Eagers Automotive Limited
Annual Report 2023

Plain-text annual report

ANNUAL REPORT 2023 Eagers Automotive Limited ABN 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 Debt1 Net debt (total debt less bailment finance less cash) - $’000 Gearing ratio (debt/debt plus equity) – % Gearing ratio (net debt/net debt plus total equity) – % 2023 $’000 2022 $’000 2021 $’000 2020 $’000 RESTATED 2019 $’000 9,851,681 8,541,502 8,663,462 8,749,675 5,816,979 688,457 (121,296) 652,410 (116,603) 651,642 (120,428) 625,447 (166,257) 342,407 (95,217) (17,451) (16,727) (5,156) (90,700) (244,925) 549,710 (130,751) 8,376 427,335 (128,267) 299,068 - (17,968) 281,100 519,080 (88,245) 11,387 442,222 (117,882) 324,340 - (16,173) 308,167 526,058 (79,619) 10,368 456,807 (118,070) 338,737 368,490 (88,384) (88,384) 280,106 (88,575) 191,531 2,265 (65,569) (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) 110.7 74.0 100 121.3 71.0 100 125.2 70.9 100 57.6 25.0 100 (67.4) 25.3 100 2023 $’000 2022 $’000 2021 $’000 2020 $’000 RESTATED 2019 $’000 1,173,069 (560,126) 199,463 9,423 821,829 1,490,490 2,545,827 4,036,317 4,858,146 1,173,069 (617,978) 510,725 21,635 1,087,451 1,300,548 1,342,946 2,643,494 3,730,945 1,173,069 (580,200) 317,848 13,860 924,577 1,443,313 1,665,761 3,109,074 4,033,651 514,374 775,295 577 494,266 785,574 2,366 456,058 773,174 2,366 1,067,324 1,188,502 1,245,734 18,670 1,354,705 3,730,945 - 1,562,943 4,033,651 - 2,380,814 4,858,146 256,933 10,767 1,056,611 128,409 49.3 10.6 256,933 11,159 256,933 9,955 1,233,079 1,744,826 129,263 314,867 57.1 12.3 68.0 27.7 1,173,659 (653,652) 750,095 35,284 1,305,386 1,224,431 2,190,898 3,415,329 4,720,715 691,192 859,573 64,072 863,245 6,546 2,236,087 4,720,715 256,900 11,188 1,796,127 262,706 57.9 17.7 1,154,572 (606,122) 655,796 37,384 1,241,630 1,261,740 1,616,867 2,878,607 4,120,237 698,393 855,022 12,118 979,385 - 1,575,319 4,120,237 255,398 11,439 1,316,234 253,452 51.2 16.8 1. 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 1. 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 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. liability reflected under current liabilities. Because of its short-term nature, it is excluded from net debt and the corresponding gearing ratio. 2 2023 Highlights Revenue $9.9bn Underlying Operating Profit Before Tax 1 $433.3m Statutory Profit Before Tax $427.3m Underlying Return on Sales 4.4% Cash At Bank $222.2m Strong Available Liquidity $620.3m Owned Property Portfolio 2 $597.9m Key drivers Strong Demand Greater Productivity 2023 Records Revenue vs Prior Year +15.3% Total Ordinary Dividend 74.0cps Underlying Operating Profit Before Tax vs Prior Year +6.9% Property Consolidation Reduced Cost Base 1. Underlying operating results refers to continuing operations outlined and reconciled to statutory results on slides 34 (FY23) and 35 (comparative financial information) of the FY2023 Investor Presentation. Underlying operating figures are non-financial measures and have not been subject to audit by the Company’s external auditors. 2. Owned property includes construction in progress – at cost and includes properties classified as Held for Sale. 3 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT Contents 5 Year Financial Summary 2023 Highlights Chairman’s Letter Chief Executive Officer’s Letter Our NEXT100 Strategy Our Principles and Values Company Profile Sustainability Report Board of Directors Executive Management Directors’ Report Auditor’s Declaration of Independence Financial Statements Notes to and Forming Part of the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Controlled Entities Shareholder Information Corporate Directory 2 3 5 6 8 9 10 13 32 33 35 59 61 68 122 123 127 129 131 4 Annual General Meeting Our Annual General Meeting will be held at 10:00am (QLD time) on Wednesday, 22 May 2024. It will be held as a "hybrid" meeting, giving shareholders an opportunity to attend either online or in person. Financial Calendar 2023 Financial Year End 31 December 2023 Full Year Results Announcement 22 February 2024 Final Dividend Announcement 22 February 2024 Final Dividend Record Date Final Dividend Payment Date Annual General Meeting* Half Year End Half Year Results Announcement* Interim Dividend Announcement* 15 March 2024 28 March 2024 22 May 2024 30 June 2024 August 2024 August 2024 Interim Dividend Record Date* September 2024 Interim Dividend Payment Date* October 2024 2024 Financial Year End 31 December 2024 *Estimate only, subject to any changes notified to the ASX. Chairman’s Letter Dear Shareholders I am delighted to report on another strong year for Eagers Automotive, with the Company’s financial performance again reaching record levels across a number of key metrics, while continuing to execute on our Next100 strategy. Our full year financial results for 2023 were underpinned by significant year-on-year revenue growth of 15.3% on 2022, an increase of $1.3 billion. Importantly, this was achieved while maintaining our strong sustainable sales margins through disciplined cost management and genuine business transformation since the pre-pandemic period. ”Eagers Automotive Limited is the leading automotive retail group in Australia and New Zealand.” The Company delivered a Statutory Profit Before Tax of $427.3 million and another record Underlying Operating Profit Before Tax of $433.3 million in 2023, an increase of 6.9% on 2022. The Board was pleased to reward shareholders with strong returns and a total dividend of 74.0 cents per share. This is the highest full year dividend in the Company’s long and proud history of paying dividends every year since listing on the stock exchange in 1957. It demonstrates the Company’s strong financial position and the Board’s conviction in our outlook for the years ahead. Throughout 2023 we continued to make progress on our sustainability journey, as detailed in our Sustainability Report at page 13 of this Annual Report. Looking ahead, we will continue to operate the business in a disciplined manner and closely monitor the external macroeconomic environment. Our strong financial position provides capacity and flexibility to continue to drive revenue growth and pursue accretive expansion and acquisition opportunities. Eagers Automotive’s track record as a leader in the industry and history of consistently delivering for all of our stakeholders does not happen by chance. I take this opportunity to thank the entire Eagers Automotive team, our executives led by Chief Executive Officer Keith Thornton and all of our people for their dedication and unwavering commitment to the ongoing prosperity of Eagers and its shareholders. Thank you also to my fellow Directors for your ongoing support and counsel. Finally, to our shareholders, thank you for your continued support. We remain confident that sustainable growth. Tim Crommelin Chairman 5 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT Chief Executive Officer’s Letter Dear Shareholders It gives me great pleasure to report on the 2023 performance of Eagers Automotive. In 2023 the Company produced its third consecutive record underlying profit, while delivering material revenue growth. These results were supported by the continued disciplined execution of our Next100 strategy. Operating Environment Throughout 2023 consumer demand for new and used vehicles remained robust while supply chains slowly returned to pre-pandemic levels, with most brands having largely normalised inventory levels by the end of 2023. The combination of consistent demand, normalising supply and the extensive pre-existing order bank across the industry culminated in a record new vehicle market in 2023. Eagers was able to leverage these favourable market dynamics, whilst offsetting the inflationary cost pressures evident across most of the economy. In an increasing cost environment, the transformation of our operating model following the merger with AHG in 2019 has provided the foundation for a more productive cost base and supported our record profit performance. Financial Performance At the start of 2023 we set a clear goal to deliver material revenue growth while maintaining a higher return on sales margin compared to pre-pandemic levels. I am pleased to report that we delivered on these goals. Turnover for 2023 was a record $9.9 billion, an increase of $1.3 billion or 15.3% on 2022. Pleasingly this growth was made up of a healthy mix of organic, greenfield and targeted scale acquisitions. This included our retail joint venture business with BYD, new innovative retail models such as the Indooroopilly Automall and greenfield partnerships with new and existing OEMs including MG, Volvo, Cupra and Chery, supplemented by the integration of scale acquisitions in the ACT and South Australia. “Turnover for 2023 was a record $9.9 billion, an increase of $1.3 billion or 15.3% on 2022.” The growth in revenue was delivered in a sustainable manner, producing a record Underlying Operating Profit Before Tax of $433.3 million, up by $28.1 million or 6.9%. This equated to a Statutory Profit Before Tax of $427.3 million. After tax the group generated a statutory profit of $299.1 million. 6 The financial result was aided by sustained strong margins achieved across the business, now embedded into the order bank, and the transformation of our cost base, leveraging proprietary technology and property consolidation to drive productivity efficiencies. This resulted in a return on sales margin, the key industry metric, at an historically strong level of 4.4% for the year. From a balance sheet perspective, the group is in a very strong position with $597.9 million of owned property and available liquidity of $620.3 million. Our liquidity position, low gearing and high value property portfolio provide the Company with the capacity and flexibility to continue to pursue accretive growth opportunities into 2024 and beyond. Strategic Progress Our 2023 financial performance highlighted the strength of our business and the genuine business transformation we have achieved through the relentless execution of our Next100 strategy. A disciplined focus on property consolidation, supported by the development and roll out of proprietary technology, has improved our operating model, delivering better customer outcomes with productivity levels above industry benchmarks. These initiatives have resulted in the transformation of our cost base and underpinned a step change in our return on sales margin. Our independent used business, made up of easyauto123 and Carlins Auctions, delivered a record result for 2023 succeeding where multiple other start ups in the Independent Used Car sector have failed. This part of our business will be a beneficiary of increased new vehicle supply which will increase the volume of pre-owned vehicles traded at our dealerships. Thank you to each of our OEM partners who have trusted us to represent your brand. We will continue to work hard every day to earn and retain the right to be a preferred retail partner for your brand. As I have said many times, it is both a privilege and responsibility we take very seriously, and I look forward to continuing to work together in 2024. To our other suppliers and partners, including financiers and landlords, your continued support is fundamental to our success and something we never take for granted. Personally, I would like to thank the Eagers Automotive Board of Directors for your continued support, advice and guidance. All shareholders benefit from the unique experience and expertise of the Eagers Automotive Board and your direction to me and the wider leadership team is invaluable. Finally, thank you to all our shareholders, large and small, for your on-going support. We are grateful for the confidence you have in the Company. As always, we are excited for what the future holds for Eagers Automotive. Keith Thornton Chief Executive Officer Our Finance and Insurance results continued to be impacted by the extended lead times between order and delivery which reduces our point of sale advantage. The industry finance penetration performance , a surrogate for volume, has declined to the lowest levels seen for more than a decade. Despite this, Eagers Automotive remained relentless in our focus on this critical income driver and continued to outperform the industry with the difference between our performance and the industry the largest it has been. We continued our growth with existing partners and new market entrants in the electric and low emission vehicle market, including new strategic partnerships in adjacent markets to create a distinct market advantage. Finally, throughout 2023 we continued to pursue accretive growth opportunities that will benefit from our scale and operating model. The large scale acquisition of multi- franchise dealerships in Victoria provides significant scale in a region the Company had previously identified as an opportunity for growth. The addition of the Peter Kittle Toyota Business in Alice Springs is complementary to our existing Toyota operations in the Northern Territory. Both of these transactions completed in early 2024 and included the acquisition of strategic property. Outlook As we move into 2024 we are confident we have laid the foundations for further revenue growth via the completion and integration of large scale strategic acquisitions combined with the expected organic growth resulting from the maturing of greenfield partnerships established in 2022 and 2023. Our material new car order book continues to underwrite deliveries even as new vehicle supply normalises, with sustained strong embedded margins and a significant run-off period. The record new car deliveries in 2023 and the normalisation of vehicle supply will benefit our pre-owned vehicle business, finance and insurance business and service and parts, demonstrating once again the resilience of our operating model. We always remain cautious and cognisant of the external environment, however we are confident that the advances we have made with our Next100 strategy will put us at an operating advantage to the industry going forward and underwrite our ability to outperform through whatever cycles eventuate. Relative outperformance in the industry remains a key driver for accretive growth. Acknowledgments I thank our customers for your ongoing loyalty and support. It is our job to earn and retain your trust, and we continue to work hard for the privilege to provide products and services to each and every customer we serve. To all of our great team members across Australia and New Zealand, thank you for your efforts that have allowed us to yet again deliver a record result for 2023. Your energy, expertise and commitment to meeting and exceeding the expectations of our customers and other key stakeholders are fundamental to the success of our Company. 7 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT Our NEXT100 Strategy Providing integrated mobility solutions for the next 100 years. OPTIMISE DEVELOP GROW Engage Our Customers, Everywhere Online. In shopping malls. In multi-brand service hubs. At home. At work. Our flexible owned and leased property portfolio allows us to continue to evolve to fit our customers’ lifestyles, circumstances, wants and needs. Redefine Our Workforce Our workforce: Re-defined and re-imagined, based on our customers’ journey. This transformation is aimed at delivering an all new and vastly superior customer experience on a more sustainable and productive cost base. Deliver Optimised Vehicle Finance Solutions Capitalise on the unique position our industry occupies in the distribution of motor vehicles, with the aim of becoming the preferred provider of automotive and mobility finance solutions. Deliver ultra- competitive, highly tailored finance solutions sourced from our extensive funding relationships. Support Innovation Reinvest With Discipline Support our partners to introduce ACE (autonomous, connected and electric) and other emerging product and service innovations. Our partners cover circa 95% of the total market for new vehicles in Australia and are at the forefront of design, performance and innovation. Disciplined use of shareholder funds combined with rigorous review of existing and new operations to support an unrelenting focus on long term wealth creation. Utilise balance sheet strength to capitalise on evolving and emerging market trends. Exceed Stakeholder Expectations Customers. Employees. Partners. Shareholders. Community. 88 Our Principles This is what we stand for and the reason why we exist. They guide our people and create a culture where everyone understands what is important for achieving success. Our Values Integrity Inclusiveness Owner’s Mindset Agility Doing what you say you’ll do Being open and recognising the contribution of all individuals Taking pride and ownership in your work Being flexible and open to change EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 99 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTOUR PEOPLEDIRECTORS’ REPORTFINANCIAL STATEMENTSSHAREHOLDER INFORMATIONCompany Profile About us Eagers Automotive Limited is the leading automotive retail group in Australia and New Zealand, with a long and proud history of 111 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, ACT, Tasmania and Auckland. Dividends and EPS growth We have paid a dividend to our shareholders every year since we listed on the Australian Securities Exchange in 1957. We have a track record of delivering Earnings Per Share (EPS) growth from acquisitions. Automotive Industry New Vehicle Sales in 2023 SUV SALES 56% EV SALES 8% Market share by type in Australia Passenger 211,361 (17%) SUV 679,462 (56%) Light Commercial 274,185 (23%) Heavy Commercial 51,772 (4%) Top 10 Brands Australia Toyota Mazda Ford Kia Hyundai Cars Mitsubishi MG Tesla Subaru Isuzu Ute New Zealand Toyota Ford Mitsubishi Kia Hyundai Suzuki MG Tesla Nissan Mazda 17.7% 8.2% 7.2% 6.3% 6.2% 5.2% 4.8% 3.8% 3.8% 3.7% Top 10 66.9% Top 10 Source: FY23 VFACTS Data 21.7% 10.9% 9.0% 6.8% 5.1% 4.6% 4.1% 3.3% 2.9% 2.8% 71.2% A History of Growth 1913 - 1922 • 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. • Established the first motor vehicle assembly plant in Queensland in 1922. 1930 - 1992 2005 - 2013 • Secured the General Motors • Operations expanded into distributorship in Queensland and Northern New South Wales in 1930. • Listed as a public company under the name of Eager Holdings Limited in 1957. • A merger in 1992 with the listed the Northern Territory with the acquisition of Bridge Toyota in 2005. • In 2010, acquired the publicly listed Adtrans Group Limited, being South Australia’s premier car retailer. A.P. Group Limited saw the addition of a number of new franchises and our name change to A.P. Eagers Limited. • Operations in South Australia were expanded with acquisition of Eblens Motors in 2011 and Main North and Unley Nissan and Renault in 2013. • Established Precision Automotive Technology as a new business to source and distribute our own range of car care products in 2013. 10 Where We Operate Eagers Automotive dealerships can be found in all States and Territories in Australia as well as in New Zealand. 4 56 42 26 Sales revenue has grown from $500m in 2000 to $9.9Bn in 2023 107 75 23 28 15 *Inclusive of new and used cars, trucks, parts, service and independent pre-owned operations for FY23 2014 - 2016 2018 - 2021 2022 - 2024 • Reynella Subaru acquired in South Australia in 2014. • Queensland operations continued to expand through acquisition of Ian Boettcher Motos in Ipswich and Craig Black Group in south-west and central Queensland in 2014. • Acquisition of the Crampton Automotive and Tony Ireland Groups, expanding to Toowoomba and Townsville in 2016. • Acquisition of Motors Group Tasmania and Victorian businesses Silver Star Motors, Mercedes-Benz Ringwood and Waverley Toyota in 2016. • Acquisition of Toowoomba Motor Group (Mitsubishi and Kia), Metro Nissan (Brisbane) and Southern Vales Nissan (Adelaide) in 2018. • Strategic acquisitions of Toowoomba Ford (Queensland) and multiple franchises in Cardiff and Maitland (New South Wales) in 2021. • Acquired strategic holding in AHG in 2012, which grew to full ownership in 2019, bringing significant operations in Perth, Sydney, Newcastle/Hunter Valley, Brisbane, Melbourne and Auckland (New Zealand). • In 2022, acquired a portfolio of dealerships and properties in the Canberra regions of Belconnen, Fyshwick, Phillip, and Gungahlin giving the Company operations in every state and territory of Australia. • Acquired Newspot (Adelaide) a multi- franchised dealership group in 2022. • Expanded in North Queensland acquiring Ireland’s of Cairns in 2023. • Early 2024, acquisition of complementary large-scale dealership group in Melbourne and Mornington region, Victoria, and also Alice Springs Toyota in Northern Territory. EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 1111 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 12 SUSTAINABILITY REPORT At Eagers Automotive, our vision is to be the most admired automotive group, and we know this cannot be realised without a strong people focus, considered environmental footprint and a business resilient to internal and external pressures. This is why our sustainability strategy has People, the Planet and our Performance at its core. Contents 1 2 Introduction About Us 3 People 4 5 Planet - Climate Change and Environment Performance - Sustainable Growth 6 Appendix 14 16 17 24 30 31 13 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 1 Introduction Welcome to Eagers Automotive’s sustainability report for 2023. Over the past year we have focused on cementing awareness of our sustainability strategy across the Group and identifying the actions and activities that we need to start, continue, stop, and optimise for us to execute on our strategy and achieve our sustainability goals. Sustainable Together Our sustainability vision is to be the most admired automotive retailer by delivering sustainable growth through the optimisation of our operations, our people and our environment. M I S S I O N & G O A L S People To attract and retain the best people, deliver superior customer service on a balanced and productive cost base and support sustainable communities through our dealerships and the Eagers Automotive Foundation. Planet To reduce our impact on, and where practicable enhance the environment through operational optimisation and collaborative partnerships. Performance To build a resilient business that can withstand and adapt through market cycles as well as grow and thrive in the face of change and disruption. 14 Sustainability Standards This report seeks to align with the Sustainability Accounting Standards Board’s (SASB) guidance for companies in the multiline and speciality retailers and distributors sector (SASB Standard), while also considering the Task Force on Climate- related Financial Disclosures (TCFD) reporting framework. Our company goals are also reflective of the five United Nations Sustainable Development Goals (UN SDGs) we believe the Group is best placed to contribute to given our prominent role in the retail automotive industry. These five UN SDGs reflect the areas we believe Eagers Automotive Group is best placed to contribute given our prominent role in the automotive retail industry. 15 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 2 About Us Eagers Automotive is the largest automotive retail group in Australia, with a long and proud history spanning over 110 years, more recently expanding operations to New Zealand. During 2023 the Group represented a diverse portfolio of over 40 automotive brands across every Australian capital city as well as regional Queensland, the Newcastle/ Hunter Valley region of New South Wales, broader Tasmania and Auckland, New Zealand. As well as the sale of new and used motor vehicles and trucks, our principal activities consist of the distribution and sale of parts, accessories and car care products, and the repair and servicing of vehicles. In 2023 we employed 7,577 people, 7,200 in Australia and 377 in New Zealand. [1] 1. As at 31 December 2023. 16 3 People People As a publicly listed automotive retail sales and service provider, our people are integral to our long-term success, and are at the core of our business and everything that we do. a) Employee Engagement We recognise there is a strong link between employee engagement and business performance. To be competitive and provide a superior customer experience, we need to attract and retain the best employees, and maintain a positive and constructive company culture – a highly engaged workforce will help to achieve sustainable high-performance outcomes. In 2023 we continued to survey our employees through our annual Employee Engagement Survey. This survey was both anonymous and confidential, conducted by an independent third-party provider, and enabled feedback to be benchmarked against a portfolio of other automotive, transportation and logistics employers. Our overall employee engagement rate increased by 4% on the Group’s 2022 results. At 72%, Eagers Automotive is performing well above the benchmark of 64% for employers in the automotive, transport and logistics industry. The survey results highlighted that safety remains an area we are highly engaged across the Group. Employee favourability was also high in team leadership, as well as the commitment from our team members to deliver high-quality work. b) Diversity, Equity & Inclusion We recognise the value in having a workforce that reflects the diversity of the communities within which we operate and the need to provide an inclusive culture where people are valued and respected, regardless of their personal characteristics, circumstances, beliefs and perspectives. This is why ‘Inclusiveness’ is one of our four Company values (i) Equal Opportunity and Treatment To attract and retain a diverse workforce comprised of the most talented and engaged people we must provide equal opportunity for workforce participation, from recruitment to retention initiatives, performance management and promotional opportunities, and remuneration and succession planning. We work on the principle that all employment decisions must be based on merit and be non-discriminatory. All employees are valued according to how they perform their duties and their ability and enthusiasm for maintaining company expectations and standards. Our leaders and managers are responsible for ensuring employees are treated fairly and with respect and dignity regardless of background or personal characteristics, in accordance with our Diversity Policy, Code of Conduct, and other governance documents. (ii) Diversity Policy and Objectives In accordance with our Diversity Policy, the Group’s governing Board has set the following objectives for achieving diversity in the composition of the Board, senior executives, and the workforce generally: A. Board Composition The Board’s diversity target of at least 30% female representation on the Board was achieved in March 2024. Female Male Mar 2024 33.3% Feb 2024 25.0% Feb 2023 25.0% Feb 2022 22.2% 66.7% 75.0% 75.0% 77.8% Feb 2021 20.0% 80.0% 17 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 3 People (continued) (ii) Diversity Policy and Objectives (continued) B. Diversity & Inclusion Training To further embed our Company value of ‘Inclusiveness’ across the Group, the Board has set the objective to develop and deliver diversity and inclusion training for managers over a four-year period. The training focuses on increasing awareness of unconscious biases and understanding how differences can contribute to the development of a high-performance culture. Other related management training, awareness and coaching provided in 2023 included in the areas of: Leadership Duty of Care Unconscious Bias Appropriate Workplace Behaviour including Discrimination Culture and Engagement Mental Health Awareness and Mentally Healthy Workplaces Legislative changes impacting employment arrangements. C. Workforce Gender Composition While the automotive industry is traditionally male dominated, we acknowledge the role that we can play, as Australia’s largest automotive retailer, to improve the gender balance of our workforce. Our objective is to better understand relevant gender issues so that we can ensure a supportive environment for all and minimise any barriers to gender equality. The following table shows the trends in gender representation across the Group, over the past three reporting years. Management All Other Employees Female Male Not disclosed / Non specific Female Male Not disclosed / Non specific 2023 13.77% 86.23% 2022 15.22% 84.78% 2021 8.16% 91.84% N/A N/A N/A 25.78% 74.19% 0.03% 25.36% 74.60% 0.04% 23.25% 76.75% N/A Rates are calculated to the nearest two decimal places. During the reporting year, programs, activities and awareness events to support and promote a gender diverse workplace included: • Eagers’ Fearless Female+ Forum • Eagers’ GROW Program • Harmony Week • Matariki Celebrations • International Women’s Day • National Reconciliation Week • NAIDOC Week • Neurodiversity Celebration Week. D. Cultural Diversity Recognition We continue to focus on improving our data gathering capabilities to meet the Board’s objective to better understand and report on the cultural heritage and diversity of our workforce. According to the respondents of our 2023 Employee Engagement Survey, while Australia, New Zealand, United Kingdom and Asia are the prominent places of origin of our employees, more than 64 other places of origin are also represented, and our employees speak more than 53 different languages. 18 c) Reward and Recognition Appropriate and adequate rewards and recognition are an important driver of employee engagement and we are proud that many of our employees have chosen to have long careers with us. To celebrate our long tenured employees, we recognise annual service anniversaries that begin after 10 years with us, and every subsequent five-year anniversary. We are committed to meeting and where reasonably practicable, exceeding, all legal and employee payment obligations. In recognition of this commitment, the Group set the goal to remunerate all Group employees above the minimum wage by the end of 2023. We are pleased to report that for 2023 all employees have been remunerated above the minimum wage. Minimum Wage Employee Rate Whole of Group 2023 2022 2021 0.0% 0.9% 1.4% Rates are calculated to the nearest one decimal place. The SASB Standards require the reporting of averaged labour rates. As the broad variety of roles within the Group means the reporting of averaged labour rates may not reflect accurately for our Group and is therefore of limited extrinsic value, we have elected not to report these averages. People d) Career Development and Training With a history of over 100 years in the automotive industry and a NEXT100 strategy guiding the Group through the next 100 years of operations, we continue to invest in the future of the automotive industry and the people that will make it a success into the future. (i) Learning and Development We value continuous learning that supports role performance, customer service improvements and the achievement of professional goals. In that regard, we provide training in many areas including: • Sales and service development • Car care • Finance and insurance • Leadership and workforce management (including advanced and emerging leadership programs) • Manufacturer and product-specific training • Systems training Company-sponsored training and educational opportunities are also available on a case-by-case basis in areas such as executive education, future leadership and sponsored higher education. (ii) Apprenticeships We have various apprenticeship and traineeship opportunities available in Automotive Trades and Services, as well as Administration. In 2023 the Group employed 789 apprentices, including 303 new apprentices. During the year, 111 apprentices completed their training to become qualified in trades such as Technicians, Service Advisors and Parts Interpreters. We provide many benefits to support our apprentices during their training. These vary by region however they include payment of technical fees, free or discounted tools, the opportunity to salary sacrifice some expenses, and discounts on vehicles, parts and servicing. 