring owned & leased properties and acquisition of strategically located leased sites to increase flexibility and deliver enhanced customer experience on lower cost base Technology Continue to invest in integrated technology solutions, enhancing customer experience & providing a platform for productivity gains M&A Continue to review acquisition, rationalisation & consolidation opportunities in line with Next100 Strategy Franchised Automotive Independent Used Strategic Property Ownership EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 1212 13 OUR NEXT100 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. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 14 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. Integrity Inclusiveness Owner’s Mindset Agility 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. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 14 15 Integrity Inclusiveness Owner’s Mindset Agility 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 — 2021 ANNUAL REPORT 16 17 What is the Eagers Automotive Foundation? Community Driven 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. Community Engagement During 2021 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. 3 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. 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. 1 To deliver 100% of donations to intended recipients. To operate with the highest standards of integrity. 1. Life Flight, QLD 2. Kevin Bynder Paints maintenance kit for NAIDOC Week, WA 3. Minda Inc, SA 4. Wrapping Christmas presents for Salvation Army, WA 5. National Schools Tree Planting Day, WA EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 16 17 Our support for these communities and charities exceeded $960,000 in 2021. Numerous charities,communities and worthwhile causes benefited from our dealerships’ initiatives during 2021 including: Northern Territory . Autism NT . Carers NT . Danilda Dilba Health Services Queensland . St.Vincent de Paul Society (Qld) . Traction for Young People . Anglicare Australia . Junior Diabetes Research Foundation . Minda Inc. . The Endeavour Rally . RACQ Life Flight Rescue . Felicity Purcell Nursing Bursary . Darkness to Daylight . The Prince Charles Hospital Foundation Common Good Bike Rally . Micah Projects . MindFX . Ginger Cloud Foundation . Australian Cervical Cancer Foundation . Ronald McDonald House (Townsville) . Townsville Sunrise Rotary Club New South Wales . Elouera Surf Life Saving Club . Little Wings . Phoenix Community Project . Variety NSW Bash Tasmania . Variety Tasmania the Children’s Charity . Camp Quality . Cancer Council Tasmania . St Giles Society . Pathways Tasmania South Australia . Backpacks for SA Kids . Kickstart for SA Kids . Youth Opportunities . Autism Dogs Program . Royal Society for the Blind . Minda Inc. . Living Without Limits Foundation Western Australia . Kevin Bynder Indigenous Artist . National Breast Cancer Foundation . Salvation Army . Hearts for the Homeless . City of Perth Christmas Parade . Movember . National Schools Tree Planting Day . Oz Harvest . Perth Children’s Hospital Foundation . Lifeline . Little Luca’s Big Fight . Pink Ribbon Breakfast . Purple Hearts Foundation . Perth Special Children’s Christmas Party Victoria . Variety Bikes for Kids . Brainwave . Monash Medical Centre – Children Hospital New Zealand . Westpac Rescue Helicopter . The Handathon . New Zealand Make a Wish Foundation . The Breast Cancer Foundation 2 4 5 EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 18 19 Sustainability Report This is Eagers Automotive’s first sustainability report. However, our sustainability journey has been underway for many years and is one of continual improvement and accountability. We have chosen to report in line with the globally recognised reporting Standard provided by the Sustainability Accounting Standards Board (SASB) and its guidance for companies in the multiline and speciality retailers & distributors sector. This Standard not only has a particular focus on the information needs of institutional investors but has also been chosen by the International Sustainability Standards Board and the IFRS Foundation in November 2021 as the preferred reporting framework for harmonising sustainability disclosures for financial markets globally. This report is arranged in four sections – Environment, Social, Governance and Climate Change - to capture the issues that are of most relevance to our business. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 18 19 Sustainability Report Contents 1. Environment 1.1 Electricity Consumption 1.2 Hazardous Chemicals 1.3 Underground Petroleum Storage Systems (UPSS) 1.4 Packaging 1.5 Commitments to Reduce CO2 Emissions 2. Social 2.1 Labour Practices 2.2 Balancing Work Goals with Life Goals 2.3 Response to COVID-19 2.4 Employee Engagement 2.5 Health and Safety 2.6 Diversity & Inclusion 2.7 Diversity Objectives 2.8 The Eagers Automotive Foundation 3. Governance 3.1 Data Security 3.2 Ethics and Whistle Blower Policies 3.3 Anticorruption 3.4 Modern Slavery 3.5 Grievance Policies 3.6 Risk Management Framework 4. Climate Change 4.1 Greenhouse Gas Emissions 4.2 Management of and Reporting on Climate Change Risk Appendix: SASB Reference Table 20 20 21 21 21 21 23 23 24 25 26 26 27 27 29 30 30 30 31 31 31 31 32 32 32 33 EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 20 1. Environment This section provides information on initiatives we utilise to reduce our environmental impact. 1.1 Electricity Consumption Heating, ventilation and air conditioning (HVAC) are the largest users of electricity in our business, at approximately 75% of total usage. We are conscious that although HVACs consume most of the electricity, it is important that we continue to provide employees with a comfortable and safe place to work and we also view this as essential for our customer facilities. We have taken a proactive approach to reduce electricity consumption, with many sites replacing traditional bulb lighting with more efficient LED lighting and installing light sensors and timing devices. 34 dealerships have also installed Solar Photovoltaic (PV) systems, that each provide between 30Kw and 200Kw of electricity. Southside Toyota Brisbane EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 21 1.2 Hazardous Chemicals Our operations involve the handling, storage and sale of many hazardous chemicals such as paints, solvents, fuel, degreasers, aerosols and oil. We have implemented a structured framework to assess and manage the risk of harm that these materials can cause to people and the environment. This includes specific control measures for each site, including a register of chemicals, Safety Data Sheets, signage and employee training in handling and use of chemicals. 1.3 Underground Petroleum Storage Systems (UPSS) Across our network of dealerships, there are 56 UPSSs that store oil and petroleum products which could present safety and environmental risks if they were to deteriorate over time. We have taken a proactive approach to address this issue. Qualified contractors complete a variety of equipment integrity tests which have been used to establish a plan that will see all UPSSs decommissioned. 18 UPSSs have been decommissioned to date. 1.4 Packaging As an automotive retailer, we do not package any products across our network of dealerships. 1.5 Commitments to Reduce CO2 Emissions Whilst automotive retailers have little influence over the sales strategies of Original Equipment Manufacturers (OEMs), the vast majority of OEMs who we represent have set significant targets for reducing CO2 emissions and increasing the sale of electric vehicles. The table on Page 22 provides a summary of those targets from 12 of the top 15 brands sold in Australia which accounted for 76% of national new vehicle sales and 89 % of our sales in 2021. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 22 23 OEM TARGET YEAR 1 2 3 4 5 6 7 8 9 10 11 12 Reduce global average CO2 emissions from new vehicles by 90% compared to 2010 levels Global battery electric vehicle sales target of 3.5 million each year Reduce the average ‘well-to-wheel’ CO2 emissions, and achieve a 90% reduction compared to 2010 levels 25% of new vehicles will be electric, with the remaining 75% having an electrified element 100% electrification of new vehicles worldwide Global sales target for electric vehicles of 1.7 million each year All vehicles, production facilities and suppliers will be carbon neutral 40% of global sales will be battery electric powered 5 electric vehicle models on sale in Australia All vehicles, production facilities and suppliers will be carbon neutral CO2 emissions from new vehicles to be 40% below 2010 levels and electric vehicles to be 50% of all vehicles sold To be carbon neutral across the life cycle of its products Introduce 23 new electrified models, including 15 new electric vehicles with the aim of an electrification mix of more than 50% globally Introduce 20 new electric vehicles and e-POWER equipped models in the next five years, targeting an increase in their electrification sales mix across major markets including Europe (+75%), Japan (+55%), China (+40%) and the US (+40% by 2030) – an investment of 2 trillion Yen Reduce vehicles’ CO2 emissions in production and during the use phase by 30% between 2018 and 2030 and increase the proportion of the fleet that is electric to at least 40% Sell more than 1 million e-cars globally Reduce the average CO2 emissions from new passenger cars by at least 90% by 2050, compared with 2010 Increase the ratio of electric vehicles and hybrid cars to up to 40% of the gross number of vehicles sold globally and, by the early 2030s, all their commercial cars to be equipped with electric powertrain technology Make entire new vehicle fleet CO2-neutral and ensure it no longer has any relevant effects on air quality in inner cities 2050 2030 2050 2030 2040 2026 2050 2030 2024 2045 2030 2050 2030 2026 2030 2025 2050 2030 2040 Plug-in hybrids or all-electric vehicles to account for more than 50 percent of car and van sales 2030 Reduce CO2 emissions per vehicle and kilometre driven by 40% on 2019 levels across entire value chain Total climate neutrality Target production of 40% electric vehicles by 2030, and 80% by 2035 100% production of electric vehicles Total climate neutrality 2030 2050 2030 2040 2050 EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 22 23 2. Social 2.1 Labour Practices To satisfy the SASB Standard, the following information excludes corporate staff. 2.1.1 Remuneration Throughout 2021 all employees were remunerated above the minimum wage except for 107 who were remunerated at the minimum wage in line with their appropriate Award or Industrial Agreement. Minimum Wage Australia 1.7% Total: 107 New Zealand 0.0% Total: 0 The average hourly remuneration of our employees in 2021, measured as total wages and commissions, less overtime payments, is summarised below. Average Full Time Earnings Australia New Zealand* $66.07 $29.41 $32.88 $54.68 Management Parts and Services Finance and Administration Sales, Car Care, Insurance Consultants $67.56 $29.06 $29.49 $51.47 *Amounts are shown in NZ Dollars. 2.1.2 Rate of Termination The table below shows the number of employment terminations across our dealerships in 2021 and this is reflective of the relatively high turnover rate across the industry. Termination Australia New Zealand Voluntary Involuntary Voluntary Involuntary 35.2% Total: 2,275 3.4% Total: 206 28.4% Total: 133 1.7% Total: 8 EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 24 25 2.1.3 Labour Laws and Payroll Systems We did not incur any monetary loss in 2021 due to legal proceedings associated with labour law violations. In December 2019 we announced on the Australian Stock Exchange that we had self-reported the underpayment of employees to Fair Work Australia. We had identified the issue during a system upgrade. Our detailed investigation, with the assistance of independent experts, determined that approximately 6,200 employees and former employees had been affected over a period of seven years, with the total payment shortfall being $4.5 million. All remediation payments plus interest were processed in 2020 and Fair Work has finalised its review of the matter. Following the merger with AHG, we undertook a further review into their payroll systems and immediately self-reported the findings to Fair Work Australia. We took full responsibility to ensure that all current and former AHG employees were paid full entitlements plus interest. It was with great disappointment that we learned of the payroll underpayments. Our people underpin our business and our value. We constantly strive to provide a work environment where all our people feel valued, recognised and respected for their contributions. A fundamental part of this is ensuring that our employees are appropriately rewarded. To this end, we have proactively remedied our mistakes and implemented many controls to mitigate the risk of any reoccurrence, including: • We have implemented a national classification framework and template employment contracts for every type of position. This assists with setting minimum terms for positions and applying correct Award conditions. • We have introduced the Kronos Time and Attendance system across the group. This assists with compliance, recording and payment of overtime and correct provisioning. • Our payroll system now automatically includes service anniversary dates that assist with implementing appropriate adjustments to Award rates. • All training is completed after commencement of employment. • Managers receive improved education and training on Award requirements. 2.2 Balancing Work Goals with Life Goals We take pride in our employees having work goals, along with life goals. We recognise this in many ways, including: 2.2.1 Service Recognition We are proud that many of our employees have chosen to have long careers with us. To celebrate this, we recognise annual service anniversaries that begin after 10 years with us, and then occur every subsequent five years. This recognition happens at multiple levels within the business and includes our Chief Executive Officer, Keith Thornton, personally acknowledging the services of these long-standing employees. We celebrate our achievements as a team in each dealership, and a token gift of appreciation and celebratory event is provided. 2.2.2 Paid Maternity Leave Program Over and above our statutory obligations under the Paid Parental Leave Act 2010 in Australia, we offer a Paid Maternity Leave Program to provide further support following birth or adoption. Our payments subsidize payments under the applicable government scheme and are designed to assist employees maintain their usual average pay for a period of up to 12 weeks during their parental leave. Where an employee does not qualify for a government scheme, we offer eligible employees to the program’s cap value of $15,000. 2.2.3 Career Development and Training Programs We value continuous learning that supports professional goals. In that regard, we provide training in many areas including: a) Sales and Service Development b) Car Care c) Finance and Insurance d) Workplace, Health, Safety and Environment e) Managing Award Based Workforce f) Product-specific training EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 24 25 2.2.4 Apprenticeships / Traineeships As Australia and New Zealand’s leading automotive retailer, we are committed to the future of the automotive industry and actively look to encourage people to pursue careers in our sector. We employ 607 apprentices. 379 new apprentices were employed in 2021 and 188 apprentices completed their training to become qualified Automotive Technicians, Automotive Electricians and Parts Interpreters. We provide many benefits to support our apprentices during their training, including payment of technical fees, interest-free loans to purchase toolkits, the opportunity to salary sacrifice some expenses, and discounts on vehicles, parts and servicing. 2.3 Response to COVID-19 A major focus of our sustainability agenda has been on the management of COVID-19 and its impact on our employees. We have continually monitored the numerous changes to State and Territory Health Directives to assist our employees in understanding these complex requirements. Each dealership has operated under a COVID Safe Plan, and our People & Safety Team has provided regular ‘COVID Alerts’ to guide our businesses as circumstances have changed. We took many steps in 2021 for the safety and wellbeing of our employees. This included implementing new operational processes, safe work practice instructions, changing work rosters to minimise movement across our operations and implementing tailored and more frequent cleaning and sanitisation practices. Specific initiatives to assist employees deal with the impact of the health crisis in 2021 included: Mental Health Awareness Training Employee Engagement We introduced the Mentally Healthy Workplace training program to assist managers implement workplace practices promoting stronger mental health outcomes for employees. COVID-19 Vaccination Incentive We launched an incentive program to encourage employees to receive their COVID-19 vaccinations. Fully vaccinated employees could elect either to receive a $200 gift card or for us to make a $200 donation to the Eagers Automotive Foundation. 5,009 employees claimed this incentive. To ensure employees continued to feel connected and supported through government- enforced lockdowns, we introduced site-specific initiatives in NSW and Victoria, including: a) Provision of financial support for employees to, for example, purchase meals through Uber Eats or other items (eg. headphones) to assist during snap lockdowns. b) In conjunction with our Corporate Health Plan providers Medibank and Bupa, we rolled out various COVID-safe activities, including Healthy Minds Podcasts, Mindfulness Tracks and Managers Guide to Mental Health, along with virtual classrooms for cooking and yoga. Economic Support to Employees We have supported employees through lockdowns by providing full access to leave entitlements and continuing to remunerate those unable to attend work due to State Health Directions and unable to work from home. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 26 27 2.4 Employee Engagement It is important that our people have a workplace that they are proud of and allows them to perform their best each day. Prior to our merger with AHG and the COVID-19 pandemic, we conducted annual employee engagement surveys. While the events of the last two years have led to this annual survey being postponed, it is being reinstated in 2022. An independent specialist organisation has been engaged to conduct our 2022 survey. By utilizing an independent external provider, employees can be confident that the survey is both anonymous and confidential, as well as allowing their feedback to be benchmarked against a portfolio of other large employers. Survey results are reviewed, relayed to employees and action plans developed to act on the feedback. 2.5 Health and Safety We are committed to ensuring that our people are safe at work. Implementing better safety and wellbeing practices is an ongoing priority and included the following in 2021. 2.5.1 New Integrated Workplace Health, Safety and Environment Management (WHSE) System Following the merger with AHG, multiple safety management systems were being used across the group. In 2021, we completed a comprehensive review of our safety management systems to ensure they all align. All of our sites now use the same WHSE software platform to report incidents and injuries, thereby improving consistency of reporting and analysis. A suite of safety training videos has also been developed to help employees understand WHSE issues on topics such as Incident & Hazard Reporting, Risk Management, Inductions, Underground Petroleum Storage Systems (UPSS) and Drug & Alcohol Policy. 2.5.2 Management of Hazardous Chemicals As referred to in the Environment section of this report, many hazardous chemicals are used, stored and sold in our business. We use a risk management approach to provide a safe working environment. Specific control measures for use and storage of chemicals have been developed for each site, including chemical registers, Safety Data Sheets, employee training and signage. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 26 27 2.6 Diversity and Inclusion We recognise the inherent benefits in having a diverse workforce and value the differences between people and the contribution these differences can make to our business. To encourage and foster the move towards a more diverse work force is not only the right thing to do, it also makes good business sense. It provides opportunity to attract and retain the most talented and engaged people whose diversity reflects the communities in which we operate. We believe this helps to encourage greater innovation within our business. In order to achieve optimum diversity in our workforce, it is essential that recruitment, selection, training, promotion and career management decisions are based on merit and are non-discriminatory. Our managers are charged with responsibility for ensuring employees are treated fairly and with respect and dignity. Within our policy of appointing or promoting on a non-discriminatory basis, we endorse the objectives of equal opportunity so that all candidates are given equal consideration. 2.7 Diversity Objectives In accordance with our diversity policy, the Board has set the following objectives for achieving diversity in the composition of our Board, senior executives and workforce generally: 2.7.1 Board Composition In February 2021, we set a diversity target to increase female representation on the Board to 30% by 2025. Women now make up 22.2% of the Board. Board 2.7.2 Diversity & Inclusion Training ‘Inclusiveness’ is one of the key values of our Company. This recognises the unique contribution that each person brings to our business and the strength and innovation that can come through a diverse and inclusive workforce. To help embed this value across the group, our objective is to develop and deliver diversity and inclusion training for all managers over a four-year period, focussing on increasing awareness of unconscious biases and understanding how differences can contribute to the development of a high-performance culture. Female 22.2% Feb 2022 Male 77.8% Feb 2022 20.0% Feb 2021 80.0% Feb 2021 Whilst progress against this objective has been hampered due to the many business lockdowns and other impacts of the COVID-19 pandemic, priority during the year was given to regional initiatives, including these targeted programs: Fearless Female Forum GROW Program This is a networking group that aims to inspire and motivate our female and non-binary employees in Western Australia, allowing them to connect with leaders in our businesses and encouraging them to take a leap in their career without doubt or negative self-talk. The forum provides a safe space to collaborate and support one another, while working towards bridging the gender gap in our industry. This program operates across our South Australian dealership network and is a 12-month in-house development program to encourage employees to lean in and develop self- confidence and personal leadership skills to further their careers. The Fearless Female Forum and GROW Program have been very successful and we intend to expand their scope. A group-wide program is being designed for broader delivery across the group. We also offer management training on a range of diversity-related topics, including: • Unconscious Bias • Duty of Care • Workplace Harassment & Bullying • Discrimination • Probation • Mental Health Awareness EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 28 29 Other diversity and inclusion activities are guided centrally and practised at the dealership level. We publish an annual Health & Wellbeing Calendar that provides dealerships with information on the various events and initiatives they may choose to support. These include RUOK Day, Harmony Day, International Women’s Day, National Sorry Day, Māori Language Week etc. For example, in relation to RUOK Day in 2021 we provided employees with access to a series of webinars on mental health. Members of our corporate team also participated in the Brisbane International Women’s Day Fun Run and the Darkness to Daylight 100km Challenge to end domestic violence. 2.7.3 Workforce Gender Composition We are committed to improving the gender balance of our workforce. Guided by the SASB reporting framework, the following table shows the gender representation in our Australian business. Management Non-management Apprentices and Trade Graduates Female Male Female Male 8.2% 91.8% Total: 74 Total: 833 25.6% 74.4% Total: 1,600 Total: 4,660 Female 5.1% Total: 41 Male 94.9% Total: 757 Our objective is to recognise and better understand relevant gender issues in our workforce. Our annual employee engagement survey will assist in achieving this, with the survey results to be utilised to improve our understanding of gender issues and to develop appropriate education and training programs to address them. We have engaged an independent organisation that specialises in facilitating workplace engagement surveys to conduct our employee engagement survey this year. By utilizing an independent external provider, employees can be confident that the survey is both anonymous and confidential, as well as allowing the survey feedback to be benchmarked against a portfolio of other large employers. The annual survey is currently underway and scheduled for completion in the first half of 2022. Survey results will be reviewed, relayed to employees and action plans developed to act on the feedback. We value feedback from our employees and we understand that their satisfaction leads to better organisational performance. We also continue with our gender pay gap analysis each year to ensure all remuneration throughout the group is based on role and performance, regardless of gender. 