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LindsayAnnual Report 2023
NAVIGATING
THE FUTURE
CONTENTS
MaxiPARTS Limited Overview
Chair’s Report
Managing Director’s Report
Our Commitment to ESG Initiatives
MaxiPARTS Operational Summary
Förch Australia Overview
Förch Australia Acquisition
Financial Report
Corporate Directory
01
02
03
06
08
10
11
12
78
MAXIPARTS LIMITED
OVERVIEW
WHO WE ARE
MaxiPARTS Limited (ASX: MXI) is a leading company
operating within Australia’s automotive and commercial
vehicle sector. Its product range includes commercial
vehicle parts for trucks and trailers, automotive
supplies and workshop consumables, catering to
a diverse customer base across several industries.
MaxiPARTS Limited owns brands MaxiPARTS and
Förch Australia.
OUR PEOPLE
MaxiPARTS Limited has over 350 employees who are dedicated to
servicing our valued customers. With some of the most experienced
staff in Australia in both the commercial vehicle parts area and the
workshop consumable & supplies sector, we are uniquely placed to
not only provide exceptional service and products, but solutions that
add value to our customers.
STRATEGIC SUPPLY PARTNERSHIPS
MaxiPARTS Limited, along with its combined entities, has been
operating for over three decades, during which it has built a strong
reputation and brand recognition with Australian consumers.
This has been achieved by establishing strategic supply
partnerships with industry leading suppliers across the globe.
OUR BRANDS
MaxiPARTS is one of the Australia’s leading independent
commercial vehicle parts distribution companies, with
27 stores conveniently situated across Australia, we are
committed to providing our customers with high-quality
products and exceptional customer service.
Förch Australia is one of Australia’s leading direct selling
companies of workshop consumables, predominantly
focused on automotive and commercial vehicle
workshops. Förch Australia has operations on the
West and East coast of Australia with plans to expand.
Annual Report 2023
01
CHAIR’S REPORT
Dear Shareholders,
It brings me great pride to present my first update as Chair of
MaxiPARTS. FY23 has shown the strength and discipline of the
underlying business and the logic of our strategy by delivering top
line revenues above $200m and ongoing EBITDA improvements.
To put this in context, the FY21 comparable sales at the time
of separation was $137m. I can’t thank the team enough for
their consistent focus on delivering our growth strategy.
More details will follow in our Managing Director’s Report.
We continue to be on the alert for further
acquisition opportunities that fit with our
strategic vision and enhance the value
of this business.
The Förch transaction was funded by
debt with an increase in the facility from
Commonwealth Bank as they continue to
support our growth as a distribution business.
The successful growth of the business
allows us to declare H2 dividend of 3.22
cents, taking the full year dividend payment
to 6.39 cents. I’d like to take the opportunity
to thank all our shareholders for their
patience and support over the last years,
and with our much more stable business
model we plan to continue to pay dividends
in line with our policy.
We also appreciate the support of
shareholders who have participated
in the dividend reinvestment plan.
I would like to once again take the
opportunity to thank Rob Wylie for his
leadership of the board over the last eight
years. Under Rob’s guidance the company
completely reinvented itself, allowing us to
deliver much better returns for you, our
shareholders. As the last piece of our board
renewal program, we welcomed Frank Micallef,
who takes on my prior role as Chair of Audit
and Risk, and adds a significant depth of
financial experience to our Board.
Finally, I again reiterate the Board’s
appreciation of the ongoing effort from the
whole MaxiPARTS team to deliver both
organic and inorganic growth resulting in
ongoing profit improvement, whilst keeping
themselves and their peers safe.
Regards,
Mary Verschuer
Chair
From a market perspective the impact of
COVID disruptions were waning as we
started the year, however the impacts of
inflation and labour shortages have needed
to be carefully managed throughout the year
and will continue to impact in the near future.
This year, after the successful acquisition
and integration of the Truckzone business,
we acquired 80% of the Förch Australia
business. This business is predominantly
workshop consumables which aligns with
our product expansion strategy, and provides
us an opportunity to expand this distribution
model nationally in line with our network
strategy. Being able to complete a second
acquisition within two years of separation
is a testament to the focus of the team.
As we move forward, the business remains
focused on delivering organic strategic
initiatives across the Network, People,
Product and Systems areas to grow the
business and drive further improvements
in our financial returns in both the
MaxiPARTS and Förch businesses.
02
MaxiPARTS Limited
MANAGING DIRECTOR’S
REPORT
It is with great pleasure to report that FY23 has seen the
business continue to deliver results that re-enforce the strategic
rationale behind the key decisions that were made to both
dispose of the Trailer Solutions business in August 2021 as
well as acquiring the Truckzone business in February 2022.
Key decisions as outlined above include:
SAFETY
• Stable earnings with predictable and
growing profits;
• Improving profit margins; and
• Strong cash generation allowing both
further investment in the business as
well as consistent capital distribution
to shareholders.
The strong financial results have been
delivered through a consistent focus on
delivering organic growth projects, margin
management, synergies linked to the
Truckzone acquisition and for one month,
a contribution from the acquisition of the
Förch Australia business.