19 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 3 People (continued) e) Labour Practices The regular monitoring of certain labour practices helps us to identify actual or potential workplace issues, including cultural issues, and to put in place actions to mitigate or address these issues. Potential indicators include employee turnover and employment violations, details of which are set out below. (i) Turnover Employee turnover rates across the Group remained stable in 2023, with slight increases compared to 2022. Voluntary turnover includes resignations and retirements, while involuntary turnover includes dismissal, redundancy and non-renewal of contracts. Group-wide Turnover Rate 2023 2022 2021 Voluntary 33.4% 33.0% 30.2% f) Balancing Work Goals with Life Goals As a large business with diverse operations and roles, we recognise that flexibility presents differently across the Group. We are committed to living our ‘Inclusiveness’ Company value and to attracting and retaining the best employees, while also meeting our stakeholder expectations and strategic objectives. To do so, our approach is to consider flexibility in all its forms to enable an engaged, inclusive and high performing workplace culture that balances work goals with life goals. (i) Parental Leave Policy We continued to support new parents through our recently revised and harmonised Parental Leave Policy. This policy provides supplementary payments to any payments made under the Australian and New Zealand Government’s paid parental leave schemes so that eligible employees can maintain their usual average pay for a period of up to 12 weeks during their parental leave. Involuntary 4.3% 3.2% 3.0% (ii) Employee Assistance Program We continue to provide employees and immediate family members with access to our Employee Assistance Program. Services include independent, free and confidential counselling and support in areas such as mental health, relationships, exercise, sleep and financial counselling, as well as a library of self-serve health and wellbeing resources. Rates are calculated to the nearest one decimal place. Improving employee retention strategies and uniting employees through periods of growth continues to be a priority. A refreshed Employee Handbook was developed and implemented during the reporting period which is provided to all new starters as part of their onboarding and serves as an important reference tool for existing employees. It introduces employees to Eagers Automotive, including what we do, our history, our values and guiding principles, workplace health and safety, and the employment basics. (ii) Labour Law and Other Violations In 2023 we did not incur any monetary loss as a result of legal proceedings associated with labour law violations or employment discrimination. 20 People h) Modern Slavery Eagers Automotive Group continues to mature its approach to the identification and understanding of modern slavery risks in its operations and supply chain, and to strengthen its controls to mitigate these risks, in line with its obligations under the Modern Slavery Act 2018 (Cth). We increased awareness of modern slavery and the Group’s commitment to the mitigation of modern slavery practices through the release of our Modern Slavery Policy and commenced roll out of general awareness modern slavery training in late 2023. We also strengthened our modern slavery governance through the release of a Modern Slavery Response Procedure and revised Complaints Management Policy and Whistleblower Policy. g) Health, Safety and Wellbeing We manage the health, safety and wellbeing of our people at work in accordance with our Workplace Health, Safety and Environment (WHSE) Policy, Risk Management Procedure, integrated WHSE software platform and other supporting documents and systems. Our health and wellbeing activities during 2023 included: Safe Work Month safety campaign focusing on hazard identification and near miss reporting Implementation of the hazardous chemical management platform - Chemwatch, and contractor induction platform - Rapid Induct Development of a hazardous chemical banned products list and a chemical substitution trial to reduce health and environmental risks. Risk assessment activities for psychosocial risks and electric vehicle safety risks Commencement of Safety Leadership Programs across various regions EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 21 21 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 3 People (continued) Celebrating Eagers Automotive Foundation 10th Anniversary (i) Supporting our Community – Eagers Automotive Foundation and local charitable initiatives Celebrating its 10th anniversary this year, the Eagers Automotive Foundation’s vision is to create a lasting spirit of giving within the Eagers Automotive network for those in need. Employees have the option to donate a portion of their salary to the Foundation through our Workplace Giving Program and are encouraged to propose charities and causes close to their heart for the Foundation to support. As all Foundation administration expenses are paid by Eagers Automotive Limited, we ensure that 100% of donations received are delivered to intended recipients. Our dealerships also have a longstanding history of supporting the communities within which they operate, through donations, sponsorships and fundraising activities. Together with the Foundation, in 2023 we provided approximately $1 million in monetary and in- kind contributions to community and charitable causes. Keith’s Closet - Supporting Mental Health We were proud to raise money through a charity golf day for Keith’s Closet – Supporting Mental Health. Keith’s Closet believes that people acquiring mental health services should have access to clothing, accessories, essential items and homewares in times of need whether in hospital or in the community. 222222 13Yarn In WA, AMCAP partnered with 13YARN to spread awareness of the 13YARN crisis line through branding on maintenance service kits. 13YARN is an Aboriginal & Torres Strait Islander crisis support line funded by the Australian Government with the support of Lifeline and developed in collaboration with Gayaa Dhuwi (Proud Spirit) Australia. It is run by Aboriginal and Torres Strait Islander people. AMCAP ships around 4,000 maintenance service kits every month with multiple touch points - AMCAP staff, the logistics / transport providers with their large warehousing facilities, on the back of trucks travelling to remote locations and eventually the hundreds of stakeholders that see and engage with these kits on a daily basis on mine sites. This is a visual reminder to all that help is always available and only a phone call away. As part of this partnership, AMCAP hosted a launch event hosted by Ernie Dingo where internal and external guests were entertained with a performance by Wadumbah Aboriginal Dance Club. National Tree Day As part of our objective to build positive community relationships and make positive environmental impacts, a number of our Toyota dealerships across the country engaged with local schools and early childhood centres to promote National Tree Day, while also beautifying school ground. These engagements involved a variety of activities including the donation of trees, gardening apparel and lunch to fuel tree planting participants, as well as educating the children on how to care for seedlings as they grow and the importance of connecting with nature and giving back to the environment. People Kids Rehab at the Childrens Hospital Westmead Over $90,000 in monetary and in-kind contributions were donated to Kids Rehab at The Children’s Hospital at Westmead - part of the Sydney Childrens Hospitals Foundation. Kids Rehab, one of the largest paediatric rehabilitation units in Australia, cares for over 4,300 children and young people in NSW who have a range of disabilities including Acquired Brain Injury, Cerebral Palsy, Limb Loss, Spinal Cord Injury / Disease, Spina Bifida and Complex Musculoskeletal Disorders. Our contributions came from a number of charity events throughout the year, including platinum sponsorship of the Emerald Ball and an annual charity golf day. Backpacks 4 SA Kids The Eagers Automotive Foundation and a number of our SA dealerships held charity events and toy donation drives, as well as donated time throughout the year in support of Backpacks for SA Kids, which aims to give every child from newborn to 18 years old entering emergency care a gift for Christmas. National Breast Cancer Foundation (NBCF) This year we continued our partnership and fundraising activities in support of the National Breast Cancer Foundation. As well as raising valuable funds, our AMCAP business continued to create breast cancer awareness through pink NBCF branded cabinets and containers. EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 23 2323 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 4 Planet Climate Change and the environment The occurrence of serious weather events affecting our areas of business are not only a continuing reminder of the risks that natural disasters pose to our property, assets and operations, but also of the broader consequences of poor environmental management and inaction. Key Highlights Establishment of a Sustainability Steering Committee 46 UPSSs decommissioned, handed back or divested, 9 of these in 2023 PAT bottle recycling pilot Installation of an additional 600kW of Solar PV capacity 24 24 Planet a) Environment Our business activities can be both impacted by, and have an impact on, the environment in which we operate. Our efforts have and will continue to focus on incorporating business resilience activities into our strategic and operational planning, and activities that reduce our environmental impact, enhance our physical environment, as well as improve customer and employee experience and satisfaction. (i) Hazardous Chemicals A. Chemical Risk Management B. Hazardous Chemical Handling Our operations involve the handling, storage and sale of hazardous chemicals such as paints, solvents, fuel, degreasers, aerosols and oil. Our WHSE risk management approach aligns with our overarching risk management approach. Our centralised safety management system and use of Chemwatch, an externally run online platform, enables the application of specific control measures for each site, including the development and maintenance of chemicals registers, Safety Data Sheets, chemical composition awareness to aid decision making, signage and employee training in the safe handling and use of chemicals. Appropriate governance documents and processes are in place to support operations including our WHSE Policy, Environmental Aspects/Impacts Register, WHSE Risk Management Procedure, and site and business- based risk profile registers. and Elimination While chemical use and management is primarily guided by vehicle manufacturer requirements and those of the third-party products we on-sell, programs have been introduced to help mitigate the environmental and safety implications of certain hazardous chemicals used within our operations. We work with key chemical supply partners to eliminate the use of harmful chemicals in products (such as detailing products) and source safer alternatives for use by our employees and contractors. Annual reviews of our spray-painting activities are completed to mitigate safety and environmental risks. Going forward, all new spray-painting plant and operations will use water-based paints to further reduce the need for harmful solvents. Our underground petroleum storage systems (UPSSs) management program continued in 2023, aimed at mitigating the safety and environmental risks associated with UPSSs if they were to deteriorate over time. To date a total of 68 UPSSs have fallen within the program, 46 of which have been decommissioned, handed back (if within a leased site) or divested (if subject to a property sale), 9 of these during the 2023 reporting period. 24 25 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 4 Planet (continued) Climate Change and the environment (ii) Waste Management Improving waste management practices continues to be an area of focus across the Group, with initiatives introduced, under investigation or planned to address specific site and operational impacts and requirements under a reduce, reuse and recycle approach. Reduce, reuse and recycle During 2023, the Group continued to leverage technology to not only improve customer and employee experience but also to reduce paper usage, increase information security, and reduce physical storage expenses. This was enabled through the roll out of electronic contracts and the implementation of a new document management system. This year, Precision Automotive Technology (PAT), the Group’s wholly-owned provider of premium aftermarket car care products, worked closely with its supplier to develop and pilot a bottle recycling program. If the pilot is successful, the intention is that the recycling initiative will be more broadly rolled out across the Group’s other regions. At our parts distribution centres and service centres, packaging initiatives have focused on reducing the use of single-use plastic, substituting plastic products with paper equivalents (i.e. plastic bags and tape) and reusing cardboard boxes for repackaging goods where appropriate (dependant on size, shape and weight considerations). Other recycling initiatives deployed throughout our sites include the recycling of: Plastics (such as pallet wrapping, bumpers and mouldings) Paper, cardboard and timber pallets Metal (predominantly manufacturer’s transport frames, damaged panels, and doors) E-waste (redundant IT equipment) Lead acid batteries and tyres. 26 Planet b) Climate Change As a group of companies operating across Australia and New Zealand, we recognise the social and environmental impacts of climate change and our responsibility in minimising our environmental footprint to mitigate these impacts. In this section we provide an overview of the Group’s climate change governance arrangements, as well as greenhouse gas (GHG) emissions for the reporting period, and current mitigation activities to reduce the impact of our operations on the environment. (i) Climate Change Governance We have integrated climate change governance into our existing governance processes and sought to embed responsibility for the risks associated with climate change throughout our business. Climate and sustainability related issues are considered by the Board as relevant, for example, when reviewing and guiding strategy and setting performance objectives. This reporting period the Audit and Risk Committee Charter and Remuneration and Nomination Committee Charter were revised to specifically address each Committee’s role in considering sustainability related matters when undertaking its responsibilities. To further the Group’s sustainability strategy, a Sustainability Steering Committee was established with cross-functional representation. The Committee is tasked with assisting management to drive a sustainability culture throughout the Group by planning and prioritising sustainability initiatives, maintaining oversight of the performance of these initiatives, and providing updates to the Executive Leadership Team on the Group’s progress. (ii) Climate Change Risks and Opportunities As a retailer of new and used vehicles, regulatory demands and consumer expectations are a driving force behind our original equipment manufacturers (OEMs) transitioning to low emission vehicles and this, as well as the physical impacts of extreme weather events, will continue to impact our business, presenting both risks and opportunities. Overall, we are well placed to respond to climate related risks due to: • Our diversified vehicle brand approach which places us in a strong competitive position to adapt to shifting consumer preferences • Our diversified business model which enables us to balance risks and leverage new opportunities, and • Our broad geographic base which enables us to maintain operations in the face of isolated extreme weather events. Together these factors increase business resilience and maintain financial stability. EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 27 27 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 4 Planet (continued) Climate Change and the environment (iii) Greenhouse Gas (GHG) Emissions Although our businesses, as retailers, generate a relatively modest level of GHG emissions, we are committed to playing our part in the broader emission reduction response and supporting our OEM partners in their emissions reductions journey. B. Leading the new energy vehicle transition and supporting our OEM Partners The evolution from largely internal combustion engines (ICE) to low emission technologies is a significant change to the automotive industry. This year the Eagers Automotive Group continued to lead the new energy vehicle (NEV) transition by: Supporting the NEV visions of existing OEM partners, including through NEV promotion, education and awareness Positioning the Company to become the preferred retail partner for new NEV market entrants Diversifying into the electric truck segment Investing in infrastructure across its network to support NEV adoption. Annual electricity generation capacity from solar 5.5Gwh A. Scope 1 and Scope 2 emissions and reduction initiatives An annual review of the emissions and energy consumption of the Group’s Australian operations is undertaken as part of our compliance with Australia’s national greenhouse and energy reporting requirements (NGERS). Our main sources of Scope 1 emissions are emissions from transport fuel (i.e. Diesel, petrol and liquefied petroleum gas (LPG)). Our NGERS reporting for the 2022-2023 reporting period shows an increase in Scope 1 emissions of 9%, likely attributable to a number of business acquisitions, including the acquisition of portfolios of dealerships in the ACT and South Australia in 2022. Our main source of Scope 2 emissions derives from purchased electricity. While our NGERS reporting for the 2022-2023 showed an increase in electricity usage across the Group, up approximately 13% from the 2020-2021 reporting period (and likely attributable to the aforementioned business acquisitions), actual Scope 2 emissions reduced by approximately 5% due to an increase in renewable energy mix. Our total Scope 1 (direct) and Scope 2 (indirect) emissions for the NGERS reporting year 2022 – 2023, in comparison to the previous years were: T CO2-e Scope 1 Scope 2 TOTAL 2022-23 2021-22 2020-21 31,670 29,067 33,009 24,762 26,104 29,561 56,432 55,171 62,570 The Group continues to focus on energy efficiency and renewable initiatives as well as site consolidations, which serves to minimise energy consumption and emission increases, despite business growth. Our emissions data collection and reporting processes are maturing, and we are currently investigating the most appropriate metrics by which to report our emissions trends that also considers our company’s growth strategy. We have continued to roll out our solar replacement and installation program with an additional 6 solar photovoltaic (PV) systems installed in 2023, each providing 100Kw of electricity. This amounts to an additional 600 kW of Solar PV capacity installed throughout 2023, which combined with existing systems of 2.75 mW, can generate approximately 5.5 Gwh of electricity annually. The Group continued to pro-actively manage the commercial installation of energy efficient lighting (i.e. LEDs) and more efficient and environmentally friendly air conditioning systems. The rollout of light sensor and timer devices also continued, which together support localised reduction strategies in energy consumption, as well as cost management in the face of increasing electricity pricing over the past few years. 28 Planet C. OEM partner targets Our OEM partners have set targets aimed at reducing CO2 emissions across their operations and value chains, and relevantly, through the increase in NEV offerings. The table below provides a summary of the targets set by 12 of the top 15 OEM brands sold in Australia and represented by the Group, which accounted for 69.3% of all new vehicle sales in Australia in 2023. OEM TARGET TARGET YEAR OEM TARGET 1 • Achieve carbon neutrality for GHG emissions throughout the lifecycle 2050 • Global battery electric vehicle sales target of 3.5 million each year • Reduce average GHG emissions by more than 50% from new vehicles compared to 2019 levels 2030 2035 2 • Endeavour for carbon neutrality throughout the entire supply chain 2050 • 25-40% of new vehicles to be electric, depending on each region’s electrification policies or more stringent regulations 3 • All vehicles, production facilities and suppliers to be carbon neutral 2030 2050 • Europe to be carbon neutral including zero emissions for all vehicle sales 2035 • 50% of global sales to be electric with 100% of car sales in Europe to be electric 2030 4 • All vehicles, production facilities and suppliers to be carbon neutral • Global sales of 1.6 million electric vehicles representing an average 52% market share in key markets • Achieve 100% renewable energy overseas and in Korea by 2040 5 • Achieve carbon neutrality and 100% renewable energy. Expand application of hydrogen technologies and encourage supply chain to achieve carbon neutrality 2045 2030 2030 2045 6 • Achieve carbon neutrality including for the entire supply chain 2050 • Electric vehicles to be 100% of all vehicles sales • CO2 emissions from new vehicles to be 50% below 2018 levels 2035 2030 7 • Targeting carbon neutrality and reduce the average well to wheel CO2 emissions from new vehicles by at least 90%, compared with 2010 • Apply electrification technologies to all vehicles produced and sold • Increase the ratio of electric vehicles and hybrid cars to at least 40% of the gross number of vehicles sold globally TARGET YEAR 2050 2035 2030 8 • Zero GHG emissions from operations and across product life cycles 2050 • Reduce CO2 emissions by 50% from 2013 levels 9 • To be net carbon neutral • Reduce vehicles’ CO2 emissions in production by 50% and emit 30% less CO2 on average per vehicle over the entire life cycle compared with 2018 2030 2050 2030 • Electric vehicles globally to be 20% of sales 2025 10 • To be carbon neutral across the life cycle of its products 2050 • Introduce 27 new electrified models, including 19 new electric vehicles with the aim that every all-new vehicle will be electrified in key markets resulting in an electrification mix of 50%+ globally across the two brands 11 • Total climate neutrality • Reduce CO2 emissions per vehicle and kilometre driven by 40% on 2019 levels across its entire value chain. A 50% reduction in CO2 emissions per vehicle during use and an 80% reduction during production compared to 2019 2030 2050 2030 12 • To be net carbon neutral along the entire value chain in the new vehicle fleet including utilising 100% renewable energy 2039 • Reduction of CO2 emissions per vehicle in the new vehicle fleet by at least 50% along all stages of the value chain. Ready to go all-electric wherever market conditions allow 2030 29 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 5 Performance Sustainable growth Performance a) Risk Management Robust risk management processes and practices integrated into our work culture are important for the resilience and long-term sustainability of our business. Our risk management framework provides the tools to identify and report on key business risks, including sustainability related risks. When identifying risks, changes in external and internal context and indicators of emerging risks are considered. The risk analysis examines consequences and likelihood to determine a risk rating that supports the priority of actions for managing risks. The risk matrix provides parameters for risk analysis to ensure a consistent approach. Following assessment, risk management plans and controls for individual risks are developed and implemented by management. Risks are assessed on a bi-annual basis. The below diagram sets out the roles and responsibilities of key risk functions within the Group. Board of Directors Audit & Risk Committee Ultimate oversight of the Group’s risk management framework - Setting risk appetite and ensuring sound risk management and control environment is in place. Delegates detailed work to assist with board risk management objectives, reporting and making recommendations regarding adequacy and effectiveness of risk management framework. Chief Executive Officer Chief Financial Officer Establishment, implementation and maintenance of the Group’s risk management framework. Internal Risk & Audit Develops and conducts audits as set out in the Annual Audit Plan, and encourages a culture that seeks continual improvement in the management of risk. Management Operations Operationalising risk management, embedding risk management processes in daily practices. b) Privacy and Information Security In response to the increasing cyber security risk landscape, a dedicated Chief Information Security Officer was appointed in 2023 to assist the Chief Information Officer oversee the Group’s cyber security and response framework. Strategies deployed by the Group to help protect, detect, monitor, assess and strengthen resilience to cyber threats and privacy breaches include: • continuous monitoring of the network • vulnerability assessments • technical and system tools and protections • employee privacy and cyber security education and training • IT, cyber security, information management and privacy related policies, guidelines and incident response documents. Eagers Automotive became aware of a cyber incident in late December 2023. This was announced to the market in late December 2023, and reported to relevant privacy regulators in early January 2024. Accordingly, any further information on the cyber incident will be included in the Group’s Sustainability Report for the 2024 calendar year. c) Ethics and Integrity Our commitment to a culture of honesty, accountability and ethical behaviour is reflected in our adoption of ‘Integrity’ as one of our four corporate values. Ethical behaviours are promoted through a suite of Group- wide policies and procedures, including Anti-Bribery and Corruption Policy, Code of Conduct, Diversity Policy and Whistleblower Policy, many of which were reviewed and updated during the year, and our newly developed Employee Manual and Appropriate Workplace Behaviours Policy. We encourage and support our employees, customers and stakeholders to speak up about unethical behaviour and our integrity reporting framework provides a safe avenue through which concerns (including eligible whistleblower disclosures) can be raised. Anyone can confidentially and anonymously raise a concern via YourCall, an external and independently operated complaints avenue. Employees can also choose to report issues directly to their managers or other senior personnel in accordance with our Complaints Management Policy, which was also reviewed and revised this year. 30 Appendix 6 Disclaimer and Disclosures This report contains forward-looking statements in relation to Eagers Automotive Limited and its controlled entities (collectively the Eagers Automotive Group or Group), including statements setting out the Group’s intent, goals, objectives, initiatives, commitments and current expectations in relation to the Group’s business and operations, external conditions and risk management practices. This report also includes forward-looking statements regarding climate change and other environmental and social considerations. While these statements are based on the Group’s good faith assumptions as to the risks and opportunities likely to affect the Group’s business and operations in the future, the Group does not give any assurance that any assumptions will eventuate or prove correct or accurate, as there are many intervening factors which are outside the control of the Group. As such, no undue reliance should be placed on these statements. The Eagers Automotive Group also advises that due to its decentralised business structure and maturing approach to sustainability reporting, data and information gathered and reported may be incomplete or inaccurate, despite the Group’s best efforts. The continued development, implementation and improvement of appropriate data gathering tools and systems is a key focus for the Group going forward. Topic Accounting Metric Page Energy Management in Retail & Distribution Total energy consumed Data Security Description of approach to identifying and addressing data security risks (1) Number of data breaches, (2) percentage involving personally identifiable information (PII), (3) number of customers affected Labour Practices (1) Average hourly wage and (2) percentage of in-store employees earning minimum wage, by region (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 Workplace Diversity & Inclusion Percentage of gender representations for (1) management and (2) all other employees Total amount of monetary losses as a result of legal proceedings associated with employment discrimination Product Sourcing, Packaging & Marketing Discussion of processes to assess and manage risks and/or hazards associated with chemicals in products Discussion of strategies to reduce the environmental impact of packaging 28 30 30 19 20 20 18 18 25 26 31 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT Board of Directors Timothy Boyd Crommelin BCom, FSIA, FSLE Chairman of Board Independent Director Member of Remuneration & Nomination Committee Non-executive Director since February 2011. Chairman since May 2013. Director of Morgans Holdings (Australia) Limited since 1991, having served as their Chairman from 2010 to 2023. Director of University of Queensland Endowment Foundation (UQEF). Trustee of Australian Cancer Research Foundation. Former Director of Senex Energy Ltd (2010 to April 2022). Former Deputy Chairman of Queensland Gas Company Ltd (2006 to 2009). Broad knowledge of corporate finance, risk management and acquisitions and over 40 years’ experience in the stockbroking and property industry. Nicholas George Politis AM, BCom Director Non-executive Director since May 2000. Motor vehicle dealer. Executive Chairman of WFM Motors Pty Ltd, Eagers Automotive Limited’s largest shareholder. Vast automotive retail industry experience and Director of a substantial number of proprietary limited companies. Daniel Thomas Ryan BEc, MBus, FAICD Director Member of Remuneration & Nomination Committee Non-executive Director since January 2010. Director and Chief Executive Officer of WFM Motors Pty Ltd, Eagers Automotive Limited’s largest shareholder. Director of a substantial number of proprietary limited companies. Significant management experience in automotive, transport, manufacturing and retail industries. 