2.7.4 Cultural Diversity Recognition To better understand the diverse demographic of our workforce and ensure that it is representative of our customers, our objective is to better understand the cultural heritage and diversity of our employees. We aim to achieve this through our annual employee engagement survey, with the survey results utilised to recognise the cultural diversity of our workforce and to develop appropriate programs to address any relevant issues. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 28 29 2.8 The Eagers Automotive Foundation We have a long and proud tradition of supporting local communities, charities and philanthropic organisations throughout our 109-year history. The Eagers Automotive Foundation provides such support through engagement with our stakeholders and utilising our growing scale. The Foundation’s vision is to create a lasting spirit of giving within the Eagers Automotive network for those in need in our community. It engages with our employees to gather their ideas on which charities and causes to support. All administration expenses of the Foundation are paid for by Eagers Automotive Limited, ensuring that 100% of donations are delivered to intended recipients. Please refer to Pages 16-17 for further information about our Foundation. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 30 3. Governance 3.1 Data Security We take a proactive approach to protecting our customer and employee data. We believe our data security strategy provides a level of protection above that of most large retail business. We have applied multiple strategies to reduce the risk of cyber security breaches, including: • Next-Generation Antivirus protection across all endpoints in the business. • Strong mail-filter settings. • Modern firewall and internet gateway. • Secure remote access mechanisms. Online cyber-security training is provided for employees. This is combined with internal simulated phishing undertaken by our security team to prepare staff for real-life cyber-security breaches. An online reporting mechanism is also available for staff to report suspicious events. An annual independent review of our cybersecurity practices is also undertaken. In addition, our Internal Audit team undertakes physical audits of security at dealership locations. There were no known successful cyber security breaches of our customer and employee data in 2021. Our Next- Generation Antivirus protection strategy prevented 450 known potential data breaches, while our mail filter strategy prevented 26.5 million spam or malicious emails from being delivered to mailboxes across the business. In the event of a data breach, our incident response plan seeks to (i) identify the situation quickly, (ii) minimise the potential loss, and (iii) importantly, ensure that affected people are notified promptly. In 2021, there were two reportable data breaches that involved the theft of personally identifiable information (PII), each involving the theft of physical documents from a dealership. Affected individuals were notified and procedures were modified to reduce the likelihood of re-occurrence. 630 individuals were affected. 3.2 Ethics and Whistle Blower Policies We are committed to a culture of honesty and ethical behaviour and have adopted integrity as one of our four corporate values. This is supported by our Code of Conduct and our Whistleblower and Ethics Policies. We believe behaving ethically in business extends beyond duties imposed by laws and includes: • Honesty and loyalty. • Putting the interest of the Company ahead of personal gain. • Not being involved in fraudulent, corrupt, illegal, unlawful or dishonest practices. • Avoidance of deceptive or sharp practices which would reflect unfavourably on the Company. • Proper use of the Company’s resources and information. We place great importance in fostering a culture that engages our people to speak up about unethical behaviour. To this end we have implemented an integrity reporting framework to provide eligible whistleblowers with a safe avenue to raise concerns confidentially and anonymously. This includes an independently operated telephone hotline. Employees can choose to report issues directly to their managers or other senior personnel. These matters are taken seriously and promptly investigated. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 31 3.3 Anticorruption 3.4 Modern Slavery Corruption describes a situation where a benefit is offered or provided, with no legitimate purpose, and with the intention to influence a third-party to act in a particular way. Our Code of Conduct recognises the risk of corruption and identifies a number of situations that may give rise to bribes or corrupt business dealings, including the making of political donations or using donations or sponsorships as a means of making improper payments. Employees must report any suspected bribery or corrupt behaviour to their manager, other senior personnel or our whistleblower hotline under the Code of Conduct. The Code will guide the investigation process. Modern slavery describes situations where coercion, threats or deception are used to exploit victims and undermine or deprive them of their freedoms. We recognise the importance of protecting human rights and acknowledge the risk that modern slavery practices may exist within our supply chains. To this end, we have established a Modern Slavery working group, as described in our Modern Slavery Statement. The focus is on due diligence, identifying risks, responding to risks, and awareness. We have surveyed our network of suppliers to better understand where risks of modern slavery practices may exist. Although no specific risks of modern slavery have been identified to date, we recognise this is a continuous process. 3.5 Grievance Policies We place great importance on providing a workplace that is fair and equitable. Employees have the right not to be bullied, discriminated against or harassed in the workplace. Our Discrimination, Sexual Harassment and Workplace Bullying Policy outlines the steps employees can take if they feel aggrieved. We are committed to: • Taking complaints seriously and investigating. • Not pre-judging any situation. • Dealing with complaints promptly, fairly, confidentially and impartially. 3.6 Risk Management Framework We recognise that robust risk management processes and practices, integrated into our work culture, are important to ensure business risks are managed appropriately. Our risk management approach aims to improve business performance by ensuring risks (including those related to climate change) are maintained within acceptable levels. Risks are identified, prioritised and managed in a way that raises awareness among employees and provides confidence to stakeholders. The Board oversees our risk governance and is responsible for ensuring a sound system of risk oversight, management and internal control is in place, including for sustainability-related risks. The Board sets the risk appetite within which management is expected to operate. The Audit & Risk Committee monitors, assesses and reports to the Board on the effectiveness of the risk management system and reviews the group risk register. The risk register is prepared by management and includes specific risk groups across multiple categories. Risk management plans and controls for individual risks are developed and implemented by management. Sustainability risks (including those related to climate change) are identified, assessed, prioritised and managed within this framework. They are considered in the strategic, legal and social risk categories of the risk register. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 32 4. Climate Change We recognise the seriousness of climate change and the need to look after our environment. Although we generate a relatively low level of emissions in the operation of our business, we pursue various initiatives across our network of businesses to reduce our environmental impact. These are described in the Environment section of this Report. As an intermediary in the sale of vehicles, we acknowledge it is likely that climate change will impact our business in the future. Risks associated with climate change might be physical as a result of extreme weather or from the impacts of countries or OEMs transitioning to a carbon-free future. 4.1 Greenhouse Gas Emissions We measure our Scope 1 and 2 greenhouse gas emissions in Australia, and these are reported annually to the Clean Energy Regulator. Scope 1 emissions are direct emissions from sources that we own or control; whilst Scope 2 emissions are indirect emissions associated with electricity that we purchase. Our Scope 1 and 2 emissions from 1 July 2020 to 30 June 2021 were: T CO2-e Scope 1 33,009 Scope 2 29,561 4.2 Management of and Reporting on Climate Change Risk Our approach to managing climate change risk sits within our Risk Management Framework, as described in the Governance section of this report. Reporting on the environmental impact of our business and the various initiatives we undertake to reduce our environmental footprint, represents only part of the broader impact from climate change. The Task Force on Climate-related Financial Disclosures (TCFD), a leading standard in climate change reporting, provides a framework for companies to explain the risks and opportunities that are presented by climate change as well as speaking to the needs of capital markets for this information. We are reviewing this framework as we continue the process of gathering data that might be necessary for reporting on the potential future impact of climate change on our business. EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 33 Appendix A: SASB Reference Table TOPIC ACCOUNTING METRIC Energy Management in Retail and Distribution Total energy consumed PAGE 20, 32 Description of approach to identifying and addressing data security risks 30, 31 Data Security (1) Number of data breaches, (2) percentage involving personally identifiable information (PII), (3) number of customers affected (1) Average hourly wage and (2) percentage of in-store employees earning minimum wage, by region Labour Practices (1) Voluntary and (2) involuntary turnover rate for in-store employees Total amount of monetary losses as a result of legal proceedings associated with labour law violations 30 23 23 24 Workplace Diversity and Inclusion Percentage of gender representations for (1) management and (2) all other employees 27, 28 Product Sourcing, Packaging and Marketing Discussion of processes to assess and manage risks and/or hazards associated with chemicals in products 21, 26, 31 Discussion of strategies to reduce the environmental impact of packaging 21 EAGERS AUTOMOTIVE — 2021 ANNUAL REPORT 34 35 Financial Report For the year ended 31 December 2021 T R O P E R L A U N N A 1 2 0 2 — I E V T O M O T U A S R E G A E Financial Report For the year ended 31 December 2021 Contents Board of Directors Executive Management Directors’ Report Auditor’s Declaration of Independence Financial Statements 2021 Notes to and Forming Part of the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report 36 37 38 56 58 64 135 136 35 T R O P E R L A U N N A 1 2 0 2 — I E V T O M O T U A S R E G A E 36 Board of Directors Timothy Boyd Crommelin BCom, FSIA, FSLE Chairman of Board Independent Director Member of Remuneration & Nomination Committee Independent, non-executive Director since February 2011. Chairman of Morgans Holdings (Australia) Limited. Director of Senex Energy Ltd (2010 to present) and Australian Cancer Research Foundation. Member of University of Queensland Senate until 31 December 2021. 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. Dan 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. David Arthur Cowper BCom, FCA Independent Director Chairman of Audit & Risk Committee 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 Independent Director Member of Audit & Risk Committee Non-executive Director since July 2016. Former Director of Australian Automotive Dealer Association Limited (2014 to 2017). Distinguished career in the automotive industry, including 38 years at manufacturer, financier and retail level and 21 years as Executive Chairman of Birrell Motors Group. Sophie Alexandra Moore BBus, CA, FFin Director Chief Financial Officer Joined the Company as Chief Financial Officer in August 2015. Appointed as a Director in March 2017. 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 Independent Director Chairman of Remuneration & Nomination Committee Member of Audit & Risk Committee 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). EAGERS AUTOMOTIVE — Financial Report 2021 Board of Directors continued Executive Management 37 Keith Thomas Thornton BEc Chief Executive Officer (since 24 February 2021) Commenced with the Company in July 2002. Prior to his appointment as Chief Executive Officer in February 2021, Keith had been responsible for the Group’s automotive operations since June 2007, most recently as Chief Operating Officer from January 2017 until February 2021. Keith is a licensed motor dealer with substantial automotive retail and wholesale experience in volume, niche and prestige industry sectors. Keith also brought significant industry experience to the Company, having previously worked for various automotive manufacturers. Keith is an Alternate Director of Australian Automotive Dealer Association Limited (2014 to present). Denis Gerard Stark LLB, BEc General Counsel & Company Secretary 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. David Scott Blackhall BCom, MBA, FAICD Independent Director 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. Chairman (since November 2021) and Chief Executive (2016 to 2019) of Australian Automotive Dealer Association Limited. 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 (until 1 March 2021) Chief Executive Officer and Managing Director (until 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. EAGERS AUTOMOTIVE — Financial Report 2021 38 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 2021 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 pages 36 - 37. Company Secretary The Company Secretary and his qualifications and experience are detailed on page 37. Directors’ Meetings The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each Director during the year were: Board Meetings Audit & Risk Committee Meetings Remuneration & Nomination Committee Meetings Attended Held Attended Held Attended Held 12 10 12 12 11 13 13 13 10 2 13 13 13 13 13 13 13 13 13 2 - - - 4 4 - 4 - - - - - - 4 4 - 4 - - - 8 - 7 - - - 8 - - - 8 - 8 - - - 8 - - - Name T B Crommelin (1) N G Politis D T Ryan (1) D A Cowper (2) M J Birrell (2) S A Moore G J Duncan (1) (2) D S Blackhall M V Prater M A Ward (3) 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. 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 2021 (FY2021). On a continuing basis, the Company delivered Underlying Operating Profit Before Tax(4) of $401.8 million, compared to $209.4 million in the prior corresponding period (pcp). Strong economic conditions and changes in consumer behaviour, primarily in response to the impacts of COVID-19, generated strong demand for new vehicles, with a 14.5% increase in the new car market(5) compared to the twelve months ended 2020. These market dynamics are further buoyed by demand continuing to materially outstrip supply, with the Company’s order bank increasing month- on-month over the last twelve months. Underlying profit continues to be supported by the ongoing benefits of our material cost out program completed over the last 18 months. Statutory Net Profit After Tax (including discontinued operations) for FY2021 was $330.7 million, compared to a profit of $156.2 million in FY2020. On a statutory basis (excluding discontinued operations), the Company recorded a Statutory Net Profit Before Tax from continuing operations of $456.8 million for FY2021 compared to a Statutory Net Profit Before Tax of $280.1 million in the pcp. The FY2021 statutory result included significant items totalling $55.0 million net income before tax, predominately relating to the gain on sale of assets totalling $42.9 million, offset by non-cash impairments of $5.2 million associated with the revaluation of a property. (1) Remuneration & Nomination Committee members (2) Audit & Risk Committee members (3) Mr Ward ceased as a Director on 1 March 2021 (4) Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 34 (FY2021) and 35 (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. (5) According to Federal Chamber of Automotive Industry (FCAI) statistics sourced through VFACTS. EAGERS AUTOMOTIVE — Financial Report 2021 39 Full Year to December 2021 $ Million Full Year to December 2020 $ Million 8,663.5 651.6 456.8 330.7 70.9 8,663.5 455.9 401.8 288.9 8,749.7 625.5 280.1 156.2 25.0 8,749.7 284.2 209.4 140.4 Key Financial Highlights from Continuing Operations Statutory Results Revenue EBITDAI (1) Statutory Profit Before Tax Statutory Profit After Tax Total Dividend per Share – cents Underlying Operating Results (2) Underlying Revenue (2) Underlying EBITDAI (1) Underlying Profit Before Tax (2) Underlying Profit After Tax (2) Dividend The Board has approved payment of an ordinary final dividend of 42.5 cps fully franked for the year (FY2020: 25.0 cps). The ordinary final dividend has been approved for payment on 20 April 2022 to shareholders who are registered on 1 April 2022 (Record Date). When combined with the ordinary interim and special dividends paid in October 2021, the total dividend based on FY2021 earnings is 70.9 cps (FY2020: 25.0 cps) fully franked. The dividends reflect a payout ratio of 57% on the attributable Statutory Net Profit After Tax (including discontinued operations) and 65% on the attributable Underlying Operating Profit After Tax(2) for the twelve months ended 31 December 2021. The payout reflects the Board’s confidence in the strength of the Eagers Automotive business and future strategy, balanced with the desire to ensure the Company has the capacity and flexibility to invest in restructuring and growth initiatives while maintaining a prudent approach to managing through the ongoing uncertainty of the COVID-19 environment. The Company’s dividend reinvestment plan (DRP) will not operate in relation to the final dividend. Dividends paid to members during the year under review were as follows: Year ended 31 December Final ordinary dividend for the year ended 31 December 2020 of 25.0 cents (2019: 11.25 cents) per share paid on 20 April 2021 Interim ordinary dividend for 2021 of 20.0 cents (2020: nil cents) per share paid on 15 October 2021 Special dividend of 8.4 cents (2020: nil) per share paid on 15 October 2021 2021 $’000 2020 $’000 64,233 28,905 51,387 115,620 21,582 137,202 - 28,905 - 28,905 (1) EBITDAI means earnings before interest, tax, depreciation, amortisation and impairment. (2) Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 34 (FY2021) and 35 (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. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 40 External Environment Financial Performance The new car market continues to be driven by strong consumer demand, with favourable economic conditions and changes in social trends and consumer behaviour contributing to a strong recovery relative to the prior period, which was heavily impacted by the onset of the COVID-19 pandemic. According to Federal Chamber of Automotive Industry (FCAI) statistics, the new car market was up 14.5% compared to FY2020. The larger markets of Queensland, New South Wales and Victoria recorded sales increases of 17.4%, 8.6% and 20.4% respectively. Other markets also recorded increases, with South Australia up 14.2%, Western Australia up 18.7% and Tasmania up 18.4%. Strategic Developments During the period, the Company made substantial progress with its Next100 Strategy across a number of key areas including: • Expansion of our fixed price, pre-owned easyauto123 business on a more efficient cost base, including new sites in Sydney, Townsville and multiple new locations in Auckland; • Development of integrated technology solutions leading to an acceleration in online capability across the entire end-to-end online customer experience, providing a platform for organic growth in online sales and productivity gains through the integration with instore processes and back-office systems; • Completion of the sale of the Daimler Truck business on 30 April 2021; • Acquisition of Toowoomba Ford and the Kelly Trotter Motor Group and Heritage Motor Group, both of which are multi franchised dealership groups in Cardiff and Maitland NSW. All three acquisitions included the purchase of strategically located properties, with a number of the properties settling in FY2022, which will enable future consolidation with existing dealership in these regions; and • Continued execution of our property strategy with a combination of exiting leased properties, strategic property acquisitions (including previously leased property) and investment in new, transformed and consolidated automotive retail formats, such as AutoMall West in Indooroopilly Shopping Centre in West Brisbane. Progress against our strategy, combined with maintaining our disciplined focus on cost base, has underpinned our record financial results and sustainable Return on Sales performance. Statutory and Underlying(1) revenue from continuing operations decreased by 1.0% to $8,663.5 million, with the marginal decline driven by the divestment of our Daimler Truck business in April 2021. On a like-for-like basis Statutory and Underlying(1) revenue from continuing operations increased by 6.5% to $8,390.0 million. In both periods revenue was impacted by the COVID-19 pandemic and supply constraints. EBITDAI(2) from continuing operations increased to $651.6 million in FY2021 (FY2020: $625.5 million). Underlying(1) EBITDAI(2) increased to $455.9 million in FY2021 (FY2020: $284.2 million). Profit margins increased as indicated by the Underlying(1) operating EBITDAI(2)/Revenue ratio of 5.3% (FY2020: 3.2%), with a comparable increase in Underlying(1) operating NPBT(3)/Sales ratio of 4.6% (FY2020: 2.4%). The strong margins predominately reflect the ongoing benefits of our material cost out program completed over the last 18 months, supported by market dynamics. Statutory borrowing costs from continuing operations decreased by 10.0% to $79.6 million (FY2020: $88.4 million), driven by a reduction in lease liabilities resulting from the sale of the Daimler Truck business. Underlying(1) borrowing costs decreased by 12.0% to $30.9 million for FY2021 (FY2020: $35.1 million), reflecting Group bailment charges benefiting from a reduction in inventory and associated bailment levels. Included within statutory borrowing costs is interest expense recognised in accordance with AASB 16 Leases of $48.7 million (down from $53.3 million in the pcp). Statutory depreciation and amortisation charges from continuing operations decreased by 27.6% to $120.4 million for FY2021 (FY2020: $166.3 million), driven by a reduction in the right-of-use asset resulting from the sale of the Daimler Truck business and prior year impairments. Underlying(1) depreciation and amortisation charges decreased by 41.7% to $23.2 million for FY2021 (FY2020: $39.8 million). The decrease is predominately driven by the sale of the Daimler Truck business and its associated buy back commitments. Included within the statutory depreciation expense is an additional $97.2 million of depreciation expense recorded in accordance with AASB 16 (down from $126.5 million in the pcp). Segments The Car Retailing Segment(4) delivered an Underlying(1) Operating Profit Before Tax of $388.4 million, an increase of $189.0 million compared to $199.4 million in FY2020. The profit performance reflects the first full year contribution to a reporting period from significant permanent cost reductions in response to COVID-19, supplemented by strong market dynamics. The increase is reflected across all regions in Australia and New Zealand. Performance across both periods was impacted by Government lockdowns, particularly in April and May 2020 – the peak impact of COVID-19 restrictions and in the second half of 2021. The Car Retailing Segment(4) recorded a Statutory Profit Before Tax from continuing operations of $403.0 million compared to a profit of $272.7 million in FY2020. (1) Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 34 (FY2021) and 35 (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) EBITDAI means earnings before interest, tax, depreciation, amortisation and impairment. (3) NPBT means Net Profit Before Tax (4) Car Retailing segment includes reallocation of Hino and Iveco operations in 2021, previously reported in Truck Retailing in 2020. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued Continued focus on our fixed price, pre-owned strategy via the easyauto123 business, with operations across Australia and New Zealand, is delivering strong results. The easyauto123 business delivered a strong performance for the year ended 2021, despite the impacts of lockdowns in key regions. The significant improvement in financial performance demonstrated across all key metrics, was underpinned by a more efficient cost base and the benefits from scale and integration into the wider business. Car Retailing Statutory and Underlying(1) revenue from continuing operations increased by 8.6% to $8,438.3 million (FY2020: $7,776.5 million), with FY2020 reflecting the peak impact of COVID-19 restrictions. On a like-for-like basis(2), Car Retailing Statutory and Underlying(1) revenue from continuing operations increased by 6.4% to $8,035.5 million (FY2020: $7,553.8 million). The Truck Segment(3) delivered an Underlying(1) Operating Profit Before Tax of $4.6 million, a decrease compared to $19.8 million in FY2020, reflecting the sale of the Daimler Truck business on 30 April 2021 and reallocation of Iveco and Hino operations to Cars retailing in 2021. The Statutory Profit Before Tax from continuing operations was $39.2 million, compared to a profit of $23.5 million in FY2020 and was impacted by the gain on sale of the Daimler Truck business. The property portfolio value increased to $432.5 million as at 31 December 2021 (excluding assets held for sale) compared with $356.5 million at 31 December 2020 and $409.2 million at 30 June 2021. The increase is due to the deliberate and ongoing rebalance of the property portfolio. The movement for the period included the acquisition of 10 strategic sites during the period, offset by the $5.2 million revaluation decrement in our property portfolio and the sale of 11 non-core properties during the period. A vacant non-core property is classified as held for sale at 31 December 2021, with settlement expected February 2022. The Property Segment recorded an Underlying(1) Operating Profit Before Tax of $12.6 million (excluding impairment and gains on sale), up $8.6 million on the pcp. The increase in underlying profit was driven by the internal rental income generated on strategically located properties acquired during the year, partially offset by the reduction in internal rental income from a number of properties divested in 2021. The Property Segment recorded a Statutory Profit Before Tax of $18.4 million for FY2021 compared to a loss of $4.1 million in the pcp. The movement was driven by gains on sale of non-core property, partially offset by a loss on revaluation of a property. 