With further investments made in our national
infrastructure through key projects including
consolidation of our Rocklea and Darra (QLD)
sites into a larger site in Richlands, relocating
our Gladstone (QLD) site and establishment
of a new branch in Bibra Lake (WA), the
MaxiPARTS business is well placed as
we move into FY24.
We remain confident that we can continue
to deliver on our proven track record of
delivering growth and profit improvement in the
MaxiPARTS business. With the acquisition
of the Förch Australia business, we now have
an additional operating stream to deliver
further growth and benefits which will further
accelerate and enhance the financial
performance of the Group in the
coming years.
The significant work completed in FY22
and FY23 on simplifying our safety program
and ensuring focus and effort was directed
towards the larger risks associated with the
distribution business we are today, has resulted
in significant improvement in our safety
performance in FY23.
MaxiPARTS as a business has never had as
many staff or sites and FY23 saw the fewest
(two) recordable injuries in our business’
history. This compared to FY22 which had
four recordable injuries (however that only
included four months of operation of the
Truckzone sites that incurred 10 injuries in
the year before the MaxiPARTS acquisition).
This performance has seen a 73% reduction
year on year in our Total Reportable Injury
Frequency Rate to end FY23 at 4.3.
The cultural adoption in respect of safety
of all staff joining MaxiPARTS, including the
recently acquired Förch Australia business,
has been extremely pleasing. While we have
injuries, we will never be satisfied with our
performance; however, we feel we are not
only meeting our legal responsibilities around
providing a safe working environment for our
staff, but are consistently demonstrating the
core value we have around safety, to ensure
we send all of our employee’s home safely
every day.
YEAR IN REVIEW
Cash and debt
Operating cashflow (from continued
operations) of $15.1m demonstrates the cash
generating ability of our distribution business
(FY22: operating cashflow of ($11.7m), which
included the MaxiTRANS Trailer Solutions
business). Operating cashflow included a
$3.9m increase in inventory for MaxiPARTS
Operations to support the underlying revenue
growth and the strategic initiatives for high
growth revenue streams such as the
Japanese Parts program.
The Group reported a closing net debt balance
of ($1m), a decrease of ($2.9m) from the
year-ended 30 June 2022.
The net cashflow included the following
investing and financing activities for the year:
• acquisition of Förch Australia for ($9.0m)
(net of cash);
• capital expenditure of ($1.6m);
• lease payments of ($5.2m);
• dividends paid of ($2.2m); and
• an increase in drawn debt of $5.0m.
The Group increased its total loan facilities
during the year from $10.0m to $20.0m, to
facilitate the acquisition of Förch Australia.
$15.0m of the loan facility was drawn at the
year ended 30 June 2023.
Annual Report 2023
03
MANAGING DIRECTOR’S REPORT CONT.
As a result of renegotiating our debt facilities,
the business has facilities with an extended
term (approx. 3 years – May 2026) and
sufficient head room to allow us to continue
to invest in the operations of the business.
We continue to operate with a conservative
leverage ratio in line with our stated capital
management policies.
Operating Results
Revenue of $201.7m was a record result
for MaxiPARTS despite the decline in sales
to the previously owned Trailer Solutions
business in H2 (as expected).
Net Profit before tax (from continued
operations) of $10.5m in FY23
compared to $7.3m in FY22.
Underlying MaxiPARTS
Sales to previously owned Trailer Solutions business
Förch Australia (1 month)
Total
Sales to Trailer Solutions business previously eliminated
when part of same Group
Reported Revenue
FY23
($Millions)
FY22
($Millions)
Movement
($ Millions)
%
Movement
175.5
25.0
1.2
201.7
201.7
129.4
27.9
0
157.3
(4.5)
152.8
46.1
(2.9)
1.2
44.4
35.6%
(10.4%)
28.2%
48.9
32%
Growth in the underlying MaxiPARTS
business has been generated by a
combination of:
• full-year impact of the expanded site
network following the acquisition of the
Truckzone business in February 2022,
which saw the addition of seven stores
(post-consolidation) to the network;
• growth from organic product and
customer programs focused on
gaining market share; and
• increases in selling prices across the
group’s product range, through effective
pass-through of supplier product cost
increases to the end customer.
Pricing adjustments to recover input cost
variations combined with supplier negotiated
cost reductions after the Truckzone acquisition
and favourable customer & product mix
changes resulted in gross profit margins
improving by 1.8% (compared to FY22)
in MaxiPARTS operations.
Like many businesses, in FY23 MaxiPARTS
Operations has seen higher than traditional
cost inflation in key areas such as freight,
salary & wages and leases.
EBITDA of $18.5m increased by 31.1% from
pcp, and EBITDA margin of 9.2% increased
by 20 bps from pcp of 9.0%, which was
a combination of:
• revenue scale benefits and an increase in
product margins through a combination of
organic growth initiatives for higher margin
product lines, supply chain synergies,
and price management;
• a decline in the lower margin sales to
ATSG now forming a lower percentage
of the overall Group sales;
• partly offset by cost inflation of wages,
site costs and freight, and the initial dilutive
impact of the integration of the Truckzone
sites that had a lower EBITDA margin.