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 an executive 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. 32 Gregory James Duncan OAM, BEc, FCA Independent Director Chairman of Remuneration & Nomination Committee Member of Audit & Risk Committee Non-executive Director since December 2019. 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). Mr Duncan was also Chairman of Cox Automotive Australia Board of Management (2016 to March 2021). David Scott Blackhall BCom, MBA, FAICD Independent Director Chairman of Audit & Risk Committee 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. 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). Katrina Susan McNamara BPharm (hons), MBA, GAICD Independent Director Non-Executive Director since 21 March 2024. More than 25 years’ experience in strategy, marketing and technology, including at Super Retail Group, as Chief Strategy & Customer Officer, at IBM, leading the digital strategy and iX (Digital customer practice) business unit across the Asia Pacific region, at Foster’s and Treasury Wine Estates, as Director of Strategy and Mergers & Acquisitions, and at McKinsey and Company. Director of Motorcycle Holdings Limited (ASX:MTO) since 2022. Managing Director of Mighty Craft Limited (ASX:MCL), having been appointed in late 2023 on a part-time basis to lead their Board’s strategic review. Executive Management Keith Thomas Thornton, BEc Chief Executive Officer 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). Edward Geschke BA, MBA Chief Operating Officer, Automotive Responsible for the Company’s Franchised Automotive and Independent Used operations across Australia and New Zealand. Since commencing in the automotive industry as a trainee sales consultant with the Company in 2004, Edward has risen to hold many operational management positions with the Company across Australia. Most recently, he was Executive General Manager of the Company’s operations in Western Australia from 2019 to 2022, leading integration of AHG’s largest State operation into the merged Eagers Automotive. Edward is also a graduate of the Harvard Business School’s General Management Program Denis Gerard Stark LLB, BEc Company Secretary Commenced with the Company in January 2008. Responsible for company secretarial and governance support to the Board of Directors and the CEO, and governance advice to the executive leadership team, with prior group accountabilities for legal, property, insurance and investor relations functions. Significant previous senior executive, company secretarial and legal experience with public companies and in private legal practice, having been admitted as a solicitor in Queensland in 1994 and Victoria in 1997. 33 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 3434 DIRECTORS’ REPORT EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 3535 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL 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 2023 and the auditor’s report thereon. Directors The Directors of the Company at any time during or since the end of the year, and their qualifications, experience and special responsibilities, are detailed on page 32. Company Secretary The Company Secretary and his qualifications and experience are detailed on page 33. Directors’ Meetings The number of Board meetings (including meetings of Board committees) held during the year under review and the number of meetings attended by each Director were: T B Crommelin2 N G Politis3 D T Ryan2, 3 M J Birrell1 S A Moore G J Duncan1, 2 D S Blackhall1 M V Prater Board Meetings Audit & Risk Committee Meetings Remuneration & Nomination Committee Meetings Attended Held Attended Held Attended Held 10 6 8 9 10 10 10 10 10 10 10 10 10 10 10 10 5 5 5 5 5 5 5 5 5 5 5 5 1. Audit & Risk Committee members 2. Remuneration & Nomination Committee members 3. Mr Politis and Mr Ryan did not attend meetings which considered proposals for the Company to acquire businesses associated with them 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. 36 Directors’ Report 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 12 months ended 31 December 2023 (FY23). The Company delivered record Underlying Operating Profit Before Tax1 of $433.3 million, compared to $405.2 million in the prior corresponding period (pcp). Financial Summary Statutory Results Revenue EBITDAI2, 3 Statutory Profit Before Tax Statutory Profit After Tax Total Ordinary Dividend per Share (cents) Underlying Operating Results1 Underlying Revenue1 Underlying EBITDAI2, 3 Underlying Profit Before Tax1 Underlying Profit After Tax1 Dividend Full Year to December 2023 $ Million Full Year to December 2022 $ Million 9,851.7 688.5 427.3 299.1 74.0 9,851.7 546.0 433.3 303.3 8,541.5 652.4 442.2 324.3 71.0 8,541.5 471.1 405.2 283.1 The Board has approved a record ordinary final dividend of 50.0 cps fully franked for FY23, up 2.0% on FY22 (49.0 cps). The ordinary dividend has been approved for payment on 28 March 2024 to shareholders who are registered on 15 March 2024 (Record Date). When combined with the ordinary interim dividend paid in September 2023, the total ordinary dividend based on FY23 earnings is a record 74.0 cps (FY22 ordinary dividend: 71.0 cps) fully franked. The record payout reflects the Company’s strong financial performance which has been underpinned by a relentless focus on execution of the Next100 strategy, driving business transformation, and the continued confidence of the Board and management team in the outlook for both the Company and the broader industry. Eagers Automotive is in an extremely strong financial position, well placed to navigate the impacts of any cyclical market or macro-economic headwinds. The Company’s dividend reinvestment plan (DRP) will not operate in relation to the ordinary dividend. Dividends paid to members during the year under review were as follows: Year ended 31 December Final dividend for the year ended 31 December 2022 of 49.0 cents per share (2021: 42.5 cents) paid on 31 March 2023. Interim ordinary dividend for 2023 of 24.0 cents (2022: 22.0 cents) per share paid on 22 September 2023 2023 $’000 125,145 61,656 2022 $’000 109,197 56,487 186,801 165,684 1. Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 34 (FY23) and 35 (comparative financial information) of the Investor Presentation. Underlying operating figures are non-financial measures and have not been subject to review by the Company’s external auditors. 2. EBITDAI means earnings before interest, tax, depreciation, amortisation and impairment. 3. Interest Income associated with the impact of AASB16 Leases has been deducted in the comparative EBITDAI calculation, aligning with current year presentation. 37 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) Financial & Operational Review (continued) Financial Performance The Company achieved a Statutory Net Profit Before Tax of $427.3 million for FY23, compared to $442.2 million in the pcp. The FY23 statutory profit before tax included significant items of $(6.0) million, primarily related to the impact of AASB16 on the business. Statutory Net Profit After Tax for FY23 was $299.1 million, compared to $324.3 million in FY22. Statutory and Underlying1 revenue increased by 15.3% to $9,851.7 million, driven by a full year contribution from the business acquisitions in the Australian Capital Territory (ACT) and South Australia, combined with a normalisation of new vehicle supply. On a like-for-like basis, Statutory and Underlying1 revenue increased by 4.7% to $8,401.3 million. Underlying1 Operating NPBT2/Sales ratio decreased to 4.4% in FY23 (FY22: 4.7%). The decline was driven by recent acquisitions which are being optimised as part of their integration into the business, partially offset by continued favourable margin dynamics and the benefit from ongoing productivity and cost-out programs. Segment performance The Car Retailing segment delivered a record Underlying1 Operating Profit Before Tax of $419.1 million, compared to $397.4 million in FY22. The increase in profit was achieved despite ongoing inflationary pressures, reflecting strong margins, the successful integration of recent business acquisitions and the organic and greenfield growth delivered through strategic partnerships. The Car Retailing segment recorded a Statutory Profit Before Tax of $434.2 million compared to a profit of $432.3 million in FY22. The result benefited from the gain on sale of businesses of $7.7 million, predominately relating to the strategic divestment of Castle Hill Autos group (with statutory items totalling $29.2 million recognised in the prior year, primarily relating to the strategic divestment of Bill Buckle Auto Group). The Company continued to focus on the growth of its national, independent pre-owned business, headlined by easyauto123 and supported by its national auction business Carlins. The independent pre-owned business delivered a record result in 2023 through disciplined scaling of the business and leveraging the unique business economics. Car Retailing Statutory and Underlying1 revenue increased by 15.3% to $9,851.3 million (2022: $8,540.6 million). The value of the property portfolio marginally decreased to $597.9 million at 31 December 2023, compared with $607.6 million at 31 December 2022 (including assets held for sale). The Property segment recorded an Underlying1 Operating Profit Before Tax of $16.4 million (excluding impairment and gains on sale), compared to $13.5 million in 2022. This increase in underlying1 profit was driven by income associated with recent property purchases, offset by the interest costs associated with debt drawn. The Property segment recorded a Statutory Profit Before Tax of $12.8 million for 2023 compared to $30.5 million in the pcp. The movement was driven primarily by the significant gains on sale of property associated with Bill Buckle Auto Group and a non-core parcel of land in Queensland in the pcp. Financial Position Eagers Automotive is in a very strong financial position holding a substantial property portfolio and asset base, together with $620.3 million of available liquidity at 31 December 2023. This liquidity position includes available cash and undrawn commitments under corporate debt facilities. Corporate debt (Term and Capital loan facilities) net of cash on hand marginally increased to $262.7 million as at 31 December 2023, up from $253.4 million at 31 December 2022, and the Company’s leverage metrics remain in a strong position, with the gearing ratio at 0.48 times as at 31 December 2023 (FY22: 0.54 times). Total inventory levels increased to $1,620.0 million as at 31 December 2023, up from $1,059.3 million at 31 December 2022, driven by normalisation in supply in 2023 and the ongoing growth in the greenfield BYD retail joint ventures. Eagers Automotive continues to maintain significant equity ownership in used vehicle inventory. The Company continues to focus on cash management, retaining a strong cash position of $222.2 million as at 31 December 2023. Strong operating cash flows of $416.3 million, supplemented by proceeds from the sale of Castle Hill Autos and associated property, enabled the acquisition of strategic property and businesses, the continued investment in the delivery of new automotive retail formats and payment of dividends. Outlook In 2023 we delivered significant revenue growth, ending the year with a record $9.9 billion in turnover, up $1.3 billion or 15.3%. This growth was balanced across organic growth, establishing new greenfield businesses and integrating scale acquisitions completed in 2022. All three categories benefitted from normalised new vehicle supply which resulted in a record new vehicle market in 2023. Throughout the year we have laid the foundation for approximately $1.0 billion in revenue growth for 2024, with this growth to be delivered through further strategic acquisitions and the expected organic growth resulting from the maturing greenfield partnerships and businesses established in 2022 and 2023. Our key Net Profit before Tax margin as a percentage of turnover (referred to as our Return on Sales %) remained strong and materially above pre-pandemic levels, at 4.8% on a like for like basis and 4.4% on a reported basis, reflecting the opportunity for further upside in the financial performance of recent acquisitions and greenfield operations. 1. Underlying operating results refers to continuing operations, adjusted for significant items outlined and reconciled to statutory results on slides 34 (FY23) and 35 (comparative financial information) of the Investor Presentation. Underlying operating figures are non-financial measures and have not been subject to review by the Company’s external auditors. 2. NPBT means Net Profit Before Tax. 38 Directors’ Report (continued) Financial & Operational Review (continued) Outlook (continued) Significant Changes in the State of Affairs In the Directors’ opinion there was no significant change in the state of affairs of the Group during the financial year that is not disclosed in this report or the consolidated financial report. Matters Subsequent to the End of the Financial Year The Directors are not aware of any matter or circumstance not dealt with in this report or the consolidated financial report (refer to Note 31) 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. Looking forward we expect to see the following dynamics drive our results: - Consistent new car market performance with demand for new cars underpinned by the post pandemic reversion to normal new car deliveries (skewed toward business buyers), aided by ongoing incentives for lower emission vehicles and our material order bank. - Record 2023 new vehicle deliveries and the normalisation of vehicle supply will benefit the pre- owned vehicle business, finance and insurance performance, and service and parts, demonstrating the resilience of the automotive retail model. - The Company continuing to use our scale and technology enabled operating platform to perform at industry leading productivity levels, with a material operating model advantage to the industry. - We are uniquely positioned with scale, brand portfolio and geographic advantages that are complementary to our market leading National Independent Pre-Owned Business, strategic fleet partners and the market leading positioning on EV and low emission vehicles. We continue to execute on our Next 100 Strategy to improve our operating model in a manner to deliver better customer outcomes on a materially lower and more sustainable cost base. This focus on productivity, which has accelerated over the last three years, should not be underestimated as it will underwrite our ability to outperform through whatever cycles eventuate. We will continue to explore strategic growth across the Australia and New Zealand market, in adjacent markets that support our core business and ensure we are best placed to deliver on a generational change to a lower emission car and truck future. We continue to closely monitor the external macroeconomic environment and will continue to operate the business in a disciplined manner. The strength of our balance sheet, evidenced by our liquidity position, low gearing and high value property portfolio, provides the Company with the capacity and flexibility to pursue accretive growth opportunities while insulating the business in the event of any material headwinds. 39 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) Risk Management Eagers Automotive recognises the importance of maintaining an effective risk management framework as part of good corporate governance. We are committed to high standards of risk management in the way we operate our business and actively identify and manage risks that may impact our ability to sustain future performance and deliver on long-term strategic objectives. Identified key risks1, and the actions Eagers is taking to mitigate them, are outlined below in alphabetical order. Risk description Challenging macro-economic conditions Eagers Automotive has operations across Australia and in New Zealand. Changes in the state of these economies, including rising unemployment, inflation, and rising interest rates, can put pressure on consumer spending, which may impact our business. Cyber security and business resilience Eagers Automotive uses information technology systems to conduct business activities. Although risk mitigation measures are in place, it is possible these might not prevent or detect unauthorized access to systems and data, which may impact our business. Geopolitical events In a connected, global industry, all businesses including Eagers Automotive can be prone to the impacts of external geo-political events around the globe, which could impact our representation of particular brands which may be associated with a particular geographic or political region. Original equipment manufacturers (OEM) Eagers Automotive has the right to sell new vehicles and OEM parts and service pursuant to agreements with the OEMs. The success of our business and our ability to grow relies on retaining relationships with existing OEMs and developing new ones. Changes to OEM distribution models also have the potential to impact our business. Privacy and data management Eagers Automotive collects and uses personal information to conduct business activities. Although risk mitigation measures are in place, it is possible these might not prevent or detect unauthorized access to data, which may impact reputation and stakeholder confidence and lead to regulatory action. Supply chain disruption Eagers Automotive sells new vehicles and parts manufactured overseas. Global supply chains make us susceptible to supply chain interruptions, such as those resulting from key component shortages, severe weather events, transport interruptions and trade and port issues, which may adversely impact our business. Workplace health, safety and environment (WHSE) Automotive industry employees are subject to an inherent risk of workplace incidents, given their proximity to the operation and servicing of motor vehicles and warehouse facilities. Incidents could impact our employees, our business and our reputation and lead to regulatory action. 1. Including environmental and social risks, if any. 40 How we respond Our diversified geographic footprint mitigates the impact of regional differences in economic conditions. We actively monitor external indicators and incorporate consideration of economic conditions and future expectations into our strategic and operational plans. We undertake financial reviews and forecast cash flows and revenues to manage our capital position considering the economic environment. We have a dedicated Information / Cyber Security team, led by our Chief Information Officer and our Chief Information Security Officer, that protects, detects, monitors, assesses and strengthens our resilience to cyber threats. We have a cyber framework that governs information security across the group. We continuously monitor our network and conduct vulnerability assessments. We focus on educating and training our employees to enhance awareness of privacy and cyber security threats. Manual work-arounds may be available if needed to assist Eagers to return to business as usual in the event of an incident We prioritise maintaining effective relationships with our OEM partners. We have actively grown the diversity of our OEM brands and business model. We closely monitor higher risk markets and participate inindustry representation. We prioritise maintaining effective relationships with our OEM partners. We have actively grown the diversity of our OEM brands and business model. We continue to focus on the development of non-franchise businesses such as easyauto123 and Carlins Automotive Auctioneers. Our privacy policy governs how we collect, use, disclose and hold personal information. We have an incident management process designed to promptly address data security incidents. We focus on educating and training our employees to enhance awareness of privacy and cyber security threats. Our diversified brand portfolio and geographic footprint mitigate against disruption to supply chains. We continue to focus on the development of nonfranchise businesses such as easyauto123 and Carlins Automotive Auctioneers. We closely monitor and manage inventory at a regional and national level. We maintain strong relationships with key suppliers. We have a WHSE management framework, including risk identification, safe work procedures, training, awareness, incident reporting and injury management. We have invested in systems to support real time injury reporting and management. We are committed to providing safe facilities for our people. Our safety teams undertake safety inspections and regular reporting to the Board. Directors’ Report (continued) Risk Management (continued) Eagers Automotive has operations across Australia and in New Zealand. Changes in the state of these economies, including rising unemployment, inflation, and rising interest rates, can put pressure on consumer We actively monitor external indicators and incorporate consideration of economic conditions and future expectations into our strategic and operational plans. How we respond Our diversified geographic footprint mitigates the impact of regional differences in economic conditions. We undertake financial reviews and forecast cash flows and revenues to manage our capital position considering the economic environment. We have a dedicated Information / Cyber Security team, led by our Chief Information Officer and our Chief Information Security Officer, that protects, detects, monitors, assesses and strengthens our resilience to cyber threats. We have a cyber framework that governs information security across the group. We continuously monitor our network and conduct vulnerability assessments. We focus on educating and training our employees to enhance awareness of privacy and cyber security threats. Manual work-arounds may be available if needed to assist Eagers to return to business as usual in the event of an incident We prioritise maintaining effective relationships with our OEM partners. We have actively grown the diversity of our OEM brands and business model. We closely monitor higher risk markets and participate inindustry representation. We prioritise maintaining effective relationships with our OEM partners. We have actively grown the diversity of our OEM brands and business model. We continue to focus on the development of non-franchise businesses such as easyauto123 and Carlins Automotive Auctioneers. Risk description Challenging macro-economic conditions spending, which may impact our business. Cyber security and business resilience Eagers Automotive uses information technology systems to conduct business activities. Although risk mitigation measures are in place, it is possible these might not prevent or detect unauthorized access to systems and data, which may impact our business. Geopolitical events In a connected, global industry, all businesses including Eagers Automotive can be prone to the impacts of external geo-political events around the globe, which could impact our representation of particular brands which may be associated with a particular geographic or political region. Original equipment manufacturers (OEM) Eagers Automotive has the right to sell new vehicles and OEM parts and service pursuant to agreements with the OEMs. The success of our business and our ability to grow relies on retaining relationships with existing OEMs and developing new ones. Changes to OEM distribution models also have the potential to impact our business. Privacy and data management Our privacy policy governs how we collect, use, disclose and hold personal information. Eagers Automotive collects and uses personal information to conduct business activities. Although risk We have an incident management process designed to promptly address data security incidents. mitigation measures are in place, it is possible these might not prevent or detect unauthorized access to data, which may impact reputation and stakeholder confidence and lead to regulatory action. Supply chain disruption Eagers Automotive sells new vehicles and parts manufactured overseas. Global supply chains make us susceptible to supply chain interruptions, such as those resulting from key component shortages, severe We focus on educating and training our employees to enhance awareness of privacy and cyber security threats. Our diversified brand portfolio and geographic footprint mitigate against disruption to supply chains. We continue to focus on the development of nonfranchise businesses such as easyauto123 and Carlins Automotive Auctioneers. weather events, transport interruptions and trade and port issues, which may adversely impact our business. We closely monitor and manage inventory at a regional and national level. Workplace health, safety and environment (WHSE) Automotive industry employees are subject to an inherent risk of workplace incidents, given their proximity to the operation and servicing of motor vehicles and warehouse facilities. Incidents could impact our employees, our business and our reputation and lead to regulatory action. 1. Including environmental and social risks, if any. We maintain strong relationships with key suppliers. We have a WHSE management framework, including risk identification, safe work procedures, training, awareness, incident reporting and injury management. We have invested in systems to support real time injury reporting and management. We are committed to providing safe facilities for our people. Our safety teams undertake safety inspections and regular reporting to the Board. 41 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) Directors’ Report (continued) REMUNERATION REPORT Contents 1. Introduction and Key Management Personnel 2. Remuneration Strategy and Principles 3. Remuneration Governance 4. FY23 Business Performance 5. No Changes to Remuneration Framework 6. Executive Remuneration Framework 7. Overview of Performance Hurdles 8. Remuneration Outcomes for FY23 9. Peer Comparator Group 10. Executive Contractual Arrangements 11. Non-executive Director Remuneration 12. Statutory Disclosures 43 44 45 45 45 46 48 48 51 52 52 53 42 42 Directors’ Report (continued) Introduction and Key Management Personnel (KMP) 1. This report outlines the remuneration arrangements for the Company’s KMP, which include Directors and executives who have authority and responsibility for planning, directing and controlling the activities of the Group. The information provided in this report has been prepared in accordance with the requirements under the Corporations Act 2001 and 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 FY23 were: Name Position Term as KMP in FY23 Non-executive Directors (NEDs) Tim Crommelin Nick Politis Daniel Ryan Marcus Birrell Greg Duncan David Blackhall Michelle Prater Executive Directors Chair Director Director Director Director Director Director Full year Full year Full year Full year Full year Full year Full year Sophie Moore (CFO) Director, Chief Financial Officer Full year Other Executive KMP Keith Thornton (CEO) Chief Executive Officer Full year Edward Geschke (COO) Chief Operating Office – Automotive Full year Denis Stark (CS) Company Secretary Full year There have been no changes to KMP since the reporting date. 43 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) Directors’ Report (continued) 2. Remuneration Strategy and Principles The Company’s remuneration strategy and principles, which guide our remuneration framework, are outlined below. Linked to the achievement of long-term financial and non-financial objectives Linked to long-term value creation for shareholders 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 if and 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. 44 44 FlexibilitySimplicityDrive equityownershipAligned to the Next100 StrategyDirectors’ Report (continued) 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 Remuneration & Nomination Committee, sets and reviews the remuneration arrangements of other executive KMP 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. No such external advisors were engaged during FY23. As reported in previous years, KPMG was engaged in FY20 and early FY21 to assist with a remuneration review, which led to improvements to our remuneration structures in FY21 which continue today. KPMG’s engagement did not involve providing any remuneration recommendations as defined by the Corporations Act 2001. 4. FY23 Business Performance During FY23, despite a challenging external environment, the Company achieved strong growth in respect of key financial and non-financial metrics, which has been reflected in record financial results for the year. In considering the Company’s performance, benefit to shareholders and appropriate remuneration for executives, the Board has regard to various financial and non-financial metrics, including those shown in the table below, which detail the Company’s performance for the five-year period ended 31 December 2023. Statutory net profit after tax (NPAT) ($ million) Statutory earnings per share (EPS) – basic (cents) Dividend per share (cents) Share price at year end ($) 2023 299.1 110.7 74.0 14.48 2022 324.3 121.3 71.0 10.85 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 5. No Changes to Remuneration Framework There have been no material changes to the remuneration framework since our previous remuneration report was approved by shareholders in May 2023. Our remuneration framework was updated in FY21 to include significant improvements following a comprehensive review by the Board. As part of the review, the Board engaged with shareholders, proxy advisors and other stakeholders to understand their concerns. Independent external advice was also obtained to assist with the review, as previously reported. 