41 Financial Position Eagers Automotive is in a very strong financial position underpinned by a substantial property portfolio and asset base, together with $733.1 million of available liquidity at 31 December 2021. This liquidity position includes available cash and undrawn commitments under our corporate debt facilities. Corporate debt (Term and Capital loan facility) net of cash on hand decreased to $128.4 million as at 31 December 2021, marginally down from $129.3 million at 31 December 2020. During the period, the debt profile of the Company was rebalanced through the refinancing of our syndicated debt facility on longer tenor whilst simultaneously repaying all debt drawn under the facility, and the utilisation of favourable long term fixed price financing to fund strategic property acquisitions. The Group’s leverage metrics are in a very strong position, with the gearing ratio at 0.28 times (FY2020: 0.29 times) and the capitalisation ratio at 8.9% (FY2020: 9.7%), excluding discontinued operations, vehicle bailment and lease liabilities. Total inventory levels decreased to $874.0 million as at 31 December 2021, down from $1,025.8 million at 31 December 2020. The decrease in inventory and associated floorplan is primarily due to the sale of the Daimler Truck business. Inventory levels continue to be impacted by a combination of global supply chain dynamics and management’s initiatives in response to COVID-19. Eagers Automotive continues to maintain a significant equity ownership in used vehicle inventory. The Company continues to focus on cash management, retaining a strong cash position of $197.6 million as at 31 December 2021 driven by strong operating cash flows of $302.7 million, supplemented by investing activities of $137.5 million, enabling a net reduction in corporate debt, acquisition of property and businesses and payment of dividends. On a like-for-like basis, adjusting for COVID-19 impacts, discontinued operations and AASB 16, net cash from operating activities for the period was $312.8 million compared to $193.5 million in the pcp. Please note that the operating cash flows for the twelve months ended 31 December 2020 included a number of extraordinary actions to fortify our cash position in response to COVID-19, including but not limited to liquidating equity owned stock, which we have rebuilt in 2021, and the receipt of government wage subsidies. The balance sheet reflects a net current asset position of $30.4 million as at 31 December 2021, compared to a net current liability position of $102.8 million at 31 December 2020. Our net current asset position is impacted by the application of the new lease standard which results in the recognition of a $132.5 million net current lease liability as at 31 December 2021, reflecting property rental charges for the next 12 months. This commitment was 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 of $162.9 million at 31 December 2021. (1) Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 34 (FY2021) and 35 (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) Like-for-like Car Retailing revenue excludes Hino and Iveco operations in 2021, and other divested operations. (3) Car Retailing segment includes reallocation of Hino and Iveco operations in 2021, previously reported in Truck Retailing in 2020. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 42 Outlook Despite the ongoing supply chain constraints and temporary disruption to logistics and resourcing experienced in early 2022 as a result of the Omicron outbreak, unusually strong demand continues in all regions across both Australia and New Zealand. Eagers Automotive has a strong balance sheet and fortified liquidity position, providing the flexibility and capacity to capitalise on transformation and consolidation opportunities, and invest in targeted organic growth initiatives and acquisition opportunities as it accelerates execution of the Next100 Strategy. In the near term, Eagers Automotive is focused on delivering improved operational performance through: • Leveraging current strong market conditions, disciplined management of operations and implementation of integrated technology solutions to drive increased efficiency, productivity and a greater customer experience; • Accelerating the scaling of easyauto123 through dedicated sourcing channels, large format, factory style reconditioning centres and the rollout of integrated technology solutions that underpin an omni-channel offering, driving growth in volume, fractionalising cost and delivering an enhanced customer experience; and • Executing our property strategy through the redevelopment of recently acquired strategic properties and further progress on our AutoMall strategy to transform and consolidate our automotive retail formats and deliver an enhanced customer experience on a substantially lower cost base. In the short to medium term, the Group is focused on driving EPS growth by prioritising the following initiatives: • Continuing to drive operational efficiencies across all aspects of our business through a whole of Company focus on delivering the Next100 Strategy; Matters Subsequent to the End of the Financial Year The Directors are not aware of any matter or circumstance not dealt with in this report or the consolidated financial report that has arisen since the end of the year under review and has significantly affected or may significantly affect the Group’s operations, the results of those operations or the state of affairs of the Group in future financial years. Environmental Regulation The Group’s property development and service centre operations are subject to various environmental regulations. Environmental licences are held for particular underground petroleum storage tanks. Planning approvals are required for property developments undertaken by the Group in relevant circumstances. Authorities are provided with appropriate details and to the Directors’ knowledge developments during the year were undertaken in compliance with planning requirements in all material respects. Management works with regulatory authorities, where appropriate, to assist compliance with regulatory requirements. There were no material adverse environmental issues during the year to the Directors’ knowledge. Remuneration Report Contents of Remuneration Report 1. Introduction and Key Management Personnel (KMP) 2. Remuneration strategy and principles 3. Remuneration governance 4. FY21 business performance 5. Executive remuneration framework for FY21 43 43 44 43 45 46 48 48 49 50 • Creating shareholder value by accelerating the growth of our 6. Remuneration structure and outcomes for FY21 7. Remuneration framework changes for FY21 8. Executive contractual arrangements 9. Non-executive Director remuneration 10. Statutory disclosures easyauto123 business as the dominant player in the pre- owned car market across Australia and New Zealand; • Leveraging our point-of-sale advantage, technology investments and a favourable credit market to continue pursuing growth in our finance penetration levels; and • Capitalise on the transformation and consolidation of the automotive retail industry through a focus on accretive acquisition opportunities, selected rationalisation of our dealership portfolio and complementary consolidation that supports our strategic mandate. 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. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 43 1. Introduction and Key Management Personnel (KMP) 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 (“the Act”) and relevant 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 FY21 were: Name Non-executive Directors (NEDs) Tim Crommelin Nick Politis David Cowper Dan Ryan Marcus Birrell Greg Duncan David Blackhall Michelle Prater Executive Directors Martin Ward Position Chair Director Director Director Director Director Director Director Term as KMP in FY21 Full year Full year Full year Full year Full year Full year Full year Full year Chief Executive Officer (until 24 February 2021), Director (until 1 March 2021) Part year – 1 January to 1 March 2021 Sophie Moore (CFO) Executive Director, Chief Financial Officer Full year Other Executive KMP Keith Thornton (CEO) Chief Operating Officer (until 24 February 2021), Chief Executive Officer (from 24 February 2021) Denis Stark (GCCS) General Counsel & Company Secretary Full year Full year There have been no changes to KMP since the reporting date. 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 Flexibility Easily explained to and understood by internal and external stakeholders 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. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 44 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 and reviewing the remuneration arrangements for NEDs and the CEO, based on recommendations of the Remuneration & Nomination Committee. The Board also reviews the CEO’s performance on a continual basis. Remuneration & Nomination Committee The Remuneration & Nomination Committee reviews and makes recommendations to the Board regarding NED and CEO remuneration arrangements and KMP equity plans. These reviews take place at least annually, taking into account relevant factors including market conditions. Management The CEO, in consultation with the Chair of the Remuneration & Nomination Committee, sets and reviews the remuneration arrangements of other executive KMPs ensuring the appropriateness of their reward framework and reviews their performance at least annually. Remuneration advisors External advisors may be engaged directly by the Board or through the Remuneration & Nomination Committee to provide advice or information relating to KMP that is free from the influence of management. As reported last year, KPMG was engaged in FY20 and early FY21 to assist with a remuneration review, changes to the executive remuneration framework and benchmarking. KPMG’s engagement did not involve providing any remuneration recommendations as defined by the Corporations Act 2001. 4. FY21 business performance During FY21, despite an unusual and 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 $330.7 MILLION EARNINGS PER SHARE 125.2 CENTS DIVIDENDS PER SHARE 70.9 CENTS 12-MONTH TOTAL SHAREHOLDER RETURN 5.1% The table below details Eagers’ performance against key financial and operational metrics for the five-year period ended 31 December 2021. Name Statutory net profit after tax (NPAT) ($ million) Statutory earnings per share (EPS) – basic (cents) Dividend per share (cents) Share price at year end ($) 2021 330.7 125.2 70.9 13.44 2020 156.2 57.6 25.0 13.29 2019 (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 EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 45 5. Executive remuneration framework for FY21 Total Fixed Remuneration (TFR) Short-Term Incentives (STI) Long-Term Incentives (LTI) • Each executive KMP receives 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, and health and fitness programs. Commission Plan for COO • The COO prior to his appointment as CEO in February 2021, New LTI Plan • As referred to in last year’s Remuneration Report, a new LTI plan was introduced for executive KMP in FY21 (LTI Plan). • Delivered in options with an exercise price of $12.32 per option. (This was the share price on the initial grant date). • Focus on creation of shareholder value by rewarding the achievement of financial performance hurdles. • Two financial performance hurdles must be achieved for any options to vest. • Performance is measured at the end of four-year period (FY21 to FY24). • Financial hurdles: • Interest cover ratio of 2.5 times; and • Compound annual growth in EPS above the Baseline: • 50% of options vest at 9.0% EPS growth over the four-year period. • 100% of options vest at 10% EPS growth over the four-year period. • For CEO, maximum award is up to 50% of base pay per annum over the four-year period, subject to the two financial hurdles. • For CFO, maximum award is up to 17% of base pay per annum over the four-year period, subject to the two financial hurdles. • For GCCS, maximum award is up to 6% of base pay per annum over the four-year period, subject to the two financial hurdles. • If options vest at end of the four-year period, and are exercised, they will convert to ordinary shares with no holding lock. • Options for the four-year period were allocated on the initial grant date, with the number of options determined using ‘fair value’ methodology. • If employment ceases, all unvested options will lapse, unless the Board determines otherwise. participated in a commission plan as described in last year’s Remuneration Report. • Under the Commission Plan, the COO received a percentage of net profit before tax of relevant business units. This had a direct link to the Company’s financial performance and is commonly used for senior management in the automotive industry, where fixed remuneration is set relatively low and variable remuneration forms a larger proportion of the remuneration mix. • The Commission Plan ceased at the end February 2021. New STI Plan • A new STI plan was introduced for executive KMP in FY21 (STI Plan). • Delivered in a mix of cash and performance rights. • Focus on creation of shareholder value by rewarding the achievement of both financial and non-financial performance hurdles. • Performance is measured annually over the four-year period (FY21 to FY24). • If rights vest, they convert to ordinary shares subject to holding lock until 28 February 2025 or cessation of employment. • Rights for the four-year period were allocated on the initial grant date, with the number of rights determined using ‘fair value’ methodology. • If employment ceases, there will be no STI payment or vesting of rights for the year in which employment ceases, unless the Board determines otherwise. CEO • Non-financial hurdles - up to one-third of base pay, by cash payment, with 50% subject to strategic hurdles and 50% subject to sustainability hurdles. • Financial hurdles – up to two-thirds of base pay, by a mix of cash payment and rights, subject to two financial hurdles (both of which must be achieved): • Interest cover ratio of 2.5 times; and • Compound annual growth in underlying EPS above baseline EPS of 52.0 cents for FY20 (Baseline): • At 7.0% EPS growth, $200,000 in cash and $200,000 of rights will vest. • At 7.5% EPS growth, a further $200,000 of rights will vest. • At 8.0% EPS growth, a further $200,000 of rights will vest. CFO • Cash payment of up to one-third of base pay, subject to non- financial and financial performance hurdles: • Non-financial hurdles - 75% of STI payment subject to strategic and sustainability hurdles (split evenly between strategic and sustainability). • Financial hurdles – 25% of STI payment subject to financial hurdle of 8% compound annual growth in underlying EPS above the Baseline. GCCS • Cash payment of up to 29% of base pay, subject to non-financial and financial performance hurdles: • Non-financial hurdles - 80% of STI payment subject to strategic and sustainability hurdles (split evenly between strategic and sustainability). • Financial hurdles – 20% of STI payment subject to financial hurdle of 7% compound annual growth in underlying EPS above the Baseline. • Performance rights of up to 12% of base pay, subject to two financial hurdles: • Interest cover ratio of 2.5 times; and • Compound annual growth in underlying EPS above the Baseline: • At 7.5% EPS growth, $25,000 of rights vest. • At 8.0% EPS growth, a further $25,000 of rights vest. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 46 6. Remuneration structure and outcomes for FY21 As reported in the finance and operational review section of this Directors‘ Report, the Company delivered strong results against key financial and non-financial metrics for FY21. The following are details of the FY21 remuneration structures and outcomes awarded to executive KMP based on both Company and individual performance. (a) STI Plan - performance outcomes for FY21 Design feature Eligibility Instrument Performance period Maximum opportunity Performance measures Further detail Executive KMP. A mix of cash and performance rights, as described in section 5 of this report. Performance is measured annually over the four-year period FY21 to FY24. As described in section 5 of this report. The Board, following review by the Remuneration & Nomination Committee, approved the achievement of the financial performance hurdles of all executive KMP, the achievement of the CEO’s non-financial performance hurdles and the CEO’s STI payment. The CEO, in consultation with the Remuneration & Nomination Committee, approved achievement of the non-financial performance hurdles of the other executives. Achievement of the financial performance hurdles was determined with reference to the Company’s annual growth in underlying EPS and interest cover performance hurdles, as described in section 5 of this report, having regard to the Group’s audited financial statements. Achievement of the non-financial performance hurdles was determined with reference to achievement of individual performance and engagement against various strategic and sustainability hurdles, including in these areas: • Strategic performance hurdles • for the CEO, achievement through leading specific progress against our Next100 Strategy, maximising franchised automotive outcomes via organic and acquisitive growth opportunities, and maximising used car business growth opportunities via a defined expansion roadmap. • for the CFO, achievement through contributions towards specific progress against our Next100 Strategy, managing key financial measures for anticipated requirements while positing the Company for Next100 execution, and leading key acquisitions and divestments to completion balancing the desired outcomes with appropriate commerciality. • for the GCCS, achievement through contributions towards specific progress against our Next100 Strategy, key acquisitions and divestments to completion balancing the desired outcome with appropriate commerciality, and establishing legal/corporate framework for growth ambitions and Next100 Strategy. • Sustainability performance hurdles • for the CEO, achievement through driving group-wide stakeholder engagement, roadmap for key sustainability initiatives including Environmental, Social, and Governance (ESG) and diversity, and group-wide operational adherence to relevant regulatory and contractual requirements. • for the CFO, achievement through organisational compliance with accounting and taxation obligations, finalisation of nominated projects, and operational adherence to relevant regulatory and contractual requirements. • for the GCCS, achievement through advisory in respect of operations, sustainability/ESG initiatives, corporate governance and corporate values, an environment of high transparency, ethics and integrity, and operational adherence to relevant regulatory and contractual requirements. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 47 6. Remuneration structure and outcomes for FY21 (continued) (a) STI Plan - performance outcomes for FY21 (continued) Executive KMPs received 100% of their STI Plan awards for FY21 following assessment by the Board, Remuneration & Nomination Committee and the CEO, as described in section 5 of this report. It was considered that no reduction to maximum entitlements was warranted based on review of the individual’s performance during the year against these measures. Performance included continuing simplification of the Group’s businesses to focus on core automotive retail, successful sale of the Daimler Truck Division, cost-out program, proactive and successful response to ongoing issues arising from the ongoing global health crisis, and continuing reorganisation and optimisation of businesses and property portfolio to provide greater flexibility for implementation of our omni-channel approach. Individual performances in these areas were considered, as were their 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 2021 operational and financial performance. CEO CFO GCCS % awarded for FY21 under STI Plan 100% 100% 100% STI paid $600,000 $200,000 $125,000 Rights vested 50,463 - 4,205 (b) COO Commission Plan - performance outcomes for FY21 Design feature Eligibility Instrument Performance period Opportunity Name COO (c) LTI Plan for FY21 Further detail COO only (and only for the months of January and February 2021, prior to his appointment as CEO). Cash. January and February 2021. This plan ceased to apply at end of February 2021. 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 net profit before tax Total Commission paid for FY21 (January and February only) A percentage of the national cars division total net profit before tax. $235,918 A new LTI plan was introduced for FY21, as detailed in section 5 of this report, for better alignment with ASX200 market practice. (d) No Retention Grants in FY21 No equity retention grants were made in FY21. As reported in our previous Remuneration Reports, a one-off equity retention grant was awarded in early 2020 to recognise the CFO’s importance to the ongoing success of the Company. As previously disclosed, 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 but without any performance conditions. More detail on the grant is provided in the following table. There were no equity retention grants made in FY21. Design feature Eligibility Instrument Grant date Vesting period Restriction period Opportunity Allocation methodology Further detail CFO only. Restricted Shares. 17 February 2020. • 30% vested immediately on grant. • 35% vested on 31 December 2020. • 35% vested 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. Vesting conditions Continued employment until the vesting date. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 48 7. Remuneration framework changes for FY21 A comprehensive review of the executive remuneration framework was undertaken in FY20 in response to the ‘first strike’ received at our 2020 Annual General Meeting. The Board engaged with shareholders, proxy advisors and other stakeholders to better understand their concerns and also obtained independent external advice in FY20 in relation to our remuneration framework. As a result, many changes were made to the remuneration framework for FY21 and these are reflected in our new STI Plan and LTI Plan, as described in section 5 of this report. Our remuneration framework is now better aligned with ASX200 market practice, while maintaining a strong pay-for-performance culture. STI • A new remuneration framework was introduced for FY21. Key Changes to Remuneration Framework • Greater disclosure on the new STI framework and performance measures is included in this Remuneration Report. • The STI Plan for FY21 was assessed against both financial and non-financial performance hurdles and was awarded in a mix of cash and equity. • There is no re-testing of STI performance hurdles. LTI • A new LTI plan was introduced for FY21 with a performance period of four years and awarded wholly in equity. • Clear LTI performance hurdles were set for the four-year performance period, assessed wholly against financial measures with graduated vesting. • There is no re-testing of LTI performance hurdles. • The new LTI plan includes appropriate change-in-control and claw-back provisions in line with market practice. OTHER • This Remuneration Report includes improved transparency and disclosure in relation to the remuneration framework and structures. • No equity retention grants were made during FY21. • The Board did not award any one-off bonuses for FY21. 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 following table details the contractual terms for executive KMP. Name CEO CFO GCCS Duration of service agreement Notice period by employee Ongoing Ongoing Ongoing 12 months 3 months 3 months Notice period by company 12 months 3 months 3 months Payments upon termination At the Board’s discretion At the Board’s discretion At the Board’s discretion EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 49 9. Non-executive Director remuneration The objectives of the Company’s policy regarding Non-executive Director (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. All NEDs receive a single fee based on their position, without any extra fees payable for sitting on Committees. NED fees for FY21 were as reflected in the following table (exclusive of superannuation). Role Chair of the Board Chair of the Audit & Risk Committee Other NEDs NED fees for FY22 are as reflected in the following table (exclusive of superannuation). Role Chair of the Board Chair of the Audit & Risk Committee Chair of the Remuneration & Nomination Committee Other NEDs Fees $100,000 per annum $100,000 per annum $85,000 per annum Fees $125,000 per annum $115,000 per annum $115,000 per annum $100,000 per annum EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 50 10. Statutory disclosures Statutory remuneration disclosures are prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards and include share-based payments expensed during the financial year, calculated in accordance with AASB 2 Share-based Payment. (a) Executive KMP in FY20 and FY21 Table 1 – Statutory Table of executive KMP remuneration Short-term benefits Post employment benefits Share-based payments Salary & fees ($) Bonus & commission ($) Year Non- monetary & other benefits 1 ($) Superannuation ($) Other post- employment benefits ($) Performance rights & options 2 ($) Performance- related percentage (%) Total ($) 2021 1,050,000 835,918 3 233,638 25,000 2020 2021 2020 2021 2020 275,000 1,082,316 4 591,667 200,000 458,333 150,000 412,500 125,000 320,833 105,000 2021 5 200,000 2020 1,109,144 - - 119,812 23,334 24,880 40,031 15,217 (9,628) 155,798 2021 2,254,167 1,160,918 287,375 2020 2,163,310 1,337,316 315,707 21,348 22,631 21,348 22,631 21,348 4,167 25,000 74,429 89,044 - - - - - - - - - 1,850,005 3,994,561 - 1,498,475 450,216 1,287,848 407,914 1,062,476 129,165 - - - 729,327 462,398 194,539 1,289,942 2,429,386 6,206,275 - 407,914 4,313,291 67 72 50 53 35 23 - - Executive KMP Keith Thornton Sophie Moore Denis Stark Martin Ward Total 1 2 3 Includes benefits such as the provision of motor vehicles, insurance policy costs, health and fitness programme costs and the movement in the provision for employee entitlements. Where amounts are negative, leave taken for the year exceeded the sum of leave accrued for the year and other benefits. This does not represent an amount paid or owed by the KMP to the Company. Performance rights and options are valued using a binomial tree methodology. A pre-determined value of the portion of the rights and options attributable to the year under review has been expensed in the income statement in conformity with AASB 2 and reflected in the recipient’s remuneration. Vesting is subject to the achievement of performance hurdles as previously detailed in this Remuneration Report. This includes $235,918 for the COO Commission Plan (in respect of the months of January and February only) as described in section 6(b) of this Remuneration Report, the balance being for the STI Plan. This is for the COO Commission Plan (January to December 2020). 