04
MaxiPARTS Limited
The Group expects the combined outcome
of the above to result in strengthening
key performance metrics such as EBITDA
and EBIT margins, as the combined growth
in underlying MaxiPARTS Operations and
Förch Australia revenue more than offset
the continued inflationary pressure on the
Group’s cost base and the reduction in
the lower margin sales to the ATSG
Trailer business.
The business could not have achieved what it
has in FY23 if it wasn’t for the support of our
ever-expanding customer base, supportive
supply partners and dedicated employees,
so I would like to thank all of them for their
support over the last year.
Peter Loimaranta
Managing Director & CEO
The above resulted in MaxiPARTS reporting a
net profit before tax from continuing operations
of $10.5m, representing a 43.8% increase
over the pcp (FY22: $7.3m), or $10.9m net
profit before tax from continued operations
excluding significant items, an increase of
33.9% on the prior year. The newly acquired
Förch Australia business contributed $0.27m
of net profit before tax, and before minority
interests, to the Group for the period.
The Group made a reportable Net Profit after
tax of $6.0m. This result included ($1.4m)
loss from discontinued operations including
tax for costs associated with closing out
auditing, tax, other run-off and compliance
costs, FY22 tax true-up and legal fees
associated with the ATSG dispute.
OUTLOOK
With the prevailing economic uncertainty
caused by the recent interest rate increases in
FY22 and FY23, as well as ongoing inflationary
pressure, like many other businesses,
MaxiPARTS finds itself navigating a period
of heightened unpredictability. Despite these
challenges, the parts industry has traditionally
exhibited resilience throughout various
economic cycles, and we are continuing
to observe strong underlying activity levels.
We anticipate our underlying MaxiPARTS
Operations revenue will continue to grow as
the Group continues to focus on the target
revenue synergies associated with the
Truckzone acquisition in February 2022, with
many of the initiatives to take 2 – 3 years to
reach maturity, as well as ongoing focus to
recover cost increases and projects to drive
market share gains. Whilst the Group does
expect this to translate into low double-digit
growth for the underlying MaxiPARTS
business, we do expect to see a much larger
reduction in low margin sales to ATSG, the
formerly owned Trailer Solutions business.
The reduction which has been seen in
FY23 H2, will continue to decline into FY24
as the parties move towards the end of
the previously agreed supply agreement
(August 2024). The above two items will
somewhat offset, resulting in a much flatter
revenue line for the business in FY24 than
recent years, before the underlying growth
drives stronger total revenue growth
in FY25 and beyond.
Key non-product cost areas such as freight,
salary & wages and operating lease costs
are expected to continue to increase generally
in line with national inflationary levels.
We do expect revenue growth in the Förch
Australia business to be greater than 20%
as we invest in expanding the national sales
team with the bulk of the benefit coming
in the second half of FY24.
Annual Report 2023
05
OUR COMMITMENT
TO ESG INITIATIVES
In FY23, MaxiPARTS made significant improvement across
various Environmental, Social, and Governance (ESG)
initiatives. Whilst there is always room for improvement, we
are excited to highlight our achievements in these areas.
We recognise the importance of collective efforts in this space, and as a result,
we have become a member of the Australian Packaging Covenant Organisation
(APCO). This partnership allows us to coordinate our reduction efforts more
effectively, leveraging the expertise and resources of APCO and its network.
By joining forces, we can maximise the impact of our sustainability initiatives
and contribute to a more sustainable future.
06
MaxiPARTS Limited
ENVIRONMENTAL
SOCIAL
GOVERNANCE
To reduce our environmental footprint, we
continuously collaborate with our suppliers
to explore ways to reduce packaging waste
or adopt environmentally friendly alternatives.
By working closely with these suppliers,
we have taken significant strides towards
minimising our ecological impact. Our ongoing
efforts to reduce the use of plastic bags
recently resulted in the elimination of 30,000
bags for a single product SKU with plans
to extend this reduction initiative across
other products.
We are also committed to reducing power
usage and promoting materials recycling
across our branch network; our efforts so
far have resulted in several physical branch
locations retrofitted with energy-efficient
lighting solutions and solar generation
equipment being included on our new
Richlands site; there are further plans to
roll these initiatives out across the network.
Undeniably, the transportation industry
plays a significant role in contributing
to environmental challenges, such as
greenhouse gas emissions and air pollution;
we recognise these concerns and understand
the importance of taking proactive steps to
mitigate environmental impact. As a result,
we have been undertaking a trial of an electric
delivery vehicle, which will allow us to assess
their feasibility and effectiveness in our
day-to-day operations.
In the social domain, we strongly emphasise
our employees’ well-being and engagement.
Our annual pulse survey had an impressive
participation rate of 73% among our staff.
It achieved an overall engagement score of
78%, which speaks volumes about our efforts
to create a workplace where our employees
feel valued and motivated.
Our employees’ well-being extends beyond
the workplace; our Employee Assistance
Program (EAP) is free and available to all
our employees and their families. By providing
this program, we demonstrate our commitment
to their holistic well-being and recognise the
importance of supporting them in all aspects
of their lives.
We have implemented a Supplier Code
of Conduct to promote responsible business
practices throughout our supply chain.
This code ensures that our suppliers adhere
to labour rights and environmental management
commitments, reinforcing our commitment to
ethical sourcing. By setting clear expectations
for our suppliers, we strengthen our position
as a socially responsible company that
contributes positively to society.