45 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) 6. Executive Remuneration Framework Total Fixed Remuneration (TFR) Short-Term Incentives (STI) Long-Term Incentives(LTI) There have been no changes to the TFR structure that was introduced in FY21, summarised as follows: - 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, insurance and health and fitness programs. There have been no changes to the STI plan that was introduced in FY21, summarised follows: There have been no changes to the LTI plan that was introduced in FY21, summarised as follows: - The focus of the STI plan is on creation of shareholder value by rewarding the achievement of both financial and non-financial performance hurdles. - The focus of the LTI plan is on creation of shareholder value by rewarding achievement of financial performance hurdles. - Clear STI performance hurdles aligned with - The hurdles are measured over a four-year performance shareholder interests. period (FY21 to FY24). - Performance is measured annually. - Delivered in a mix of cash and performance rights - Clear LTI performance hurdles assessed wholly against financial measures aligned with shareholder interests. (not options). - Performance is measured only at the end of the four-year - Performance rights for a four-year period (FY21 to FY24) were allocated on the initial grant date in February FY21, with the number of rights determined using ‘fair value’ methodology. - Two financial hurdles must be achieved for any rights to vest. - Graded vesting. - If rights vest, they convert to ordinary shares subject to holding lock until February 2025 or cessation of employment. - If employment ceases, there is no award for the year in which employment ceases unless the Board determines otherwise. - There is no re-testing. - Change-in-control - in line with market practice, the Board has discretion to determine an appropriate treatment for unexercised awards in the event of a change-in-control event. period. - Delivered in share options (not cash or performance rights). - Options have an exercise price of $12.32 per option, being the share price on the initial grant date in February 2021. - Options for the four-year period were allocated on the initial grant date, with the number of options determined using ‘fair value’ methodology. - Two financial hurdles must be achieved for any options to vest: 1. Interest cover ratio of at least 2.5 times; and 2. Compound annual growth in underlying EPS above FY20 baseline of 52.0 cents per share (Baseline): • 50% of options will vest at 9.0% EPS growth over the four-year period. • 100% of options will vest at 10% EPS growth over the four-year period. - Graded vesting. - Clawback and malus – equity awards may lapse or be forfeited, at the discretion of the Board, in certain circumstances including fraudulent behaviour, serious misconduct or where the awards vested as a result of a material misstatement in the financial statements. - If options vest and are exercised, they will convert to ordinary shares at the end of the four-year period. - If employment ceases, all unvested options will lapse, unless the Board determines otherwise. - There is no re-testing. - Change-in-control - in line with market practice, the Board has discretion to determine an appropriate treatment for unexercised awards in the event of a change-in-control event. - Clawback and malus – equity awards may lapse or be forfeited, at the discretion of the Board, in certain circumstances, including fraudulent behaviour, serious misconduct or where the awards vested as a result of a material misstatement in the financial statements - Maximum award - 50% of base pay per annum over the four-year period, subject to achievement of the two financial hurdles referred to above. CEO - Non-financial hurdles - up to one-third of base pay, by cash payment, subject to strategic and sustainability hurdles (split evenly between strategic and sustainability). - 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): 1. Interest cover ratio of at least 2.5 times; and 2. Compound annual growth in underlying EPS above FY20 baseline of 52.0 cents per share (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. 46 Directors’ Report (continued) 6. Executive Remuneration Framework (continued) Long-Term Incentives(LTI) - Maximum award - 17% of base pay per annum over the four-year period, subject to the achievement of the two financial hurdles referred to above. - Maximum award - 50% of base pay per annum over the four-year period, subject to the achievement of the two financial hurdles referred to above. - Maximum award 10% of base pay per annum over the four-year period, subject to the achievement of the two financial hurdles referred to above. Total Fixed Remuneration (TFR) Short-Term Incentives (STI) CFO - Performance rights - up to one-third of base pay, subject to two financial hurdles (both of which must be achieved): 1. Interest cover ratio of at least 2.5 times; and 2. Compound annual growth in underlying EPS above the Baseline: • At 7.5% EPS growth, 50% of rights will vest. • At 8.0% EPS growth, 100% of rights will vest. - Up to 42% of base pay, by cash payment, subject to: • Non-financial hurdles - 60% of payment subject to strategic and sustainability hurdles (split evenly between strategic and sustainability). • Financial hurdles – 40% of payment subject to financial hurdle of 7% compound annual growth in underlying EPS above the Baseline. COO - No performance rights. - Up to $200,000, by cash payment, subject to business units achieving specified non-financial hurdles (split between strategic and sustainability hurdles). - The COO does not participate in the STI plan. He was appointed to the role after that plan had commenced. He is however entitled to a commission plan. - The commission plan applies only to the COO. - The commission plan is subject to a cap. - The commission plan consists of a cash payment equal to a percentage of net profit before tax of relevant business units. It therefore has a direct link to the Company’s financial performance. - Commission plans are 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. CS - Performance rights of up to 20% of base pay, subject to two financial hurdles (both of which must be achieved): 1. Interest cover ratio of at least 2.5 times; and 2. Compound annual growth in underlying EPS above the Baseline: • At 7.5% EPS growth, 50% of rights will vest. • At 8.0% EPS growth, 100% of rights will vest. - Up to 29% of base pay, by cash payment, subject to: • Non-financial hurdles - 80% of payment subject to strategic and sustainability hurdles (split evenly between strategic and sustainability). • Financial hurdles – 20% of payment subject to financial hurdle of 7% compound annual growth in underlying EPS above the Baseline. 47 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) 7. Overview of Performance Hurdles In FY23, Eagers continued to focus on the delivery of sustainable operational excellence while delivering against the Company’s Next100 Strategy. Executive remuneration plans aligned the following Financial, Sustainability and Strategic performance hurdles: - Financial hurdles are quantitative measures that are aligned across the senior executive team to ensure common objectives are communicated and shared while also incorporating an element of STI performance, payable only when the Company performs financially. - Sustainability hurdles are qualitative measures centred on each executive playing a productive role in developing sustainable business practices across operational, safety, risk, culture, governance and other ESG measures. - Strategic hurdles are a blend of quantitative and qualitative, measuring progress against our Next100 Strategy initiatives and also specific strategic projects initiated by the Company from time to time. This blend of financial, sustainability and strategic hurdles focuses the senior executive team on immediate performance (as measured over the financial year) balanced against appropriate initiatives to protect and grow the Company over the medium and longer term, thereby aligning executive and shareholder interests. Where appropriate, executives have a combination of group hurdles that must be achieved as well as individual hurdles applicable to their role and the function they lead across the Company. The COO, with a direct P&L responsibility, is also eligible for monthly commission payments as a key part of his remuneration plan, and this has a direct link to the Company’s financial performance. The utilisation of both group and individual performance hurdles unites the executive as ‘one team’ working towards common objectives, while also recognising and rewarding individual performance. 8. Remuneration Outcomes for FY23 The CEO and senior management team have performed strongly throughout FY23 and the Board is highly satisfied with their performance and the record results achieved for shareholders. The Company delivered strong results against key financial and non-financial metrics for FY23, as reported above in this Directors‘ Report. Details of the FY23 remuneration structures and outcomes awarded to executive KMP based on both Company and individual performance are as follows: (a) STI Plan - performance outcomes for FY23 Design feature Further detail Eligibility Executive KMP. Instrument A mix of cash and performance rights, as described in section 6 of this remuneration report. Performance period Maximum opportunity Review of Performance Performance is measured annually. As described in section 6 of this remuneration report. The Board, following review by the Remuneration & Nomination Committee, approved the achievement of the financial performance hurdles by the CEO and all executive KMP, the achievement of the CEO’s non-financial performance hurdles and the payment of the CEO’s STI award. The CEO, in consultation with the Remuneration & Nomination Committee, approved the achievement of the non- financial performance hurdles by the other executive KMP. Achievement of Financial Hurdles Achievement of the financial performance hurdles by the CEO and all other executive KMP was determined with reference to the Company’s annual growth in underlying EPS and interest cover ratio performance hurdles, as described in section 6 of this remuneration report, having regard to the group’s audited financial statements. FY23 Financial Performance Hurdle FY23 Actual Achieved 8% Compound Annual Growth in Underlying EPS Interest cover ratio 65.5 cents per share 112.4 cents per share At least 2.5 times 6.0 times Yes Yes 48 Directors’ Report (continued) 8. Remuneration Outcomes for FY23 (continued) (a) STI Plan - performance outcomes for FY23 Design feature Further detail Achievement of Strategic Hurdles Achievement of the Strategic performance hurdles was determined with reference to achievement of both group and individual performance and engagement against strategic initiatives, including in these areas: Group-wide Strategic Achievements - Acquisitions of significant dealership business in Queensland and integration of acquisitions from the previous year in the ACT and South Australia. - Divestments of specific businesses that did not suit the Company’s portfolio in Victoria, New South Wales and Auckland. - Organic franchised automotive growth through new representation of automotive brands and in new locations. - Organic growth with new representation of non-traditional brands such as BYD, Chery, Volvo and Cupra. - Execution of AutoMall strategy at Indooroopilly Shopping Centre, Brisbane, which now includes Cupra, MG, Fiat and Alfa. - Organic growth in independent used automotive business, including through the relocation of easyauto123 at Joondalup, WA. - Growth through our property strategy, with properties acquired in Qld and the ACT and divested in NSW. - Significant property developments, including the AutoMall site in Osborne Park, WA, and numerous dealerships across the country. - Organic growth through the Company’s proprietary technology driving growth in productivity and incremental revenue opportunities in all regions. Individual Strategic Achievements - For the CEO, achievement through leading specific progress against the Next100 Strategic Plan as described above, including maximising franchised automotive outcomes via organic and acquisitive growth opportunities, and maximising used automotive business growth opportunities. - For the CFO, achievement through contributions towards specific progress against the Next100 Strategic Plan as described above, managing key financial measures for anticipated requirements while positioning the Company for Next100 execution, and leading key projects for acquisition, divestment and growth, balancing the desired outcomes with appropriate commerciality. - For the COO, achievement through contributions towards specific progress against the Next100 Strategic Plan as described above, including development and rollout of nominated strategic projects across relevant business units such as growing representation of both traditional and new brands, the AutoMall strategy, used automotive business initiatives, implementation of proprietary technology, while balancing desired outcomes with appropriate commerciality. - For the CS, achievement through contributions towards specific progress against the Next100 Strategic Plan as described above, key acquisitions, divestments and growth initiatives, balancing desired outcomes with appropriate commerciality, and establishing and maintaining governance framework for growth ambitions and Next100 Strategy. 49 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) 8. Remuneration Outcomes for FY23 (continued) (a) STI Plan - performance outcomes for FY23 Design feature Further detail Achievement of Sustainability Hurdles Achievement of the Sustainability performance hurdles was determined with reference to achievement of both group and individual performance and engagement against sustainability and performance initiatives, including in these areas: Group-wide Sustainability Achievements - Establishment of our Sustainability Steering Committee with multi-disciplinary representation from across the group, assisting in developing our sustainability goals, activities and culture in line with our sustainability strategy and roadmap. - Driving stakeholder engagement across the group, including through the annual employee engagement survey and our Sustainability Steering Committee. - Multiple safety initiatives implemented, including improved risk management and safety leadership programme - Environmental initiatives such as the decommissioning of underground petroleum storage systems and installation of solar photovoltaic systems. - Group-wide adherence to relevant regulatory and contractual requirements. - Foundational activities in preparation for financial sustainability reporting requirements. - Ongoing cost-out program and optimisation of businesses and property portfolio to provide for a more sustainable business and greater flexibility for implementation of omni-channel approach. Individual Sustainability Achievements - For the CEO, achievement through leading specific progress against the group-wide sustainability initiatives as described above, including driving group-wide stakeholder engagement, group-wide adherence to relevant regulatory and contractual requirements, and roadmap for key sustainability initiatives including ESG and diversity, while balancing desired outcomes with appropriate commerciality. - For the CFO, achievement through contributions towards specific group-wide sustainability initiatives as described above, organisational compliance with accounting and taxation obligations, adherence to relevant regulatory and contractual requirements, contributions towards nominated non-strategic projects, while balancing desired outcomes with appropriate commerciality. - For the COO, achievement through contributions towards specific group-wide sustainability initiatives as described above, including the rollout of operational projects across new and used automotive and other business units, driving employee engagement levels, safety initiatives and the cost-out program, while balancing desired outcomes with appropriate commerciality. - For the CS, achievement through contributions towards specific group-wide sustainability initiatives as described above, advisory to Board and management in respect of sustainability/ESG initiatives, governance, corporate values and operations, adherence to relevant regulatory requirements, in an environment of high transparency, ethics and integrity, and while balancing desired outcomes with appropriate commerciality. Having regard to the group and individual achievements outlined above, all executive KMPs received 100% of their STI plan awards for FY23 following assessment by the Board, Remuneration & Nomination Committee and CEO, as described in section 6 of this remuneration report. It was considered that no reduction to maximum entitlements was warranted based on review of the individual performances during the year against these measures. In these circumstances, payment of the full STI awards was determined to be appropriate, particularly in light of the Company’s record 2023 operational and financial performance. % Awarded for FY23 under STI Plan STI Paid ($) No. of Rights Vested 100% 100% 100% 100% 600,000 250,000 200,000 75,000 54,103 18,034 - 4,509 CEO CFO COO CS 50 Directors’ Report (continued) 8. Remuneration Outcomes for FY23 (continued) (b) Accounting Treatment of STI Plan The cost of the CEO’s STI plan will average a maximum of $600,000 per annum over the four-year period FY21 to FY24, and will only reach the maximum cost if 100% of the performance rights under the plan are to vest over the four year period (which would require at least 8% compound annual growth in underlying EPS for the four years, as described above). This is based on the fair value methodology on the initial grant date. However, accounting standards require that the remuneration table on page 53 must include the cost of the STI plan each year based on progressive recognition of the performance rights in the period from the grant date to their vesting date, rather than their average annual cost. This has resulted in the remuneration table showing a decrease in the CEO’s share-based pay for FY23 as compared to FY22. Despite this accounting treatment, the number of performance rights which vested for the CEO has actually risen from 52,265 rights in FY22 to 54,103 rights in FY23. (c) No Equity Retention Grants and No Board Discretion There were no equity retention grants and the Board has not exercised its discretion to award one-off bonuses to any KMP since the current remuneration framework was adopted in FY21. (d) LTI Plan for FY23 There have been no changes to the LTI Plan since it was introduced in FY21. Performance against the LTI Plan will be measured at the end of FY24, as described in section 6 of this remuneration report. 9. Peer Comparator Group The Board utilises a peer comparator group comprised of the following companies for the purpose of reviewing the remuneration arrangements of Eagers‘ most senior executives (Peer Comparator Group): - Automotive retail companies that are listed on the ASX; - Companies in the S&P/ASX 200 consumer discretionary index; - - Automotive retailers in Australia that are not listed on the ASX; and - Automotive retailers that are listed on recognised stock exchanges overseas. The Peer Comparator Group is a targeted list of companies with a broad range of metrics for comparison purposes, including market capitalisation, revenue, profitability, number of employees, geographic footprint, together with industry-specific factors. For the following reasons, the Board does not believe any meaningful comparison of the Company’s senior executive remuneration practices can be made unless the comparator group includes domestic non-listed automotive retailers and foreign automotive retailers, together with a range of non-automotive ASX-listed companies: - - The comparator group needs to be broader than other ASX-listed automotive retailers as there are only three such companies and they are dwarfed by Eagers on virtually every metric, such as enterprise value, scale, revenue, profitability, number of vehicles sold, brands represented, number of employees and geographic footprint. For example, by market capitalisation, Eagers is more than 7 times larger than the next largest ASX- listed automotive retailer. It is difficult to find any single ASX-listed company from any industry, with metrics and industry dynamics similar to Eagers. For a meaningful comparison, it is therefore appropriate that the comparator group include a range of ASX-listed companies with a broad range of metrics for comparison purposes, such as the S&P/ASX 200 consumer discretionary index. - The comparator group ought to include automotive retailers in the Australian market that are not listed on the ASX for these reasons: • Non-listed automotive retailers in Australia are Eagers‘ largest group of competitors for executive leadership talent. Note that all ASX-listed companies (including Eagers) account for only 15% of the national new car market, with non-listed operators accounting for the remaining 85% of the market. • Industry practice for remunerating senior leaders of our non-listed competitors is not typical for ASX- listed companies. It is common for the remuneration of these private operators to be comprised of a relatively low fixed base pay, a very large variable at-risk component in the form of a commission plan, and a significant equity ownership plan, including share loan plans. These arrangements are often mandated by major global suppliers and, despite being directly linked to financial performance, the creation of shareholder value and attracting, retaining and motivating key talent, are at times viewed as unattractive by analysts with limited industry experience. The comparator group needs to also include overseas- based automotive retailers as there is only a limited domestic pool of executive talent capable of leading an automotive retailer of Eagers‘ scale, brand representation, geographic footprint, complexity and industry attributes. One factor that significantly limits the pool of available domestic talent is the need for our senior leaders to have strong relationships with new vehicle suppliers, 100% of which are global suppliers located overseas. 51 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) 10. 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 key contractual terms. Duration of service agreement Notice period by employee Name CEO Ongoing Other executive KMP Ongoing 12 months 6 months Notice period by company 12 months 6 months Payments upon termination At the Board’s discretion At the Board’s discretion 11. Non-executive Director Remuneration There have been no changes to NED remuneration arrangements since our previous remuneration report which was approved by shareholders in May 2023. The objectives of the Company’s NED remuneration arrangements are as follows: - - - To be market competitive, taking into account time commitments and responsibilities. NED fees are reviewed annually. To preserve NED independence by not providing 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. The maximum aggregate NED fees are capped at an amount approved by shareholders. This cap is currently $1 million per annum, which was approved by shareholders at the 2020 Annual General Meeting. Each NED receives a single fee based on his or her role as set out in the following table. Additional fees are not payable for being a Committee member. Role Chair of the Board Chair of the Audit & Risk Committee Chair of the Remuneration & Nomination Committee Other NEDs Fee (exclusive of superannuation) for FY23 $125,000 per annum $115,000 per annum $115,000 per annum $100,000 per annum 52 Directors’ Report (continued) 12. Statutory Disclosures Statutory remuneration disclosures are prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards and include share-based payments expensed during the financial year, calculated in accordance with AASB 2 Share based payments. (a) Executive KMP in FY22 and FY23 Table 1 – Statutory Table of executive KMP remuneration Short-term benefits Post employment benefits Share-based payments Executive KMP Year Salary & fees ($) Bonus & commission ($) Non-monetary & other benefits1 ($) Superannuation ($) Other post- employment benefits ($) Performance rights & options2 ($) Performance- related percentage (%) Total ($) Keith Thornton Edward Geschke4 Sophie Moore Denis Stark6 Total 2023 1,200,000 600,000 84,787 2022 1,200,000 600,000 223,798 2023 200,000 1,629,444 5 195,690 2022 133,333 1,151,4875 103,056 2023 600,000 250,000 2022 600,000 250,000 2023 2022 271,347 75,000 425,000 125,000 50,810 133,692 79,599 68,725 2023 2,271,347 2,554,444 410,886 2022 2,358,334 2,126,487 529,272 25,000 25,000 27,500 18,333 27,500 27,500 27,500 27,500 107,500 98,333 - - - - - - - - - - 949,9993 2,859,786 1,250,0003 3,298,798 100,000 2,152,634 66,666 1,472,876 216,665 1,144,975 316,667 1,327,860 54,170 507,616 79,167 725,393 1,320,834 6,665,011 1,712,501 6,824,927 54 56 80 83 41 43 25 28 1. 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. If a negative amount is shown, 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. 2. 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 detailed in this Remuneration Report. 3. Includes the cost of STI performance rights vested for the year under review. In accordance with accounting standards, the amount for vested rights each year is based on progressive recognition of the rights over the period from the grant date to their vesting date. This results in a higher cost in the earlier years of the STI plan and a lower cost in later years on the assumption that all performance hurdles will be achieved over the four-year period (FY21 to FY24). Despite this accounting treatment, the number of performance rights which vested for the CEO increased from 52,265 rights in FY22 to 54,103 rights in FY23. For further details, refer to the section “Accounting Treatment of STI Plan” on page 51. 4. Commenced as a KMP on 1 May 2022. 5. 6. Includes $200,000 STI payment, with the balance being the COO’s commission plan. 60% FTE from 1 February 2023. 53 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) 12. Statutory Disclosures (continued) (b) NEDs in FY22 and FY23 Table 2 – Statutory Table of NED remuneration Short-term benefits Post employment benefits Share-based payments Salary & fees ($) Bonus & commission ($) Non-monetary & other benefits1 ($) Superannuation ($) Other post- employment benefits ($) Performance rights & options ($) Performance- related percentage (%) Total ($) NED KMP Tim Crommelin Year 2023 2022 125,000 125,000 Nick Politis Dan Ryan Marcus Birrell David Blackhall 2 Greg Duncan Michelle Prater David Cowper 3 Total 2023 100,000 2022 100,000 2023 100,000 2022 100,000 2023 100,000 2022 2023 2022 2023 2022 100,000 115,000 110,846 115,000 115,000 2023 100,000 2022 2023 2022 2023 2022 100,000 - 43,192 755,000 794,038 - - - - - - - - - - - - - - - - - - 960 606 960 606 960 606 960 606 960 606 960 606 960 606 - 202 6,720 4,446 13,438 12,813 10,750 10,250 10,750 10,250 10,750 10,250 12,362 11,372 12,362 11,788 10,750 10,250 - 4,319 81,162 81,292 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 139,398 138,419 111,710 110,856 111,710 110,856 111,710 110,856 128,322 122,824 128,322 127,394 111,710 110,856 - 47,713 842,882 - 879,776 - - - - - - - - - - - - - - - - 1. Includes insurance policy costs. 2. Appointed Chairman of Audit & Risk Committee on 29 March 2022. 3. Ceased as a Director on 18 May 2022. (c) Performance Rights and Options of KMP The following are details of all current performance rights and options which were granted to KMP over unissued ordinary shares in the Company in, before or since 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 FY23 and FY24 Name CEO CFO COO CS Balance as at 1 January 2023 Rights granted Rights lapsed Rights vested & exercised in FY231 Rights vested & exercised in FY242 Balance as at 22 February 2024 162,390 54,130 nil 13,533 nil nil nil nil nil nil nil nil 52,265 17,422 nil 4,355 54,103 18,034 nil 4,509 56,022 18,674 nil 4,669 1. These performance rights were granted for 2022. They vested, were automatically exercised and converted to ordinary shares on 23 February 2023, valued at the closing price of the underlying shares on that day. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. 2. These performance rights were granted for 2023. They vested, were automatically exercised and converted to ordinary shares on 22 February 2024, valued at the closing price of the underlying shares on that day. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. 54 Directors’ Report (continued) 12. Statutory Disclosures (continued) (c) Performance Rights and Options of KMP (continued) ii. Movement in Options of KMP Table 4 – Grants and exercise of Options in FY23 and FY24 Name CEO CFO COO CS Balance as at 1 January 2023 Options granted Options lapsed Options exercised in FY23 Options vested in FY24 Balance as at 22 February 2024 869,564 144,927 144,927 36,232 nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil 869,564 144,927 144,927 36,232 iii. Performance Rights and Options granted to KMP Table 5 – Details of share-based payments (Performance Rights and Options) Performance Rights Options CEO Grant Date No. granted No. lapsed No. exercised Fair value No. granted No. lapsed No. exercised Fair value 50,463 52,265 54,103 56,022 24 Feb 2021 nil nil nil nil 50,463 $11.89 52,2651 $11.48 54,1032 $11.09 nil $10.71 869,564 nil nil $2.76 End of performance period Status 31 December 2021 Vested 23 February 2022 31 December 2022 Vested 23 February 2023 31 December 2023 Vested 22 February 2024 31 December 2024 31 December 2024 Unvested Unvested 1. These performance rights were granted for 2022. They vested, were automatically exercised and converted to ordinary shares on 23 February 2023, valued at the closing price of the underlying shares on that day. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. 2. These performance rights were granted for 2023. They vested, were automatically exercised and converted to ordinary shares on 22 February 2024, valued at the closing price of the underlying shares on that day. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. Performance Rights Options CFO Grant Date No. granted No. lapsed No. exercised Fair value No. granted No. lapsed No. exercised Fair value 17,422 18,034 18,674 24 Feb 2021 nil nil nil 17,422 1 $11.48 18,034 2 $11.09 nil $10.71 144,927 nil nil $2.76 End of performance period Status 31 December 2022 Vested 23 February 2023 31 December 2023 Vested 22 February 2024 31 December 2024 31 December 2024 Unvested Unvested 1. These performance rights were granted for 2022. They vested, were automatically exercised and converted to ordinary shares on 23 February 2023, valued at the closing price of the underlying shares on that day. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. 2. These performance rights were granted for 2023. They vested, were automatically exercised and converted to ordinary shares on 22 February 2024, valued at the closing price of the underlying shares on that day. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. 55 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) 12. Statutory Disclosures (continued) (c) Performance Rights and Options of KMP (continued) iii. Performance Rights and Options granted to KMP (continued) Table 5 – Details of share-based payments (Performance Rights and Options) (continued) Performance Rights Options COO Grant Date No. granted No. lapsed No. exercised Fair value No. granted No. lapsed No. exercised Fair value 24 Feb 2021 144,927 nil nil $2.76 Performance Rights Options CS Grant Date No. granted No. lapsed No. exercised Fair value No. granted No. lapsed No. exercised Fair value 4,205 4,355 4,509 4,669 24 Feb 2021 nil nil nil nil 4,205 $11.89 4,3551 $11.48 4,5092 $11.09 nil $10.71 36,232 nil nil $2.76 End of performance period 31 December 2024 Status Unvested End of performance period Status 31 December 2021 Vested 24 February 2022 31 December 2022 Vested 23 February 2023 31 December 2023 Vested 22 February 2024 31 December 2024 31 December 2024 Unvested Unvested 1. These performance rights were granted for 2022. They vested, were automatically exercised and converted to ordinary shares on 23 February 2023, valued at the closing price of the underlying shares on that day. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. 2. These performance rights were granted for 2023. They vested, were automatically exercised and converted to ordinary shares on 22 February 2024, valued at the closing price of the underlying shares on that. They remain subject to a trading restriction as described in section 6 of this Remuneration Report. Further details of the performance rights and options granted to KMP are specified in Notes 32 and 33 to the consolidated financial report. 56 Directors’ Report (continued) 12. Statutory Disclosures (continued) (d) Relevant Interest in the Company’s Shares Held by KMP Table 6 – Shareholdings of KMP Name Year Opening balance as at 1 January Received from Employee Share Plan Purchases Sales Closing balance as at 31 December Tim Crommelin Nick Politis Daniel Ryan Marcus Birrell Greg Duncan David Blackhall Michelle Prater David Cowper 1 CEO CFO COO CS 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 448,286 438,286 70,585,321 70,005,321 1,200 1,200 2,000,000 2,000,000 350,000 350,000 40,000 28,056 2,540,096 2,540,096 - 15,053 369,869 319,406 182,005 121,789 15,000 15,000 157,922 176,339 NED nil nil nil nil nil nil nil nil nil nil nil nil nil nil - nil EXECUTIVE KMP 52,265 50,463 17,422 96,216 nil nil 4,355 4,205 nil 10,000 100,000 580,000 4,000 nil nil nil nil nil nil 11,944 nil nil - nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil nil - nil nil nil nil 36,000 nil nil 37,378 22,622 448,286 448,286 70,685,321 70,585,321 5,200 1,200 2,000,000 2,000,000 350,000 350,000 40,000 40,000 2,540,096 2,540,096 - 15,053 422,134 369,869 199,427 182,005 15,000 15,000 124,899 157,922 1. Ceased as a Director on 18 May 2022. (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 Remuneration Report. 57 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTDirectors’ Report (continued) Directors’ Interests The relevant interest of each Director in shares, rights and options issued by the Company as at the date of this report are as follows: Auditor Deloitte Touche Tohmatsu continues in office as auditor of the Group in accordance with section 327 of the Corporations Act 2001. Ordinary Shares Share Options Performance Rights Tim Crommelin 448,286 Nick Politis Dan Ryan 70,685,321 5,200 Marcus Birrell 2,000,000 Sophie Moore Greg Duncan David Blackhall 217,461 350,000 40,000 Michelle Prater 2,540,096 - - - - - - - - 144,927 18,674 - - - - - - Shares Under Option No options or performance rights were granted by the Company over unissued fully paid ordinary shares during the year under review. No options or rights have been granted since the end of the year under review. No shares were issued as a result of the exercise of options or performance rights during or since the year under review. At the date of this report, there are 1,992,751 unissued shares under option and 79,365 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. Non-Audit Services A copy of the auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is attached and forms part of this report. The Company may decide to employ its auditor on assignments additional to their statutory audit duties where the auditor’s expertise or experience with the Group is important. Details of the amounts paid or payable to the auditor for audit and non-audit services provided to the Group during the year are set out in Note 30 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. Tim Crommelin Director Brisbane, 22 February 2024 58 Directors’ Report (continued) Auditor’s Declaration of Independence Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organisation”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. Deloitte Touche Tohmatsu ABN 74 490 121 060 Level 23, Riverside Centre 123 Eagle Street Brisbane, QLD, 4000 Australia Phone: +61 7 3308 7000 www.deloitte.com.au The Board of Directors Eagers Automotive Limited 5 Edmund Street Newstead, QLD 4006 22 February 2024 Dear Board Members AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo EEaaggeerrss AAuuttoommoottiivvee LLiimmiitteedd In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Eagers Automotive Limited. As lead audit partner for the audit of the financial report of Eagers Automotive Limited for the year ended 31 December 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i)The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii)Any applicable code of professional conduct in relation to the audit. Yours faithfully DELOITTE TOUCHE TOHMATSU David Rodgers Partner Chartered Accountants 6060 FINANCIAL STATEMENTS Contents Financial statements Consolidated statement of profit or loss Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to and forming part of the consolidated financial statements Directors’ declaration Independent auditor’s report 61 62 63 64 65 67 68 122 123 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 6161 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTConsolidated Statement of Profit or Loss 31 December 2023 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 for the year Attributable to: Owners of Eagers Automotive Limited Non-controlling interests Notes 3 4 5 6(a) 6(a) 6(a) 6(b) Consolidated 2023 $’000 2022 $’000 9,851,681 8,541,502 8,376 7,584 1,277 11,387 55,182 1,067 (8,008,334) (6,900,716) (728,339) (678,452) (130,751) (88,245) (121,296) (116,603) (17,451) (16,727) (435,412) (366,173) 427,335 442,222 7 (128,267) (117,882) 299,068 324,340 281,100 308,167 17,968 16,173 299,068 324,340 Cents Cents EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY Basic earnings per share Diluted earnings per share 35(a) 35(b) 110.7 110.5 121.3 121.1 The above Consolidated Statement of Profit or Loss should be read in conjunction with the accompanying notes. 62 Consolidated Statement of Profit or Loss and Other Comprehensive Income 31 December 2023 Profit for the year OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss Notes Consolidated 2023 $’000 2022 $’000 299,068 324,340 Exchange differences on translation of foreign operations 23(a) Items that will not be reclassified subsequently to profit or loss Revaluation increment - property Deferred tax expense on revaluation increment - property Revaluation increment - Financial assets at fair value through other comprehensive income (FVOCI) Deferred tax expense on revaluation increment - Financial assets at fair value through other comprehensive income (FVOCI) 15, 23(a) 17, 23(a) 23(a) 17, 23(a) 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 101 101 7,199 (2,160) 8,737 (544) 13,232 13,333 (3,127) (3,127) 21,446 (6,434) 189 - 15,201 12,074 312,401 336,414 294,433 320,241 17,968 16,173 312,401 336,414 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 63 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTConsolidated Statement of Financial Position 31 December 2023 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other current assets Finance lease receivables Assets classified as held for sale Total current assets NON-CURRENT ASSETS 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 14 10(c) 12 10(c) 15 16 17 13(a)(i) 14 18 20(a) 19 13(a)(i) Consolidated 2023 $’000 2022 $’000 222,214 347,487 190,434 275,300 1,620,009 1,059,301 32,871 13,506 6,546 21,680 39,104 - 2,242,633 1,585,819 33,119 64,072 2,422 23,954 691,192 859,573 137,688 9,494 565,805 90,763 32,468 12,118 2,331 19,048 698,393 855,022 142,116 10,575 564,109 198,238 2,478,082 2,534,418 4,720,715 4,120,237 578,507 1,329,622 13,938 106,784 11,379 150,668 375,672 939,324 16,331 104,527 12,924 168,089 2,190,898 1,616,867 20(b) 466,505 19 13(a)(i) 22 23(a) 23(b) 14,810 15,633 727,483 1,224,431 376,910 15,922 14,227 854,681 1,261,740 3,415,329 2,878,607 1,305,386 1,241,630 1,173,659 (653,652) 750,095 1,154,572 (606,122) 655,796 1,270,102 1,204,246 35,284 37,384 1,305,386 1,241,630 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 64 Consolidated Statement of Changes in Equity 31 December 2023 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 1,154,572 36,502 (89,171) (1,914) (479,042) (72,497) 655,796 1,204,246 37,384 1,241,630 TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS: CONSOLIDATED ENTITY Notes Balance at 1 January 2023 Profit for the year Other comprehensive income Total comprehensive income for the year Transfer to retained earnings - - - - - 5,039 5,039 - - - - - Share-based payments expense Dividends provided for or paid Shares issued pursuant to staff share plan Share buy-back Purchase of shares from non-controlling interests Recognition of non-controlling interests on acquisition Shares issued as purchase consideration on acquisition Income tax on items taken to or transferred directly from equity Balance at 31 December 2023 23(a) 23(b) 23(a) - - - 22(b) (913) - - 22(b), 25(c) 20,000 17 - 19,087 - - - - - - - - - 1,821 - 1,891 - - - - 1,264 4,976 - 101 101 - - - - - - - - - - - - - - - - - - (65,839) - - - - 281,100 281,100 17,968 299,068 8,193 - 13,333 - 13,333 8,193 281,100 294,433 17,968 312,401 - - - - - - - 1,821 - 1,821 - (186,801) (186,801) (14,827) (201,628) - - - - - - - - - - - - 1,891 (913) - - 1,891 (913) (65,839) (7,721) (73,560) - 2,480 2,480 20,000 - 20,000 1,264 - 1,264 (65,839) - (186,801) (228,577) (20,068) (248,645) 1,173,659 41,541 (84,195) (1,813) (544,881) (64,304) 750,095 1,270,102 35,284 1,305,386 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 65 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT 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 24,078 (91,541) 1,213 (479,042) (72,686) 510,725 1,065,816 21,635 1,087,451 Consolidated Statement of Changes in Equity 31 December 2023 TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS: CONSOLIDATED ENTITY Notes Balance at 1 January 2022 Profit for the year Other comprehensive income Total comprehensive income forthe year Transfer to retained earnings 23(b) Share-based payments expense Dividends provided for or paid 23(a) 23(b) Shares acquired by Employee Share Trust 23(a) Shares issued pursuant to staff share plan Income tax on items taken to or transferred directly from equity 23(a) 17 - - - - - Share buy-back 22(b) (18,497) Purchase of shares from non-controlling interests Issue of shares to non-controlling interests Balance at 31 December 2022 - - (18,497) - - - - - 15,012 15,012 (2,588) - - - - - (3,127) (3,127) - - - - - - - - - - - - - - - - - - - 2,396 - (681) 1,295 (640) - - - 2,370 - - - - - - - - - - - - - - 308,167 308,167 16,173 324,340 189 - 12,074 - 12,074 189 308,167 320,241 16,173 336,414 - 2,588 - - - - - 2,396 - 2,396 - (165,684) (165,684) (9,612) (175,296) - - - - - - - - - - - - (681) 1,295 (640) - - - (681) 1,295 (640) (18,497) - (18,497) - - (1,300) (1,300) 10,488 10,488 - (165,684) (181,811) (424) (182,235) 1,154,572 36,502 (89,171) (1,914) (479,042) (72,497) 655,796 1,204,246 37,384 1,241,630 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 66 Consolidated Statement of Cash Flows 31 December 2023 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers - inclusive of GST Payments to suppliers and employees - inclusive of GST Receipts from insurance claims Interest and other costs of finance paid Income taxes paid Dividends received Interest received Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for acquisition of businesses Payments for property, plant and equipment Payments for intangible assets Payments for shares in other corporations Proceeds from sale of businesses Proceeds from sale of property, plant and equipment Proceeds from sale of shares in other corporations Receipts from subleases Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of shares and other equity securities Payments for shares acquired by the Employee Share Trust Proceeds from borrowings Purchase of shares under share buy-back arrangement Repayment of borrowings Transactions with non-controlling interests Consolidated 2023 $’000 2022 $’000 Notes 10,757,368 9,334,840 (10,099,691) (8,764,033) 2,537 (130,751) (126,176) 4,275 8,701 36 416,263 7,100 (88,245) (96,355) 811 13,425 407,543 (104,553) (197,917) (11,019) (11,754) 49,256 68,856 - 21,282 (6,646) (70,296) (4,000) (61,833) 9,261 83,498 18,616 5,351 (26,049) (185,849) 1,891 - 27,000 (913) (17,575) (53,560) 1,295 (681) 104,560 (18,497) (16,571) (305) 26(a) 27 12(a) 23(a) 23(a) 22(b) Dividends paid to members of Eagers Automotive Limited 8 (186,801) (165,684) Dividends paid to minority shareholders of a subsidiary Repayment of lease liabilities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year 9 (9,968) (118,526) (358,452) 31,762 190,434 18 222,214 (9,612) (122,880) (228,375) (6,681) 197,620 (505) 190,434 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 67 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements 31 December 2023 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. The financial report was authorised for issue by the Directors on 22 February 2024. Compliance with International Financial Reporting Standards 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 financial report 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 This financial report has 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 disclosure details are outlined in detail in Note 12 and Note 15. Functional and presentation currency The functional and presentation currency of the Company and its subsidiaries is the Australian Dollar. Going concern The financial report has been prepared on the basis that the Group is a going concern in line with AASB 101 Presentation of Financial Statements, able to realise assets in the ordinary course of business and settle liabilities as and when they fall due. The Group has net current assets of $51.7 million as at 31 December 2023 ($45.2 million excluding assets classified as held for sale). The Group has maintained a robust balance sheet with total available liquidity of $620.3 million (cash in bank of $222.2 million and undrawn facilities of $398.1 million, excluding bailment finance) at 31 December 2023 and a substantial asset base including a property portfolio valued at $597.9 million (including construction in progress and assets held for sale). The Group has generated positive net cash flows from operating activities of $416.3 million and profit of $299.1 million for the year ended 31 December 2023. Based on the strength of the Group’s balance sheet 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 this report. The Directors are therefore of the opinion that the preparation of the financial report as a going concern is appropriate. (b) Basis of consolidation The financial report incorporates the financial statements of Eagers Automotive Limited and entities (including structured entities) controlled by the Company and its subsidiaries. Consolidation 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 period 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. 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. (c) Rounding of amounts The Company is of a kind referred to in the Australian Securities and Investments Commission (ASIC) Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by 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. 68 1. Summary of significant accounting policies (continued) - AASB 2023-2 Amendments to Australian Accounting Standards - International Tax Reform - Pillar Two Model Rules; The Group has adopted the amendments to IAS 12 Income Taxes (IAS 12) for the first time in the current year. The IASB amends the scope of IAS 12 to clarify that the Standard applies to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules published by the OECD, including tax law that implements qualified domestic minimum top up taxes described in those rules. The amendments introduce a temporary exception to the accounting requirements for deferred taxes in IAS 12, so that an entity would not recognise information about deferred tax assets and liabilities related to Pillar Two income taxes. Following the amendments, the group is required to disclose that it has applied the exception and to disclose separately its current tax expense (income) related to Pillar Two income taxes. - AASB 2021-2 Amendments to Australian Accounting Standards - Disclosure of Accounting Policies and Definition of Accounting Estimates; The group has adopted the amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8) for the first time in the current year. The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. The definition of a change in accounting estimates was deleted. 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 17 Insurance Contracts - the Group does not have any contracts that meet the definition of an insurance contract under AASB 17; AASB 2022-1 Amendments to Australian Accounting Standards - Initial Application of AASB 17 and AASB 9 - Comparative Information; - AASB 2021-5 Amendments to Australian Accounting Standards - Deferred Tax related to Assets and Liabilities arising from a Single Transaction; (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) New or revised standards and interpretations that are first effective in the current reporting year New and revised standards and amendments thereof and interpretations effective for the current year that are relevant to the Group, and have a material impact, are: - AASB 2021-2 Amendments to Australian Accounting Standards - Disclosure of Accounting Policies and Definition of Accounting Estimates; The Group has adopted IAS 1 Presentation of Financial Statements (IAS 1) for the first time in the current year. The amendments to IAS 1 change the requirements with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material. These changes have been reflected throughout the notes to the financial report. 69 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 Cyber Incident The Company announced on 29 December 2023 that it had experienced a cyber incident resulting in an outage that disrupted parts of the Company’s operations across Australia and New Zealand. On detecting the incident, the Company took prompt action to isolate potentially impacted systems and engaged external experts to assist with managing the Company’s response. The company has launched an investigation and work continues to determine the extent of the incident and impact on personal information. The Company has notified the Australian and New Zealand Cyber Security Centres, The Office of the Australian Information Commissioner and the NZ Office of the Privacy Commissioner. The Company can confirm that the incident involved unauthorised access to parts of the Company’s IT systems by a third party which illegally accessed and removed data. While investigations are ongoing, the third party also claims it has published data online that it alleges was removed from the Company’s IT environment. As the investigation progresses the Company has notified individuals identified who may face serious risk of data misuse. If the Company detects any further personal information has been impacted, affected individuals will be notified and the Company will provide further guidance and support in accordance with the Company’s obligations. The financial impact of the cyber incident is not material to the 2023 financial report and is not expected to be material to subsequent periods. The primary impact is related to the deferral of revenue recognition in relation to some transactions across the last 5 days of December 2023 disrupted as a result of the incident as the transaction were unable to be fully processed. The deferred transactions will be recognised in the 2024 financial year. As the investigation continues, further updates will be provided to customers, employees, shareholders, regulators and other stakeholders. No other matter or circumstance has occurred subsequent to the 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. 1. Summary of significant accounting policies (continued) (e) New or revised standards and interpretations that are first effective in the current reporting year (continued) The standards in issue but not yet effective, and do not have a material impact on the Group, are as follows: - AASB 2023-5 Amendments to Australian Accounting Standards - Lack of Exchangeability; - - - AASB 2014-10 Amendments to Australian Accounting Standards - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture; AASB 2021-7c Amendments to Australian Accounting Standards - Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections [deferred AASB 10 and AASB 128 amendments in AASB 2014-10 apply]; 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 2022-6 Amendments to Australian Accounting Standards -Non-current Liabilities with Covenants; - AASB 2022-5 Amendments to Australian Accounting Standards - Lease Liability in a Sale and Leaseback; - AASB 2023-1 Amendments to Australian Accounting Standards - Supplier Finance Arrangements. 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 Key judgements and estimates Note 11 Judgements required in determining the write-down required from cost to net realisable value for inventory Note 13 Judgement required in determining the lease term of contracts with renewal options and the incremental borrowing rate on inception of the lease Note 14 Judgement required in determining the recoverability of finance lease receivables Note 15 Judgement required in determining the fair value of land and buildings Note 16 Recoverability of goodwill and other intangibles with indefinite useful lives Note 26 The fair value of assets and liabilities acquired in business combinations 70 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 3. Revenue Set out below is the disaggregation of the Group’s revenue from contracts with customers: Consolidated revenue for the year ended 31 December 2023 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 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 6,568,840 1,658,034 1,039,265 533,708 51,498 9,851,345 9,313,713 537,632 9,851,345 9,368,606 482,739 9,851,345 - - - - 336 336 336 - 336 336 - 336 6,568,840 1,658,034 1,039,265 533,708 51,834 9,851,681 9,314,049 537,632 9,851,681 9,368,942 482,739 9,851,681 Consolidated revenue for the year ended 31 December 2022 Retailing $’000 Property $’000 Total $’000 5,301,413 1,795,998 904,259 489,246 49,658 8,540,574 8,046,055 494,519 8,540,574 8,068,711 471,863 8,540,574 - - - - 928 928 928 - 928 928 - 928 5,301,413 1,795,998 904,259 489,246 50,586 8,541,502 8,046,983 494,519 8,541,502 8,069,639 471,863 8,541,502 71 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 3. Revenue (continued) (a) Recognition and measurement Revenue 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 which is when control of the underlying vehicles or parts transfers to the customer. Revenue is measured at the fair value of consideration receivable, net of any discounts, rebates and incentives. Agency commission represent fees from third parties where the Group acts as an agent by arranging a third party to provide goods and services to a customer. In such cases, the Group is not primarily responsible for providing the underlying good or service to the customer. Agency commission is recognised when the performance obligation is satisfied, which per the contractual arrangement is upon the completion of the referral. Agency commissions are reported as sales revenue. 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. 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. 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 (AASB 15), warranties are considered to be a distinct performance obligation 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 (referred to as deferred revenue) at the time of the initial sales transaction and is released on a straight-line basis over the warranty period. Dividend revenue Dividend revenue is recognised when the right to receive a dividend has been established. Rental income Rental income from operating leases is recognised on a straight-line basis over the lease term. Interest revenue Interest revenue is recognised on a time proportional basis, taking into account the effective interest rates applicable to the financial assets. 72 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 4. Finance income Finance income Consolidated 2023 $’000 8,376 2022 $’000 11,387 Finance income relates to income earned on sublease arrangements on finance leases, in accordance with AASB 16 Leases (AASB 16). 5. Other gains Gain on disposal of non-financial assets (Loss)/gain on disposal of property, plant and equipment Gain on disposal of businesses Notes 27 27 Consolidated 2023 $’000 3,551 (3,652) 7,685 7,584 2022 $’000 2,813 17,121 35,248 55,182 73 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 6. Expenses (a) Profit before income tax includes the following specific expenses: DEPRECIATION Buildings Plant and equipment Leasehold improvements Right-of-use assets Total depreciation AMORTISATION Customer relationships Other intangible assets Total amortisation Total depreciation and amortisation FINANCE COSTS Vehicle bailment Interest on lease liabilities Syndicate interest and related costs Total finance costs Share-based payments1 Business acquisition and divestment costs1 Business restructuring and integration costs1 EMPLOYEE BENEFITS Employee benefits - excluding superannuation Superannuation Total employee benefits excluding amounts recognised in raw materials and consumables purchased Employee benefits expense recognised in raw materials and consumables purchased Total employee benefits expense (b) Impairment expense Expected credit loss provision movement - finance lease receivables2 Expected credit loss provision movement - trade and other receivables Impairment of right-of-use assets2 Consolidated 2023 $’000 2022 $’000 7,352 15,396 7,081 88,669 118,498 1,462 1,336 2,798 9,097 15,670 4,289 85,624 114,680 1,462 461 1,923 121,296 116,603 Notes 15 15 15 13(a)(ii) 16 16 13(a)(ii) 64,763 43,207 22,781 130,751 1,821 2,254 - 662,251 66,088 728,339 111,619 839,958 25,504 45,837 16,904 88,245 2,396 3,034 1,850 619,288 59,164 678,452 102,196 780,648 2022 $’000 15,000 726 1,727 17,453 Notes 14(b) 10(b) 13(a) Consolidated 2023 $’000 17,451 1,278 - 18,729 1. These expenses are included in the other expenses balance in the Consolidated Statement of Profit and Loss 2. These figures comprise the Impairment of non-current assets expense in the Consolidated Statement of Profit and Loss 74 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 7. Income Tax (a) Income tax expense Current income tax expense Deferred income tax expense/(benefit) DEFERRED INCOME TAX EXPENSE/(BENEFIT) INCLUDED IN INCOME TAX EXPENSE COMPRISES: In respect of the current year In respect of the prior year Notes 17 17 Consolidated 2023 $’000 125,626 2,641 128,267 (861) 3,502 2,641 2022 $’000 111,856 6,026 117,882 4,324 1,702 6,026 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 427,335 442,222 Tax at the Australian tax rate of 30% (2022: 30%) 128,201 132,667 Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Non-taxable dividends Non recognition of capital loss on disposal Non deductible income / accounting loss Non assessable income / accounting gains Non-deductible capital expenditure Non-allowable expenses Application of capital losses against current year capital gains Sundry items Income tax expense (993) 1,967 941 (2,306) 498 975 - (1,016) 128,267 - - - - 910 783 (16,267) (211) 117,882 (c) Tax expense relating to items of other comprehensive income Aggregate deferred tax arising in the reporting period and recognised in other comprehensive income (2,704) (6,434) The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period. 75 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 7. Income Tax (continued) (d) Recognition and measurement i. 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. The tax treatment of New Zealand operations is not material to the financial report and therefore has not been presented separately. Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated 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 2022 of 49.0 cents per share (2021: 42.5 cents) paid on 28 March 2023. Interim dividend for the year ended 31 December 2023 of 24.0 cents per share (2022: 22.0 cents) paid on 21 September 2023. Total dividends paid Consolidated 2023 $’000 2022 $’000 125,145 109,197 61,656 56,487 186,801 165,684 DIVIDENDS PAID IN CASH DURING THE YEARS ENDED 31 DECEMBER 2023 AND 2022 WERE AS FOLLOWS: Paid in cash 186,801 165,684 (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 50.0 cents per share (2022: 49.0 cents per share), fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 28 March 2024 (2022: 31 March 2023) out of the retained profits at 31 December 2023 but not recognised as a liability at year end is: 128,450 125,145 76 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 8. Dividends (continued) (c) Franked dividends The final dividend recommended after 31 December 2023 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 2023. Franking credits available for subsequent reporting periods based on a tax rate of 30% (2022: 30%) Franking credits available for New Zealand subsequent reporting periods based on a tax rate of 28% (2022: 28%) Consolidated 2023 $’000 546,250 2022 $’000 529,115 8,919 - 555,169 529,115 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 55,050 (53,634) 9. Current assets – Cash and cash equivalents Current assets Cash at bank and on hand Consolidated 2023 $’000 2022 $’000 222,214 190,434 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. 77 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 10. 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 2023 is detailed below: Consolidated 2023 $’000 352,901 (5,414) 347,487 2022 $’000 279,961 (4,661) 275,300 Not past due Past due 0-30 days Past due 31 days plus Total Consolidated 2023 2022 Gross $’000 Provision $’000 330,987 12,701 9,213 352,901 4,175 318 921 5,414 Gross $’000 266,328 9,061 4,572 279,961 Provision $’000 3,703 227 731 4,661 Included in the Group’s trade receivables balance are debtors with a gross amount of $21.9 million (2022: $12.7 million) which are past due at the reporting date. The average age of these receivables is 62 days (2022: 62 days). (b) Movement in expected credit losses Opening balance Additional loss allowance Amounts utilised Disposal due to divestment Closing balance Consolidated 2023 $’000 4,661 1,278 (525) - 5,414 2022 $’000 4,064 726 (35) (94) 4,661 The Group applies the simplified approach permitted by AASB 9 Financial Instruments (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 and expected future losses. In line with this, the Group has provided 10% for all receivables over 60 days and 2.5% for all receivables over 30 days but less than 60 days. (c) Non-current receivables Loans receivable Other non-current receivables 33,119 23,954 57,073 32,468 19,048 51,516 The Company have determined there to be an immaterial risk of default based on the nature of these financial assets and therefore, no expected credit loss (ECL) has been recognised at 31 December 2023. (d) Recognition and measurement Receivables Trade receivables are recognised at the transaction price, less the expected lifetime credit losses to be recognised from initial recognition of the receivables. 