4 5 Mr Ward was a KMP until 1 March 2021. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 51 10. Statutory disclosures (continued) (b) NEDs in FY20 and FY21 Table 2 – Statutory Table of NED remuneration Short-term benefits Post employment benefits Share-based payments Salary & fees ($) Bonus & commission ($) Non- monetary & other benefits 6 ($) Superannuation ($) Other post- employment benefits ($) Performance rights & options 7 ($) Performance- related percentage (%) Total ($) 100,000 50,000 85,000 42,500 85,000 42,500 100,000 50,000 85,000 42,500 85,000 42,500 85,000 42,500 85,000 35,417 710,000 347,917 - - - - - - - - - - - - - - - - - - 514 519 514 519 514 519 514 519 514 519 514 519 514 519 514 475 4,112 4,108 9,750 4,750 8,288 4,038 8,288 4,038 9,750 4,750 8,288 4,038 8,288 4,038 8,288 4,038 8,288 3,365 69,228 33,055 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 110,264 55,269 93,802 47,057 93,802 47,057 110,264 55,269 93,802 47,057 93,802 47,057 93,802 47,057 93,802 39,257 783,340 8 385,080 - - - - - - - - - - - - - - - - NED Tim Crommelin Nick Politis Dan Ryan David Cowper Marcus Birrell Greg Duncan David Blackhall Michelle Prater Total Year 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 6 7 8 Includes benefits such as the provision of motor vehicles, insurance policy costs, health and fitness programme costs and the movement in the provision for employee entitlements. Performance rights and options are valued using a binomial tree methodology. A pre-determined value of the portion of the rights and options attributable to the year under review has been expensed in the income statement in conformity with AASB 2 and reflected in the recipient’s remuneration. Vesting is subject to the achievement of performance hurdles as previously detailed in this Remuneration Report. The increase in total fees for NEDs in 2021 was due to the Directors having agreed to forego their fees for six months during 2020 as a result of the initial impact and uncertainty arising from the COVID-19 pandemic. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 52 10. Statutory disclosures (continued) (c) Performance Rights and Options of KMP 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. (i) Movement in Performance Rights of KMP Table 3 – Grants and vesting of Performance Rights in FY21 Name Keith Thornton Sophie Moore Denis Stark Martin Ward (ii) Movement in Options of KMP Table 4 – Grants and exercise of Options in FY21 Name Keith Thornton Sophie Moore Denis Stark Martin Ward Opening balance Performance Rights granted Performance Rights Vested (1) Performance Rights lapsed nil nil nil nil Opening balance 518,583 117,570 64,820 2,153,985 212,853 54,130 17,738 nil Options granted 869,564 144,927 36,232 50,463 nil 4,205 nil Options exercised 518,583 (2) nil 64,820 (3) nil 2,153,985 (4) nil nil nil nil Options lapsed nil nil nil nil Closing balance 162,390 54,130 13,533 nil Closing balance 869,564 262,497 36,232 nil (1) These rights vested and converted to ordinary shares on 24 February 2022 and remain subject to a trading restriction as described in section 5 of this Remuneration Report. (2) These options were granted on 4 July 2014 and had vested by end of 2019. They were exercised on 7 June 2021 at an exercise price of $5.4652 and were valued at $10.318 per option on the day of exercise. (3) These options were granted on 4 July 2014 and had vested by end of 2019. They were exercised on 29 March 2021 at an exercise price of $5.4652 and were valued at $9.1748 per option on the day of exercise. (4) These options were granted on 4 July 2014 and had vested by end of 2019. 1,180,000 of them were exercised on 29 March 2021 at an exercise price of $5.4652 and were valued at $9.1748 per option on the day of exercise. The balance of these options were exercised on 4 June 2021 at an exercise price of $5.4652 and were valued at $10.5048 per option on the day of exercise. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 53 10. Statutory disclosures (continued) (c) Performance Rights and Options of KMP (continued) (iii) Performance Rights and Options granted to KMP Table 5 – Details of share-based payments (Performance Rights and Options) Chief Executive Officer Performance Rights Options No. No. No. Fair No. No. Grant Date granted lapsed exercised (1) value granted lapsed 24 February 2021 50,463 52,265 54,103 56,022 nil nil nil nil 50,463 $11.89 nil nil nil $11.48 $11.09 $10.71 No. exercised Fair value End of performance period 31 Dec 2021 Status Vested 24 February 2022 31 Dec 2022 Unvested 31 Dec 2023 Unvested 31 Dec 2024 Unvested 869,564 nil nil $2.76 31 Dec 2024 Unvested (1) Performance rights are automatically exercised upon vesting. 50,463 rights granted for 2021 were exercised on 24 February 2022, valued at the closing price of the underlying shares on the day of exercise. Chief Financial Officer Performance Rights Options No. No. No. Fair No. No. Grant Date granted lapsed exercised value granted lapsed No. exercised Fair value 17 February 2020 24 February 2021 30,000 (2) 35,000 (2) 35,000 (2) 17,422 18,034 18,674 nil nil nil nil nil nil nil nil $9.00 $9.00 nil $9.00 nil nil nil $11.48 $11.09 $10.71 End of performance period 31 Dec 2019 31 Dec 2020 31 Dec 2021 Status Vested 17 February 2020 Vested 31 December 2020 Vested 31 December 2021 31 Dec 2022 Unvested 31 Dec 2023 Unvested 31 Dec 2024 Unvested 144,927 nil nil $2.76 31 Dec 2024 Unvested (2) These rights converted to ordinary on their vesting date and remain subject to a trading restriction as described in section 6(d) of this Report. General Counsel & Company Secretary Performance Rights Options No. No. No. Fair No. No. Grant Date granted lapsed exercised (3) value granted lapsed 24 February 2021 4,205 4,355 4,509 4,669 nil nil nil nil 4,205 $11.89 nil nil nil $11.48 $11.09 $10.71 No. exercised Fair value End of performance period 31 Dec 2021 Status Vested 24 February 2022 31 Dec 2022 Unvested 31 Dec 2023 Unvested 31 Dec 2024 Unvested 36,232 nil nil $2.76 31 Dec 2024 Unvested (3) Performance rights are automatically exercised upon vesting. 4,205 rights granted for 2021 were exercised on 24 February 2022, valued at the closing price of the underlying shares on the day of exercise. Further details of the performance rights and options granted to KMP are specified in Notes 42 and 43 to the consolidated financial report. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 54 10. Statutory disclosures (continued) (d) Relevant Interest in the Company’s Shares Held by KMP Table 6 – Shareholdings of KMP Name NEDs Tim Crommelin Nick Politis Dan Ryan David Cowper Marcus Birrell Greg Duncan David Blackhall Michelle Prater (1) Opening balance as at 1 January Year Received from EIP Purchases Sales Closing balance as at 31 December 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 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 2,540,096 nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil 46,000 100,000 368,805 nil nil nil nil nil nil 50,000 15,558 nil 5,000 nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil 438,286 438,286 70,005,321 69,905,321 1,200 1,200 15,053 15,053 2,000,000 2,000,000 350,000 300,000 28,056 28,056 2,540,096 2,540,096 (1) Ms Prater was appointed as a non-executive Director on 3 February 2020. Name Executive KMP Keith Thornton Sophie Moore Denis Stark Martin Ward (2) Opening balance as at 1 January Year Received from EIP Purchases Sales Closing balance as at 31 December 2021 2020 2021 2020 2021 2020 2021 2020 266,162 392,852 121,789 16,622 151,519 173,606 2,583,682 2,484,615 518,583 23,310 nil 105,167 64,820 108,473 nil 99,067 nil nil nil nil nil nil 40,000 nil 465,339 150,000 nil nil 40,000 130,560 nil nil 319,406 266,162 121,789 121,789 176,339 151,519 2,623,682 2,583,682 (2) These figures reflect Mr Ward’s dealings up to 1 March 2021 as he ceased being a KMP on that date. (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. EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 55 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 Tim Crommelin Nick Politis Dan Ryan David Cowper Marcus Birrell Sophie Moore Greg Duncan David Blackhall Michelle Prater Ordinary Shares Share Options Performance Rights 438,286 70,005,321 1,200 15,053 2,000,000 121,789 350,000 28,056 2,540,096 - - - - - - - - - - 262,497 54,130 - - - - - - Shares Under Option Non-Audit Services 2,173,910 options and 284,721 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. 3,492,998 shares were issued as a result of the exercise of options and 54,668 shares were issued as a result of the exercise of performance rights during or since the year under review. At the date of this report, there are 2,503,728 unissued shares under option and 230,053 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 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 40 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. 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. Deloitte Touche Tohmatsu continues in office as auditor of the Group in accordance with section 327 of the Corporations Act 2001. Tim Crommelin Director Brisbane, 24 February 2022 EAGERS AUTOMOTIVE — Financial Report 2021Directors’ Report continued 56 Auditor’s Declaration of Independence EAGERS AUTOMOTIVE — Financial Report 2021 57 Financial Statements 2021 For the year ended 31 December 2021 Consolidated Statement of Profit or Loss Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position 38 16 43 Consolidated Statement of Changes in EquityConsolidated Statement of Cash Flows Notes to and Forming Part of the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report 63 43 45 46 EAGERS AUTOMOTIVE — Financial Report 2021 58 Consolidated Statement of Profit or Loss For the year ended 31 December 2021 Revenue Finance income Other gains Share of net profits of associates Raw materials and consumables purchased Employee benefits expense Finance costs Depreciation and amortisation expense Impairment of non-current assets Other expenses Profit before tax Income tax expense Profit from continuing operations Loss from discontinued operations Profit 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 operations Diluted earnings/(loss) per share From continuing operations From discontinued operations Notes 3 4 5 48(c) 6(a) 6(a) 6(a) 6(b) 7 37 34(c) 32(b) 45(a) 45(b) Consolidated 2021 $’000 2020 $’000 8,663,462 8,749,675 10,368 58,234 1,130 - 48,900 3,758 (7,043,492) (7,179,720) (672,077) (79,619) (120,428) (5,156) (613,158) (88,384) (166,257) (90,700) (355,615) (384,008) 456,807 280,106 (118,070) 338,737 (8,000) 330,737 317,824 12,913 330,737 (88,575) 191,531 (35,320) 156,211 147,290 8,921 156,211 Cents Cents 125.2 128.4 (3.2) 124.7 127.9 (3.2) 57.6 71.4 (13.8) 57.3 71.0 (13.7) The above Consolidated Statement of Profit or Loss should be read in conjunction with the accompanying notes. EAGERS AUTOMOTIVE — Financial Report 2021 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2021 59 Profit for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Items that will not be reclassified subsequently to profit or loss Gain on revaluation of property Deferred tax expense Total other comprehensive income for the year Total comprehensive profit for the year Total comprehensive profit attributable to: Owners of Eagers Automotive Limited Non-controlling interests Notes 32(a) 19, 32(a) 32(a) Consolidated 2021 $’000 330,737 2020 $’000 156,211 9 9 4,999 (1,500) 3,499 51 51 6,459 (1,937) 4,522 3,508 4,573 334,245 160,784 321,332 12,913 334,245 151,863 8,921 160,784 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. EAGERS AUTOMOTIVE — Financial Report 2021 60 Consolidated Statement of Financial Position As at 31 December 2021 Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax receivables Prepayments and deposits Finance lease receivables 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 receivables 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 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 Notes 9 10 11 24 12 18 13 14 15 16, 48 14 19 20 21 17(a)(i) 18 22 23 24 25 26 17(a)(i) 27 29 28 17(a)(i) 31 32(a) 32(b) 34(c) Consolidated 2021 $’000 2020 $’000 197,620 228,960 874,049 574 18,787 34,715 18,670 209,092 268,863 1,025,781 - 31,898 27,309 - 1,373,375 1,562,943 23,910 577 2,074 11,801 514,374 775,295 152,000 10,508 631,099 235,932 23,148 2,366 1,561 2,851 494,266 785,574 162,005 9,837 801,129 187,971 2,357,570 3,730,945 2,470,708 4,033,651 364,263 696,292 - 101,770 13,442 167,179 436,372 878,149 16,381 131,372 23,965 179,522 1,342,946 1,665,761 311,062 16,462 14,058 958,966 1,300,548 2,643,494 304,513 20,906 26,497 1,091,397 1,443,313 3,109,074 1,087,451 924,577 1,173,069 (617,978) 510,725 1,065,816 21,635 1,087,451 1,173,069 (580,200) 317,848 910,717 13,860 924,577 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. EAGERS AUTOMOTIVE — Financial Report 2021 61 Consolidated Statement of Changes in Equity For the year ended 31 December 2021 Issued capital $’000 Asset revaluation reserve $’000 Share- based payments reserve $’000 Foreign currency translation reserve $’000 Business combination reserve $’000 Investment revaluation reserve $’000 Retained earnings $’000 Attributable to owners of the parent $’000 Non- controlling interests $’000 Total equity $’000 1,173,069 32,834 (62,510) 1,204 (479,042) (72,686) 317,848 910,717 13,860 924,577 - - - - - - - - - - - - - 3,499 3,499 (12,255) - - - - - - - - - - - - 3,204 - (51,019) 19,037 (253) - - (29,031) - 9 9 - - - - - - - - - - - - - - - - - - - - - - - 317,824 317,824 12,913 330,737 - 3,508 - 3,508 - 317,824 321,332 12,913 334,245 - 12,255 - - - - - - - - - - - - 3,204 - 3,204 (137,202) (137,202) (3,985) (141,187) - - - - - (51,019) 19,037 (253) - - - (51,019) 19,037 (253) - - (2,548) (2,548) 1,395 1,395 (137,202) (166,233) (5,138) (171,371) 1,173,069 24,078 (91,541) 1,213 (479,042) (72,686) 510,725 1,065,816 21,635 1,087,451 Consolidated entity Notes Balance at 1 January 2021 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 32(a) Dividends provided for or paid 32(b) 32(a) 32(a) Shares acquired by employee share trust Shares issued pursuant to staff share plan Income tax on items taken to or transferred directly from equity Sale of shares to non-controlling interests Issues of shares to NCI Balance at 31 December 2021 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. EAGERS AUTOMOTIVE — Financial Report 2021 62 Consolidated Statement of Changes in Equity For the year ended 31 December 2021 Issued capital $’000 Asset revaluation reserve $’000 Share- based payments reserve $’000 Foreign currency translation reserve $’000 Business combination reserve $’000 Investment revaluation reserve $’000 Retained earnings $’000 Attributable to owners of the parent $’000 Non- controlling interests $’000 Total equity $’000 1,173,069 28,312 (37,863) 1,153 (479,042) (72,686) 199,463 812,406 9,423 821,829 - - - - - - - - - - 4,522 4,522 - - - - - - - - - 408 - (31,497) 8,610 (2,168) (24,647) - 51 51 - - - - - - - - - - - - - - - - - 147,290 147,290 8,921 156,211 - 4,573 - 4,573 - 147,290 151,863 8,921 160,784 - - - - - - - 408 - 408 (28,905) (28,905) (4,484) (33,389) - - - (31,497) 8,610 (2,168) - - - (31,497) 8,610 (2,168) (28,905) (53,552) (4,484) (58,036) 1,173,069 32,834 (62,510) 1,204 (479,042) (72,686) 317,848 910,717 13,860 924,577 Consolidated entity Notes 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: Share-based payments expense 32(a) Dividends provided for or paid 32(b) Shares acquired by employee share trust 32(a) Payments received from employees for exercised options Income tax on items taken to or transferred directly from equity Balance at 31 December 2020 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. EAGERS AUTOMOTIVE — Financial Report 2021 Consolidated Statement of Cash Flows For the year ended 31 December 2021 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 63 Consolidated 2021 $’000 2020 $’000 Notes 9,529,429 9,924,255 (9,032,831) (9,360,074) - 4,776 (79,619) (131,176) 1,695 10,431 133,780 4,276 (96,723) (84,281) 4,629 2,025 Net cash provided by operating activities 46 302,705 527,887 Cash flows from investing activities Payments for acquisition of businesses - net of cash acquired Payments for property, plant and equipment Payments for shares in other corporations Proceeds from sale of businesses Proceeds from sale of property, plant and equipment Proceeds from return of capital Receipts from subleases 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 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)/provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 35(a) 36(a) 32(a) 32(a) 8 9 (14,403) (67,807) 1,524 111,774 85,265 - 21,138 137,491 19,037 (51,019) - (16,741) (42,246) - 7,747 6,568 15,236 - (29,436) 8,610 (31,497) 108,699 (150,522) (284,483) (1,666) (137,202) (9,102) (121,194) (451,668) (11,472) 209,092 197,620 - (28,905) (3,096) (160,222) (390,894) 107,557 101,535 209,092 The December 2020 and 2021 Consolidated Statement of Cash Flows has been prepared to include cash flows from continuing and discontinued operations in accordance with AASB 107 Statement of Cash Flows. Refer to Note 37. The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. EAGERS AUTOMOTIVE — Financial Report 2021 64 Notes to and Forming Part of the Consolidated Financial Statements 31 December 2021 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 consolidated 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 consolidated 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 consolidated financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (IFRS). Historical cost convention These consolidated 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 Impairment of Assets. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; • Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and • Level 3 inputs are unobservable inputs for the asset or liability. Functional and presentation currency The presentation currency of the Group is the Australian Dollar. The consolidated financial statements were authorised for issue by the Directors on the 24th of February 2022. 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 consolidated financial statements have been prepared on the basis that the Group is a going concern, able to realise assets in the ordinary course of business and settle liabilities as and when they fall due. The Group has maintained a robust Consolidated Statement of Financial Position with net current assets of $30 million at the reporting date ($12 million excluding assets classified as held for sale). The Consolidated Statement of Financial Position includes a substantial asset base and property portfolio valued at $448.3 million (including construction in progress) at 31 December 2021 and total available liquidity of $733 million (cash in bank of $198 million and undrawn facilities of $535 million). Corporate debt net of cash is $128 million at 31 December 2021. The Group has generated positive net cash flows from operating activities of $303 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $657 million for the year ended 31 December 2021. Based on the strength of the Group’s Consolidated Statement of Financial Position and its cash flow 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 these consolidated financial statements. The Directors are therefore of the opinion that the preparation of the consolidated financial statements as a going concern is appropriate. In regards to the ongoing COVID-19 pandemic, lockdowns and other restrictions have occurred across parts of Australia and New Zealand during the year. The Directors of the Company have assessed these restrictions on continuing operations and consider the future impacts to be short term in nature, and will not have a material impact on the overall Group and its available liquidity. (b) Basis of consolidation The consolidated financial statements incorporate the consolidated 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. EAGERS AUTOMOTIVE — Financial Report 2021 65 1 Summary of significant accounting policies (continued) (b) Basis of consolidation (continued) The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including: • the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; • potential voting rights held by the Company, other vote holders or other parties; • rights arising from other contractual arrangements; and • any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non- controlling interests having a deficit balance. When necessary, adjustments are made to the consolidated financial statements of subsidiaries to bring their accounting policies in 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 Financial Instruments (when applicable), the cost on initial recognition of an investment in an associate, or a joint venture. Investments in associates (ii) 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 Non-current Assets Held for Sale and Discontinued Operations. 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 Investments in Associates and Joint Ventures are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment of assets as a single asset by comparing its recoverable amount (higher of value-in-use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases. The Group discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with AASB 9. The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 66 1 Summary of significant accounting policies (continued) (b) Basis of consolidation (continued) Investments in associates (continued) (ii) 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 35(c). When a Group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group. (c) Rounding of amounts The Company is of a kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission (ASIC), 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. (d) Goods and services tax Revenues, expenses, assets and liabilities are recognised net of the amount of goods and services tax (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 Consolidated Statement of Financial Position. Cash flows are included in the Consolidated 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. (e) Other accounting policies Significant other accounting policies that summarise the recognition, treatment and measurement basis used, and are relevant to understanding the consolidated financial statements, are included throughout the relevant notes to the consolidated financial statements. (f) 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 2020-8 Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform - Phase 2; and • AASB 2021-3 Amendments to Australian Accounting Standards - Covid-19-Related Rent Concessions beyond 30 June 2021. The standards in issue but not yet effective, and are not expected to have a material impact on the Group, are as follows: • AASB 17 Insurance Contracts (as amended); • AASB 2021-5 Amendments to Australian Accounting Standards - Deferred Tax related to Assets and Liabilities arising from a Single Transaction; • AASB 2021-2 Amendments to Australian Accounting Standards - Disclosure of Accounting Policies and Definition of Accounting Estimates; • 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; • 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; • AASB 2020-6 Amendments to Australian Accounting Standards - Classification of Liabilities as Current or Non-current - Deferral of Effective Date; and • AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018-2020 and Other Amendments. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 67 2 Critical accounting estimates 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 included in the following notes: Note Note 11 Note 11 Note 17 Note 17 Note 19 Note 20 Note 21 Note 35 Note 36 Key judgements and estimates Demonstrator vehicle write-down to net realisable value Used vehicle write-down to net realisable value Leases Recoverability of right-of-use assets and other non-current assets Fair value estimation of land, buildings and capital works in progress Recoverability of goodwill and other intangibles with indefinite useful lives Deferred tax asset The fair value of assets and liabilities acquired in business combinations Sale of Daimler Truck Operations and property 3 Revenue Set out below is the disaggregation of the Group’s revenue: Consolidated revenue for the year ended 31 December 2021 from continuing operations Type of goods or service New vehicles Used vehicles Parts Service Other Total 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 Retailing $’000 Property $’000 Total $’000 5,182,209 1,970,178 937,638 524,567 47,517 8,662,109 8,128,223 533,886 8,662,109 8,143,758 518,351 8,662,109 - - - - 1,353 1,353 5,182,209 1,970,178 937,638 524,567 48,870 8,663,462 1,353 8,129,576 - 533,886 1,353 8,663,462 1,353 - 8,145,111 518,351 1,353 8,663,462 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 68 3 Revenue (continued) Consolidated revenue for the year ended 31 December 2020 from continuing operations Type of goods or service New vehicles Used vehicles Parts Service Other Total 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 (a) Recognition and measurement (i) Revenue Retailing $’000 Property $’000 Total $’000 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 4,973,458 2,078,945 1,008,382 584,035 104,855 8,749,675 1,803 8,165,640 - 584,035 1,803 8,749,675 1,803 8,284,490 - 465,185 1,803 8,749,675 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. 