We also believe in the power of diversity
and inclusion to foster an inclusive workplace
culture. In FY23, we conducted a
comprehensive diversity and inclusion
training program, which was mandatory
for all management.
We place great importance on all ESG
practices, and our Board approved plan
will continue to highlight our recognition
of the significance of environmental activities
and the need to report on their impact.
With all Non-Executive Directors being
Independent Directors, we prioritise
transparency and accountability in our
decision-making processes.
In FY23, our Female Board participation was
40% and our first female Chair was appointed.
This achievement showcases our commitment
to diversity at all leadership levels and our
recognition of diverse perspectives’ adding
value to our organisation.
We will continue to build upon these
accomplishments as we progress and
set even more ambitious targets for our
ESG initiatives. By continually striving for
excellence in environmental stewardship,
social responsibility, and governance
practices, we aim to inspire our employees
and other companies in our industry
to contribute to a more sustainable
and inclusive future.
We thank our employees, suppliers, and
stakeholders who have been instrumental
in our ESG journey. Together, we can create
a brighter, more sustainable future.
Annual Report 2023
07
MAXIPARTS OPERATIONAL SUMMARY
Since the Truckzone acquisition was completed in February 2022, MaxiPARTS has
been working through a variety of projects targeted towards helping us extract as much
value as possible out of the acquisition ensuring the future MaxiPARTS business has
a strong and stable foundation to support additional growth in the future.
THESE PROJECTS HAVE INCLUDED:
• Gaining sales growth from core
• A targeted key account acquisition
• Site network rationalisation and
product offerings
and growth program
additional investment
–
–
–
Trailer product through the
acquired Truckzone sites
Truck product through the
MaxiPARTS sites
Japanese product through
all sites
Revenue by Customer Segment – FY23
34%
30%
7%
15%
14%
Revenue by Product Segment – FY23
4%
15%
36%
16%
30%
Note: Data is generated from March to June 2023.
Percentages have been rounded up.
• Supply chain improvement and
diversification
• Investment in our E-Commerce
and digital marketing efforts.
Although many of these initiatives will span multiple years, the overall financial results
demonstrate the benefits already achieved and the product and customer group snap
shots below show our areas of focus are all trending in the directions we expected.
Fleet
Trailer OE
Workshop
Resellers
Cash and Other
Axles, Suspensions, Tyres,
Wheels, Brakes
Other General Products
Trailer Products
Truck, Engine, Filtration, Oil,
Lubricants, and Consumables
Japanese Truck Products
MaxiPARTS Bibra Lake, WA
Mezzanine storage, Truganina DC, VIC
08
MaxiPARTS Limited
E-COMMERCE AND
DIGITAL MARKETING
As reported in FY22, we saw a noticeable
shift in our customers’ buying behaviour,
largely due to the pandemic, however
as time went on, strong month-on-month
growth suggested the shift was here to stay.
Throughout FY23, MaxiPARTS saw
consistent monthly growth with total online
revenue surpassing all previous records,
showing an increase of 180% compared
to the previous year. This growth can be
attributed to the ongoing work surrounding
user-experience, product offering and
digital marketing initiatives.
Leveraging data-driven insights, we executed
targeted and high-impact digital marketing
campaigns across various online channels.
We also applied cutting-edge SEO strategies,
resulting in improved search engine rankings
and a substantial increase in organic traffic
to our website. The successful integration
of digital marketing analytics and automation
tools further optimised our efforts. As a result
of these efforts, MaxiPARTS experienced
dramatic growth in both brand awareness and
revenue generation, making digital marketing
a focal pillar of our ongoing success.
MaxiPARTS Richlands, QLD
NETWORK INVESTMENT
During FY23, the business completed several
key projects related to improving our national
site network including:
• Consolidation of two Perth sites
(previous MaxiPARTS site and acquired
Truckzone site) in July 2022
• Relocation of existing Gladstone
(QLD) store into a more suitable site
• Opening of a new site in Bibra Lake
(WA) in May 2023
• Consolidation of the existing Rocklea
and Darra sites into a larger site
in Richlands (QLD)
• Investment into new Mezzanine storage
within the Truganina (VIC) warehouse
allowing national stocking of our Japanese
Product range, to both improve warehouse
efficiency as well as allowing the racking
in our Wetherill Park site to be relayed to
increase warehouse capacity in Sydney
In Q1 of FY24, the business will relocate the
Adelaide store into a larger site to support
future growth.
Annual Report 2023
09
FÖRCH AUSTRALIA OVERVIEW
Förch Australia is one of Australia’s leading direct selling companies for workshop,
installation and fastening products for trade and industrial companies. With sites in
Perth and Melbourne alongside a third-party distributor in Brisbane, Förch Australia
holds an exclusive Australian distribution agreement for all FÖRCH product with
Theo FÖRCH GmbH & Co KG of Germany.