78 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 11. Current assets – Inventories New and demonstrator motor vehicles and trucks Used vehicles and trucks Parts and other consumables Total inventories (a) Recognition and measurement Inventories Consolidated 2023 $’000 2022 $’000 1,230,149 660,044 216,953 172,907 241,639 157,618 1,620,009 1,059,301 The inventory balances above are net amounts after applying a write-down from cost to net realisable value. The write- down recorded in the current year was $3.0 million (2022: $3.9 million). The critical estimates and judgements made in determining the write-down are outlined below. (b) Critical accounting estimates and judgements The accounting for inventory requires judgement in determining the net realisable value of inventory on hand and if any write-down to net realisable value is required. Judgements made by management in determining the estimated write-down from cost include: - Historic experience and current knowledge of the market for the products held as inventory - Consideration of published used vehicle valuations - Consideration of the ageing of inventory on hand or any other risk factors identified 12. Non-current assets – Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Shares in listed companies1 Shares in an unlisted company2 Consolidated 2023 $’000 63,897 175 64,072 2022 $’000 11,943 175 12,118 1. The Directors have assessed the fair value of the investments as at 31 December 2023 based on the market price of the shares on the last trading day of the reporting period. These are level 1 fair value measurement assets being derived from inputs based on quoted prices that are observable. 2. The Directors have assessed the fair value of the investment as at 31 December 2023 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. (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 2023 are as follows: Movements in Non-Current Assets measured at fair value through OCI Opening balance - 1 January 2023 Purchases Issues Disposals/settlements Revaluations Closing balance - 31 December 2023 There were no transfers between levels in the year. Level 1 - McMillan Shakespeare Ltd $’000 Level 1 - Other listed companies $’000 Level 3 - Unlisted companies $’000 - 61,833 - - 1,628 63,461 11,943 - - (18,616) 7,109 436 175 - - - - 175 Total $’000 12,118 61,833 - (18,616) 8,737 64,072 79 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 12. Non-current assets – Financial assets at fair value through other comprehensive income (continued) (b) Recognition and measurement Investments and other financial assets Investments and other financial assets 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. Investments and other financial assets are initially recognised at fair value, net of transaction costs. Subsequent measurement is dependent on the classification of each investment and other financial asset as outlined below. The Group classifies its investments and other 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 (PL)); and - Those to be measured at amortised cost. The classification is made on an investment by investment basis and is dependent on the contractual cash flow characteristics and the business model to manage financial assets of the investment. Such matters considered in determining the classification include whether the investment is held for trading. For some of its investments, the Group has made irrevocable election at the time of initial recognition to account for the investment at fair value through other comprehensive income (FVOCI). 13. 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 CONSOLIDATED ENTITY Year ended 31 December 2023 Opening net book amount Exchange differences Additions Disposals Depreciation charge Rent reviews Adjustments to lease terms Closing net book amount Consolidated 2023 $’000 2022 $’000 565,805 564,109 Property $’000 Equipment $'000 Total $’000 564,109 (5,047) 33,041 (10,989) (88,669) 20,883 52,477 565,805 - - - - - - - - 564,109 (5,047) 33,041 (10,989) (88,669) 20,883 52,477 565,805 Disposal of property right-of-use assets reported above are primarily driven by the purchase of a property previously leased ($3.2 million). The remainder of the movement relates to miscellaneous lease exits. 80 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 13. Right-of-use assets and lease liabilities (continued) (a) Leases (continued) i. Amounts recognised in the Consolidated Statement of Financial Position (continued) Property $’000 Equipment $'000 Total $’000 CONSOLIDATED ENTITY Year ended 31 December 2022 Opening net book amount Exchange differences Additions Disposals Depreciation charge Impairment loss Rent reviews Adjustments to lease terms Closing net book amount LEASE LIABILITIES Current Non-current ii. Amounts recognised in the Consolidated Statement of Profit or Loss The Consolidated 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 cashflows Notes 6(a) MATURITY ANALYSIS Not later than 1 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 629,853 (2,525) 21,598 (17,440) (84,378) (1,727) 15,155 3,573 564,109 1,246 631,099 - - - (1,246) - - - - (2,525) 21,598 (17,440) (85,624) (1,727) 15,155 3,573 564,109 Consolidated 2023 $’000 2022 $’000 150,668 727,483 878,151 168,089 854,681 1,022,770 Consolidated 2023 $’000 2022 $’000 88,669 - 88,669 43,207 3,053 84,378 1,246 85,624 45,837 5,196 Consolidated 2023 $’000 2022 $’000 150,668 514,721 421,209 168,089 537,006 577,351 1,086,598 1,282,446 (208,447) (259,676) 878,151 1,022,770 81 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 13. Right-of-use assets and lease liabilities (continued) (b) Recognition and measurement (c) Critical accounting estimates and judgements 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. The Group leases land and buildings for its corporate offices, warehouses and service workshops, automotive dealerships, showrooms and retail outlets under agreements of between 1 to 15 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The financial liability is measured at the net present value of future payments under the lease, including optional renewal periods, where the Group has assessed that the probability of exercising the renewal is reasonably certain. The weighted average remaining term on the Group’s leases at 31 December 2023, including options where the Group has assessed that the probability of exercising the renewal is reasonably certain, is 8.52 years. 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). 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. 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. At initial inception of a lease, the Group applies a policy based on location of the lease (i.e. Rural or Urban). For each reporting period after initial inception, the Group revisits each lease individually to re-assess the lease term. 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). Incremental borrowing rate The Group has determined its incremental borrowing rate by considering the interest rate on their financing facility and applying, where considered necessary, adjustments to align this with an asset specific rate. The adjustments consider the term of the agreement, security of asset and the funds necessary to obtain the asset of a similar value in a similar economic environment. 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. 82 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 14. Finance lease receivables (a) Amounts receivable under finance leases Current Non-current Total finance lease receivables Year 1 Year 2 Year 3 Year 4 Year 5 Onwards Total undiscounted lease payments Less: unearned finance income Allowance for expected credit losses Present value of lease payments receivable (b) Movement in expected credit losses Opening balance Additional loss allowance Amounts utilised during the period Closing balance (c) Recognition and measurement Sub-lease arrangements Consolidated 2023 $’000 13,506 90,763 104,269 13,506 13,306 12,805 12,900 12,900 92,197 157,614 (32,179) (21,166) 104,269 15,000 17,451 (11,285) 21,166 2022 $’000 39,104 198,238 237,342 39,104 37,548 28,945 27,903 22,918 169,941 326,359 (74,017) (15,000) 237,342 - 15,000 - 15,000 When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two separate contracts. The sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease. As a result of the sub-leasing arrangements entered into following the previous business divestments, the Group has recognised a current finance lease receivable of $13.5 million, and a non current finance lease receivable of $90.8 million. Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return of the Group’s net investment outstanding in respect of the leases. All subleases are back-to-back arrangements. The back-to-back subleases have terms between 1 and 13 years. Leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. (d) Critical accounting estimates and judgements Calculation of loss allowance When measuring the ECL for finance lease receivables, the Group uses reasonable and supportable forward-looking macroeconomic information and how these drivers will affect each other, and the history of default. Management has also incorporated into the calculation of the ECL any known loss events. 83 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 15. Non-current assets – Property, plant and equipment FREEHOLD LAND AND BUILDINGS - AT FAIR VALUE Directors' valuation1 Land Buildings Total land and buildings CONSTRUCTION IN PROGRESS - AT COST Construction in progress LEASEHOLD IMPROVEMENTS At cost Accumulated depreciation Total leasehold improvements PLANT AND EQUIPMENT At cost Accumulated depreciation Total plant and equipment Total property, plant and equipment 1. Valuation of land and buildings Consolidated 2023 $’000 2022 $’000 253,196 295,495 548,691 285,292 291,763 577,055 42,696 30,510 43,440 (7,016) 36,424 89,222 (25,841) 63,381 691,192 42,357 (5,670) 36,687 68,415 (14,274) 54,141 698,393 Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at 31 December 2023 are as follows: Carrying value Range of unobservable inputs Unobservable inputs used in determination of fair values Class of assets and liabilities Level 3 Car – HBU Alternate Use Level 3 Franchised Automotive Dealership 2023 $’000 2022 $’000 Inputs used to measure fair value 2023 2022 Valuation technique Key input Adopted capitalisation rate 6.0% - 8.0% 6.2% - 8.1% 39,960 41,881 Net market rental (per sqm) $187 - $328 $120 - $298 Price per sqm land $2,681 - $5,156 $1,473 - $4,826 Adopted capitalisation rate 4.5% - 8.3% 4.9% - 10.1% 508,731 535,174 Net market rental (per sqm) $4 - $312 $4 - $270 Net rent per sqm GBA $54 - $982 $54 - $1,029 Direct comparison, capitalisation of net income and discounted cash flow (DCF) Summation method, capitalisation of net income, direct comparison and discounted cash flow (DCF) External valuations External valuations, industry benchmarks Total 548,691 577,055 Explanation of asset classes: Car - Higher and Best Use (HBU) Alternate Use refers to properties which have a HBU greater than that of a car dealership; Franchised Automotive Dealership refers to properties operating as car dealerships with a HBU consistent with that use. 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 $259.5 million (2022: $250.5 million). If freehold buildings were carried at historical cost, its current carrying value (after depreciation) would be $295.5 million (2022: $269.6 million). Non-current assets pledged as security Refer to Note 20(c) for information on non-current assets pledged as security by the Group. 84 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 15. Non-current assets – Property, plant and equipment (continued) 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 2023 Opening net book amount Exchange differences Transfers Additions Additions through business combinations Revaluation increment - property Disposals Depreciation charge Freehold land $’000 285,292 - (7,435) 5,239 8,519 7,199 (45,618) - Buildings $’000 291,763 - 25,593 10,132 7,967 - (32,608) (7,352) Construction in progress $’000 30,510 - (26,436) 38,622 - - - - Leasehold improvements $’000 36,687 394 3,300 3,524 - - (400) (7,081) Plant and equipment $’000 54,141 (1,421) 4,978 28,369 776 - (8,066) (15,396) Total $'000 698,393 (1,027) - 85,886 17,262 7,199 (86,692) (29,829) Carrying amount at end of year 253,196 295,495 42,696 36,424 63,381 691,192 During the period, the Group acquired land and buildings of which $31.6 million was directly funded through capital loan facilities obtained by the Group. Refer to Note 20 for further information on movement in borrowings. Consolidated 2022 Opening net book amount Exchange differences Transfers Additions Additions through business combinations Revaluation gain recognised in asset revaluation reserve Disposals Depreciation charge Freehold land $’000 249,962 - (20,872) 15,243 37,083 21,446 (17,570) - Buildings $’000 182,490 - 34,710 17,856 78,094 - (12,290) (9,097) Construction in progress $’000 15,825 - (22,645) 37,394 - - (64) - Leasehold improvements $’000 24,394 - 7,293 10,349 - - (1,060) (4,289) Plant and equipment $’000 41,703 (892) 1,514 19,758 11,185 - (3,457) (15,670) Total $'000 514,374 (892) - 100,600 126,362 21,446 (34,441) (29,056) Carrying amount at end of year 285,292 291,763 30,510 36,687 54,141 698,393 (a) Recognition and measurement Property, plant and equipment Land and buildings are measured at fair value. 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. The Group considers the valuation of land and buildings every reporting date and the Group’s policy requires land and buildings to be externally valued every three years. At reporting dates where an asset is not externally valued, the Group considers whether market conditions or asset specific factors support the position that the carrying value of the asset is materially in line with fair value. This includes consideration of changes in market variables such as capitalisation rates and terminal growth observable through comparable independent valuations obtained and also considers comparable market transactions. The Group also considers whether the usage of a property has changed that may alter the valuation of the property. In the current year, the Group commissioned additional valuations of additional properties above the usual cyclical valuations to reflect uncertainty driven by market conditions. 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. 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 The shorter of the lease term and the useful life of the asset (5-30 years). Leasehold improvements (b) Critical accounting estimates and judgements Fair value estimation of land and buildings Land and buildings with a carrying value of $548.7 million (2022: $577.1 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. Each year, for those properties not captured by a formal independent valuation, the Group performs a review of available market inputs to identify any properties that materially differ to current market conditions. 85 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 16. Non-current assets – Intangibles Goodwill Trade marks/brand names Customer relationships Other intangible assets 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 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 MOVEMENT - OTHER INTANGIBLE ASSETS Balance at the beginning of the financial year Recognition of other intangibles Amortisation charge Balance at the end of the financial year Consolidated 2023 $’000 837,968 5,915 2,468 13,222 859,573 2022 $’000 834,619 5,915 3,930 10,558 855,022 834,619 763,988 3,349 - 837,968 5,915 5,915 3,930 (1,462) 2,468 10,558 4,000 (1,336) 13,222 81,664 (11,033) 834,619 5,915 5,915 5,392 (1,462) 3,930 - 11,019 (461) 10,558 Impairment tests for goodwill and other indefinite life assets (a) 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 nine groups of CGUs in the car retailing segment, grouped by the operating regions (QLD & NT, NSW, ACT, VIC & TAS, SA, WA, NZ), national retailing rights (BYD), and a National Used CGU. Impairment testing is performed at this level. 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. In the current year the Group has used value-in-use to determine the recoverable amount of the group of CGUs. 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 CGUs and then applying a discount rate to calculate the present value. The model assumes an inflation rate consistent with the growth rate in the discounted cash flow. The key assumptions determined by the Directors as being the assumptions to which the CGUs recoverable amount is most sensitive are: Cash flow growth rates The DCF model adopted by the Directors utilises cash flow forecasts derived from the 2024 financial budgets approved by the Board to help determine year one cash flows. The budgets consider all available sources of information (both external and internal). Year 1 - Reflects the cash flow forecasts derived from the 2024 financial budgets approved by the Board. Year 2 to terminal period - Reflects a range of cash flow growth rates applied that does not exceed 2.3% (2022: 2.3%) in both our Australian and New Zealand operations. 86 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 16. Non-current assets – Intangibles (continued) (a) Impairment tests for goodwill and other indefinite life assets (continued) (b) Recognition and measurement i. Goodwill Terminal growth rates A terminal growth rate of 2.5% is applied from year four and into the terminal period (2022: 2.5%). 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. Discount rate A post-tax discount rate of 8.5% (2022: 8.5%) was applied to the cash flows for Australian operations and a post- tax discount rate of 9.25% (2022: 8.75%) for New Zealand, incorporating the impact of AASB 16 (IFRS 16 Leases in New Zealand) on the Group’s cost of debt. Management engaged a third party specialist to provide the discount rate utilised in the DFC value-in-use models. 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 or business at the date of acquisition. 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. Consideration of climate change iii. Trademarks / brand names In estimating recoverable amount, the Directors have considered the potential impacts of climate change both on the Group’s business model and corporate strategy. The most significant change for vehicle retailers will be the increasing rate of demand for electric vehicles (including hydrogen fuel cell electric vehicles) in preference to 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 vehicles to meet consumer demand. Other impacts such as the Group’s desire to meet net zero emissions over time are being considered and will be reflected in the recoverable amount as the strategy progresses. There is significant headroom in all CGUs. Sensitivity analysis performed The Group has performed sensitivity analysis of the reasonably possible changes in the key assumptions used in the model, including reducing cash flow growth rates from a maximum of 2.3% to a fixed growth rate of 0% applied from the second forecast year through to year five, whilst holding terminal growth rate at 2.5%. Further, the Group has sensitised the discount rate from 8.5% to 9.0% in Australian operations, and from 9.25% to 9.75% in New Zealand operations. Under each of these independent scenarios, no impairment was identified. The CGU most sensitive to possible impairment is New Zealand. However, management have conducted a break even sensitivity, and note that the CGU is required to achieve a profit of $4.9m with no short term growth assumptions. Management is comfortable that this profit will be achieved. All intangibles are allocated to the Car Retailing segment. Conclusion Whilst supply chain dynamics persist, the Group’s fundamentals reflect the strength of our ongoing business, with continued growth of our new car order bank and realised benefits from our ongoing productivity and cost- out programs. The forecast growth rates and terminal growth rate have been based on consideration of historical performance and the expected future operating conditions. 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 and brand names are valued using a discounted cash flow methodology at acquisition. 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. Franchise rights Other intangible assets include costs associated with franchise licences which provide a benefit for more than one reporting period are amortised over the remaining term of the franchise licence. Capitalised costs associated with renewal options for franchise licences are deferred and amortised over the renewal option period. The unamortised balance is reviewed each balance date and charged to the Consolidated Statement of Profit or Loss to the extent that future benefits are no longer probable. (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 $843.9 million (2022: $840.5 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, 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 Directors have determined that the recoverable value exceeds the carrying value for each of its CGUs or groups of CGUs; therefore, no impairment charge has been recorded in 2023. A range of reasonably possible scenarios was considered and under none of these sensitivities, was impairment identified for any of the Group’s CGUs or groups of CGUs. 87 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 17. Non-current assets - Deferred tax assets Deferred tax assets THE BALANCE COMPRISES TEMPORARY DIFFERENCES ATTRIBUTABLE TO: Book versus tax carrying value of plant and equipment Right of use asset Lease liability Sublease receivable Deferred income Inventory valuation Prepayments Expected credit losses Employee benefits Other Sundry items Revaluation increment - Financial assets at fair value through other comprehensive income (FVOCI) Revaluation of property Share options trust Net deferred tax asset Movement in deferred tax: Opening balance at 1 January 2023 Deferred tax (expense)/benefit Adjustments recognised in the current year in relation to deferred tax in prior years Deferred tax recognised in other comprehensive income Revaluation increment - property Disposal of property with prior period revaluation Revaluation increment - Financial assets at fair value through other comprehensive income (FVOCI) Notes Consolidated 2023 $’000 137,688 2022 $’000 142,116 16,788 (169,742) 263,445 (37,630) 4,302 3,585 (2,306) 7,984 35,127 7,234 23,893 (544) 27,857 (169,233) 306,830 (75,703) 4,516 2,565 (1,707) 5,901 35,237 6,319 16,668 (57) (16,703) (18,020) 2,255 137,688 943 142,116 142,116 152,000 861 (3,502) (2,641) (4,324) (1,702) (6,026) (2,160) (6,434) - (544) (2,704) 1,109 (57) (5,382) 7(a) 7(a) 23(a) 23(a) 23(a) Deferred tax recognised directly in equity Share options trust Deferred tax recognised through a business combination Deferred tax assets relating to business combination Closing balance at 31 December 2023 23(a) 1,264 (640) (347) 137,688 2,164 142,116 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 (226,923) (264,719) 364,611 406,835 137,688 142,116 At the reporting date, the Group has no unused revenue tax losses (2022: nil) available for offset against future profits. No deferred tax asset has been recognised in respect of capital losses of $68.9 million (2022: $57.5 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. 88 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 17. Non-current assets - Deferred tax assets (continued) (a) Recognition and measurement International Tax Reform - Pillar Two Model Rule The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to address the tax challenges arising from the digitalisation of the global economy. It is unclear if the Pillar Two model rules create additional temporary differences, whether to remeasure deferred taxes for the Pillar Two model rules and which tax rate to use to measure deferred taxes. In response to this uncertainty, on 23 May 2023 and 27 June 2023, respectively, the IASB and AASB issued amendments to IAS 12 introducing a mandatory temporary exception to the requirements of IAS 12 under which a company does not recognise or disclose information about deferred tax assets and liabilities related to the proposed OECD/G20 BEPS Pillar Two model rules. The Group applied the temporary exception at 31 December 2023. (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. 18. Current liabilities – Trade and other payables TRADE AND OTHER PAYABLES Trade payables1 Other payables Consolidated 2023 $’000 2022 $’000 339,864 238,643 578,507 142,505 233,167 375,672 Other payables comprises of customer deposits held of $89.6 million (2022: $95.1 million) taxes payable of $15.9 million (2022: $10.2 million), general accruals of $112.3 million (2022: $96.6 million), with the remaining balance relating to miscellaneous payables. 1. The average credit period on purchases of goods is 30 days. No interest is charged on trade payables from the date of invoice. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. (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. 89 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 19. Liabilities - Provisions CURRENT PROVISIONS Annual leave Long service leave NON - CURRENT PROVISIONS Long service leave Other provisions Consolidated 2023 $’000 2022 $’000 56,040 50,744 106,784 8,989 6,644 15,633 55,534 48,993 104,527 8,537 5,690 14,227 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. (a) Movements in provisions Movements in each class of employee benefits provisions during the financial year and prior year are set out below: 2023 $’000 2022 $’000 55,534 38,402 (37,787) (109) 56,040 48,993 (6,994) (464) 9,209 50,744 8,537 9,661 (9,209) 8,989 57,429 37,427 (41,421) 2,099 55,534 44,341 (5,635) 2,211 8,076 48,993 8,613 8,000 (8,076) 8,537 MOVEMENTS IN ANNUAL LEAVE PROVISION Opening balance Leave accrued Leave paid Transfers Closing balance MOVEMENTS IN CURRENT LONG SERVICE LEAVE PROVISION Opening balance Leave paid Transfers Amounts vested Closing balance MOVEMENTS IN NON-CURRENT LONG SERVICE LEAVE PROVISION Opening balance Leave accrued Amounts vested Closing balance 90 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 20. Liabilities - Borrowings (a) Bailment finance and other current loans Bailment finance Capital loan i. Bailment finance Consolidated 2023 $’000 1,311,207 18,415 1,329,622 2022 $’000 872,348 66,976 939,324 Bailment finance is provided on a vehicle-by-vehicle basis by various finance providers at an average interest rate of 6.22% p.a. (2022: 3.67%). Bailment finance is repayable within a short period after the vehicle is sold to a third party, generally within 48 hours. ii. Interest rate risk exposures Details of the Group’s exposure to interest rate changes on interest bearing liabilities is set out in Note 24. iii. Fair value disclosures Details of the Group’s fair value of interest bearing liabilities is set out in Note 24. iv. Security Details of the security relating to each of the secured liabilities and further information on bank loans is set out in the non-current section below. (b) Non - current loans Term facility Capital loan (c) Secured liabilities Term facility1 Capital loan2 Bailment finance3 Consolidated 2023 $’000 124,560 341,945 466,505 2022 $’000 104,560 272,350 376,910 Consolidated 2023 $’000 124,560 360,360 1,311,207 1,796,127 2022 $’000 104,560 339,326 872,348 1,316,234 1. 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. 2. 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. 3. Vehicle bailment finance reflects a liability payable to the consolidated entity’s bailment financiers. This liability is represented by and secured over debtors included in current assets receivables in respect of recent vehicle deliveries to customers, and by new vehicles, demonstrator vehicles and some used vehicles all included in inventories (bailment stock). Refer to Note 11. Refer to Note 24 for maturities. 91 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 20. Liabilities - Borrowings (continued) (c) Secured liabilities (continued) Assets pledged as security The carrying amounts of assets pledged as security are: NON-CURRENT ASSETS PLEDGED AS SECURITY Freehold land and buildings - first mortgage Other non-current assets CURRENT ASSETS PLEDGED AS SECURITY Inventories Other current assets Total assets pledged as security (d) Financing arrangements The Group has access to the following lines of credit at the balance date: Total facilities Term facility1 Working capital facility (includes bank overdraft)2 Capital loan3 Bailment finance4 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 2023 $’000 2022 $’000 548,691 577,055 1,135,135 1,052,900 1,311,207 416,139 872,348 353,639 3,411,172 2,855,942 Consolidated 2023 $’000 2022 $’000 382,000 30,000 471,030 382,000 30,000 472,545 1,700,657 1,624,700 66,100 66,100 2,649,787 2,575,345 124,560 360,360 1,311,207 37,837 104,560 339,326 872,348 53,408 1,833,964 1,369,642 257,440 30,000 110,670 389,450 28,263 815,823 277,440 30,000 133,219 752,352 12,692 1,205,703 1. Term facility at balance date was provided on a non-amortisable (interest only) basis subject to compliance with specific covenants for a fixed term. 2. Working capital facility at balance date was provided on a non-amortisable (interest only) basis subject to compliance with specific covenants and an annual review. 3. Capital loan facility at balance date was provided on a non-amortisable (interest only) basis for a fixed term. 4. Dealerships utilise bailment finance to fund both new and used vehicle inventory. New vehicles are purchased from the original equipment manufacturer (OEM) using financing provided by a bailment finance provider, who retains title in the vehicle until it is subsequently sold by the dealership to the customer. Vehicle financed under bailment plans are recognised as inventory with the corresponding bailment liability owing to the finance providers. These facilities include a combination of fixed term and open-ended arrangements and are subject to review periods ranging from quarterly to annual. The facilities are available for drawdown by specified dealerships on a vehicle-by-vehicle basis, with repayment as it relates to an individual vehicle required immediately after the vehicle is sold. The Group also utilises the bailment finance facility to finance some of its used vehicle inventory. 92 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 21. Segment information Segments are identified on the basis of internal reports about components of the consolidated entity that are regularly reviewed by the chief operating decision maker, being the Board of Directors, in order to allocate resources to the segment and to assess its performance. The Group has historically operated in two operating and reporting segments being (i) Car Retailing, and (ii) Property. These are identified on the basis of being the components of the Group that are regularly reviewed by the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. Information regarding the Group’s reporting segments is presented below. The accounting policies of the reportable segments are the same as the Group’s accounting policies as outlined within the notes to the financial report. 