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. (ii) Other revenue items 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 Revenue from Contracts with Customers, 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. Rental income Rental income from operating leases is recognised on a straight-line basis over the lease term. Finance and insurance commissions 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 69 3 Revenue (continued) (a) Recognition and measurement (continued) (ii) Other revenue items (continued) 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. 4 Finance income Finance income Consolidated 2021 $’000 10,368 2020 $’000 - Finance income relates to income earned on sublease arrangements, in accordance with AASB 16 Leases. Refer to Note 18. 5 Other gains Gain/(loss) on disposal of non-financial assets Gain on disposal of properties Gain on disposal of businesses Brand restructure compensation Gain on divestment of associates Waived rent Notes 36(a) Consolidated 2021 $’000 15,168 10,957 31,894 215 - - 2020 $’000 (567) 1,962 5,417 31,751 860 9,477 58,234 48,900 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 70 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 relationships Total amortisation Total depreciation and amortisation Finance costs Vehicle bailment Interest on lease liabilities Other Total finance costs Superannuation Provision expenses Notes 19 19 19 17(a)(ii) 20 17(a)(ii) Consolidated 2021 $’000 2020 $’000 4,754 19,165 5,383 89,664 118,966 3,402 36,563 5,087 119,151 164,203 1,462 1,462 2,054 2,054 120,428 166,257 17,022 48,715 13,882 79,619 22,219 53,324 12,841 88,384 55,499 56,806 Allowance for expected credit losses 10(b) 765 1,386 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 672,077 107,530 - - 706,129 116,339 (92,971) (40,813) 779,607 688,684 42, 43 3,204 1,803 408 1,789 Business restructuring and integration costs - 1,689 (b) Impairment of non-current assets Revaluation decrement of land and buildings Impairment of right-of-use asset Impairment of fixed assets Notes 19 17 19 Consolidated 2021 $’000 5,156 - - 5,156 2020 $’000 9,996 73,150 7,554 90,700 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 71 6 Expenses (continued) (c) Recognition and measurement (i) Property, plant and equipment Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows: • Buildings • Plant & equipment 30 - 40 years 3 - 10 years • Leasehold improvements The shorter of the lease term and the useful life of the asset (5 - 30 years) (ii) 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. 7 Income tax (a) Income tax expense Current income tax expense Deferred income tax expense Notes Consolidated 2021 $’000 108,736 9,334 118,070 2020 $’000 73,192 15,383 88,575 Deferred income tax expense included in income tax expense comprises: In respect of the current year 21 9,334 15,383 Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax expense Tax at the Australian tax rate of 30% (2020: 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Non-taxable income Non-deductible capital expenditure Non-taxable dividends Non-allowable expenses Property impairment Application of capital losses against current year capital gains Sundry items Income tax expense (c) Tax (expense) relating to items of other comprehensive income 456,807 280,106 137,042 84,032 - 541 (325) 608 1,547 (17,488) (3,855) 118,070 (1,781) - (6,503) 559 2,999 - 9,269 88,575 Aggregate deferred tax arising in the reporting period and recognised in other comprehensive income (1,500) (1,937) EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 72 7 Income tax (continued) (d) Recognition and measurement 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. 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. 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. Income tax The income tax expense or benefit 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. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. 8 Dividends (a) Ordinary dividends fully franked based on tax paid @ 30% Final dividend for the year ended 31 December 2020 of 25.0 cents per share (2019: 11.25 cents) paid on 20 April 2021 Interim dividend for the year ended 31 December 2021 of 28.4 cents per share (2020: nil) paid on 15 October 2021. This is based on an ordinary dividend of 20.0 cents, and a special dividend of 8.4 cents. Total dividends paid Consolidated 2021 $’000 2020 $’000 64,233 28,905 72,969 - 137,202 28,905 Dividends paid in cash during the years ended 31 December 2021 and 2020 were as follows: Paid in cash 137,202 28,905 (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 42.5 cents per share, fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 20 April 2022 out of the retained profits at 31 December 2021 but not recognised as a liability at year end is: 109,197 64,233 (c) Franked dividends The final dividend recommended after 31 December 2021 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 2021. Franking credits available for subsequent reporting periods based on a tax rate of 30% (2020: 30%) 487,161 388,995 The above amounts represent the balances of the franking account as at the end of the financial year, adjusted for: (i) franking credits that will arise from the payment of the current tax liability; (ii) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and (iii) 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 (46,799) (27,528) EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 9 Current assets – Cash and cash equivalents Current assets Cash at bank and on hand Short term deposits Restricted cash 73 Consolidated 2021 $’000 2020 $’000 197,620 207,334 - - 1,455 303 197,620 209,092 The above figures are reconciled to cash at the end of the financial year as shown in the Consolidated Statement of Cash Flows. (a) Recognition and measurement Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Consolidated Statement of Financial Position. 10 Current assets – Trade and other receivables Trade and other receivables Allowance for expected credit losses (a) Ageing of trade receivables The ageing of trade receivables at 31 December 2021 is detailed below: Not past due Past due 0-30 days Past due 31 days plus Total Consolidated 2021 $’000 233,024 (4,064) 228,960 2020 $’000 274,502 (5,639) 268,863 Consolidated 2021 2020 Gross $’000 223,166 6,604 3,254 Provision $’000 3,573 165 326 Gross $’000 252,371 15,124 7,007 233,024 4,064 274,502 Provision $’000 4,560 378 701 5,639 The Group has applied the expected credit losses methodology to these trade receivables, in line with AASB 9. Included in the Group’s trade receivables balance are debtors with a net carrying amount of $9,367,000 (2020: $21,052,000) which are past due at the reporting date. The average age of these receivables is 61 days (2020: 63 days). (b) Movement in expected credit losses Opening balance Additional loss allowance Amounts written off during the year Disposal due to divestment Closing balance Consolidated 2021 $’000 5,639 765 (676) (1,664) 4,064 2020 $’000 4,888 1,386 (635) - 5,639 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 74 10 Current assets – Trade and other receivables (continued) (b) Movement in expected credit losses (continued) 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. (c) Recognition and measurement 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. 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 2021 $’000 528,027 (15,013) 513,014 247,445 (14,347) 233,098 136,374 (8,437) 127,937 2020 $’000 705,824 (16,748) 689,076 216,472 (16,714) 199,758 148,094 (11,147) 136,947 Total inventories 874,049 1,025,781 (a) Recognition and measurement 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 affected 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 based on 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 based on specific identification. (b) Critical accounting estimates and judgements (i) Demonstrator vehicle write-down to net realisable value In determining the amount of write-downs for 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. (ii) 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 have been used in determining any write- downs to net realisable value. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 12 Other current assets Prepayments and deposits 13 Assets classified as held for sale Assets classified as held for sale 75 Consolidated 2021 $’000 18,787 2020 $’000 31,898 Consolidated 2021 $’000 18,670 2020 $’000 - Assets classified as held for sale at 31 December 2021 represents a vacant property sale that is unconditional at the reporting date, and is due to settle in February 2022. The asset is presented within total assets of the Property segment in Note 30. (a) Recognition and measurement Assets held for sale 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. 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 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. 14 Non-current assets – Receivables Other loans receivable Other non-current receivables Consolidated 2021 $’000 23,910 11,801 35,711 15 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 (1) Consolidated 2021 $’000 322 255 577 2020 $’000 23,148 2,851 25,999 2020 $’000 588 1,778 2,366 1 The Directors have assessed that the fair value of the investment as at 31 December 2021 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 76 15 Non-current assets – Financial assets at fair value through other comprehensive income (continued) (a) 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 2021 are as follows: Class of financial assets and liabilities Level 3 financial assets at fair value through other comprehensive income - unlisted Unobservable inputs used in determination of fair values Carrying amount 31/12/21 $'000 Carrying amount 31/12/20 $'000 Valuation technique Key input 577 2,366 Net asset assessment. Pre-tax operating margin taking into account managements' experience and knowledge of market conditions and financial position. There were no transfers between levels in the year. (b) Recognition and measurement 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. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, the classification will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). Measurement At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not carried 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. 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. Impairment 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 16 Non-current assets – Investments in associates Shares in associate - Vehicle Parts (WA) Pty Ltd Shares in associate - Mazda Parts 77 Consolidated 2021 $’000 1,555 519 2,074 2020 $’000 1,233 328 1,561 Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting (refer Note 48). Reconciliation of the carrying amount of investment in associate is set out in Note 48(b). 17 Right-of-use assets and lease liabilities (a) Leases (i) Amounts recognised in the Consolidated Statement of Financial Position The Consolidated Statement of Financial Position shows the following amounts relating to leases: Right-of-use assets Property Equipment Consolidated entity Year ended 31 December 2021 Opening net book amount Exchange differences Additions Disposals Depreciation charge Rent reviews Adjustments to lease terms Closing net book amount 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 2021 $’000 2020 $’000 629,853 1,246 631,099 Property $’000 Equipment $’000 801,129 (3,070) 49,471 (132,743) (89,415) 5,002 (521) - - 1,495 - (249) - - 801,129 - 801,129 Total $’000 801,129 (3,070) 50,966 (132,743) (89,664) 5,002 (521) 629,853 1,246 631,099 Notes 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 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 78 17 Right-of-use assets and lease liabilities (continued) (a) Leases (continued) (i) Amounts recognised in the Consolidated Statement of Financial Position (continued) Lease liabilities Current Non-current (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 (iii) Maturity analysis of contracted undiscounted cash flows 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 Notes 6(a) 6(a) Consolidated 2021 $’000 2020 $’000 167,179 958,966 1,126,145 179,522 1,091,397 1,270,919 Consolidated 2021 $’000 2020 $’000 89,415 249 89,664 48,715 3,645 52,360 119,093 58 119,151 53,324 2,146 55,470 Consolidated 2021 $’000 2020 $’000 167,179 585,321 665,649 1,418,149 (292,004) 1,126,145 179,522 665,413 742,344 1,587,279 (316,360) 1,270,919 In addition to the above lease payments is a minimum lease payment of $49.2 million expected to occur 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 2022. 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 79 17 Right-of-use assets and lease liabilities (continued) (b) Recognition and measurement Leases The Group as a lessee The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognises a right-of- use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short- term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. 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. Right-of-use assets The Group recognises right-of-use assets at cost at the commencement date of the lease (i.e., the date the underlying asset is available for use). The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are subsequently measured at cost, less any accumulated depreciation and impairment losses, and are adjusted for any remeasurement of lease liabilities. 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. Any identified impairment loss is accounted for in line with our accounting policy for ‘Property, plant and equipment’ (refer to Note 19(a)). 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. Sale and leaseback transactions Where the Group enters into a sale and leaseback transaction, the Group firstly applies the requirements of AASB 15 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: • 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 80 17 Right-of-use assets and lease liabilities (continued) (b) Recognition and measurement (continued) Leases (continued) 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 an 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. (c) Critical accounting estimates and judgements (i) Recoverability of right-of-use assets and other non-current assets In applying the standard, the Directors have made certain assumptions and judgements in relation to the determination of the recoverable amount for these assets. (ii) Leases 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 make ongoing assumptions and judgements including but not limited to the appropriate discount rate on incremental borrowing rates and likely exercise of the renewal options. 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 reassesses 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). EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 18 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 receivables 81 Consolidated 2021 $’000 34,715 34,430 33,223 28,525 27,428 192,135 350,456 (79,809) 270,647 34,715 235,932 270,647 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 During the year, the finance lease receivables increase was driven by a number of sublease arrangements being entered into associated with the divestment of Daimler Truck Operations. 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 1 and 14 years. Lease agreements in place include clauses to enable rental increases in line with that of the corresponding head lease held by the Group. The Directors of the Group estimate the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime expected credit losses. None of the finance lease receivables at the end of the reporting period are 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, the expected credit loss associated with the finance lease receivables balance is immaterial. As such, no expected credit loss allowance was recorded in the current year in respect of finance lease receivables. (a) Recognition and measurement Leases The Group as a lessor Sublease arrangements When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease. 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 82 19 Non-current assets – Property, plant and equipment Freehold land and buildings - at fair value Directors' valuation 2 Land Buildings Total land and buildings Construction in progress - at cost Construction in progress Leasehold improvements At cost Accumulated depreciation Total leasehold improvements Plant and equipment At cost Accumulated depreciation Total plant and equipment Consolidated 2021 $’000 2020 $’000 249,962 182,490 432,452 202,384 154,079 356,463 15,825 7,405 27,809 (3,415) 24,394 48,516 (6,813) 41,703 43,793 (4,319) 39,474 141,514 (50,590) 90,924 Total property, plant and equipment 514,374 494,266 2 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 the 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 2021 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 — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 83 19 Non-current assets - Property, plant & equipment (continued) Valuation of land and buildings (continued) Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at 31 December 2021 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 31/12/21 $'000 Carrying amount 31/12/20 $'000 Valuation technique 40,541 46,140 Direct comparison Key input Input External valuations Price/sqm land Average/ range 2021 Average/ range 2020 Average $2,692/ sqm Average $3,071/ sqm Range $1,489 - $4,002/ sqm Range $1,234 - $5,065/ sqm Other key information Land size Range (weighted average) 2021 Range (weighted average) 2020 Average 4,067 sqm Average 3,005 sqm Range 2,015 - 4,931 sqm Range 2,015 - 4,853 sqm 380,956 283,222 Summation method, income capitalisation and direct comparison External valuations industry benchmarks Capitalisation rate Average 6.1% Average 6.4% Net rent / sqm land Average $116/sqm Average $115/sqm Level 3 Truck Dealership 9,888 20,039 Direct comparison External valuations Price/sqm land Price/ sqm GBA Range 0.0% - 9.0% Range 5.4% - 9.5% Range $0 - $300/ sqm Range $47 - $330/ sqm Net rent / sqm GBA 3 Average $295/sqm Average $255/sqm Average $430/ sqm Range $430 - $430/ sqm Average $411/sqm Land size Range $276 - $532/sqm Range $0 - $980/ sqm Average 23,006 sqm Range 23,006 - 23,006 sqm Range $107 - $1,730/ sqm Average 24,353 sqm Range 23,006 - 25,700 sqm Net rent/ sqm land Average $20/sqm Average $29/sqm Range $0 - $20/sqm Range $17 - $39/sqm Capitalisation rate Average 4.7% Average 6.9% Range 4.7% - 4.7% Range 6.3% - 7.2% Level 3 Other Logistics 1,067 7,062 Income capitalisation method supported by market comparison External valuations Capitalisation rate Average 8.0% Average 6.8% Net rent / sqm GBA (1) Average $71/sqm Average $129/sqm Range 8.0% - 8.0% Range 7.8% - 8.5% Range $71 - $71/sqm Range $143 - $215/sqm Total 432,452 356,463 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. 3 GBA is the gross building area. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 84 19 Non-current assets - Property, plant & equipment (continued) Carrying amounts that would have been recognised if land and buildings were stated at cost If freehold land was carried at historical cost, its current carrying value would be $235,675,000 (2020: $165,799,000). If freehold buildings were carried at historical cost, its current carrying value (after depreciation) would be $182,490,000 (2020: $154,079,000). Non-current assets pledged as security Refer to Note 27 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 2021 Freehold land $’000 Buildings $’000 Construction in progress $’000 Leasehold improvements $’000 Plant and equipment $’000 Total $’000 Opening net book amount 202,384 154,079 Exchange differences Transfers Additions Revaluation gain recognised in asset revaluation reserve Revaluation recognised in profit and loss Disposals Transfer to property assets held for sale - - - 1,521 112,376 56,336 4,999 (5,156) (45,971) (18,670) - - (24,692) - Depreciation charge - (4,754) 7,405 - (1,972) 10,392 - - - - - Carrying amount at end of year 249,962 182,490 15,825 39,474 - (1,888) 5,488 - - 90,924 494,266 (438) 2,339 15,187 - - (438) - 199,779 4,999 (5,156) (13,297) (47,144) (131,104) - (5,383) 24,394 - (19,165) 41,703 (18,670) (29,302) 514,374 During the period the Group acquired Land and Buildings of which $138 million was directly funded through capital loan facilities obtained by the Group. Refer to Note 27 for further information on movement in borrowings. During the period the Group concluded all buyback arrangements, reflected as a disposal. 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 $’000 176,031 - 6 32,450 6,459 (9,996) (2,566) - - Buildings $’000 Construction in progress $’000 Leasehold improvements $’000 Plant and equipment $’000 Total $’000 76,713 - 10,268 73,428 - - (2,928) (3,402) - 14,453 6 (15,380) 8,326 - - - - - 60,851 128,010 456,058 320 4,943 2,232 - - (21,220) (5,087) (2,565) 39,474 206 163 532 - 30,210 146,646 - - (26,113) (36,563) (4,989) 90,924 6,459 (9,996) (52,827) (45,052) (7,554) 494,266 Carrying amount at end of year 202,384 154,079 7,405 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 85 19 Non-current assets - Property, plant & equipment (continued) (a) Recognition and measurement 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. The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 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 shorter. (b) Critical accounting estimates and judgements Fair value estimation of land, buildings and capital work in progress Land and buildings with a carrying value of $432.5 million (2020: $356.5 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 86 20 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 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 Less: Disposal of businesses Balance at the end of the financial year Movement - Customer relationships Balance at the beginning of the financial year Amortisation charge Balance at the end of the financial year (a) Impairment tests for goodwill Notes 35 36 36 Consolidated 2021 $’000 763,988 5,915 5,392 2020 $’000 771,755 6,965 6,854 775,295 785,574 771,755 757,301 10,749 (18,516) 763,988 6,965 (1,050) 5,915 6,854 (1,462) 5,392 15,500 (1,046) 771,755 6,965 - 6,965 8,908 (2,054) 6,854 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. During the twelve months, and following the disposal of the Daimler Truck Operations business, the remaining truck businesses were allocated to three of the six operating CGUs in the Car Retailing Segment. As a result, there no longer remains a national Trucks Segment CGU. 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 2022 financial budgets approved by the Board, with a range of growth rates applied thereafter to year four that does not exceed 2% (2020: 1.5%). A growth rate of 2% is applied from year four and into the terminal period (2020: 1.5%). The budgets consider all available sources of information (both external and internal); external macro-economic conditions are strong and despite supply chain dynamics, the industry continues to deliver vehicles. The Group is continuing to benefit from favourable market conditions and cost outs achieved, delivering underlying profit before tax performance significantly ahead of budget. 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 consumer price index (CPI) rate. A post-tax discount rate of 8.0% was applied to the cash flows, incorporating the impact of AASB 16 on the Group’s cost of debt. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 87 20 Non-current assets – Intangibles (continued) (a) Impairment tests for goodwill (continued) 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 2021, the Directors acknowledge that there is a heightened level of uncertainty around key assumptions in the current environment. The Directors have considered the market context and performance with reference to the VFACTS National Report New Vehicle Sales results for December 2021. National market new vehicle sales increased 14.5% year-to-date December 2021, compared to year-to-date December 2020. New vehicle sales is a leading indicator for used vehicle, parts and service department performance. Consideration of climate change In estimating the recoverable amount the Group has considered the potential impacts of climate change both on the Group’s business model and corporate strategy. It is believed that the most significant change for a vehicle retailer may be the increasing rate of demand for electric and hybrid vehicles (including hydrogen fuel cell electric vehicles) in preference to traditional internal combustion engine vehicles. This change, in isolation, is not expected to significantly impact the Group’s business model as the Group is pivoting to supplying a greater percentage of electric and hybrid vehicles in line with consumer demand and availability of supply. Other potential impacts of the Group’s initiatives in respect of climate change are being considered and will be reflected in the recoverable amount as the Group’s sustainability planning evolves. There is significant headroom in all CGUs and the impact of the Group’s initiatives in respect of climate change impacts is not expected to have an impact on the carrying value of assets. Sensitivity analysis performed The Group has performed sensitivity analysis of reasonably possible changes in the assumptions used in the model, including reducing growth rates from a maximum of 2.0% to a fixed growth rate of 0% applied from the second forecast year through to year five, whilst holding terminal growth rate at 2.0%. Further, the Group has sensitised the discount rate from 8.0% to 8.5%. Under each of these independent scenarios, no impairment was identified. 