80,000
Lines of quality German
products available
100%
No overstocking, product
quality and satisfaction
Market leading
stock fill rates
KEY PRODUCT CATEGORIES
Chemicals
Drilling, Tapping
& Threading
Cutting, Sanding
& Sawing
Soldering
& Welding
DIN & Standard
Parts
Electronics
Vehicle Products
Truck Range
Hand Tools
Pneumatic Tools
Storage Systems
Workshop
Requirements,
Devices & Working
Safety
10
MaxiPARTS Limited
FÖRCH AUSTRALIA ACQUISITION
On the 1st of June 2023, MaxiPARTS completed the acquisition of 80% of the equity in
the Förch Australia business. The agreements include a put and call option structured
to acquire the remaining 20% within 2-5 years under an agreed valuation principle.
Förch Australia is a distributor of workshop
consumables, predominantly focused on
automotive and commercial vehicle workshops
and holds an exclusive Australian distribution
agreement for all FÖRCH product with
Theo FÖRCH GmbH & Co KG of Germany
through to April 2030.
Trading performance before acquisition
(based on H1 FY23 results) show Förch
Australia annualised Revenue of $11.7m
and annualised normalised adjusted EBITDA
of $2.5m*. In the one month of trading under
MaxiPARTS control, the business produced
results in line with these financial metrics.
The acquisition is strongly aligned with
MaxiPARTS M&A strategy criteria and
is our first adjacent product acquisition.
Förch provides immediate incremental
improvements to both profit margins and
earnings per share metrics, with significant
opportunity to add further scale in the
coming years.
Förch Australia is predominantly a Western
Australia based business with a new, smaller
site in Victoria that, with MaxiPARTS support,
can look to replicate the highly successful
Western Australia model across the rest
of Australia.
The businesses currently share a set
of core business operating and success
factors including:
• Management of a high-volume industrial
product range
• Managing a long lead time overseas
supply chain
• A predominantly B2B customer base
All employees of Förch Australia have
remained with the business post completion,
including the two current Executive Directors,
Terry Childs and Peter Burgess, who will
be responsible for the day-to-day operating
of the Förch Australia business, reporting to
the MaxiPARTS Managing Director and CEO.
ALIGNS WITH CORE M&A STRATEGY
MaxiPARTS Limited
Förch Australia
Operating in the commercial
vehicle parts market
Supplier of workshop consumables to a variety of B2B customers, including the
Commercial vehicle market
Enhances product range
and geographies
Enhances Group’s core product range into a logical adjacent product segment
with only minor current exposure
Clear post-acquisition
integration and growth strategy
Detailed integration planning complete/plans for the activities to grow into a
national business utilising existing MaxiPARTS network and administration support
Cultural and Corporate fit
Culture and business operating fundamentals strongly aligned
Experienced Leadership Team
Existing staff, including current owners (Founders) continuing
in current roles post completion
Attractive valuation and
earnings accretive
Attractive valuation multiple with immediate benefits to margins and EPS
• Logical adjacent product acquisition of a manageable size and immediate financial benefits.
*
Figure is pre-AASB EBITDA.
Annual Report 2023
11
CONTENTS
Report of the Directors
Lead Auditor’s Independence Declaration
Director’s Declaration
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 the Consolidated Financial Statements
Independent Auditor’s Report
Australian Stock Exchange Additional Information
13
29
30
31
32
33
34
35
71
76
12
MaxiPARTS Limited
REPORT OF THE DIRECTORS
For the year ended 30 June 2023
Your Directors submit their report together with the consolidated financial report of MaxiPARTS Limited ACN 006 797 173 (“the Company”) and
its subsidiaries (together referred to as the “Group”), and the Group’s interest in associates for the year ended 30 June 2023 and the auditor’s
report thereon.
DIRECTORS
The names of Directors in office at any time during or since the end of the financial year are:
Mr Robert H. Wylie
(Director since September 2008 – Chair since 30 June 2016, retired 12 May 2023)
Ms Mary Verschuer
(Director since 24 January 2019, Deputy Chair since 27 April 2022, Chair since 12 May 2023)
Mr Peter Loimaranta
(Managing Director since 6 September 2021)
Mr Gino Butera
(Director since 17 September 2021)
Ms Debra Stirling
(Director since 29 August 2022)
Mr Frank Micallef
(Director since 24 February 2023)
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year consisted of distribution and sale of commercial Truck and Trailer Parts.
On the 31 May 2023, MaxiPARTS acquired an 80% stake in Förch Australia Pty Ltd, a distributor of workshop consumables, predominantly
focused on automotive and commercial vehicle workshops. Förch Australia is an adjacent product opportunity for MaxiPARTS.
DIVIDENDS
Fully franked dividends paid during the financial year were as follows:
Date of Payment
19‑Sep‑22
20‑Mar‑23
Cents
Per Share
2.50
3.17
Total Amount
$’000
1,185
1,508
A fully franked final dividend of 3.22 cents per share has been proposed by the directors after reporting date for payment on 15 September 2023.
The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2023 and will be
recognised in subsequent financial reports.
EVENTS SUBSEQUENT TO BALANCE DATE
On the 31 May 2023, MaxiPARTS acquired an 80% stake in Förch Australia Pty Ltd. Final completion processes were agreed between parties
on 9 August 2023 and included in the accounts at 30 June 2023. Management considers the Business Combination for the Förch Australia
acquisition to be ‘closed’ at 30 June 2023.
There were no other material events subsequent to balance date impacting on the financial statements.