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 segment. Funding costs in relation to bills payable are allocated to the Car Retailing and Property segments based on notional market based covenant levels. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance. For the purpose of monitoring segment performance and allocating resources between segments, the chief operating decision maker monitors the tangible, intangible, and financial assets attributable to each segment. All assets are allocated to reportable segments. 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 a motor auction business and forklift rental business. ii. 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 rent 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. There is no one customer that is responsible for 10% or more of sales. (a) Geographic information The Group operates in two principal geographic locations, being Australia and New Zealand. (b) Segment results SEGMENT REPORTING 2023 Sales to external customers Inter-segment sales Total sales revenue SEGMENT RESULTS Operating profit before interest External interest expense allocation Interest Income Operating contribution Business acquisition and divestment costs Other expenses Profit on termination of leases Profit on sales of businesses Loss on sale of property Segment profit Unallocated corporate expenses Profit before tax Income tax expense Net profit Car Retailing $’000 9,851,345 - 9,851,345 534,915 (116,321) 8,376 426,970 (2,254) (1,225) 3,050 7,685 - 434,226 Property $’000 336 39,348 39,684 30,852 (14,430) - 16,422 - - - - (3,652) 12,770 Depreciation and amortisation (113,944) (7,352) Assets Segment assets Liabilities Segment liabilities Net assets 4,122,782 597,933 3,025,409 1,097,373 389,920 208,013 Eliminations $’000 - Consolidated $’000 9,851,681 (39,348) (39,348) - 9,851,681 - - - - - - - - - - - - - - 565,767 (130,751) 8,376 443,392 (2,254) (1,225) 3,050 7,685 (3,652) 446,996 (19,661) 427,335 (128,267) 299,068 (121,296) 4,720,715 3,415,329 1,305,386 93 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 21. Segment information (continued) (c) (b) Segment results (continued) SEGMENT REPORTING 2022 Sales to external customers Inter-segment sales Total sales revenue SEGMENT RESULTS Operating profit before interest External interest expense allocation Interest Income Operating contribution Business acquisition and divestment costs Impairment of non-current assets Other expenses Profit on sale of property Profit on sales of businesses Profit on termination of leases Segment profit Unallocated corporate expenses Profit before tax Income tax expense Net profit Car Retailing $’000 8,540,574 - 8,540,574 468,448 (76,742) 11,387 403,093 (3,034) (1,727) (3,926) - 35,248 2,672 928 34,665 35,593 24,973 (11,503) - 13,470 - - - 17,121 - - 432,326 30,591 Property $’000 Eliminations $’000 Consolidated $’000 - 8,541,502 (34,665) - (34,665) 8,541,502 - - - - - - - - - - - - - - - 493,421 (88,245) 11,387 416,563 (3,034) (1,727) (3,926) 17,121 35,248 2,672 462,917 (20,695) 442,222 (117,882) 324,340 (116,603) 4,120,237 2,878,607 1,241,630 Depreciation and amortisation (107,506) (9,097) Assets Segment assets Liabilities Segment liabilities Net assets (d) Recognition and measurement Operating segments 3,522,360 597,877 2,509,721 1,012,639 368,886 228,991 Operating segments are identified based on internal reports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resources to the segment and assess its performance. 94 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 22. Contributed equity (a) Paid up capital 2023 Shares 2022 Shares 2023 $’000 2022 $’000 Consolidated Ordinary shares - fully paid 256,900,410 255,398,099 1,173,659 1,154,572 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 2,252,648 outstanding shares, which are reported in share capital (2022: 2,509,566). (b) Movements in ordinary share capital Date Details 01-Jan-2023 Opening balance at 1 January 2023 25-May-2023 Share buy-back 26-May-2023 Share buy-back 03-July-2023 Shares issued as purchase consideration on acquisition 31-Dec-2023 Closing balance at 31 December 2023 01-Jan-2022 Opening balance at 1 January 2022 26-Aug-2022 Share buy-back 30-Aug-2022 Share buy-back 15-Sep-2022 Share buy-back 16-Sep-2022 Share buy-back 19-Sep-2022 Share buy-back 20-Sep-2022 Share buy-back 23-Sep-2022 Share buy-back 26-Sep-2022 Share buy-back 27-Sep-2022 Share buy-back 28-Sep-2022 Share buy-back 29-Sep-2022 Share buy-back 30-Sep-2022 Share buy-back 04-Oct-2022 Share buy-back 19-Oct-2022 Share buy-back 20-Oct-2022 Share buy-back 21-Oct-2022 Share buy-back 10-Nov-2022 Share buy-back 16-Nov-2022 Share buy-back 17-Nov-2022 Share buy-back 22-Nov-2022 Share buy-back 07-Dec-2022 Share buy-back 07-Dec-2022 Share buy-back 08-Dec-2022 Share buy-back 12-Dec-2022 Share buy-back 20-Dec-2022 Share buy-back 21-Dec-2022 Share buy-back 22-Dec-2022 Share buy-back 23-Dec-2022 Share buy-back 28-Dec-2022 Share buy-back 29-Dec-2022 Share buy-back 30-Dec-2022 Share buy-back Number of shares 255,398,099 (39,000) (32,816) 1,574,127 256,900,410 256,933,106 (152,289) (19,880) (7,995) (120,569) (80,408) (145,690) (127,322) (161,629) (93,967) (39,011) (65,920) (99,997) (24,992) (12,359) (60,000) (18,001) (31,886) (35,000) (8,865) (5,000) (35,000) (2,016) (10,496) (25,504) (30,000) (20,000) (27,856) (44,925) (14,261) (14,000) (169) Share price $’000 - 1,154,572 $12.86 $12.52 $12.71 - - $13.13 $12.57 $12.74 $12.73 $12.77 $12.75 $12.68 $12.16 $11.55 $11.63 $11.39 $11.17 $10.91 $11.56 $11.10 $10.97 $11.77 $11.99 $11.90 $11.98 $11.64 $11.60 $11.57 $11.50 $11.09 $11.10 $11.08 $10.80 $10.75 $10.68 $10.73 (502) (411) 20,000 1,173,659 1,173,069 (2,000) (250) (102) (1,535) (1,026) (1,857) (1,615) (1,966) (1,086) (454) (751) (1,117) (273) (143) (666) (197) (375) (420) (106) (60) (407) (23) (121) (293) (333) (222) (309) (485) (153) (150) (2) 31-Dec-2022 Closing balance at 31 December 2022 255,398,099 - 1,154,572 95 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 23. 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 increment - property Deferred tax on revaluation increment - property Transfer to retained earnings relating to properties sold 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 Payments received from employees for exercised options Shares acquired by the Employee Share Trust Employee share schemes - value of employee services Shares issued pursuant to staff share plan Deferred tax 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 Movement during the period Balance at the end of the financial year INVESTMENT REVALUATION RESERVE: Balance at the beginning of the financial year Revaluation increment - Financial assets at fair value through other comprehensive income (FVOCI) Deferred tax on revaluation increment - Financial assets at fair value through other comprehensive income (FVOCI) Balance at the end of the financial year 96 Consolidated 2023 $’000 41,541 (84,195) (1,813) (544,881) (64,304) (653,652) 2022 $’000 36,502 (89,171) (1,914) (479,042) (72,497) (606,122) Consolidated 2023 $’000 2022 $’000 36,502 7,199 (2,160) - - 41,541 24,078 21,446 (6,434) (3,697) 1,109 36,502 (89,171) (91,541) - - 1,821 1,891 1,264 (84,195) (1,914) 101 (1,813) 1,295 (681) 2,396 - (640) (89,171) 1,213 (3,127) (1,914) Notes 15 17 23(b) 17, 23(b) 17 (479,042) (479,042) 25(c) (65,839) - (544,881) (479,042) 12 17 (72,497) (72,686) 8,737 (544) 189 - (64,304) (72,497) Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 23. 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 (net of tax) Dividends provided for or paid Retained profits at the end of the financial year (c) Nature and purpose of other reserves i. Property, plant and equipment revaluation reserve Consolidated 2023 $’000 655,796 299,068 (17,968) - (186,801) 750,095 2022 $’000 510,725 324,340 (16,173) 2,588 (165,684) 655,796 The property, plant and equipment revaluation reserve is used to record increments and decrements on the revaluation of non-current assets as described in Note 15(a). ii. Investment revaluation reserve The investment revaluation reserve represents the cumulative gains and losses arising on assets held at FVOCI that have been recognised in other comprehensive income as described in Note 12. 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. 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 32 and 33. v. Business combination reserve The business combination reserve is used to recognise difference between the value of consideration paid to acquire the non-controlling interest, the carrying value of the non-controlling interest and the value of shares acquired, as described in Note 25(c). 24. Financial instruments (a) Overview The Group has exposure to the following key risks from its use of financial instruments: - Credit risk - - Market risk (interest rate risk) Liquidity 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 the financial report. 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 provides 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. 97 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 24. Financial instruments (continued) (a) Overview (continued) 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 policies for managing each of these risks and they are summarised as follows. 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 and forward-looking information. 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 financial report. 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. Definition of default The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable: - when there is a breach of financial covenants by the debtor; or - information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held by the Group). 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 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. 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. i. Interest rate risk The Group’s policy is to keep between 0% and 50% of its borrowings at fixed rates of interest. As at 31 December 2023, 17% (2022: 23%) of the Group’s borrowings were at a fixed rate of interest. ii. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the 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 variable were held constant, the Group’s net profit after tax would increase/ decrease by $9.4 million (2022: $6.8 million) per annum. This is mainly due to the Group’s exposures to interest rates on its variable rate borrowings. 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. 98 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 24. 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 as at the reporting date was: Trade and other receivables Less: Allowance for expected credit losses Other non-current receivables Consolidated 2023 $’000 352,901 (5,414) 347,487 57,073 404,560 2022 $’000 279,961 (4,661) 275,300 51,516 326,816 ii. Impairment losses The ageing of trade receivables at reporting date is detailed in Note 10. iii. Fair values and exposures to credit and liquidity risk Detailed in the following table, the Directors consider that the carrying amounts of financial assets and financial liabilities recorded in the financial report 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 Term facility Capital loan Bailment finance Trade and other payables Maturity profile 347,487 222,214 57,073 626,774 124,560 360,360 1,311,207 578,507 275,300 190,434 51,516 517,250 104,560 339,326 872,348 375,672 2,374,634 1,691,906 The following table provides a maturity profile for the Group’s financial instruments that are exposed to interest rate risk at the 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. 99 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 24. Financial instruments (continued) (b) Credit risk (continued) iii. Fair values and exposures to credit and liquidity risk (continued) 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 $’000 222,214 1,079 223,293 4.11% - 1,079 1,079 7.49% - 1,079 1,079 7.49% 1,311,576 - - 9,826 9,771 272,929 213,106 9,771 9,771 1,331,173 282,700 222,877 - 1,079 1,079 7.49% - - 9,771 9,771 - 1,079 1,079 7.49% - - - 222,214 15,478 20,873 15,478 243,087 7.49% - - 1,311,576 495,861 76,579 31,545 147,208 76,579 31,545 1,954,645 4.11% 2.79% 2.54% 6.42% 6.42% 6.39% 23,819 43,025 60,274 26,399 18,866 129,412 301,795 3.17% 3.16% 3.15% 3.16% 3.15% 3.14% AT 31 DECEMBER 2023 INTEREST BEARING FLOATING RATE Financial assets Cash and cash equivalents Trade Debtors Average interest rate Financial liabilities Bailment finance Term facility Capital loan Average interest rate FIXED RATE Financial liabilities Capital loan Average interest rate NON-INTEREST BEARING Financial assets Trade debtors and other receivables 371,441 Financial liabilities Trade and other payables 578,507 - - - - - - - - 18,719 390,160 - 578,507 Please refer to Notes 13(a)(iii) and 14(a) for ageing of lease liabilities and finance lease receivables, respectively. 100 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 24. Financial instruments (continued) (b) Credit risk (continued) iii. Fair values and exposures to credit and liquidity risk (continued) 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 $’000 190,434 1.31% 872,348 7,437 2,358 - - - - - - - - - 7,437 271,409 213,168 2,358 2,358 2,358 882,143 9,795 273,767 215,526 4.08% 1.66% 1.65% 1.05% - - - - - - - - 190,434 872,348 499,451 2,358 2,358 5.24% 19,422 31,212 19,422 1,403,011 5.24% 75,396 24,363 43,563 60,783 26,877 149,599 380,581 3.33% 3.18% 3.18% 3.17% 3.19% 3.18% AT 31 DECEMBER 2022 INTEREST BEARING FLOATING RATE Financial assets Cash and cash equivalents Average interest rate Financial liabilities Bailment finance Term facility Capital loan Average interest rate FIXED RATE Financial liabilities Capital loan Average interest rate NON-INTEREST BEARING Financial assets Trade debtors and other receivables 294,348 Financial liabilities Trade and other payables 375,672 - - - - - - - - 32,468 326,816 - 375,672 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. 101 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 25. Investments in subsidiaries (a) Deed of Cross Guarantee NAME OF ENTITY Eagers Automotive Limited A.P. Ford Pty Ltd A.P. Group Ltd A.P. Motors (No.1) Pty Ltd A.P. Motors (No.2) Pty Ltd A.P. Motors (No.3) Pty Ltd A.P. Motors Pty Ltd ACM Autos Holdings Pty Ltd ACM Autos Pty Ltd ACM Liverpool Pty Ltd ACN 132 712 111 Pty Ltd Adtrans Australia Pty Ltd Adtrans Automotive Group Pty Ltd Adtrans Corporate Pty Ltd Adtrans Group Pty Ltd Adtrans Sydney Pty Ltd (formerly Adtrans Hino Pty Ltd) Adtrans Truck Centre 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 102 Equity Holding Member of DOCG Membership Group 2016/785 Opt In/Out 23-0919 Opt In/Out 2023 % 2022 % 2023 2022 2023 2022 2023 2022 2023 2022 Opt Out Opt In * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 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 - 78 100 100 100 100 100 100 100 100 100 100 100 80 80 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 Y Y Y N/A N/A Y Y Y Y Y Y Y Y Y Y Y Y N/A Y N/A Y Y Y Y Y Y Y N/A Y N/A Y Y Y Y Y N/A Y Y N/A Y Y Y Y Y Y Y Y N Y Y Y Y Y Y Y Y Y Y Y Y Y N 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 C C C N/A N/A C C EC EC C C C C C C C C C C C N/A C C C EC EC C C C C C C C C N/A N/A C C N/A N/A C C C C C C C N/A C N/A C C C C C N/A C C N/A EC C C C C C C C C C C C C C C C C C C C C C C C EC C C C C Opt In Opt In Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 25. Investments in subsidiaries (continued) (a) Deed of Cross Guarantee (continued) NAME OF ENTITY AUT 6. Pty Ltd Auto Ad 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 Holdings Pty Ltd Bill Buckle Leasing Pty Ltd Black Auto CQ Pty Ltd Boonarga Welding Pty Ltd Bradstreet Motors Holdings Pty Ltd Bradstreet Motors Pty Limited Bridge NT Pty Ltd Cardiff Car City Holdings Pty Ltd Cardiff Car City Pty Limited Carlin Auction Services (NSW) 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 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 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 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 ACT Pty Ltd Eagers ACT Rentals Pty Ltd Eagers ACT Cars MGMT Pty Ltd Eagers Finance Pty Ltd Eagers MD Pty Ltd Eagers Nominees Pty Ltd Equity Holding Member of DOCG Membership Group 2016/785 Opt In/Out 23-0919 Opt In/Out 2023 % 2022 % 2023 2022 2023 2022 2023 2022 2023 2022 * * * * * * * * * * * * * * * * * * * * * * * 100 100 100 100 80 80 100 100 - 100 80 80 80 100 80 80 53 53 53 53 53 53 100 - - 100 100 100 100 80 80 100 100 100 - 100 - - 100 78 100 100 100 100 80 100 100 100 100 100 80 80 100 100 100 100 80 80 80 - 80 80 53 53 53 53 53 53 100 100 100 100 100 100 100 80 80 100 100 100 100 100 100 100 100 78 100 100 100 100 80 100 Y Y Y Y Y Y Y Y N/A Y Y Y Y Y Y Y N N N N N N Y N/A N/A Y Y Y Y Y Y Y Y Y N/A Y N/A N/A Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y N Y Y Y Y N/A Y Y Y N N N N N Y N Y Y Y Y Y Y Y Y Y Y Y Y N N Y Y Y Y Y Y Y Y C C C C EC EC C C C C C C EC EC C C N/A N/A C EC EC EC C EC EC N/A N/A N/A N/A N/A N/A C N/A N/A C C C C EC EC C C C N/A C N/A N/A C EC C C C C EC C C EC EC EC N/A EC EC N/A N/A N/A N/A N/A N/A C N/A C C C C C EC EC C C C C C N/A N/A C EC C C C C EC C Opt In Opt In Opt In Opt In Opt In Opt In Opt In 103 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 25. Investments in subsidiaries (continued) (a) Deed of Cross Guarantee (continued) NAME OF ENTITY Eagers NT Pty Ltd Eagers Retail Pty Ltd Eagers TACT Pty Ltd Eagers VIC Pty Ltd (formerly Essendon Auto (2017) Pty Ltd) EASST Pty Ltd Easy Auto 123 Pty Ltd Eurocars (SA) Pty Ltd EV Dealer Group Pty Ltd Falconet Pty Ltd Ferntree Gully Autos Holdings Pty Ltd Ferntree Gully Autos Pty Ltd Finmo Pty Ltd F.R. Ireland 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 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 104 Equity Holding Member of DOCG Membership Group 2016/785 Opt In/Out 23-0919 Opt In/Out 2023 % 2022 % 2023 2022 2023 2022 2023 2022 2023 2022 * * * * * * * * * * * * * * * * * * * * * * * * * * 100 100 80 100 85 100 100 80 100 100 100 100 78 100 100 90 80 80 100 100 100 80 100 - 100 100 100 100 100 100 80 80 - 100 100 80 100 100 - 100 100 100 87.5 100 100 - 100 80 100 85 100 100 49 100 100 100 100 - 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 Y Y Y Y Y Y Y N Y N N Y Y Y Y Y Y Y Y N N Y Y N/A Y Y Y Y Y Y Y Y N/A Y Y Y Y Y N/A Y Y Y Y Y Y N/A Y Y Y Y Y Y C C EC C EC C C N/A C EC C EC C C N/A N/A N/A Opt Out Opt In Opt In Y N N Y N/A 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 N Y Y Y Y Y Y Opt In Opt In C N/A N/A C EC C C EC EC EC C N/A N/A EC C N/A C C C C C C EC EC N/A C C C N/A N/A C N/A C C EC EC EC C N/A N/A EC C C C C C C C C EC EC C C C Opt In EC EC C C C C N/A N/A C C C C C C EC EC C C C C Opt In Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 25. Investments in subsidiaries (continued) (a) Deed of Cross Guarantee (continued) NAME OF ENTITY North City (1981) Pty Ltd North City 2005 Pty Ltd Northside Autos 2005 Pty Ltd Northside Nissan (1986) Pty Ltd Northwest (WA) Pty Ltd Novated Direct Pty Ltd NSW Vehicle Wholesale Pty Ltd Nuford Ford Pty Ltd Nundah Motors Pty Ltd OPM (2012) Holdings Pty Ltd OPM (2012) Pty Ltd Osborne Park Autos Pty Ltd Penrith Auto (2016) Pty Ltd Perth Auto Alliance Pty Ltd 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 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 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 Widevalley Pty Ltd WS Motors Pty Ltd WS Vehicle Sales Pty Ltd (formerly Cheap Cars QLD Pty Ltd) Zupp Holdings Pty Ltd Zupps Aspley Pty Ltd Zupps Gold Coast Pty Ltd Zupps Mt Gravatt Pty Ltd Zupps Parts Pty Ltd Equity Holding Member of DOCG Membership Group 2016/785 Opt In/Out 23-0919 Opt In/Out 2023 % 2022 % 2023 2022 2023 2022 2023 2022 2023 2022 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 100 100 100 100 100 - 100 100 - 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 80 80 100 100 100 100 92.5 92.5 100 100 80 80 100 80 100 100 100 100 100 100 100 100 100 100 - 100 100 - 100 78 78 100 100 - 100 100 100 100 80 80 100 80 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 78 78 100 100 100 100 100 Y Y Y Y Y N/A Y Y N/A Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y N N/A Y Y N/A Y Y Y Y Y N/A Y Y Y Y Y Y Y Y Y Y N Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y N Y Y N Y Y Y Y Y Y Y Y C C C C C N/A C C C C C C C C C C N/A N/A C C C C C C EC EC C C C C Opt Out Opt In Opt Out Opt In EC EC Opt In C C EC EC C EC C C C C C C C C C N/A N/A C C C C EC EC C EC C C C C C C C C C C N/A C C N/A N/A C EC EC C C N/A C C C EC EC C C C C C Opt Out Opt In 105 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 25. Investments in subsidiaries (continued) (a) Deed of Cross Guarantee (continued) C - Member of the Closed Group EC - Member of the Extended Closed Group 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 2023. Under the DOCG each of these companies guarantee the debts of the other named companies. Entities which have opted in or out of the relief for the current or prior year are noted in the 2016/785 columns in the table above. 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. On 21 December 2023 the Company announced that it has obtained relief from the Australian Securities and Investments Commission from the requirement for certain of it’s non-wholly owned subsidiaries to have their individual financial reports audited each year. To be eligible for the relief, the subsidiaries must be party to the Eagers group Deed of Cross Guarantee. The relief applies only to the individual subsidiaries and does not affect the financial reporting or audit obligations of the parent company, Eagers Automotive Limited. Entities which have opted in to the relief for the current year are noted in the 23-0919 columns in the above table. As a party to the deed of cross guarantee, each of the wholly-owned subsidiaries (marked *) is relieved from the requirement to prepare and lodge an audited financial report. The table below provides details of the Eligible Subsidiaries which may be eligible to rely on the relief, and whether or not that Eligible Subsidiary relied on the relief for the financial year ended 31 December 2023: Entity name Reliance on relief ACM Autos Holdings Pty Ltd ACM Autos Pty Ltd BASW 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 City Auto (2016) Holdings Pty Ltd City Auto (2016) Pty Ltd EACAB Pty Ltd AP Townsville Pty Ltd WS Vehicle Sales Pty Ltd WS Motors Pty Ltd FR Ireland Pty Ltd Eagers MD Pty Ltd Eagers TACT Pty Ltd EASST Pty Ltd Graham Cornes Motors Pty Ltd Grand Autos 2005 Pty Ltd Highland Autos Pty Ltd IB MD Pty Ltd Maitland City Motor Group Holdings Pty Ltd Maitland City Motor Group Pty Ltd MCM Autos Pty Ltd Motors Group (Glen Waverley) Pty Ltd OPM (2012) Holdings Pty Ltd OPM (2012) Pty Ltd PT (2013) Pty Ltd Sabalan Holdings Pty Ltd Sabalan Pty Ltd South West Queensland Motors Pty Ltd No No Yes No No No No No Yes Yes Yes Yes No Yes No No Yes Yes No No Yes No No No No Yes No No Yes No No No 106 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 25. Investments in subsidiaries (continued) (a) Deed of Cross Guarantee (continued) The following entities obtained relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 in 2022, but were ineligible for relief in 2023: Entity name A.P. Ford Pty Ltd Nuford Ford Pty Ltd Osborne Park Autos Pty Ltd Ineligibility date 31 December 2023 31 December 2023 31 December 2023 The following entities joined the DOCG in 2023 by assumption deed: Entity name Bridge NT Pty Ltd Eagers NT Pty Ltd F.R. Ireland Pty Ltd Assumption date 15 December 2023 15 December 2023 01 June 2023 The following entities were removed from the DOCG in 2023 via revocation deed: Entity name A.P. Motors (No.2) Pty Ltd AHG Management Company Pty Ltd AHG Property Pty Ltd AHG Training Pty Ltd AHGSW 2018 Pty Ltd Drive A While Pty Ltd Janasen Pty Ltd Matchacar Pty Ltd Novated Direct Pty Ltd Revocation date 23 June 2023 23 June 2023 23 June 2023 23 June 2023 23 June 2023 23 June 2023 23 June 2023 23 June 2023 23 June 2023 Vehicle Storage & Engineering Pty Ltd 14 October 2023 Zupps Gold Coast Pty Ltd 23 June 2023 The following entities were deregistered in 2023: Entity name Deregistration date A.P. Motors (No.1) Pty Ltd A.P. Motors (No.2) Pty Ltd Adtrans Trucks Pty Ltd Adverpro Pty Ltd 03 April 2023 01 October 2023 03 April 2023 03 April 2023 AHG Management Company Pty Ltd 01 October 2023 AHG Property Pty Ltd AHG Training Pty Ltd AHGSW 2018 Pty Ltd Bill Buckle Leasing Pty Ltd Carzoos Pty Ltd Drive A While Pty Ltd Duncan Autos 2005 Pty Ltd Duncan Autos Pty Ltd Janasen Pty Ltd Matchacar Pty Ltd 01 October 2023 01 October 2023 01 October 2023 03 April 2023 03 April 2023 01 October 2023 03 April 2023 03 April 2023 01 October 2023 01 October 2023 Melbourne Truck and Bus Centre Pty Ltd 03 April 2023 Novated Direct Pty Ltd Nundah Motors Pty Ltd VMS Pty Ltd Western Equipment Rentals Pty Ltd 01 October 2023 03 April 2023 03 April 2023 03 April 2023 Zupps Gold Coast Pty Ltd 01 October 2023 The following entities were subject to a notice of disposal in 2023: Entity name Notice of disposal date Castle Hill Autos No. 1 Pty Ltd 30 June 2023 107 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 25. 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 2023 is set out below: 2023 $’000 2022 $’000 257,840 (86,499) 171,341 - 292,086 (87,203) 204,883 - 171,341 204,883 158,467 266,509 1,079,449 21,154 13,506 171,515 224,849 844,733 15,129 39,104 1,539,085 1,295,330 6,546 - 1,545,631 1,295,330 37,397 64,072 2,422 23,954 667,847 680,553 125,579 9,494 489,022 90,763 32,474 12,119 1,845 19,048 677,897 685,695 127,568 10,575 509,197 198,238 2,191,103 2,274,656 3,736,734 3,569,986 DEED OF CROSS GUARANTEE CONSOLIDATED STATEMENT OF PROFIT OR LOSS Profit before tax from continuing operations Income tax benefit/(expense) from continuing operations Profit for the period from continuing operations Loss for the period from discontinued operations Profit for the year CONSOLIDATED STATEMENT OF FINANCIAL POSITION Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments and deposits Finance lease receivable Assets classified as held for sale Total current assets Non-current assets Other loans receivable Financial assets at fair value through other comprehensive income Investments in associates Other non-current receivables Property, plant and equipment Intangible assets Deferred tax assets Other non-current assets Right-of-use assets Finance lease receivable Total non-current assets Total assets 108 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 25. 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 2023 $’000 2022 $’000 197,345 884,949 12,224 87,185 5,182 135,984 160,356 737,517 3,085 85,286 7,321 156,515 1,322,869 1,150,080 466,505 14,810 13,602 651,498 1,146,415 376,910 15,922 11,939 796,369 1,201,140 2,469,284 2,351,220 1,267,450 1,218,766 1,173,659 (674,888) 768,679 1,267,450 - 1,154,572 (625,353) 689,547 1,218,766 - 1,267,450 1,218,766 109 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 25. 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 2023 is set out below: 2023 $’000 2022 $’000 394,839 (118,234) 276,605 - 427,012 (112,642) 314,370 - 276,605 314,370 160,059 331,071 173,573 271,578 1,365,700 1,043,490 27,166 13,506 6,546 20,244 39,104 - 1,904,048 1,547,989 38,156 64,072 2,422 23,954 685,490 839,536 136,368 9,494 562,824 90,763 33,506 12,119 2,331 19,048 696,958 841,183 140,000 10,575 564,109 198,238 2,453,079 2,518,067 4,357,127 4,066,056 DEED OF CROSS GUARANTEE CONSOLIDATED STATEMENT OF PROFIT OR LOSS Profit before tax from continuing operations Income tax benfit/(expense) from continuing operations Profit for the period from continuing operations Loss for the period from discontinued operations Profit for the year CONSOLIDATED STATEMENT OF FINANCIAL POSITION Current assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Finance lease receivable Assets classified as held for sale Total current assets Non-current assets Other loans receivable Financial assets at fair value through other comprehensive income Investments in associates Other non-current receivables Property, plant and equipment Intangible assets Deferred tax assets Other non-current assets Right-of-use assets Finance lease receivable Total non-current assets Total assets 110 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 25. 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 2023 $’000 2022 $’000 325,435 1,174,125 14,304 107,371 9,772 146,204 1,777,211 466,505 14,810 14,369 270,919 932,482 14,403 105,091 12,433 164,846 1,500,174 376,910 15,922 12,904 728,813 853,308 1,224,497 1,259,044 3,001,708 2,759,218 1,355,419 1,306,838 1,173,659 (655,657) 807,779 1,154,572 (606,123) 723,996 1,325,781 1,272,445 29,638 34,393 1,355,419 1,306,838 111 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 25. 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 Total equity 2023 $’000 2022 $’000 248,194 203,025 125,423 664,712 790,134 16,372 - 16,372 773,762 1,173,660 201,432 1,683 (479,042) (39,351) (84,620) 773,762 17,943 673,872 691,815 11,226 - 11,226 680,589 1,154,572 140,634 1,683 (479,042) (48,087) (89,171) 680,589 Refer Notes 28(a) and 28(b) in respect of guarantees entered into by the parent entity in relation to debts of its subsidiaries Information relating to other transactions relating to investments in subsidiaries during the year (c) During the period the group also acquired an additional 31% ownership interest in EV Dealer Group Pty Ltd for a total consideration of $70 million. This consideration was comprised of $50 million in cash and $20 million of shares in Eagers Automotive Limited. This transaction has been recorded within equity. At the completion of this transaction, the Group now has an 80% ownership interest in the BYD retail joint venture, with the remaining 20% retained by EVDirect.com. 112 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 26. Business acquisitions (a) Acquisition of other businesses The Group acquired the following businesses during the 2023 year as detailed below: Year 2023 Name of business Date of acquisition Principal activity Proportion acquired Ireland's of Cairns 31 May 2023 Motor Vehicle Dealer 100% ALLOCATION OF PURCHASE CONSIDERATION The purchase price of the businesses acquired has been allocated as follows: Cash used to acquire business Consideration financed through capital loan Total purchase consideration CONSOLIDATED FAIR VALUE AT ACQUISITION DATE Net assets acquired Cash Receivables, prepayments Inventory Property1 Plant and equipment Deferred tax assets Creditors, borrowings and provisions Net assets acquired Acquisition cost Goodwill on acquisition 2 Ireland's of Cairns $’000 6,646 16,486 23,132 994 1,897 14,319 16,486 776 409 (15,098) 19,783 23,132 3,349 1. The acquisition includes property which was directly funded through capital loan facilities obtained by the Group. 2. Goodwill arose on the business combinations at the date of acquisition as the consideration paid for the combination included amounts in relation to the benefit of expected synergies and further revenue and profit growth. Revenue and profit contribution The acquired Ireland’s of Cairns business contributed revenues of $49.1 million and net profit of $1.1 million to the group for the period from 31 May 2023 to 31 December 2023. If the Ireland’s of Cairns acquisition had occurred on 1 January 2023, the contribution to consolidated pro-forma revenue and profit for the year ended 31 December 2023 would have been $84.1 million and $1.9 million respectively. Other new businesses During the period the Group registered the following entities with the Australian Securities and Investments Commission: - Bridge NT Pty Ltd Eagers NT Pty Ltd - (b) Recognition and measurement Business combinations 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 16(b)(i)). 