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 2021 $’000 2020 $’000 763,988 730,077 5,915 5,392 5,915 6,854 775,295 742,846 - - - 41,678 1,050 42,728 775,295 785,574 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 88 20 Non-current assets – Intangibles (continued) (b) Recognition and measurement Impairment of long-lived assets (excluding goodwill) (i) 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 19(a)). 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 19(a)). (ii) 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. (iii) 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. (iv) 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 groups of CGUs for the purpose of impairment testing. (c) Critical accounting estimates and judgements Recoverability of goodwill and other intangibles with indefinite useful lives Goodwill and other intangibles with indefinite useful lives of $769.9 million (2020: $778.7 million) 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 21 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 Provisions Expected credit losses Employee benefits Other Sundry items Total amounts recognised in profit or loss Amounts recognised directly in equity 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 of the above temporary differences resulted from the following movements: Opening balance at 1 January 2021 Deferred tax (expense) Deferred tax recognised directly in equity Revaluation of property, plant and equipment Share options trust Deferred tax recognised through a business combination Deferred tax assets relating to business combinations Closing balance at 31 December 2021 89 Notes Consolidated 2021 $’000 2020 $’000 152,000 162,005 25,548 67,047 4,944 (2,157) (766) 1,215 33,115 6,475 24,422 159,843 (8,948) 1,105 (7,843) 162,005 (9,334) (1,500) 253 15,036 72,919 12,372 212 (1,737) 1,688 36,786 10,371 26,839 174,486 (17,190) 4,709 (12,481) 176,505 (15,383) (1,937) 2,168 576 652 152,000 162,005 7(a) 32(a) 32(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 (11,871) 163,871 152,000 (18,927) 180,932 162,005 At the reporting date, the Group has no unused revenue tax losses (2020: nil) available for offset against future profits. No deferred tax asset has been recognised in respect of capital losses of $116.9 million (2020: $142.9 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 90 21 Non-current assets - Deferred tax assets (continued) (a) Recognition and measurement Deferred taxes 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. (b) Critical accounting estimates and judgements Deferred tax asset Recognition and measurement of deferred tax assets require certain judgements and assumptions to be made, including but not necessarily limited to the expected realisation of certain assets and liabilities and the likelihood and timing of sufficient profits available in the future. 22 Current liabilities – Trade and other payables Trade and other payables Trade payables 4 Other payables Consolidated 2021 $’000 2020 $’000 116,668 247,595 364,263 144,988 291,384 436,372 Other payables comprises of customer deposits held of $71.4 million (2020: $57.6 million), taxes payable of $15.4 million (2020: $21.5 million), general accruals of $118.8 million (2020: $175.9 million), with the remaining balance relating to miscellaneous payables. 4 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. (a) Recognition and measurement 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 23 Current Liabilities - Borrowings - bailment and other current loans Bailment finance Term facility Capital loan 91 Consolidated 2021 $’000 2020 $’000 681,325 844,307 - 14,967 696,292 26,000 7,842 878,149 (i) Bailment finance Bailment finance is provided on a vehicle-by-vehicle basis by various finance providers at an average interest rate of 2.21% p.a. applicable at 31 December 2021 (2020: 2.38%). Bailment finance is repayable within a short period after the vehicle is sold to a third party, generally within 48 hours. (ii) Capital loan Capital loans are provided by various finance providers to the Group to fund certain property transactions. The capital loans are secured by registered first mortgages given by subsidiaries over specific freehold land and buildings. The majority of capital loans are amortising in nature, with principal and interest repayable each period, with the remainder non-amortising in nature and repayable on the expiry date. Refer to Note 33(b) for further information on contractual maturity analysis. Interest rate risk exposures (iii) Details of the Group’s exposure to interest rate changes on interest bearing liabilities is set out in Note 33. (iv) Fair value disclosures Details of the Group’s fair value of interest bearing liabilities is set out in Note 33. (v) Security Details of the security relating to each of the secured liabilities and further information on bank loans is set out in Note 27. (a) Recognition and measurement (i) 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. (ii) 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. 24 Current liabilities – Current tax liability or receivable Current income tax receivable Current income tax payable Net current income tax (receivable)/payable (a) Recognition and measurement Please refer to Note 7 for recognition and measurement of tax balances. Consolidated 2021 $’000 (574) - (574) 2020 $’000 - 16,381 16,381 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 92 25 Current liabilities – Provisions Annual leave Long service leave Buyback provision Consolidated 2021 $’000 57,429 44,341 - 2020 $’000 62,977 51,279 17,116 101,770 131,372 (a) Recognition and measurement (i) 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. (ii) 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. Contributions are made by the Group to defined contribution employee superannuation funds and are charged as expenses when incurred. (iii) 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 Consolidated Statement of Profit or Loss. Assets under operating leases, a residual value provision, and deferred lease income are recognised in the Consolidated Statement of Financial Position. Refer to Notes 26 and 29. 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. All buyback arrangements have concluded in the current reporting period. 26 Current liabilities – Other current liabilities Deferred revenue Consolidated 2021 $’000 13,442 2020 $’000 23,965 Deferred revenue relates to recognition of revenue in accordance with the performance obligations in certain warranty contracts. Balances in the prior year also include buybacks arrangements within the Group that concluded in the current reporting period. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 27 Non-current liabilities – Borrowings (secured) Term facility Capital loan Secured liabilities Total secured liabilities (current and non-current) are: Term facility 5 Capital loan 6 Bailment finance 7 Refer to Note 33(b)(iii) 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 93 Notes Consolidated 2021 $’000 - 311,062 311,062 2020 $’000 111,500 193,013 304,513 - 326,029 681,325 137,500 200,855 844,307 1,007,354 1,182,662 19 432,452 905,967 681,325 346,057 349,625 970,529 844,307 380,280 2,365,801 2,544,741 5 6 7 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. 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. 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 94 27 Non-current liabilities – Borrowings (secured) (continued) Financing arrangements The consolidated entity has access to the following lines of credit at the balance date: Total facilities Term facility 8 Working capital facility (includes bank overdraft) Capital loan 9 Bailment finance 10 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 2021 $’000 2020 $’000 382,000 30,000 449,527 367,600 130,000 314,930 1,597,030 1,808,588 58,000 60,918 2,516,557 2,682,036 - 326,029 681,325 49,257 137,500 200,855 844,307 50,417 1,056,611 1,233,079 382,000 30,000 123,498 915,705 8,743 230,100 130,000 114,075 964,281 10,501 1,459,946 1,448,957 Term facility at the balance date was provided on a non-amortisable (interest only) basis subject to compliance with specific covenants for a fixed term. The majority of the capital loan facility at the balance date was provided on an amortisable (principal and interest) basis over a fixed term. 8 9 10 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 Consolidated Statement of Financial Position. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 28 Non-current liabilities - Provisions Long service leave Other provisions 95 Consolidated 2021 $’000 8,613 5,445 14,058 2020 $’000 8,574 17,923 26,497 The other provisions balance held at reporting date relates to provisions held for make good of leased property. This is for the expected cost of restoring the premises to its original condition at the end of the lease. Balances in the prior year also include buybacks arrangements within the Group that concluded in the current reporting period. (a) Recognition and measurement (i) 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. (ii) 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 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 the reporting date. 29 Non-current liabilities - Deferred revenue Deferred revenue Consolidated 2021 $’000 16,462 2020 $’000 20,906 Deferred revenue relates to recognition of revenue in accordance with the performance obligations in certain warranty contracts (refer to Note 3(a)(ii)). Balances in the prior year also include buybacks arrangements within the Group that concluded in the current reporting period. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 96 30 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 (“the Board”), in order to allocate resources to the segment and to assess its performance. The Group operates in four operating and reporting segments (with no aggregation taking place) being (i) Car Retailing (ii) Truck Retailing (iii) Property and (iv) Investments, these being identified on the basis of being the components of the Group that are regularly reviewed by the Board for the purpose of resource allocation and assessment of segment performance. Information regarding the Group’s reporting segments is presented below. As a result of the divestment of the Daimler Truck Operations business during the first half of 2021, the Group has changed the structure of its internal organisation. This has caused a change in the composition of its reportable segments since the prior period, resulting in the Group operating in three reporting segments from April 2021. The Truck Retailing reporting segment represents only Daimler dealerships for the twelve months ended 31 December 2021. The remaining non-Daimler Truck dealerships have been reallocated to the Car Retailing segment. Per AASB 8 Operating Segments paragraph 29, the corresponding segment information for earlier periods, including the prior year, has not been restated in respect of the change in the structure of the Group’s reportable segments as this information is not available. Instead, in accordance with AASB 8 paragraph 30, the Group has disclosed segment information for the current period on both the old basis and the new basis of segmentation. 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 Board for the purposes of resource allocation and assessment of segment performance. For the purpose of monitoring segment performance and allocating resources between segments, the Board monitors the tangible, intangible, and financial assets attributable to each segment. All assets are allocated to reportable segments. (i) Car Retailing Within the Car Retailing segment, the Group offers a diversified range of automotive products and services, including new vehicles, used vehicles, vehicle maintenance and repair services, vehicle parts, 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 includes the Motors Tasmania Truck Retailing business (as it is managed inside the Motors Tasmania car business), a motor auction business and forklift rental business. For the year ended 31 December 2021, this segment also incorporates the remaining non- Daimler Truck dealerships, as detailed above. (ii) Truck Retailing For the year ended 31 December 2021, this segment includes only Daimler Truck dealerships which has been divested during the period, as detailed above. Within the Truck Retailing segment, the Group offers a diversified range of products and services, including new trucks, used trucks, truck maintenance and repair services, truck parts, 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. (iii) Property Within the Property segment, the Group 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 Group. Investments (iv) This segment includes the Group’s investment in DealerMotive Limited which is only relevant for the prior year segment note as the investment was disposed of in 2020. (a) Geographic information The Group operates in two principal geographic locations, being Australia and New Zealand. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 97 30 Segment information (continued) (b) Segment results In accordance with AASB 8 paragraph 30, the Group has disclosed segment information for the current period on both the old basis and the new basis of segmentation. The table below discloses segment information on the new basis of segmentation for the 12 months ended 31 December 2021: Segment reporting 2021 - new basis Car Retailing $’000 Truck Retailing $’000 Property $’000 Investments $’000 Eliminations $’000 Consolidated $’000 Sales to external customers 8,438,283 223,826 Inter-segment sales Total sales revenue - - 8,438,283 223,826 1,353 30,699 32,052 21,748 (9,158) 12,590 - - (5,156) - - 10,957 - - 459,990 (68,147) 391,843 1,078 (1,412) - 8,833 1,708 - 215 735 6,333 (2,314) 4,019 - (391) - 5,364 30,186 - - - 403,000 39,178 18,391 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 Property revaluation Profit on termination of leases Profit on sale of businesses Profit on sale of property Manufacturer compensation income Miscellaneous Segment profit Unallocated corporate expenses Profit before tax Income tax expense Net profit Depreciation and amortisation (106,441) (7,819) (6,168) Assets Segment assets Liabilities Segment liabilities Net assets 3,271,999 2,317,465 954,534 - - - 458,946 326,029 132,917 - - - - - - - - - - - - - - - - - - - - 8,663,462 (30,699) - (30,699) 8,663,462 - - - - - - - - - - - - - - - - 488,071 (79,619) 408,452 1,078 (1,803) (5,156) 14,197 31,894 10,957 215 735 460,569 (3,762) 456,807 (118,070) 338,737 (120,428) 3,730,945 2,643,494 1,087,451 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 98 30 Segment information (continued) (b) Segment results (continued) In accordance with AASB 8 paragraph 30, the Group has disclosed segment information for the current period on both the old basis and the new basis of segmentation. The table below discloses segment information on the old basis of segmentation for the 12 months ended 31 December 2021. Segment reporting 2021 - old basis Car Retailing $’000 Truck Retailing $’000 Property $’000 Investments $’000 Eliminations $’000 Consolidated $’000 Sales to external customers 8,084,944 577,165 Inter-segment sales Total sales revenue - - 8,084,944 577,165 1,353 30,699 32,052 21,748 (9,158) 12,590 - - (5,156) - 10,957 - - - 446,376 (66,110) 380,266 1,078 (1,412) - 8,833 - 1,708 215 735 19,947 (4,351) 15,596 - (391) - 5,364 - 30,186 - - 391,423 50,755 18,391 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 Property revaluation Profit on termination of leases Profit on sale of property Profit on sale of business Manufacturer compensation income Miscellaneous Segment profit Unallocated corporate expenses Profit before tax Income tax expense Net profit Depreciation and amortisation (101,918) (12,342) (6,168) Assets Segment assets Liabilities Segment liabilities Net assets 3,172,170 99,828 458,947 2,218,404 953,766 99,061 767 326,029 132,918 - - - - - - - - - - - - - - - - - - - - 8,663,462 (30,699) - (30,699) 8,663,462 - - - - - - - - - - - - - - - - 488,071 (79,619) 408,452 1,078 (1,803) (5,156) 14,197 10,957 31,894 215 735 460,569 (3,762) 456,807 (118,070) 338,737 (120,428) 3,730,945 2,643,494 1,087,451 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 99 Property $’000 Investments $’000 Eliminations $’000 Consolidated $’000 30 Segment information (continued) (b) Segment results (continued) 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 Manufacturer compensation income Segment profit Unallocated corporate expenses Profit before tax Income tax expense Net profit 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) 123,669 31,751 272,693 26,391 (9,059) 17,332 - (1,177) - - 441 - 6,899 - 23,495 1,803 14,903 16,706 11,830 (7,857) 3,973 - - - (9,996) 1,962 - - - - - - - - - 2,788 - - - 860 - - - (4,061) 3,648 Depreciation and amortisation (131,435) (31,402) (3,420) Assets Segment assets Liabilities Segment liabilities Net assets 3,283,011 403,274 347,366 2,506,415 776,596 381,804 21,470 220,855 126,511 - - - - (c) Recognition and measurement Operating segments Operating segments are identified based on internal reports that are regularly reviewed by the Group’s Board of Directors in order to allocate resources to the segment and assess its performance. The Group has four operating segments being (i) Car Retailing (ii) Truck Retailing (iii) Property and (iv) Investments. Currently the segment of “Other” is not required. - 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 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 100 31 Contributed equity (a) Paid up capital Ordinary shares - Fully paid Consolidated 2021 $’000 2020 $’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 2,597,771 shares, which are reported in share capital (2020: 2,274,938). (b) Movements in ordinary share capital Date Details 1 January 2021 Opening balance 31 December 2021 Closing balance Number of shares 256,933,106 256,933,106 Issue price - - $’000 1,173,069 1,173,069 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 32 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 the 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 Share-based payments reserve: Balance at the 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 Foreign currency translation reserve: Balance at the beginning of the financial year Other comprehensive income Balance at the end of the financial year Business combination reserve: Balance at the beginning of the financial year Balance at the end of the financial year Investment revaluation reserve: Balance at the beginning of the financial year Balance at the end of the financial year 101 Notes 19 21 32(b) 21 Consolidated 2021 $’000 24,078 (91,541) 1,213 (479,042) (72,686) (617,978) 32,834 4,999 (1,500) (12,255) 24,078 2020 $’000 32,834 (62,510) 1,204 (479,042) (72,686) (580,200) 28,312 6,459 (1,937) - 32,834 (62,510) (37,863) (253) 19,037 (51,019) 3,204 (91,541) 1,204 9 1,213 (2,168) 8,610 (31,497) 408 (62,510) 1,153 51 1,204 (479,042) (479,042) (479,042) (479,042) (72,686) (72,686) (72,686) (72,686) EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 102 32 Reserves and retained earnings (continued) (b) Retained earnings Retained profits at the beginning of the financial year Net profit for the year Less: NCI Share Transfer to retained earnings Dividends provided for or paid Retained profits at the end of the financial year (c) Nature and purpose of other reserves Consolidated 2021 $’000 317,848 330,737 (12,913) 12,255 (137,202) 510,725 2020 $’000 199,463 156,211 (8,921) - (28,905) 317,848 (i) Asset revaluation reserve The asset revaluation reserve is used to record increments and decrements on the revaluation of non-current assets as described in Note 19(a). (ii) 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 42 and 43. (iii) Foreign currency translation reserve The foreign currency translation reserve is used to recognise the cumulative net movement in foreign assets, liabilities and results held by foreign subsidiaries since acquisition. (iv) Business combination reserve The business combination reserve is used to recognise the 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. Investment revaluation reserve (v) The investment revaluation reserve represents the cumulative gains and losses arising on assets held at FVOCI that have been recognised in other comprehensive income. 33 Financial instruments (a) Overview The Group 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 Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’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 Group’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 Group’s risk management system. The Committee will provide regular reports to the Board of Directors on its activities. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, 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 Group’s activities. The 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 and short-term deposits. The main purpose of these financial instruments is to raise finance for and fund the Group’s operations. 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 on policies for managing each of these risks and they are summarised as follows. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 103 (iii) Market risk Market risk is the risk that changes in market prices, such as interest rates, will affect the Group’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. 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 2021, 30% (2020: 53%) of the Group’s borrowings were at a fixed rate of interest (excluding bailment interest). The Group classifies interest rate swaps as cash flow hedges. 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 the reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s net profit after tax would increase/decrease by $5.0 million (2020: $5.9 million) per annum. This is mainly due to the Group’s exposures to interest rates on its variable rate borrowings. (iv) 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 Group’s approach to capital management during the period. 33 Financial instruments (continued) (a) Overview (continued) (i) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. Further, it is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. Trade receivables consist of a large number of customers, spread across geographical areas. The Group applies the simplified approach permitted by AASB 9, which requires expected lifetime credit losses to be recognised from initial recognition of the receivable. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience. With respect to credit risk arising from financial assets of the Group (comprised of cash, cash equivalents, receivables, finance lease receivables and other loans receivable), the Group’s maximum exposure to credit risk at the balance date, excluding the value of any collateral or other security, is the carrying amount as disclosed in the Consolidated Statement of Financial Position and Notes to the Consolidated 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. (ii) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. The Group’s overall objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Group’s ability to manage liquidity risk is not affected by the application of AASB 16 given the net current asset position at 31 December 2021, despite recognition of current lease liabilities and finance lease receivables. 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 meet 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 104 33 Financial instruments (continued) (b) Credit risk (i) Exposure to credit risk The carrying amount of financial assets (as per Note 10) represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Trade and other receivables Less: Allowance for expected credit losses Consolidated 2021 $’000 233,024 (4,064) 228,960 2020 $’000 274,502 (5,639) 268,863 Impairment losses (ii) The ageing of trade receivables at the reporting date is detailed in Note 10. (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 consolidated 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 Consolidated 2021 $’000 2020 $’000 Notes 10 9 14 27 27 22 228,960 197,620 35,711 462,291 - 326,029 681,325 364,263 268,863 209,092 25,999 503,954 137,500 200,855 844,307 436,372 1,371,617 1,619,034 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). EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 105 33 Financial instruments (continued) (b) Credit risk (continued) (iii) Fair values & exposures to credit & liquidity risk (continued) Maturity profile The below table provides a maturity profile for the Group’s financial instruments that are exposed to interest rate risk at balance date. The amounts disclosed in the table are gross contractual undiscounted cash flows (principal and interest) required to settle the respective liabilities. The interest rate is based on the rate applicable as at the end of the financial period. Contractual maturities of financial assets and liabilities Less than 1 year $’000 1 - 2 years $’000 2 - 3 years $’000 3 - 4 years $’000 4 - 5 years $’000 5+ years $’000 Total $’000 At 31 December 2021 Interest bearing Floating rate Financial assets Cash and cash equivalents Average interest rate 197,620 0.10% - - - 3,295 1,764 5,059 1.72% - - - 3,295 1,764 5,059 1.52% - - - - - - 268,707 207,034 1,764 1,764 270,471 208,798 1.49% 1.91% - - - - 16,313 16,313 3.09% 197,620 681,325 485,626 25,133 1,192,084 681,325 3,295 1,764 686,384 1.95% 24,005 3.34% 72,925 3.35% 21,892 3.19% 41,086 3.18% 58,270 3.17% 154,735 3.20% 372,913 Trade and other payables 364,264 240,761 - - - - - - - - 23,910 264,671 - 364,264 Please refer to Note 17(a)(iii) and Note 18 for ageing of lease liabilities and finance lease receivables, respectively. Financial liabilities Vehicle bailment (current) Fully drawn advances Capital loan Average interest rate Fixed rate Financial liabilities Capital loan Average interest rate Non-interest bearing Financial assets Trade debtors Financial liabilities EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 106 33 Financial instruments (continued) (b) Credit risk (continued) (iii) Fair values & exposures to credit & liquidity risk (continued) Maturity profile (continued) Less than 1 year $’000 209,092 0.10% 844,307 32,114 1,791 878,212 2.32% 1 - 2 years $’000 2 - 3 years $’000 3 - 4 years $’000 4 - 5 years $’000 5+ years $’000 Total $’000 - - - 247,206 1,791 248,997 2.21% - - - 191,595 1,791 193,386 2.35% - - - - 1,791 1,791 1.79% - - - - - - - - 1,791 1,791 1.86% 14,565 14,565 1.71% 209,092 844,307 470,915 23,520 1,338,742 12,429 3.17% 12,429 3.17% 61,349 3.17% 10,316 3.17% 29,610 3.17% 202,451 328,584 3.17% 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 11 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 Trade and other payables 436,372 271,714 - - - - - - - - 23,148 294,862 - 436,372 (iv) 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. 