ENVIRONMENTAL REGULATION
The Group’s environmental obligations are regulated under Local, State and Federal Law. All environmental performance obligations are internally
monitored and subjected to regular government agency audit and site inspections. The Group has a policy of complying with its environmental
performance obligations. No breach of any environmental regulation or law has been notified to the Group during or since the year ended
30 June 2023.
Annual Report 2023
13
REPORT Of ThE DIRECTORS CONTINUED
SIGNIfICANT ChANGES IN ThE STATE Of AffAIRS
Refer to commentaries outlined in the Operating & Financial Review.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS Of OPERATIONS
Refer to outlook section in the Operating & Financial Review.
OPERATING & fINANCIAL REVIEW
Review of Operations
MaxiPARTS Operations
MaxiPARTS Operations sells commercial vehicle parts at both a wholesale and trade level in Australia. Wholesale customers are typically part
resellers and trailer manufacturers. The trade business sells parts to road transport operators as well as commercial vehicle service and repair
providers in Australia under the MaxiPARTS brand.
At the end of FY23, MaxiPARTS operated from 27 sites and during the year, completed a number of key projects related to improving our national
site network including consolidation of our two Perth sites, opening of a new site in Bibra Lake (WA), consolidation of the existing Rocklea and
Darra sites into a larger site in Richlands (QLD) and investment into a new mezzanine storage area within the Truganina (VIC) warehouse
allowing national stocking of our Japanese Product range, to both improve warehouse efficiency and increase our Sydney distribution capacity
for traditional stock as a direct result.
At the beginning of the financial year, MaxiPARTS was less than four months into the Truckzone acquisition and was executing several integration
projects, including rebranding the acquired sites and unlocking the cost synergies for the amalgamation of the Truckzone sites into the
MaxiPARTS network. The integration projects and rebranding, along with a refresh to the branding of MaxiPARTS sites, all successfully
completed during the year.
Alongside expansion of the MaxiPARTS network, the Truckzone acquisition provides MaxiPARTS with the opportunity to accelerate growth over
the coming years by leveraging the product strengths of each business to drive core product expansion. The foundational work to achieve this
continued to gain traction and remains on target with expectations of seeing accelerated revenue growth in the coming periods, with management
still expecting these initiatives to take 2‑3 years to reach maturity. The Group is also targeting additional EBITDA margin improvement through the
integration of the businesses, site consolidations and optimising the combined supply chain.
Like many businesses, in FY23 MaxiPARTS Operations saw higher than traditional cost inflation in key areas such as freight, salary & wages
and leases.
Förch Australia
On the 31 May 2023, MaxiPARTS acquired 80% of Förch Australia Pty Ltd, a distributor of workshop consumables, predominantly focused on
automotive and commercial vehicle workshops. Förch Australia holds an exclusive Australian distribution agreement for all FÖRCH product,
with Theo FÖRCH GmbH & Co KG of Germany, through to April 2030 (“Australian Distribution Agreement”). At the end of FY23, Förch Australia
operated from two sites (Perth & Melbourne), and one independent distributor (Brisbane).
The purchase consideration was $9.1m, with $9.6m paid on the acquisition date, and ($0.5m) in working capital adjustments (recorded as a
receivable at reporting date). The purchase price included the net asset value of $2.7m, and $6.4m ($4.5m net of tax) identifiable intangible asset
in relationship to the exclusive distribution agreement between Theo Förch GmbH (Förch Germany) & Co. KG & Förch Australia. The transaction
has resulted in the recognition of $3.4m of Goodwill and recorded a non‑controlling interest of ($1.4m) equating to 20% of net assets.
Förch Australia is an adjacent product opportunity for MaxiPARTS, providing immediate incremental improvements to both profit margins and
earnings per share metrics with significant opportunity to add further scale in the coming years. Since acquisition date, Förch Australia, under
MaxiPARTS Limited leadership, has already set a strong strategic agenda with several initiatives underway to grow the turnover of the business
and leverage the MaxiPARTS business to accelerate growth.
14
MaxiPARTS Limited
REPORT Of ThE DIRECTORS CONTINUED
Financial Review
Sales
Group revenue of $201.7m represents a 28.1% increase over the pcp revenue of $157.4m. The pcp Total sales includes $4.6m of inter‑company
sales to the divested Trailer Sales division, when adjusting for these sales, MaxiPARTS reports an adjusted sales growth of $48.9m or 32.0%
over reported Sales. The sales growth included the full‑year impact of the expanded site network following the acquisition of the Truckzone
business in February 2022, which saw the addition of seven stores (post consolidation) to the network.
Growth in sales was also attributed to increases in selling prices across the Group’s product range, through effective pass‑through of supplier
product increases to the end customer, growth in sales from organic programs and success in acquiring new customers. The newly acquired
Förch Australia business contributed $1.2m of sales to the Group in June 2023.
The result includes a decline in the revenue attributed to ATSG, the previously owned Trailer Solutions business, with sales to ATSG of $25.0m,
compared to pcp of $27.9m. The decline in sales was more significant in the second half of the year.