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 Group reports provisional amounts for the items for which accounting is incomplete. The provisional amounts are adjusted during the measurement period (no longer than 12 months from the initial acquisition) on a retrospective basis by restating the comparative information presented in the financial report. 113 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 26. Business acquisitions (continued) (c) Critical accounting estimates and judgements i. 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 identifiable intangible assets have been acquired in the business combinations other than Goodwill. Experts were engaged to determine the fair value of assets acquired at the acquisition date. 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. 27. Business divestments (a) Business disposal and discontinued operations The Group sold the following businesses during the 2023 year as detailed below: Year Name of business Date of sale Principal activity Proportion disposed 2023 Castle Hill Autos No. 1 Pty Ltd 30 June 2023 Automotive Business 2023 Essendon Nissan 5 September 2023 Automotive Business 2023 West Auckland Nissan 29 November 2023 Automotive Business NET ASSETS DISPOSED OF Receivables, prepayments and cash Inventory Property Plant and equipment Intangible assets Creditors, borrowings and provisions Net assets disposed Total consideration received (100% cash) Liabilities paid on our behalf Sale consideration for businesses Sale consideration for properties Total sale consideration Gain on sale of businesses Loss on sale of properties Total gain on sale 100% 100% 100% Consolidated 2023 $’000 5,810 7,431 71,852 944 24 (12,633) 73,428 77,461 - 9,261 68,200 77,461 7,685 (3,652) 4,033 The Directors have considered these disposals during the twelve month period to 31 December 2023 in the context of AASB 5 Non-current Assets Held for Sale (AASB 15), 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, noting this is not a separate major line of business. Other divestments During the year the Group deregistered the following entities with the Australian Securities and Investments Commission: - Janasen Pty Ltd - Matchacar Pty Ltd - Melbourne Truck and Bus Centre Pty Ltd - Novated Direct Pty Ltd - Nundah Motors Pty Ltd - VMS Pty Ltd - Western Equipment Rentals Pty Ltd - Zupps Gold Coast Pty Ltd 114 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 28. 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 2023 no subsidiary was in default in respect of any arrangement guaranteed by the parent entity and all amounts owed have been brought to account as liabilities in the financial report. (b) Deed of cross guarantee Eagers Automotive Limited operates a deed of cross guarantee lodged with the Australian Securities and Investments Commission as at 31 December 2023. Under the deed of cross guarantee each company within the Closed Group guarantees the debts of the other companies. The maximum exposure of the parent entity in relation to the cross guarantees is $3.00 billion (2022: $2.76 billion). Refer to Note 25 for a listing of subsidiaries party to the deed. 29. 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 30. Remuneration of auditor Deloitte and related network firms1 Audit or review of financial reports: Group Subsidiaries and joint operations Other assurance and agreed-upon procedures under other legislation or contractual arrangements Other services: Tax compliance services Regulatory compliance services Other Total remuneration for other services Other auditors and their related network firms Audit of subsidiary financial reports 1. The auditor of Eagers Automotive Limited is Deloitte Touche Tohmatsu. Consolidated 2023 $’000 31,740 2022 $’000 11,343 Consolidated 2023 $’000 2022 $’000 1,072 702 1,774 32 315 20 116 451 50 2,307 1,011 283 1,294 16 453 47 6 506 - 1,816 115 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 31. Subsequent events Results of General Meeting to Approve Acquisition of Dealership Group in Victoria In 2023, the Company announced that it had agreed to acquire a portfolio of dealerships and key strategic properties located across Melbourne and the Mornington region of Victoria from a group of companies associated with Mr Nick Politis for a combination of cash and shares in the Company. On 30 January 2024, the Company held a General Meeting of shareholders to pass the proposed resolution, to acquire the dealerships and the properties, and to enter into the leases and to issue the consideration shares. On the same day, the Company announced the results of its General Meeting of shareholders in which the resolution was passed on a poll, with 99.13% of votes in favour. Completion is expected to take place on or about 29 February 2024. 32. Key management personnel The remuneration report included in the Directors’ Report sets out the remuneration policies of the Group 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 Directors and Executives of Eagers Automotive Limited during the financial year were: (a) Details of key management personnel i. Directors T B Crommelin S A Moore N G Politis D T Ryan M J Birrell G J Duncan D S Blackhall M V Prater ii. Executives D G Stark K T Thornton E Geschke Chairman (non-executive) Director and Chief Financial Officer Director (non-executive) Director (non-executive) Director (non-executive) Director (non-executive) Director (non-executive) Director (non-executive) Company Secretary Chief Executive Officer Chief Operating Officer - Automotive (b) Compensation of key management personnel The aggregate compensation made to key management personnel of the Company and the Group is set out below. Consolidated 2023 $’000 5,998 189 1,321 7,508 2022 $’000 5,813 180 1,713 7,706 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 32(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 34. 116 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 32. Key management personnel (continued) (f) Share-based payments Plan M: EPS Performance Rights and Options – Key Executives The Group has an Earnings Per Share (EPS) based performance rights and option compensation scheme for specific executive officers which commenced 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 PERFORMANCE RIGHTS Number 54,668 74,042 76,646 79,365 PERFORMANCE OPTIONS Number 2,173,910 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% Grant date End performance period Expiry date Fair value at grant date 24-Feb-21 24-Feb-21 24-Feb-21 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 Grant date 24-Feb-21 End performance period 31-Dec-24 Expiry date 30-Apr-25 Fair value at grant date $ 2.76 No performance rights were forfeited or expired during the year. 74,042 Plan M rights were issued during the year. No options were granted during the year The value of the performance rights expensed during the year was $495,835, with a cumulative expense being recognised at 31 December 2023 of $2,987,509 (2022: $2,491,674). The value of the performance options expensed during the year was $1,324,988, with a cumulative expense being recognised at 31 December 2023 of $4,299,984 (2022: $2,974,996). 117 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 33. Other share-based payments Plan K: EPS Performance Rights and Options – Key Executives The Group has an Earnings Per Share (EPS) based performance rights and options compensation scheme for one specific executive officer which commenced in 2016. The fair value of these performance rights and options is calculated on grant date and recognised over the period to vesting. The vesting of the performance rights and options granted is based on the achievement of specified earnings per share growth targets and interest cover thresholds. The fair value has been calculated using a binomial option pricing model based on numerous variables including the following: PERFORMANCE RIGHTS Award date 31 March 2016 Vesting date Expiry date Share price at grant date Expected life Volatility Risk free interest rate Dividend yield PERFORMANCE OPTIONS Award date 31 March 2016 Vesting date Expiry date Share price at grant date Exercise price Expected life Volatility Risk free interest rate Dividend yield 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-24 31-Mar-24 31-Mar-24 31-Mar-24 $9.75 1.0 year 27% 1.95% 3.8% $9.75 $9.75 $9.75 2.0 years 3.0 years 4.0 years 27% 1.88% 3.8% 27% 1.90% 3.8% 27% 1.98% 3.8% 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-24 31-Mar-24 31-Mar-24 31-Mar-24 $9.75 $10.34 $9.75 $10.34 $9.75 $10.34 $9.75 $10.34 4.5 years 5.0 years 5.5 years 6.0 years 27% 2.03% 3.8% 27% 2.08% 3.8% 27% 2.13% 3.8% 27% 2.18% 3.8% One specific executive has been granted rights and options under the EPS share incentive plan (Plan K). The modified grant date method (AASB 2) is applied to this incentive plan whereby the cost of the plan is determined by the value of the rights and options at grant date and the probability of the EPS targets being achieved and vesting occurring. The number of rights and options granted under the plan is as follows: PERFORMANCE RIGHTS Number 7,987 8,296 8,620 8,960 PERFORMANCE OPTIONS Number 48,076 46,012 44,910 43,859 Grant date 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 $9.39 $9.04 $8.70 $8.37 Grant date End performance period Expiry date Fair value at grant date 31-Mar-16 31-Mar-16 31-Mar-16 31-Mar-16 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Mar-24 31-Mar-24 31-Mar-24 31-Mar-24 $1.56 $1.63 $1.67 $1.71 No performance rights or options were forfeited or expired during the year. A total of 182,857 options were exercised during the year. No costs of the share plan were expensed during 2023 (2022: nil). The share plan was fully expensed by the end of 2019, with a cumulative expense being recognised of $599,980. Recognised share-based payments expenses Refer Note 23(a) for movements in the share-based payments reserve. 118 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 iii. Ms M Prater is a director and owner of a number of properties leased by subsidiaries of Eagers Automotive Limited. The lease transactions of $13,256,552 (2022: $nil as Ms M Prater was not a related party) 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. iv. Controlled entities may, from time to time, sell motor vehicles, parts and servicing of motor vehicles for domestic use to directors of entities in the consolidated entity or their director-related entities within a normal employee relationship on terms and conditions no more favourable than those which it is reasonable to expect would have been adopted if dealing with the directors or their director-related entities at arm’s length in the same circumstances. Wholly-owned Group The parent entity of the wholly-owned group is Eagers Automotive Limited. Information relating to the wholly-owned group is set out in Note 25. 34. 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 $1,872,323 (2022: $1,074,893) and purchases of $859,686 (2022: $1,005,027) during the last 12 months, are primarily the sale and purchase of spare parts and accessories. During the year, the Group also purchased a property located in the ACT for $8,229,000, and leased a property owned by Mr N G Politis, with future lease payments valued at $828,559, also in the ACT. These transactions were 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 $882,121 (2022: $1,412,805) 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. During the period $13,200 (2022: $109,956) was received in relation to short term sub-lease arrangements. Furthermore, in the prior year Mr M Birrell purchased stock with a value of $8,212 from one of the subsidiaries, with the transactions being carried out under terms and conditions no more favourable than those which is reasonable to expect to have been applied if the transactions were at arm’s length. No stock was purchased in the current year. 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 $59,967 (2022: $89,900), are commissions paid to the consolidated entity and are carried out under terms and conditions no more favourable than those which it is reasonable to expect would have applied if the transactions were at arm’s length. 119 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 35. Earnings per share (a) Basic earnings per share From operations attributable to the ordinary equity holders of the company (b) Diluted earnings per share Consolidated 2023 Cents 110.7 2022 Cents 121.3 From operations attributable to the ordinary equity holders of the company 110.5 121.1 (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 DILUTED EARNINGS PER SHARE Profit for the year attributable to share holders of the parent 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 Consolidated 2023 $’000 2022 $’000 299,068 (17,968) 281,100 324,340 (16,173) 308,167 281,100 308,167 281,100 308,167 2023 Number 2022 Number 253,847,590 254,010,439 622,803 553,128 Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted earnings per share 254,470,393 254,563,567 120 Notes to and Forming Part of the Consolidated Financial Statements (continued) 31 December 2023 36. Reconciliation of net profit after tax to the net cash inflows from operations Net profit after tax Depreciation and amortisation Impairment expense Share of profits of associates Gain on disposal of non-financial assets Loss/(gain) on sale of property, plant and equipment Employee share scheme expense Gain on sale of businesses (INCREASE)/DECREASE IN ASSETS - Receivables Inventories Prepayments Non-current receivables Deferred tax assets INCREASE/(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, 27 5, 27 Consolidated 2023 $’000 299,068 121,296 17,451 (1,277) (3,551) 3,652 1,821 (7,685) (72,187) (560,708) (11,188) (3,825) 4,428 2022 $’000 324,340 116,603 16,727 (1,067) (2,813) (17,121) 2,396 (35,248) (46,340) (185,252) (2,893) - 9,884 630,357 209,552 3,662 (2,658) (2,393) 2,927 (1,057) 16,905 416,263 407,543 37. Changes in liabilities arising from financing activities The below table represents the cash and non-cash movements in financing activities for 2023: Term facility Capital loan Lease liabilities Total 1 January 2023 Financing cashflows Termination of leases 104,560 339,326 20,000 (10,575) - - 1,022,770 (118,526) (136,500) 1,466,656 (109,101) (136,500) Fair value adjustments/ rent reviews Property acquisitions New leases 31 December 2023 - - 74,543 74,543 - 31,609 - - - 35,864 124,560 360,360 878,151 31,609 35,864 1,363,071 The below table represents the cash and non-cash movements in financing activities for 2022: Term facility Capital loan Lease liabilities Total 1 January 2022 Financing cashflows Termination of leases - 104,560 326,029 (16,571) - - 1,126,145 (122,880) (20,150) 1,452,174 (34,891) (20,150) Fair value adjustments/ rent reviews Property acquisitions New leases 31 December 2022 - - 17,225 17,225 - 29,868 - - 104,560 339,326 - 22,430 1,022,770 29,868 22,430 1,466,656 121 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTNotes to and Forming Part of the Consolidated Financial Statements (continued)31 December 2023 Directors’ Declaration The Directors declare that: a. b. 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; In the Directors’ opinion, the consolidated financial statements and notes set out on pages 61 to 121 are in accordance with the Corporations Act 2001, including: i. Complying with Accounting Standards and the Corporate 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 Directors’ opinion, the consolidated financial statements and notes are in accordance with International Financial Reporting Standards, and a statement of compliance with these standards is included 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. The Directors declare that, in their opinion, there are reasonable grounds to believe that the Company and its subsidiaries to which the ASIC Corporation Instrument applies, as detailed in Note 25 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, 22 February 2024 122 Independent Auditor’s Report Deloitte Touche Tohmatsu ABN 74 490 121 060 Level 23, Riverside Centre 123 Eagle Street Brisbane, QLD, 4000 Australia Phone: +61 7 3308 7000 www.deloitte.com.au Independent Auditor’s Report to the Members of Eagers Automotive Limited RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt Opinion We have audited the financial report of Eagers Automotive Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 31 December 2023, the consolidated statement of profit or loss, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: • Giving a true and fair view of the Group’s financial position as at 31 December 2023 and of its financial performance for the year then ended; and • Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. 123 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORT KKeeyy AAuuddiitt MMaatttteerr HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr Our audit procedures included, but were not limited to: • Obtaining an understanding of and assessing the judgements made in identifying the Group’s CGUs and the level at which goodwill is allocated and tested for impairment. • Obtaining an understanding of the methodology applied by management in developing the impairment assessments including the underlying key assumptions. • Obtaining an understanding of management’s process in • preparing the impairment models used to estimate the recoverable amount of each CGU. Performing risk assessment procedures to identify the CGUs that displayed an elevated risk of impairment at 31 December 2023. These risk assessment procedures included, but were not limited to: o Assessing management’s historical forecasting accuracy through retrospective analysis of the actual results to forecast. o o Considering comparable company multiples, in relation to the CGUs implied multiples. In conjunction with our internal valuation specialists, assessing the reasonableness of key assumptions, including growth rates and discount rates. • In line with management’s disclosure in Note 16 (a) where it is noted that the New Zealand CGU is most sensitive to impairment, our risk assessment procedures identified a focus on this CGU was warranted and accordingly the following additional audit procedures were performed: o o Assessing the mathematical accuracy and integrity of management’s impairment model. In conjunction with our internal valuation specialists, assessing the methodology used to estimate the recoverable amount and challenging the reasonableness of key assumptions, including forecast cash flows, growth rates and the discount rate. o Performing independent sensitivity analysis on key assumptions. • Evaluating the adequacy of the related disclosures included within the financial report in Note 16. IImmppaaiirrmmeenntt tteessttiinngg ooff ggooooddwwiillll aanndd ootthheerr iinnttaannggiibbllee aasssseettss wwiitthh iinnddeeffiinniittee uusseeffuull lliivveess As disclosed in Note 16 (a), management has performed impairment testing on goodwill and other intangible assets with indefinite useful lives with a total value of $843.9 million (PY: $840.5 million). No impairment was identified. The recoverable amount of the Group’s cash generating units and groups of cash generating units (“CGUs”) to which goodwill has been allocated has been determined by management using the ‘value-in-use’ approach, which incorporates significant judgement related to the estimation of future cash flows, short term growth rates, long term growth rates and an appropriate discount rate. Accordingly, this is considered to be a key audit matter. 124 Independent Auditor’s Report Other Information The directors are responsible for the other information. The other information comprises the Directors’ Report which we obtained prior to the date of this auditor’s report, and also includes the following information which will be included in the Group’s annual report (but does not include the financial report and our auditor’s report thereon): Chairman’s Letter, Chief Executive Officer’s Message, Company Profile, 2023 Highlights, Sustainability Report, Controlled Entities and the Shareholder Information which is expected to be made available to us after that date. Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Group’s annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material 125 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTIndependent Auditor’s Report (continued) Independent Auditor’s Report (continued) 126 uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. •Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fairpresentation.•Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the financial report. We are responsible for the direction,supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt Opinion on the Remuneration Report We have audited the Remuneration Report included in the Directors’ Report for the year ended 31 December 2023 as set out on pages 42 to 57 of the Directors Report.In our opinion, the Remuneration Report of Eagers Automotive Limited, for the year ended 31 December 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. DELOITTE TOUCHE TOHMATSU David Rodgers Partner Chartered Accountants Brisbane, 22 February 2024 Controlled Entities As at 31 December 2023 Entity Name A.C.N. 132 712 111 PTY LTD A.P. FORD PTY. LTD. A.P. GROUP PTY LTD ACN Entity Name 132 712 111 BLACK AUTO CQ PTY LTD 010 602 383 BOONARGA WELDING PTY LTD 010 030 994 BRADSTREET MOTORS HOLDINGS PTY LTD A.P. MOTORS (NO.3) PTY. LTD. 010 585 252 BRADSTREET MOTORS PTY LIMITED A.P. MOTORS PTY. LTD. 010 579 996 BRIDGE NT PTY LTD ACM AUTOS HOLDINGS PTY LTD 621 081 552 CARDIFF CAR CITY HOLDINGS PTY LTD ACM AUTOS PTY LTD ACM LIVERPOOL PTY LTD 121 604 082 CARDIFF CAR CITY PTY LIMITED 121 604 055 CARLIN AUCTION SERVICES (NSW) PTY LTD ACN 135 015 191 099 480 903 602 181 386 061 172 183 670 979 889 602 181 751 062 072 299 069 462 148 ADTRANS AUSTRALIA PTY. LTD. 008 278 171 CARLINS AUTOMOTIVE AUCTIONEERS (QLD) PTY LTD 648 699 325 ADTRANS AUTOMOTIVE GROUP PTY LTD 007 866 917 CARLINS AUTOMOTIVE AUCTIONEERS (S.A) PTY LTD 639 409 537 ADTRANS CORPORATE PTY LTD 056 340 928 CARLINS AUTOMOTIVE AUCTIONEERS (WA) PTY LTD 121 606 826 ADTRANS GROUP PTY LTD ADTRANS SYDNEY PTY LTD 008 129 477 CARLINS AUTOMOTIVE AUCTIONEERS PTY LTD 069 430 182 127 369 260 CARLINS GROUP HOLDINGS PTY LTD ADTRANS TRUCK CENTRE PTY LTD 106 764 327 CARSPLUS AUSTRALIA PTY LTD ADTRANS USED PTY. LTD. 074 561 514 CASTLEGATE ENTERPRISES 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 NEWCASTLE 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 WA (2015) PTY LTD AHGCL 2016 PTY LTD AP TOWNSVILLE PTY LTD APE CARS MGMT PTY LTD ASSOCIATED FINANCE PTY. LIMITED AUCKLAND AUTO COLLECTION LIMITED AUSTRAL PTY LTD AUT 6. PTY LTD AUTO AD PTY LTD AUTOMOTIVE HOLDINGS GROUP (QUEENSLAND) PTY LTD 116 779 198 CFD (2012) PTY LTD 162 034 111 CH AUTO PTY LTD 609 750 558 112 854 387 064 015 676 128 362 185 147 802 211 600 832 755 132 055 728 132 055 737 145 856 328 132 055 700 609 816 257 603 598 750 615 618 678 600 279 927 632 136 906 009 677 678 NZCN939375 009 662 202 008 985 886 605 815 021 127 499 683 CHELLINGWORTH PTY LTD CITY AUTO (2016) HOLDINGS PTY LTD CITY AUTO (2016) PTY LTD CITY AUTOMOTIVE GROUP PTY LIMITED CITY MOTORS (1981) PTY LTD CRAMPTON AUTOMOTIVE PTY LTD DUAL AUTOS PTY LTD E. G. EAGER & SON PTY. LTD. EACAB PTY LTD EAGERS ACT CARS MGMT PTY LTD EAGERS ACT PTY LTD EAGERS ACT RENTALS PTY LTD EAGERS FINANCE PTY. LTD. EAGERS MD PTY LTD EAGERS NOMINEES PTY. LTD. EAGERS NT PTY LTD EAGERS RETAIL PTY. LTD. EAGERS TACT PTY LTD EAGERS VIC PTY LTD EASST PTY LTD EASY AUTO 123 PTY LTD EUROCARS (SA) PTY LTD AUTOMOTIVE HOLDINGS GROUP (VICTORIA) PTY LTD 158 935 249 EVDEALER GROUP PTY LTD AUTOMOTIVE HOLDINGS GROUP PTY LTD 111 470 038 F.R. IRELAND PTY. LTD. BASW PTY LTD BIG ROCK 2005 PTY LTD BIG ROCK PTY LTD 601 452 199 FALCONET PTY. LTD. 112 854 403 FERNTREE GULLY AUTOS HOLDINGS PTY LTD 008 968 867 FERNTREE GULLY AUTOS PTY LTD BILL BUCKLE HOLDINGS PTY LIMITED 062 951 106 FINMO PTY LTD 619 469 966 082 428 279 088 414 715 158 508 233 600 297 783 112 854 467 611 922 993 611 928 968 067 985 602 008 973 402 057 283 253 113 068 830 009 658 306 652 679 000 659 468 934 658 497 753 658 934 224 009 721 288 009 727 753 009 723 488 672 223 200 009 662 211 658 497 299 616 989 596 651 942 264 148 136 314 114 124 346 657 632 758 009 983 126 008 936 409 613 081 208 145 562 401 621 801 054 127 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTEntity Name ACN Entity Name GIANT AUTOS (1997) PTY LTD 078 830 770 SABALAN HOLDINGS PTY LTD GIANT AUTOS PTY LTD 112 854 832 SABALAN PTY LTD GRAHAM CORNES MOTORS PTY. LTD. 008 123 993 SHEMAPEL 2005 PTY LTD ACN 602 181 117 002 698 188 112 854 412 GRAND AUTOS 2005 PTY LTD 112 854 878 SOUTH WEST QUEENSLAND MOTORS PTY LTD 600 279 589 HIGHLAND AUTOS PTY LTD 121 604 297 SOUTHEAST AUTOMOTIVE GROUP PTY LTD HIGHLAND KACKELL PTY LTD 121 805 785 SOUTHERN AUTOMOTIVE GROUP PTY LTD HM (2015) HOLDINGS PTY LTD 605 790 065 SOUTHSIDE AUTOS (1981) PTY LTD HM (2015) PTY LTD IB MD PTY LTD IB MOTORS PTY LTD 605 791 142 SOUTHSIDE AUTOS 2005 PTY LTD 169 210 173 SOUTHWEST AUTOMOTIVE GROUP PTY LTD 169 209 607 SUBMO PTY LTD JANETTO HOLDINGS PTY LTD 104 649 505 SWGT PTY LTD KINGSPOINT PTY LTD 104 766 565 TOTAL AUTOS (1990) PTY LTD LEASELINE & GENERAL FINANCE PTY. LTD. 010 131 361 TOTAL AUTOS 2005 PTY LTD LIONTEAM PTY LTD 112 854 458 VEHICLE STORAGE & ENGINEERING PTY LTD LWC INTERNATIONAL LIMITED NZBN 9429031129497 WA TRUCKS PTY LTD LWC LIMITED NZBN 9429033893587 WEBSTER TRUCKS MGMT PTY LTD MAITLAND CITY MOTOR GROUP HOLDINGS PTY LTD 602 179 000 WIDEVALLEY PTY. LTD. MAITLAND CITY MOTOR GROUP PTY LTD 112 526 431 WS MOTORS PTY LTD MB VIC PTY LTD MBSA MOTORS PTY LTD MCM AUTOS PTY LTD 608 791 877 WS VEHICLE SALES PTY LTD 132 711 892 ZUPP HOLDINGS PTY. LTD. 121 606 862 ZUPPS ASPLEY PTY. LTD. MCM SUTHERLAND PTY LTD 121 606 808 ZUPPS MT GRAVATT PTY LTD MELBOURNE CITY AUTOS (2012) PTY LTD 150 616 747 ZUPPS PARTS PTY. LTD. MELVILLE AUTOS 2005 PTY LTD 112 854 421 Southside Autos (1981) Pty Ltd MELVILLE AUTOS PTY LTD 107 617 774 Southside Autos 2005 Pty Ltd MORNINGTON AUTO GROUP (2012) PTY LTD 150 616 890 Southwest Automotive Group Pty Ltd 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 157 829 626 Total Autos (1990) Pty Ltd NORTH CITY (1981) PTY LTD NORTH CITY 2005 PTY LTD 008 974 061 Total Autos 2005 Pty Ltd 113 532 077 Vehicle Storage & Engineering Pty Ltd NORTHSIDE AUTOS 2005 PTY LTD 112 854 805 VMS Pty. Ltd. NORTHSIDE NISSAN (1986) PTY LTD 008 974 070 WA Trucks Pty Ltd NORTHWEST (WA) PTY LTD 158 935 294 Webster Trucks Mgmt Pty Ltd NSW VEHICLE WHOLESALE PTY LIMITED 140 971 259 Western Equipment Rentals Pty Ltd NUFORD FORD PTY LTD 112 854 449 Widevalley Pty Ltd OPM (2012) HOLDINGS PTY LTD 623 139 177 WS Motors Pty Ltd OPM (2012) PTY LTD 158 377 452 Zupp Holdings Pty. Ltd. OSBORNE PARK AUTOS PTY LTD 112 854 476 Zupps Aspley Pty. Ltd. PENRITH AUTO (2016) PTY LTD 611 323 150 Zupps Gold Coast Pty. Ltd. PERTH AUTO ALLIANCE PTY LTD 089 353 346 Zupps Mt Gravatt Pty Ltd PRECISION AUTOMOTIVE TECHNOLOGY PTY LTD 163 233 207 Zupps Parts Pty. Ltd. PT (2013) PTY LTD RENT TWO BUY PTY LTD RL SUBLESSOR PTY LTD 128 162 030 015 165 880 562 639 689 320 103 071 290 103 181 237 008 968 821 112 854 369 096 279 480 637 015 457 098 706 051 009 162 387 112 854 896 121 604 242 112 854 341 632 136 899 065 389 120 608 791 804 616 472 729 009 824 462 009 900 298 009 695 694 009 842 648 008 968 821 112 854 369 096 279 480 637 015 457 098 706 051 009 162 387 112 854 896 121 604 242 121 604 037 112 854 341 632 136 899 131 269 184 065 389 120 608 791 804 009 824 462 009 900 298 009 681 261 009 695 694 009 842 648 Controlled Entities (continued)As at 31 December 2023 Shareholder Information As at 25 March 2024 Distribution of Equity Securities Range 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and over Total Ordinary Shareholders Percentage of Units 5,746 3,915 843 809 111 0.92 3.60 2.41 7.88 85.19 11,424 100.00 The company’s quoted securities consist of 258,684,137 ordinary fully paid shares (ASX:APE). 503 shareholders hold less than a marketplace parcel of 37 shares at $13.88 per share. Equity Security Holders Twenty Largest Quoted Equity Security Holders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 WFM MOTORS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED JOVE PTY LTD ARGO INVESTMENTS LIMITED WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED MUTUAL TRUST PTY LTD NATIONAL NOMINEES LIMITED ALAN PIPER INVESTMENTS (NO1) PTY LTD BNP PARIBAS NOMS PTY LTD BERNE NO 132 NOMINEES PTY LTD CPU SHARE PLANS PTY LIMITED BIRRELL INVESTMENTS PTY LTD FOUR LEAF FAMILY PTY LTD N G P INVESTMENTS (NO2) P/L BNP PARIBAS NOMINEES PTY LTD BERNE NO 132 NOMINEES PTY LTD HEGFORD PTY LTD 20 LG MCGRATH INVESTMENTS PTY LTD Total Substantial Shareholders Substantial holders1 in the Company are set out below: WFM MOTORS PTY LTD, its group companies and Nicholas George Politis VERNON CHARLES WHEATLEY 1. As disclosed in substantial holding notices received by the Company Ordinary Shares Number of Shares Held Percentage of Shares Issued 70,553,037 25,995,070 25,441,092 15,220,814 12,396,588 6,083,588 5,864,230 5,348,239 5,058,969 4,936,250 2,628,352 2,444,101 2,176,002 2,000,000 2,000,000 1,910,097 1,845,712 1,574,127 1,381,652 1,328,632 27.27 10.05 9.83 5.88 4.79 2.35 2.27 2.07 1.96 1.91 1.02 0.94 0.84 0.77 0.77 0.74 0.71 0.61 0.53 0.51 196,186,552 75.84 Notice Date No of Shares1 29 Feb 2024 72,469,048 17 Nov 2019 15,356,763 129 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTShareholder Information (continued) As at 25 March 2024 Performance Rights and Options 79,365 unvested performance rights and 1,992,751 unvested options are on issue to 12 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 No shares were purchased during the reporting period for the purposes of the Company’s employee incentive scheme. On-market Buy-back The Company does 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/ 130 Board of Directors Tim Crommelin, Chairman, Non-executive Director Nick Politis, Non-executive Director Dan Ryan, Non-executive Director Marcus Birrell, Non-executive Director Sophie Moore, Executive Director and Chief Financial Officer Greg Duncan, Non-executive Director David Blackhall, Non-executive Director Michelle Prater, Non-executive Director Katie McNamara, Non-executive Director Chief Executive Officer Keith Thornton Company Secretary Denis Stark Corporate Directory Eagers Automotive Limited ABN 87 009 680 013 Incorporation Incorporated in Queensland on 17 April 1957 Registered Office 5 Edmund Street Newstead QLD 4006 Australia Postal Address PO Box 199 Fortitude Valley QLD 4006 Australia 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: 1300 552 270 Enquiries outside Australia: +61 3 9415 4000 131 EAGERS AUTOMOTIVE LIMITED — 2023 ANNUAL REPORTeagersautomotive.com.au 

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