11 The amount included in fully drawn advances relate to variable rates that are hedged with interest rate swaps to fixed rates. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 107 34 Investments in subsidiaries (a) 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 Pty 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 Pty Ltd Adtrans Hino Pty Ltd Adtrans Truck Centre Pty Ltd Adtrans Trucks Adelaide Pty Ltd Adtrans Trucks Pty Ltd Adtrans Used Pty Ltd Adverpro Pty Ltd AHG 1 Pty Ltd AHG Automotive Mining and Industrial Solutions Pty Ltd AHG Coatings Pty Ltd AHG Finance 2005 Pty Ltd AHG Finance Pty Ltd AHG Franchised Automotive Pty Ltd AHG International Pty Ltd AHG Management Company Pty Ltd AHG Newcastle Pty Ltd AHG Property Pty Ltd AHG Services (NSW) Pty Ltd AHG Services (QLD) Pty Ltd AHG Services (VIC) Pty Ltd AHG Services (WA) Pty Ltd AHG Trade Parts Pty Ltd AHG Training Pty Ltd AHG WA (2015) Pty Ltd AHGCL 2016 Pty Ltd AHGSW 2018 Pty Ltd AP Townsville Pty Ltd APE Cars Mgmt Pty Ltd Associated Finance Pty Ltd Auckland Auto Collection Limited Austral Pty Ltd AUT 6. Pty Ltd Auto Ad Pty Ltd Equity Holding Member of DOCG Membership Group Opt In/Out 2021 % 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 78 100 100 100 100 100 100 2020 % 2021 2020 2021 2020 2021 2020 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 Y N N N Y Y Y Y Y Y N N 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 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 Y Y Y Y Y Y N Y Y Y C N/A N/A N/A C C C C C C C C C C C C C C C C N/A N/A N/A N/A Opt Out C C C C C C C C N/A C C C C C C C C C C C C C C C C C C C C C C EC C C C C C C C C C 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 N/A C C C Opt Out Opt In EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 108 34 Investments in subsidiaries (continued) (a) Deed of cross guarantee (continued) Name of Entity Automotive Holdings Group (Queensland) Pty Ltd Automotive Holdings Group (Victoria) Pty Ltd Automotive Holdings Group Pty Ltd BASW Pty Ltd Big Rock 2005 Pty Ltd Big Rock Pty Ltd Bill Buckle Autos Pty Ltd Bill Buckle Holdings Pty Ltd Bill Buckle Leasing Pty Ltd Black Auto CQ Pty Ltd Boonarga Welding Pty Ltd Bradstreet Motors Holdings Pty Ltd Bradstreet Motors Pty Ltd Cardiff Car City Holdings Pty Ltd Cardiff Car City Pty Ltd Carlin Auction Services (NSW) Pty Ltd Carlin Auction Services (QLD) Pty Ltd Carlins Automotive Auctioneers (QLD) Pty Ltd Carlins Automotive Auctioneers (S.A) Pty Ltd Carlins Automotive Auctioneers (WA) Pty Ltd Carlins Automotive Auctioneers Pty Ltd Carlins Corporate Vehicle Services Pty Ltd Carlins Group Holdings Pty Ltd Carsplus Australia Pty Ltd Carzoos Pty Ltd Castle Hill Autos No. 1 Pty Ltd Castlegate Enterprises Pty Ltd CFD (2012) Pty Ltd CH Auto Pty Ltd Cheap Cars QLD Pty Ltd Chellingworth Pty Ltd City Auto (2016) Holdings Pty Ltd City Auto (2016) Pty Ltd City Automotive Group Pty Ltd City Motors (1981) Pty Ltd Crampton Automotive Pty Ltd Doncaster Auto (2016) Pty Ltd Drive A While Pty Ltd Dual Autos Pty Ltd Duncan Autos 2005 Pty Ltd Duncan Autos Pty Ltd E. G. Eager & Son Pty Ltd EACAB Pty Ltd Eagers Finance Pty Ltd Eagers MD Pty Ltd Eagers Nominees Pty Ltd Eagers Retail Pty Ltd EASST Pty Ltd Easy Auto 123 Pty Ltd Essendon Auto (2017) Pty Ltd Equity Holding Member of DOCG Membership Group Opt In/Out 2021 % 2020 % 2021 2020 2021 2020 2021 2020 100 100 100 80 80 100 100 100 100 100 80 80 80 80 80 53 - 53 53 53 53 - 53 100 100 100 100 100 100 78 100 80 80 100 100 100 - 100 100 100 100 100 78 100 80 100 100 100 100 100 100 100 100 80 80 100 100 100 100 100 80 80 80 80 80 53 53 - 53 100 53 53 53 100 100 100 100 100 100 100 100 80 80 100 100 100 100 100 100 100 100 100 - 100 80 100 100 - 100 100 Y Y Y Y N Y Y Y Y Y Y N N N N N N N N N N N N Y Y Y Y Y Y Y Y N N Y Y Y N Y Y Y Y Y Y Y Y Y Y Y Y Y Opt Out Opt Out Opt Out Opt Out Y Y Y Y N Y Y Y Y Y Y N N N N N N N/A N N N N N Y Y Y Y Y Y Y Y N N Y Y Y Y Y Y Y Y Y N/A Y Y Y Y N/A Y Y C C C EC 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 N/A C C C C C C EC C N/A N/A C C C N/A C C C C C EC C EC C C C C C C C C EC 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 N/A C C C C C C C C N/A N/A C C C C C C C C C N/A C EC C C N/A C C EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 109 34 Investments in subsidiaries (continued) (a) Deed of cross guarantee (continued) Name of Entity 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 Kingspoint Pty Ltd Laverton Auto (2016) Pty Ltd Leaseline & General Finance Pty Ltd Lionteam Pty Ltd LWC International Limited LWC Limited Maitland City Motor Group Holdings Pty Ltd Maitland City Motor Group Pty Ltd Matchacar Pty Ltd MB VIC Pty Ltd MBSA Motors Pty Ltd MCM Autos Pty Ltd MCM Sutherland Pty Ltd Melbourne City Autos (2012) Pty Ltd Melbourne Truck and Bus Centre Pty Ltd Melville Autos 2005 Pty Ltd Melville Autos Pty Ltd Mornington Auto Group (2012) Pty Ltd Motors Group (Glen Waverley) Pty Ltd Motors TAS Pty Ltd Newcastle Commercial Vehicles Pty Ltd North City (1981) Pty Ltd North City 2005 Pty Ltd Northside Autos 2005 Pty Ltd Northside Nissan (1986) Pty Ltd Northwest (WA) Pty Ltd Novated Direct Pty Ltd NSW Vehicle Wholesale Pty Ltd Nuford Ford Pty Ltd Nundah Motors Pty Ltd OPM (2012) Holdings Pty Ltd OPM (2012) Pty Ltd Equity Holding Member of DOCG Membership Group Opt In/Out 2021 % 2020 % 2021 2020 2021 2020 2021 2020 100 100 100 100 100 - 100 100 90 80 80 100 100 100 80 100 100 100 100 - 100 100 100 100 80 80 100 100 100 80 100 100 100 100 100 100 87.5 100 100 100 100 100 100 100 100 100 100 100 80 80 100 100 80 80 100 100 100 100 99 80 80 100 80 80 80 100 100 100 100 100 100 100 100 100 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 Y Y N N Y N Y Y Y N N Y N N Y Y Y Y Y N Y Y Y Y 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 N N Y Y Y Y Y N N Y N N Y Y Y Y Y Y Y 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 Opt In Opt Out Opt Out Opt Out Opt In Opt Out Opt In Opt Out Opt Out C C N/A N/A C N/A C C EC N/A N/A C N/A N/A EC C C C C N/A C C C C N/A N/A C C C C C N/A N/A C C C C EC N/A N/A C N/A N/A EC C C C 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 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 110 34 Investments in subsidiaries (continued) (a) Deed of cross guarantee (continued) Name of Entity 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 Rent Two Buy Pty Ltd RL Sublessor Pty Ltd Sabalan Holdings Pty Ltd Sabalan 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 Equity Holding Member of DOCG Membership Group Opt In/Out 2021 % 2020 % 2021 2020 2021 2020 2021 2020 100 100 100 - 100 100 100 100 80 80 100 - 80 100 100 100 100 100 - 100 100 100 100 100 100 100 100 100 - 100 78 100 100 100 100 100 - 100 100 100 100 100 99 100 100 80 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 Y Y Y N Y N Y Y N N Y N Y Y Y Y Y Y N Y Y Y Y Y Y Y Y Y N Y Y Y Y Y Y Y N Y Y Y Y Y N Y N N N Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y C C C N/A C N/A C C N/A N/A C N/A EC C C C C C N/A C C C C C C C C C N/A C EC C C C C C N/A C C C C C N/A C N/A N/A N/A C C EC C C C C C C C C C C C C C C C C C C C C C C C C Opt In Opt In Opt Out C - Member of the Closed Group EC - Member of the Extended Closed Group 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 2021. Under the DOCG each of these companies guarantee the debts of the other named companies. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 111 34 Investments in subsidiaries (continued) (a) Deed of cross guarantee (continued) (i) Members of the closed group A Consolidated Statement of Profit or Loss and Consolidated 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 2021 is set out below: Deed of Cross Guarantee Consolidated Statement of Profit or Loss Profit before tax from continuing operations Addback: AASB 16 closed group adjustment Profit before tax from continuing operations Income tax expense from continuing operations Profit for the period from continuing operations Loss for the period from discontinued operations 2021 $’000 2020 $’000 350,166 (2,733) 347,433 (84,315) 263,118 (8,000) 198,694 553 199,247 (67,687) 131,560 - Profit for the year 255,118 131,560 Consolidated Statement of Financial Position Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax receivable Prepayments and deposits Finance lease receivables 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 receivables Total non-current assets Total assets 189,637 195,455 720,778 10,270 16,055 34,715 18,670 172,663 235,378 813,512 - 29,820 27,309 - 1,185,580 1,278,682 22,659 577 1,555 11,801 502,015 679,996 139,439 10,508 563,243 235,932 23,148 588 1,233 - 474,122 667,283 147,219 9,837 718,161 187,971 2,167,725 2,229,562 3,353,305 3,508,243 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 112 34 Investments in subsidiaries (continued) (a) Deed of cross guarantee (continued) (i) Members of the closed group (continued) Deed of Cross Guarantee Current liabilities Trade and other payables Borrowings - bailment and other current loans Current tax liabilities Provisions Deferred revenue Lease liabilities 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 2021 $’000 2020 $’000 258,081 557,415 - 85,145 7,917 150,975 326,232 680,536 24,235 112,306 15,864 164,104 1,059,533 1,323,277 311,062 16,462 11,857 304,513 20,906 24,264 883,559 1,014,753 1,222,940 1,364,436 2,282,473 2,687,713 1,070,832 820,530 1,173,069 (637,209) 534,972 1,070,832 - 1,173,069 (599,431) 246,892 820,530 - 1,070,832 820,530 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 113 34 Investments in subsidiaries (continued) (a) Deed of cross guarantee (continued) (ii) 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 Consolidated Statement of Financial Position, comprising the entities that are parties to the Deed of Cross Guarantee, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 31 December 2021 is set out below: Deed of Cross Guarantee Consolidated Statement of Profit or Loss Profit before tax from continuing operations Addback: AASB 16 extended closed group adjustment Profit before tax from continuing operations Income tax expense from continuing operations Profit for the period from continuing operations Loss for the period from discontinued operations 2021 $’000 2020 $’000 380,566 (2,343) 378,223 (91,784) 286,439 (8,000) 252,610 328 252,938 (73,484) 179,454 - Profit for the year 278,439 179,454 Consolidated Statement of Financial Position Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax receivable Prepayments and deposits Finance lease receivables 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 receivables Total non-current assets Total assets 190,115 213,264 788,357 6,643 16,604 34,715 18,670 173,360 245,710 862,063 - 30,016 27,309 - 1,268,368 1,338,458 22,659 577 1,555 11,801 508,009 725,089 142,297 10,508 590,088 235,932 23,148 588 1,233 - 477,058 700,616 149,049 9,837 736,978 187,971 2,248,515 2,286,478 3,516,883 3,624,936 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 114 34 Investments in subsidiaries (continued) (a) Deed of cross guarantee (continued) (ii) Members of the extended closed group (continued) Deed of Cross Guarantee Current liabilities Trade and other payables Borrowings - bailment and other current loans Current tax liabilities Provisions Deferred revenue Lease liabilities 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 2021 $’000 2020 $’000 257,600 614,087 - 93,178 8,910 157,804 314,441 726,228 21,600 116,919 16,517 167,992 1,131,579 1,363,697 311,062 16,462 11,857 304,513 20,906 24,264 911,644 1,029,540 1,251,025 1,379,223 2,382,604 2,742,920 1,134,279 882,016 1,173,069 (617,978) 562,539 1,117,630 16,649 1,173,069 (580,201) 281,430 874,298 7,718 1,134,279 882,016 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 34 Investments in subsidiaries (continued) (b) Information relating to Eagers Automotive Limited (the parent entity) Financial performance Profit for the year Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Retained earnings Reserves Asset revaluation reserve Business combination reserve Investment revaluation reserve Share-based payments reserve 115 2021 $’000 2020 $’000 192,927 85,373 40,811 612,945 653,756 - - - - 637,655 637,655 13,883 - 13,883 653,756 623,772 1,173,069 1,173,069 97,863 38,898 1,683 1,683 (479,042) (479,042) (48,276) (91,541) 653,756 (48,326) (62,510) 623,772 Refer Notes 38(a) and 38(b) in respect of guarantees entered into by the parent entity in relation to debts of its subsidiaries. (c) Details of non-wholly owned subsidiaries The table below shows details of non-wholly owned subsidiaries of the Group. The Group have reviewed its subsidiaries that have non- controlling interests and note that they are not material to the reporting entity. Individually immaterial subsidiaries with non-controlling interest Profit allocated to non-controlling interests Accumulated non-controlling interests 2021 $’000 12,913 2020 $’000 8,921 2021 $’000 21,635 2020 $’000 13,860 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 Consolidated 2021 $’000 2020 $’000 13,860 12,913 1,395 (3,985) (2,548) 21,635 9,423 8,921 - (4,484) - 13,860 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 116 35 Business acquisitions (a) Acquisition of businesses The Group acquired the following businesses during the 2021 year as detailed below: Year 2021 2021 2021 Name of business Westpoint Volkswagen Armstrong Ford Date of acquisition Principal activity 31 March 2021 Motor Vehicle Dealer 1 September 2021 Motor Vehicle Dealer Kelly Trotter and Heritage Motor Group 1 December 2021 Motor Vehicle Dealer Proportion acquired 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: Westpoint Volkswagen $’000 Armstrong Ford $’000 Kelly Trotter and Heritage Motor Group $’000 2021 Total consolidated $’000 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 1 785 785 890 890 12,728 12,728 14,403 14,403 2021 $’000 79 8,025 604 (5,054) 3,654 14,403 10,749 1 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 consolidated financial statements. Therefore the amount allocated to goodwill on acquisition has been provisionally determined at the end of the reporting period. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 117 35 Business acquisitions (continued) (b) Acquisition of businesses in prior year The Group acquired the following businesses during the 2020 year, which have been finalised in the 2021 year, as detailed below: Year 2020 2020 2020 Name of business Toyota Albion Daimler Trucks Somerton Indooroopilly Honda Date of acquisition Principal activity 31 January 2020 Motor Dealership 31 July 2020 Motor Dealership 12 November 2020 Motor Dealership Proportion acquired 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 2 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 2 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 consolidated financial statements. Subsequent to year end, the acquisitions were finalised with no adjustment. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 118 35 Business acquisitions (continued) (c) Recognition and measurement 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 20(b)(iv)). 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 consolidated financial statements. (d) Critical accounting estimates and judgements The fair value of assets and liabilities acquired in business combinations 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 36 Business divestments (a) Business disposal and discontinued operations The Group sold the following businesses during the 2021 year as detailed below: Year 2021 2021 2021 2021 2021 2021 2021 Name of business 360 Finance Daimler Truck Operations Carlins Automotive Auctioneers (WA) Pty Ltd Coffs Harbour Iveco and Hino Doncaster Jaguar Land Rover Skippers Transport Parts Port City Autos Date of sale Principal activity 31 March 2021 Finance Company 30 April 2021 31 May 2021 18 June 2021 1 July 2021 Trucks Business Automotive Business Trucks Business Automotive Business 13 August 2021 Parts Business 1 September 2021 Automotive Business Net assets disposed of Receivables, prepayments Inventory Property, plant and equipment Goodwill Intangible assets Creditors, borrowings and provisions Deferred tax asset Net assets disposed Total consideration received (100% cash) Liabilities paid on our behalf Total sale consideration Legal fees Gain on sale 119 Proportion disposed 100% 100% 47% 100% 100% 100% 100% Consolidated 2021 $’000 42,656 163,530 15,937 18,516 1,050 (166,565) 5,072 80,196 111,774 308 112,082 (8) 31,894 The Directors have considered these disposals during the twelve month period to December 2021 in the context of AASB 5 and they have determined that the disclosure requirements of discontinued operations do not apply. This judgement has been made based on all of the available facts and circumstances surrounding the sale and the impact of the related segments and remaining businesses. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 120 36 Business divestments (continued) (b) Disposal of businesses in prior year The Group sold the following businesses during the 2020 year as detailed below: Year 2020 2020 2020 2020 2020 2020 2020 2020 2020 Name of business Date of sale Principal activity Frankston Mitsubishi and Kia 16 March 2020 Motor Vehicle Dealership Bunbury Trucks Refrigerated Logistics Stillwell Kia Knox Mitsubishi Caloundra City Autos Zupps Beaudesert Zupps Browns Plains Browns Plains Mazda 15 May 2020 Motor Dealership 29 June 2020 Other Logistics 3 July 2020 8 July 2020 Motor Dealership Motor Dealership 16 October 2020 Motor Vehicle Dealership 6 November 2020 Motor Vehicle Dealership 12 November 2020 Motor Vehicle Dealership 13 November 2020 Motor Vehicle Dealership 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 Proportion disposed 100% 100% 100% 100% 100% 100% 100% 100% 100% Consolidated 2020 $’000 425 5,052 2,013 1,046 (6,206) 2,330 7,747 5,417 (c) Critical accounting estimates and judgements Sale of Daimler Truck Operations and property The Group completed the agreement for the sale of its Daimler Truck business to Velocity Vehicle Group (VVG) on 30 April 2021, as announced on the Australian Securities Exchange on 14 December 2020. The Group also completed the sale of the Milperra property, the location of the Stillwell Trucks operation, to VVG as part of the transaction. The sale of the Daimler Truck business delivered cash proceeds of $104 million and a gain on sale of $30 million. The calculation of the gain on sale requires judgement in determining the amount of goodwill to be allocated to the sale. Accordingly, the Directors have applied a consistent approach to past divestments and allocated goodwill to the sale based on the past trading performance of the disposed truck businesses. The Directors have also considered AASB 5 and judgementally determined that the divestment did not meet the recognition criteria for a discontinued operation. Therefore, the trading results for 2021 up to the date of disposal have been included within continuing operations. In the prior year, with consideration to the requirements of AASB 5, the Directors determined that the definition of a disposal group held-for-sale was not met at the reporting date for the Daimler Truck business. Therefore, the associated assets and liabilities were not reclassified to non-current assets held-for-sale as at 31 December 2020. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 121 37 Discontinued operations The loss from discontinued operations in the year ended 31 December 2020 relates to the divestment of Refrigerated Logistics which occurred on 29 June 2020. This business was acquired as part of the acquisition of AHG in 2019 and was immediately classified as an asset held for sale. 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 Refrigerated Logistics. The loss from discontinued operations reported in the Consolidated Statement of Profit or Loss represents a combination of Refrigerated Logistics trading losses for the period ended 31 December 2020 and the loss realised on divestment of the business. The loss from discontinued operations in the current year ended 31 December 2021 relates to a provision recorded for a claim submitted prior to the end of the financial year from Anchorage Capital Partners in relation to the Refrigerated Logistics Share Sale Agreement. 38 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 2021 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 consolidated 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 ASIC as at 31 December 2021. 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 extended guarantees is $2,383,000,000 (2020: $3,095,000,000). 39 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 40 Remuneration of auditor Deloitte and related network firms 3 Audit or review of financial reports: Group Subsidiaries Statutory assurance services required by legislation to be provided by the auditor Other services: Tax consulting services Regulatory compliance services Total remuneration for other services 3 The auditor of Eagers Automotive Limited is Deloitte Touche Tohmatsu Consolidated 2021 $’000 8,801 2020 $’000 2,263 Consolidated 2021 $’000 2020 $’000 1,083 237 1,320 103 485 95 580 2,003 1,106 209 1,315 - 162 1,146 1,308 2,623 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 122 41 Subsequent events No matter or circumstance has occurred subsequent to year end that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent financial years. 42 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 Group’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) S A Moore D A Cowper N G Politis D T Ryan M J Birrell G J Duncan D S Blackhall M V Prater M A Ward D G Stark K T Thornton Director and Chief Financial Officer Director (non-executive) Director (non-executive) Director (non-executive) Director (non-executive) Director (non-executive) Director (non-executive) Director (non-executive) Previously Managing Director and Chief Executive Officer, resigned 24 February 2021 Company Secretary Chief Executive Officer, appointed 24 February 2021. Previously 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 42(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 44. Consolidated 2021 $’000 4,417 144 2,429 6,990 2020 $’000 4,168 122 408 4,698 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 123 42 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 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 1.7 years 2.7 years 3.7 years 4.7 years 5.7 years 25% 2.51% 4.2% 25% 2.63% 4.2% 25% 2.79% 4.2% 25% 2.96% 4.2% 25% 3.13% 4.2% 31-Mar-16 04-Jul-21 $ 5.47 $ 5.47 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. Nil rights were issued and 3,061,498 options exercised during the year. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 124 42 Key management personnel (continued) (f) Share-based payments (continued) Plan C: EPS Performance Rights and Options – Key Executives 2014 (continued) No costs of the share plan were expensed during 2021 (2020: nil). The share plan was fully expensed by the end of 2019, with a cumulative expense being recognised of $6,557,247. Plan J: EPS Performance Rights and Options - Key Executive The Group commenced a new EPS based performance rights and options compensation scheme for two specific executive officers in 2015. The fair value of these performance rights and options is calculated on grant date and recognised over the period to vesting. The vesting of the performance rights and options granted is based on the achievement of specified earnings per share growth targets and interest cover thresholds. The fair value has been calculated using a binomial option pricing model based on numerous variables including the following: Performance rights Award date 12 June 2015 Vesting date Expiry date Share price at grant date Expected life Volatility Risk free interest rate Dividend yield Performance options Award date 12 June 2015 Vesting date Expiry date Share price at grant date Exercise price Expected life Volatility Risk free interest rate Dividend yield 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 12-Jun-22 12-Jun-22 12-Jun-22 30-Sep-22 30-Sep-22 $9.25 $9.25 $9.25 $9.25 $9.25 0.8 years 1.8 years 2.8 years 3.8 years 4.8 years 24% 1.98% 3.7% 24% 1.99% 3.7% 24% 2.06% 3.7% 24% 2.18% 3.7% 24% 2.33% 3.7% 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 12-Jun-22 12-Jun-22 12-Jun-22 30-Sep-22 30-Sep-22 $9.25 $9.25 $9.25 $9.25 $9.25 $9.25 $9.25 $9.25 $9.25 $9.25 3.9 years 4.4 years 4.9 years 5.5 years 6.1 years 24% 2.19% 3.7% 24% 2.27% 3.7% 24% 2.35% 3.7% 24% 2.46% 3.7% 24% 2.54% 3.7% Two specific executives have been granted 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. No rights were issued, and no options were exercised during the year. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 125 42 Key management personnel (continued) (f) Share-based payments (continued) Plan J: EPS Performance Rights and Options - Key Executive (continued) No costs of the share plan were expensed during 2021 (2020: nil). The share plan was fully expensed by the end of 2019, with a cumulative expense being recognised of $449,959. 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-Dec-19 31-Dec-20 31-Dec-21 $9.00 $9.00 $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 17-Feb-20 17-Feb-20 17-Feb-20 End performance period Fair value at grant date 31-Dec-19 31-Dec-20 31-Dec-21 $9.00 $9.00 $9.00 No performance rights were forfeited or expired during the year. A total of 35,000 rights were issued during the year in respect of the 2020 performance year. The value of the performance rights expensed during the year was $133,548, with a cumulative expense being recognised at 31 December 2021 of $846,531 (2020: $712,983). EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 126 42 Key management personnel (continued) (f) Share-based payments (continued) Plan M: EPS Performance Rights and Options – Key Executives The Group commenced a new EPS based performance rights and option compensation scheme for specific executive officers in 2021. 