Profit
MaxiPARTS net profit before tax from continuing operations of $10.5m represents a 43.8% increase over the pcp (FY22: $7.3m), or an increase
of 33.9%, with a net profit before tax from continuing operations of $10.9m, when excluding significant items. The newly acquired Förch Australia
business contributed $0.27m of net profit before tax, and before minority interests, to the Group for the period.
The Group made a reportable Net Profit after tax of $6.0m. This result included ($1.4m) loss from discontinued operations after tax for costs
associated with closing out auditing, tax, other run‑off and compliance costs, FY22 tax true‑up and legal fees associated with the ATSG dispute.
Cash Generation & Capital Management
Operating cashflow of $15.1m demonstrated strong cash flow generation from operating activities for the MaxiPARTS continued operations
(FY22: operating cashflow of ($11.7m), which included the MaxiTRANS Trailer Solutions business). Operating cashflow included a $3.9m increase
in inventory for MaxiPARTS Operations to support the underlying revenue growth and to support strategic initiatives for high growth revenue
streams, like the Japanese Parts program.
The Group reported a closing net debt balance of ($1.0m), a decrease of ($2.9m) from the year‑ended 30 June 2022.
The net cashflow for the year included the following investing and financing activities for the year: acquisition of Förch Australia for ($9.0m)
(net of cash), capital expenditure of ($1.6m), lease payments of ($5.2m), dividends paid of ($2.2m), and an increase in drawn debt of $5.0m.
The Group increased its total loan facilities during the year from $10.0m to $20.0m, to facilitate the acquisition of Förch Australia. $15.0m
of the loan facility was drawn at the year ended 30 June 2023. The facility is sufficient to support the business in its current form.
Discontinued Operations/ATSG Dispute
The consolidated statement of financial position as at 30 June 2023 includes a receivable (recognised within trade and other receivables) of
$2.4m in relation to the final sale price completion accounts process between MaxiPARTS and ATSG, and also includes a deferred consideration
receivable (recognised within financial assets) from ATSG for $4.0m, the receivable which has a maximum term of two years from the completion
date of 31 August 2021, with the full amount falling due on the 31 August 2023. Interest has been charged, and paid, on a quarterly basis over the
term of the loan.
The outstanding receivable amount of $2.4m has been ruled upon by a jointly appointed independent accountant in accordance with the
requirements under the Sale Agreement, and is payable by ATSG. The Group has pursued the outstanding receivable from ATSG. ATSG
have not paid the outstanding amount, on the basis they believe they have offsetting Warranty claims related to the transaction that amount
to approximately $5.0m. MaxiPARTS has filed a claim with the Supreme Court for the $2.4m owed. ATSG has filed a counter claim with the
Supreme Court for a proposed breach of Sellers Warranty. MaxiPARTS denies the allegations in the counterclaim, and is of the view that
many items are unfounded, have already been determined by another process, or are grossly exaggerated in the value assigned to the item.
Annual Report 2023
15
REPORT Of ThE DIRECTORS CONTINUED
Risk
MaxiPARTS recognises that risk is inherent in its business, and that effective risk management is essential to protecting and enhancing the
business value and delivering the ongoing performance of the business.
The MaxiPARTS Audit & Risk Management Committee, a sub‑committee of the Board, governs the framework and process for the identification
and mitigation of material business risks.
Operational Risks
The MaxiPARTS Audit & Risk Management Committee, a sub‑committee of the Board, governs the framework and process for the identification
and mitigation of material business risks.
During FY23, the Group continued to deliver its risk management maturity roadmap to address the latest requirements of global risk management
standard ISO31000:2009.
The Group identifies risk based on likelihood and materiality. By understanding and mitigating key risks, we can:
•
•
Increase the likelihood of achieving our strategic goals and objectives;
Improve our decision making and capital allocation; and
• Enhance corporate governance and regulatory compliance.
The key operational risks identified are as follows:
• Economic slow‑down due to interest rates and inflation;
• Health and Safety of our people;
• MaxiPARTS key customer retention and competitiveness in marketplace;
• Reliability and supportability of IT Systems;
• Proficiency and stability of key business process and systems; and
•
Finance and governance; management of working capital; an appropriate funding model; internal policies and procedures; changing
regulatory environment and maintenance of proper licences to operate the business.
Management report to the Audit & Risk Management Committee on the ongoing status of controls and activities in place to mitigate each of these risks.
Foreign Exchange & Commodities Risk
The Group has exposure to movements in the Australian dollar against the United States dollar, the Euro, Japanese Yen and the Chinese Yuan
as a result of importing parts for sale.
The Group has a policy of only hedging foreign currency cash flow risk utilising forward contracts to protect against movements in short‑term
committed expenditure.
Depreciation of the Australian dollar may adversely affect the operating cost base and therefore margins. The Group currently hedges short‑term
committed foreign currency purchases. Some or all of this risk may be further mitigated by price management and efficiency improvement.
16
MaxiPARTS Limited
REPORT Of ThE DIRECTORS CONTINUED
Health & Safety
MaxiPARTS has continued its focus of improving health and safety outcomes for our people. Over the year, the business worked through projects
to ensure our safety program was suitable for the distribution business that we are today, as well as ensuring we integrate the Förch Australia
business, and ensure we quickly lifted the safety standards of those new sites to be in line with the larger Group.