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 24 February 2021 Vesting date Expiry date Share price at grant date Expected life Volatility Risk free interest rate Dividend yield Performance options Award date 24 February 2021 Vesting date Expiry date Share price at grant date Exercise price Expected life Volatility Risk free interest rate Dividend yield 28-Feb-22 28-Feb-23 28-Feb-24 28-Feb-25 28-Feb-22 28-Feb-23 28-Feb-24 28-Feb-25 $ 12.32 $ 12.32 $ 12.32 $ 12.32 1.0 years 2.0 years 3.0 years 4.0 years 38% 0.06% 3.5% 38% 0.08% 3.5% 38% 0.21% 3.5% 38% 0.42% 3.5% 28-Feb-25 30-Apr-25 $ 12.32 $ 12.32 4.1 years 38% 0.44% 3.5% Specific executives have been granted performance rights and options under the EPS share incentive plan (Plan M). 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 54,668 74,042 76,646 79,365 Performance options Number 2,173,910 Grant date End performance period Expiry date Fair value at grant date 24-Feb-21 24-Feb-21 24-Feb-21 24-Feb-21 Grant date 24-Feb-21 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24 28-Feb-22 28-Feb-23 28-Feb-24 28-Feb-25 $ 11.89 $ 11.48 $ 11.09 $ 10.71 End performance period Expiry date Fair value at grant date 31-Dec-24 30-Apr-25 $ 2.76 No performance rights or options were forfeited or expired during the year. No rights were issued during the year, and no options were exercised. The value of the performance rights expensed during the year was $1,570,838, with a cumulative expense being recognised at 31 December 2021 of $1,570,838 (2020: nil). The value of the performance options expensed during the year was $1,499,998, with a cumulative expense being recognised at 31 December 2021 of $1,499,998 (2020: nil). EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 127 43 Share-based payments Recognised share-based payments expenses Refer Note 32(a) for movements in share-based payments reserve. Plan F: EPS Performance Options – Senior Management 2013 The Group commenced an 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% Specific executives have been granted options under the EPS share incentive plan (Plan F). The modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the options at grant date and the probability of the EPS targets being achieved and vesting occurring. The number of options granted under the plan is as follows: Performance options Number 951,950 951,950 911,510 892,840 883,750 Grant date End performance period Expiry date Fair value at grant date 27-Mar-13 27-Mar-13 27-Mar-13 27-Mar-13 27-Mar-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Mar-20 31-Mar-20 31-Mar-20 31-Mar-20 31-Mar-20 $ 0.93 $ 0.93 $ 0.96 $ 0.98 $ 0.99 No options were forfeited or expired during the year. No options were exercised during the year. No costs of the share plan were expensed during 2021 (2020: nil). The share plan was fully expensed by the end of 2017 with a cumulative expense recognised of $3,607,822. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 128 43 Share-based payments (continued) Plan H: EPS Performance Rights and Options – Key Executives The Group commenced a new EPS based performance rights and options compensation scheme for four specific executive officers in 2015. The fair value of these performance rights and options is calculated on grant date and recognised over the period to vesting. The fair value has been calculated using a binomial option pricing model based on numerous variables including the following: Performance rights Award date 21 January 2015 Vesting date Expiry date Share price at grant date Expected life Volatility Risk free interest rate Dividend yield Performance options Award date 21 January 2015 Vesting date Expiry date Share price at grant date Exercise price Expected life Volatility Risk free interest rate Dividend yield 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 21-Jan-22 21-Jan-22 21-Jan-22 30-Sep-22 30-Sep-22 $5.85 $5.85 $5.85 $5.85 $5.85 1.2 years 2.2 years 3.2 years 4.2 years 5.2 years 22% 2.20% 4.4% 22% 2.12% 4.4% 22% 2.11% 4.4% 22% 2.15% 4.4% 22% 2.22% 4.4% 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 21-Jan-22 21-Jan-22 21-Jan-22 30-Sep-22 30-Sep-22 $5.85 $5.65 $5.85 $5.65 $5.85 $5.65 $5.85 $5.65 $5.85 $5.65 4.1 years 4.6 years 5.1 years 5.9 years 6.4 years 22% 2.15% 4.4% 22% 2.18% 4.4% 22% 2.21% 4.4% 22% 2.28% 4.4% 22% 2.33% 4.4% Four specific executives have been granted rights and options under the EPS share incentive plan (Plan H). The modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the rights and options at grant date and the probability of the EPS targets being achieved and vesting occurring. The number of rights and options granted under the plan is as follows: Performance rights Number Grant date End performance period Expiry date Fair value at grant date 14,412 15,065 15,746 16,459 17,202 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 21-Jan-22 21-Jan-22 30-Sep-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 21-Jan-22 21-Jan-22 30-Sep-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. No rights were issued during the year. A total of 407,969 options were exercised during the year. No costs of the share plan were expensed during 2021 (2020: nil). The share plan was fully expensed by the end of 2019, with a cumulative expense being recognised of $749,281. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 129 43 Share-based payments (continued) Plan K: EPS Performance Rights and Options – Key Executives The Group commenced a new EPS based performance rights and options compensation scheme for one specific executive officer in 2016. The fair value of these performance rights and options is calculated on grant date and recognised over the period to vesting. The vesting of the performance rights and options granted is based on the achievement of specified earnings per share growth targets and interest cover thresholds. The fair value has been calculated using a binomial option pricing model based on numerous variables including the following: Performance rights Award date 31 March 2016 Vesting date Expiry date Share price at grant date Expected life Volatility Risk free interest rate Dividend yield Performance options Award date 31 March 2016 Vesting date Expiry date Share price at grant date Exercise price Expected life Volatility Risk free interest rate Dividend yield 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-24 31-Mar-24 31-Mar-24 31-Mar-24 $9.75 $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 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 Performance options Number 48,076 46,012 44,910 43,859 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. No rights were issued during the year. No costs of the share plan were expensed during 2021 (2020: nil). The share plan was fully expensed by the end of 2019, with a cumulative expense being recognised of $599,980. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 130 44 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 $352,415 (2020: $465,669) and purchases of $710,876 (2020: $976,540) during the last 12 months, are primarily the sale and purchase of spare parts and accessories and are carried out under terms and conditions no more favourable than those which it is reasonable to expect would have applied if the transactions were at arm’s length. (ii) Mr M Birrell is a Director and owner of a number of properties leased by subsidiaries of Eagers Automotive Limited. The lease transactions of $2,076,941 (2020: $1,870,034) 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 nil (2020: $175,585) for which Mr M Birrell’s related party was liable. During the period $105,775 (2020: nil) was received in relation to short term sublease arrangements. Furthermore, during the twelve months ended 31 December 2021, Mr M Birrell purchased stock with a value of $5,986 (2020: $251,746) from one of the subsidiaries. This transaction was carried out under terms and conditions no more favourable than those which it is reasonable to expect would have applied if the transactions were at arm’s length. Mr M Birrell 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 $170,753 (2020: $204,241), are commissions paid to the Group 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 Group or their Director-related entities within a normal employee relationship on terms and conditions no more favourable than those which it is reasonable to expect would have been adopted if dealing with the Directors or their Director-related entities at arm’s length in the same circumstances. Wholly-owned Group The parent entity of the wholly-owned Group is Eagers Automotive Limited. Information relating to the wholly-owned Group is set out in Note 34. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 45 Earnings per share (a) Basic earnings per share Attributable to the ordinary equity holders of the Company From continuing operations From discontinued operation (b) Diluted earnings per share 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 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 131 Consolidated 2021 Cents 125.2 128.4 (3.2) 124.7 127.9 (3.2) 2020 Cents 57.6 71.4 (13.8) 57.3 71.0 (13.7) Consolidated 2021 $’000 2020 $’000 330,737 (12,913) 156,212 (8,921) 317,824 147,291 Diluted earnings per share Profit for the year attributable to the owners of Eagers Automotive Limited 317,824 147,291 Profit attributable to the ordinary equity holders of the Company used in calculating diluted earnings per share Weighted average number of ordinary shares outstanding during the year Shares deemed to be issued for no consideration in respect of employee options Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted earnings per share 317,824 147,291 2021 Number 2020 Number 253,801,325 255,840,110 1,105,408 1,315,694 254,906,733 257,155,804 EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 132 45 Earnings per share (continued) (d) Recognition and measurement 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; and • 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. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 133 46 Reconciliation of net profit after tax to the net cash inflows from operations Net profit after tax Depreciation and amortisation Revaluation decrement of non-current assets Share of profits of associate (Gain) on disposal of non-financial assets (Gain) on sale of property, plant & equipment Employee share scheme expense Rent waivers (Gain) on sale of business (Increase)/decrease in assets - Receivables Inventories Prepayments Contract assets Non-current receivables (Decrease) in liabilities - Creditors (including bailment finance) Provisions Deferred revenue Taxes payable Net cash inflow from operating activities Notes 6(a) 6(b) 5 5 5 5 Consolidated 2021 $’000 330,737 120,428 5,156 (1,130) (15,168) (10,957) 3,204 - (31,894) 39,903 151,732 13,111 39,594 (8,950) 2020 $’000 156,211 166,257 90,700 (3,758) (860) (1,395) 408 (9,477) (5,417) 40,660 433,146 (8,678) 31,905 - (260,245) (347,084) (42,041) (14,968) (15,807) (5,888) - (8,843) 302,705 527,887 47 Changes in liabilities arising from financing activities The below table represents the cash and non-cash movements in financing activities for 2021: 1 January 2021 $’000 Financing cash flows $’000 Termination of leases $’000 137,500 (137,500) 200,855 1,270,919 (13,022) (121,194) - - (104,053) Term facility Capital loan Lease liabilities Total 1,609,274 (271,716) (104,053) Fair value adjustments/ rent reviews $’000 Property acquisitions $’000 New leases $’000 Other changes 4 $’000 31 December 2021 $’000 - - 5,674 5,674 - 138,196 - 138,196 - - 78,050 78,050 - - (3,251) (3,251) - 326,029 1,126,145 1,452,174 The below table represents the cash and non-cash movements in financing activities for 2020: 1 January 2020 $’000 Financing cash flows $’000 Termination of leases $’000 Fair value adjustments/ rent reviews $’000 Property acquisitions $’000 New leases $’000 Other changes (1) $’000 31 December 2020 $’000 Term facility Capital loan 332,313 (194,625) 77,778 18,840 Lease liabilities 1,192,557 (160,222) Total 1,602,648 (336,007) - - (84,366) (84,366) - - 48,823 48,823 - 104,237 - 104,237 - - 220,422 220,422 (188) - 53,705 53,517 137,500 200,855 1,270,919 1,609,274 4 Other changes includes interest charged and foreign currency translation in relation to financing activities. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 134 48 Investments in associates (a) Carrying amounts Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Information relating to the associates is set out below: Name of company Unlisted securities Vehicle Parts (WA) Pty Ltd Mazda Parts Ownership interest Consolidated 2021 % 50.00 16.67 2020 % 50.00 16.67 2021 $’000 2020 $’000 1,555 519 2,074 1,233 328 1,561 Vehicle Parts (WA) Pty Ltd Vehicle Parts (WA) Pty Ltd provides warehousing and distribution of automotive parts and accessories for Subaru in Western Australia. Mazda Parts Mazda Parts provides warehousing and distribution of automotive parts and accessories for Mazda in Western Australia. (b) Movement in the carrying amounts of investments in associates Carrying amount at the beginning of the financial year Equity share of profit from ordinary activities after income tax Dividends received during the year Disposal of Investment Carrying amount at the end of the financial year (c) Share of associate profit Consolidated 2021 $’000 1,561 1,130 (617) - 2,074 2020 $’000 16,806 3,758 (4,629) (14,374) 1,561 Based on the last published results for the 12 months to 30 June 2021 plus unaudited results up to 31 December 2021. Profit from ordinary activities after income tax 1,130 3,758 (d) Reporting date of associates The associates’ reporting dates are 30 June annually. EAGERS AUTOMOTIVE — Financial Report 2021Notes to and Forming Part of the Consolidated Financial Statements continued31 December 2021 135 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 consolidated financial statements and notes set out on pages 58 to 134 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards and the Corporations Regulations 2001, and (ii) giving a true and fair view of the financial position and performance of the Company and the consolidated entity; (c) in the Director’s opinion, the financial statements and notes are in accordance with International Financial Reporting Standards as stated in Note 1(a); (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 referred to in the ASIC Corporation Instrument 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 its subsidiaries to which the ASIC Corporation Instrument applies, as detailed in Note 34 to the consolidated 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 Tim Crommelin Director Brisbane, 24 February 2022 EAGERS AUTOMOTIVE — Financial Report 2021 136 Independent Auditor’s Report EAGERS AUTOMOTIVE — Financial Report 2021 137 EAGERS AUTOMOTIVE — Financial Report 2021Independent Auditor’s Report continued 138 EAGERS AUTOMOTIVE — Financial Report 2021Independent Auditor’s Report continued 139 EAGERS AUTOMOTIVE — Financial Report 2021Independent Auditor’s Report continued 140 EAGERS AUTOMOTIVE — Financial Report 2021Independent Auditor’s Report continued SHAREHOLDER INFORMATION 141 Shareholder Information As at 10 March 2022 Equity Securities The company’s quoted securities consist of 256,933,106 ordinary fully paid shares (ASX:APE). Top 20 Holders of Ordinary Shares WFM MOTORS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED JOVE PTY LTD NATIONAL NOMINEES LIMITED MILTON CORPORATION LIMITED ARGO INVESTMENTS LIMITED MUTUAL TRUST PTY LTD ALAN PIPER INVESTMENTS (NO1) PTY LTD FOUR LEAF FAMILY PTY LTD BNP PARIBAS NOMINEES PTY LTD CPU SHARE PLANS PTY LIMITED BERNE NO 132 NOMINEES PTY LTD BIRRELL INVESTMENTS PTY LTD D COLMAN BNP PARIBAS NOMS PTY LTD PULO RD PTY LTD LG MCGRATH INVESTMENTS PTY LTD HEGFORD PTY LTD No. of shares % of issued shares 69,873,037 30,160,020 16,274,853 14,419,795 12,396,588 8,188,052 6,795,986 6,083,588 5,358,239 4,936,250 3,288,587 3,012,451 2,602,154 2,444,101 2,000,000 1,881,710 1,843,558 1,746,935 1,428,632 1,371,652 27.20 11.74 6.33 5.61 4.82 3.19 2.65 2.37 2.09 1.92 1.28 1.17 1.01 0.95 0.78 0.73 0.72 0.68 0.56 0.53 EAGERS AUTOMOTIVE — Financial Report 2021 142 Shareholder Information continued As at 10 March 2022 Distribution of Shareholders Range 1 1,001 5,001 10,001 100,001 and over - - - - 1,000 5,000 10,000 100,000 505 shareholders hold less than a marketable parcel of 40 shares at $12.75 per share. Substantial Shareholders1 WFM Motors Pty Ltd Vernon Charles Wheatley/Jove Pty Ltd 1 As disclosed in substantial holding notices received by the Company Performance Rights and Options No. of shareholders 5,438 3,789 803 803 109 10,942 Notice date No. of shares1 23 September 2019 17 November 2019 69,536,516 15,356,763 230,053 performance rights, 2,173,910 unvested options and 329,818 vested options are on issue to 15 holders pursuant to the Company’s equity incentive plans. Vesting is subject to achievement or waiver of pre-determined performance hurdles. Performance rights and options do not have any dividend or voting rights. Employee Incentive Scheme 3,887,280 shares were purchased on-market during the reporting period for the purposes of our employee incentive scheme at an average price of $13.54 per share. On-market Buy-back The company does not have a current on-market share buy-back. Voting Rights The following voting rights attach to ordinary shares, subject to the company’s constitution: • A shareholder entitled to attend and vote at a meeting may do so in person or by proxy, attorney or corporate representative. • On a show of hands, each shareholder entitled to vote has one vote. • On a poll, each shareholder entitled to vote has one vote for each fully paid share and a fraction for each partly paid share. • If a share is held jointly with two or more holders in attendance, only the holder whose name appears first in the register may vote. Corporate Governance Statement The company’s Corporate Governance Statement is located on the company’s website at https://www.eagersautomotive.com.au/ shareholders/corporate-governance/. EAGERS AUTOMOTIVE — Financial Report 2021 Corporate Directory Eagers Automotive Limited Board of Directors ABN 87 009 680 013 Tim Crommelin, Chairman, Non-executive Director 143 Nick Politis, Non-executive Director Dan Ryan, Non-executive Director David Cowper, Non-executive Director Marcus Birrell, Non-executive Director Sophie Moore, Executive Director & Chief Financial Officer Greg Duncan, Non-executive Director David Blackhall, Non-executive Director Michelle Prater, Non-executive Director Chief Executive Officer Keith Thornton Company Secretary Denis Stark Incorporation Incorporated in Queensland on 17 April 1957 Registered Office 5 Edmund Street Newstead Qld 4006 Postal Address PO Box 199 Fortitude Valley Qld 4006 Telephone (07) 3608 7100 Facsimile (07) 3608 7111 Website www.eagersautomotive.com.au Auditor Deloitte Touché Tohmatsu Riverside Centre 123 Eagle Street Brisbane Qld 4001 Share Registry Computershare Investor Services Pty Limited Level 1 200 Mary Street Brisbane Qld 4000 Enquiries within Australia: Enquiries outside Australia: +61 3 9415 4000 1300 552 270 EAGERS AUTOMOTIVE — Financial Report 2021 144 Controlled Entities As at 10 March 2022 Entity ACN Entity A.C.N. 132 712 111 PTY LTD 132 712 111 AHG SERVICES (QLD) PTY LTD A.P. FORD PTY. LTD. 010 602 383 AHG SERVICES (VIC) PTY LTD A.P. GROUP PTY LTD 010 030 994 AHG SERVICES (WA) PTY LTD A.P. MOTORS (NO 1) PTY. LTD. 010 585 234 AHG TRADE PARTS PTY LTD A.P. MOTORS (NO 2) PTY. LTD. 010 585 243 AHG TRAINING PTY LTD A.P. MOTORS (NO.3) PTY. LTD. 010 585 252 AHG WA (2015) Pty Ltd A.P. MOTORS PTY. LTD. 010 579 996 AHGCL 2016 Pty Ltd ACM AUTOS HOLDINGS PTY LTD 621 081 552 AHGSW 2018 Pty Ltd ACM AUTOS PTY LTD 121 604 082 AP TOWNSVILLE PTY LTD ACM LIVERPOOL PTY LTD 121 604 055 APE CARS MGMT PTY LTD ACN 132 055 737 145 856 328 132 055 700 609 816 257 159 538 226 603 598 750 615 618 678 626 195 668 600 279 927 632 136 906 ADTRANS AUSTRALIA PTY. LTD. 008 278 171 ASSOCIATED FINANCE PTY. LIMITED 009 677 678 ADTRANS AUTOMOTIVE GROUP PTY LTD 007 866 917 AUCKLAND AUTO COLLECTION LIMITED 939375 ADTRANS CORPORATE PTY LTD 056 340 928 AUSTRAL PTY LTD ADTRANS GROUP PTY LTD 008 129 477 AUT 6. PTY LTD ADTRANS HINO PTY LTD 127 369 260 AUTO AD PTY LTD ADTRANS TRUCK CENTRE PTY LTD 106 764 327 AUTOMOTIVE HOLDINGS GROUP (QUEENSLAND) PTY LTD 009 662 202 008 985 886 605 815 021 127 499 683 ADTRANS TRUCKS PTY. LTD. ADTRANS USED PTY. LTD. ADVERPRO PTY LTD AHG 1 PTY LTD 008 264 935 074 561 514 AUTOMOTIVE HOLDINGS GROUP (VICTORIA) PTY LTD 158 935 249 AUTOMOTIVE HOLDINGS GROUP PTY LTD 111 470 038 612 630 618 BASW PTY LTD 116 779 198 BIG ROCK 2005 PTY LTD 601 452 199 112 854 403 008 968 867 AHG AUTOMOTIVE MINING AND INDUSTRIAL SOLUTIONS PTY LTD 162 034 111 BIG ROCK PTY LTD AHG COATINGS PTY LTD 609 750 558 BILL BUCKLE AUTOS PTY LTD 000 388 054 AHG FINANCE 2005 PTY LTD 112 854 387 BILL BUCKLE HOLDINGS PTY LIMITED 062 951 106 AHG FINANCE PTY LTD 064 015 676 BILL BUCKLE LEASING PTY LIMITED 000 871 910 AHG FRANCHISED AUTOMOTIVE PTY LTD 128 362 185 BLACK AUTO CQ PTY LTD 135 015 191 AHG INTERNATIONAL PTY LTD 147 802 211 BOONARGA WELDING PTY LTD 099 480 903 AHG MANAGEMENT COMPANY PTY LTD 147 802 337 BRADSTREET MOTORS HOLDINGS PTY LTD 602 181 386 AHG NEWCASTLE PTY LTD 600 832 755 BRADSTREET MOTORS PTY LIMITED 061 172 183 AHG PROPERTY PTY LTD 131 182 968 CARDIFF CAR CITY HOLDINGS PTY LTD 602 181 751 AHG SERVICES (NSW) PTY LTD 132 055 728 CARDIFF CAR CITY PTY LIMITED 062 072 299 EAGERS AUTOMOTIVE — Financial Report 2021 145 Controlled Entities continued As at 10 March 2022 Entity ACN Entity CARLIN AUCTION SERVICES (NSW) PTY 069 462 148 EASY AUTO 123 PTY LTD ACN 148 136 314 CARLINS AUTOMOTIVE AUCTIONEERS PTY LTD 069 430 182 ESSENDON AUTO (2017) PTY LTD 616 989 596 CARLINS AUTOMOTIVE AUCTIONEERS (QLD) PTY LTD 648 699 325 EUROCARS (SA) PTY LTD CARLINS AUTOMOTIVE AUCTIONEERS (SA) PTY LTD 639 409 537 FALCONET PTY. LTD. CARLINS AUTOMOTIVE AUCTIONEERS (WA) PTY LTD 121 606 826 FERNTREE GULLY AUTOS HOLDINGS PTY LTD 114 124 346 008 936 409 613 081 208 CARLINS GROUP HOLDINGS PTY LTD 619 469 966 FERNTREE GULLY AUTOS PTY LTD 145 562 401 CARSPLUS AUSTRALIA PTY LTD 082 428 279 FINMO PTY LTD CARZOOS PTY LTD 608 791 911 GIANT AUTOS (1997) PTY LTD CASTLE HILL AUTOS NO. 1 PTY. LTD. 148 096 244 GIANT AUTOS PTY LTD 621 801 054 078 830 770 112 854 832 CASTLEGATE ENTERPRISES PTY LTD 088 414 715 GRAHAM CORNES MOTORS PTY. LTD. 008 123 993 CFD (2012) PTY LTD CH AUTO PTY LTD CHEAP CARS QLD PTY LTD CHELLINGWORTH PTY LTD 158 508 233 600 297 783 616 472 729 112 854 467 GRAND AUTOS 2005 PTY LTD HIGHLAND AUTOS PTY LTD HIGHLAND KACKELL PTY LTD 112 854 878 121 604 297 121 805 785 HM (2015) Holdings Pty Ltd 605 790 065 CITY AUTO (2016) HOLDINGS PTY LTD 611 922 993 HM (2015) PTY LTD CITY AUTO (2016) PTY LTD 611 928 968 IB MD PTY LTD CITY AUTOMOTIVE GROUP PTY LIMITED 067 985 602 IB MOTORS PTY LTD CITY MOTORS (1981) PTY LTD 008 973 402 JANASEN PTY LTD CRAMPTON AUTOMOTIVE PTY LTD 057 283 253 JANETTO HOLDINGS PTY LTD DRIVE A WHILE PTY LTD DUAL AUTOS PTY LTD DUNCAN AUTOS 2005 PTY LTD DUNCAN AUTOS PTY LTD 168 250 128 113 068 830 112 854 485 093 664 192 KINGSPOINT PTY LTD LEASELINE & GENERAL FINANCE PTY. LTD. 010 131 361 LIONTEAM PTY LTD 112 854 458 LWC INTERNATIONAL LIMITED E. G. EAGER & SON PTY. LTD. 009 658 306 LWC LIMITED EACAB Pty Ltd EAGERS FINANCE PTY. LTD. 652 679 000 009 721 288 MAITLAND CITY MOTOR GROUP HOLDINGS PTY LTD 602 179 000 MAITLAND CITY MOTOR GROUP PTY LTD 112 526 431 EAGERS MD PTY LTD 009 727 753 MATCHACAR PTY LTD EAGERS NOMINEES PTY. LTD. 009 723 488 MB VIC PTY LTD EAGERS RETAIL PTY. LTD. EASST Pty Ltd 009 662 211 651 942 264 MBSA MOTORS PTY LTD MCM AUTOS PTY LTD 609 773 873 608 791 877 132 711 892 121 606 862 605 791 142 169 210 173 169 209 607 009 388 621 104 649 505 104 766 565 3361910 1861124 EAGERS AUTOMOTIVE — Financial Report 2021 146 Controlled Entities continued As at 10 March 2022 Entity ACN Entity MCM SUTHERLAND PTY LTD 121 606 808 SOUTH WEST QUEENSLAND MOTORS PTY LTD ACN 600 279 589 MELBOURNE CITY AUTOS (2012) PTY LTD 150 616 747 SOUTHEAST AUTOMOTIVE GROUP PTY LTD 103 071 290 MELBOURNE TRUCK AND BUS CENTRE PTY LTD MELVILLE AUTOS 2005 PTY LTD MELVILLE AUTOS PTY LTD 143 202 699 SOUTHERN AUTOMOTIVE GROUP PTY LTD 103 181 237 112 854 421 107 617 774 SOUTHSIDE AUTOS (1981) PTY LTD 008 968 821 SOUTHSIDE AUTOS 2005 PTY LTD 112 854 369 MORNINGTON AUTO GROUP (2012) PTY LTD 150 616 890 SOUTHWEST AUTOMOTIVE GROUP PTY LTD 096 279 480 637 015 457 098 706 051 009 162 387 112 854 896 MOTORS GROUP (GLEN WAVERLEY) PTY LTD 164 997 228 SUBMO PTY LTD MOTORS TAS PTY LTD 608 791 680 SWGT PTY LTD NEWCASTLE COMMERCIAL VEHICLES PTY LTD NORTH CITY (1981) PTY LTD NORTH CITY 2005 PTY LTD 157 829 626 008 974 061 113 532 077 TOTAL AUTOS (1990) PTY LTD TOTAL AUTOS 2005 PTY LTD VEHICLE STORAGE & ENGINEERING PTY LTD 121 604 242 NORTHSIDE AUTOS 2005 PTY LTD 112 854 805 NORTHSIDE NISSAN (1986) PTY LTD 008 974 070 VMS PTY. LTD. WA TRUCKS PTY LTD 121 604 037 112 854 341 WEBSTER TRUCKS MGMT PTY LTD 632 136 899 WESTERN EQUIPMENT RENTALS PTY LTD 131 269 184 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. 065 389 120 608 791 804 009 824 462 009 900 298 009 681 261 009 695 694 009 842 648 NORTHWEST (WA) PTY LTD NOVATED DIRECT PTY LTD 158 935 294 164 980 705 NSW VEHICLE WHOLESALE PTY LIMITED 140 971 259 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 112 854 449 009 681 556 623 139 177 158 377 452 112 854 476 611 323 150 PERTH AUTO ALLIANCE PTY LTD 089 353 346 PRECISION AUTOMOTIVE TECHNOLOGY PTY LTD 163 233 207 PT (2013) PTY LTD RENT TWO BUY PTY LTD RL SUBLESSOR PTY LTD 162 030 015 165 880 562 639 689 320 SABALAN HOLDINGS PTY LTD 602 181 117 SABALAN PTY LTD SHEMAPEL 2005 PTY LTD 002 698 188 112 854 412 EAGERS AUTOMOTIVE — Financial Report 2021 147 T R O P E R L A U N N A 1 2 0 2 — I E V T O M O T U A S R E G A E Annual2021ReportEagers Automotive LimitedABN 87 009 680 013