FY23 recorded the lowest number of recordable injuries on record for MaxiPARTS. Throughout the year, we experienced two recordable injuries,
a notable decrease compared to FY22, which saw four recordable injuries (only included four months of Truckzone acquired sites).
The cultural adoption of safety practised by all staff members who have joined MaxiPARTS over the past two years has been truly gratifying.
While we understand that any injuries are unacceptable, we are confident that we not only fulfill our responsibilities in providing a safe work
environment, but also consistently embody our core value of prioritising safety.
Strategy
MaxiPARTS strategy focuses on four key pillars of activity being:
• Network
• People
• Product
• Systems and Solutions
The focused initiatives within these pillars are designed to not only drive growth in the business, but to ensure the foundations remain in place
to support this growth over a sustained period.
The business will continue to implement a range of organic projects to enhance our key strategic pillars. However, we will also continue to explore
further acquisition opportunities if we believe they meet the underlying strategic rationale and make financial sense.
Outlook
With the prevailing economic uncertainty caused by the recent interest rate increases in FY22 and FY23, as well as ongoing inflationary pressure,
like many other businesses, MaxiPARTS finds itself navigating a period of heightened unpredictability. Despite these challenges, the parts
industry has traditionally exhibited resilience throughout various economic cycles, and we are continuing to observe strong underlying
activity levels.
We anticipate growth in our underlying MaxiPARTS Operations revenue as the Group continues to focus on the target revenue synergies
associated with the Truckzone acquisition in February 2022, with many of the initiatives to take 2 – 3 years to reach maturity, as well as ongoing
focus to recover cost increases and gain market share. Whilst the Group does expect this to translate into low double‑digit growth for the
underlying MaxiPARTS business, we do expect to see a much larger reduction in the lower margin sales to ATSG, the formerly owned Trailer
Solutions business. The reduction which has been seen in FY23 H2 will continue to decline into FY24 as the parties move towards the end of
the previously agreed supply agreement (August 2024). The above two items will somewhat offset, resulting in a much flatter revenue line for
the business than has been seen in the last couple of years.
Key non‑product cost areas such as freight, salary & wages, and operating lease costs are expected to continue to increase generally in line
with national inflationary levels.
We do expect revenue growth in the Förch Australia business to be greater than 20%, as we invest in expanding the national sales team with
the bulk of the benefit coming in the second half of FY24.
The Group expects the combined outcome of the above to result in strengthening key metrics such as EBITDA/EBIT margins. The combined
growth in underlying MaxiPARTS operations and Förch Australia revenue more than offset the continued inflationary pressure on the Group’s
cost base, and the reduction in the lower margin sales to the ATSG Trailer Solutions business.
Annual Report 2023
17
REPORT Of ThE DIRECTORS CONTINUED
INfORMATION Of DIRECTORS
Ms. Mary Verschuer
Name:
Title:
Qualifications:
Experience & Expertise:
Chair, Independent Non‑Executive Director (appointed Chair 12 May 2023, Deputy Chair
27 April 2022 to 12 May 2023, appointed as Director 24 January 2019)
MA Research Methods, Macquarie University
Fellow, AICD
MBA, Macquarie University
Master of Science and Society, University of New South Wales (history and philosophy of science)
Bachelor of Applied Science (Chemistry), UTS
Ms Verschuer has over 25 years of global senior management experience across a range of
industries, including leading the Minerals and Metals business for Schenck Process and the Asian
business for Huhtamaki. In those roles, Ms Verschuer had responsibility for manufacturing, supply
chain and sales operations in diverse geographies and cultures.
Currently a NED of Redox Ltd, a listed chemical distribution business (ASX:RDX), and chairs the
People and Safety Committee, NED and Chair of Audit and Risk at Forestry Corporation of NSW,
a state owned corporation managing NSW forests and President of The Infants’ Home, a provider
of integrated early childhood education. Formally Non‑Executive Director of The Hydroponics
Company (ASX pre‑IPO).
Special Responsibilities:
Chair of the Board
Member of:
Audit and Risk Management Committee
Remuneration & Human Resources Committee
Nomination Committee.
Other Current Directorships
(ASX Listed Companies):
Non‑Executive Director of Redox Ltd a listed chemical distribution business (ASX:RDX) –
June 2023.
Former Directorships (ASX Listed
Companies previous 3 years):
Nil
Interest in Shares:
Interest in Options:
Name:
Title:
Qualifications:
Experience & Expertise:
20,562 ordinary shares beneficially held
Nil
Mr. Peter Loimaranta
Managing Director, Executive (appointed 6 September 2021)
Former Chartered Accountant
Bachelor Commerce, University of Queensland
Graduate, AICD
Mr Loimaranta was appointed Managing Director and CEO of MaxiPARTS in 2021 following
the disposal of the MaxiTRANS Trailer Solutions business. Before his current appointment,
Mr Loimaranta held the roles of General Manager MaxiPARTS and International and Group
General Manager – International. Prior to joining MaxiTRANS, he held various finance and
corporate development roles with global construction material companies Hanson and Holcim
in Australia and various parts of Asia.
Special Responsibilities:
Other Current Directorships:
Former directorships:
Interest in Shares:
Interest in Options:
None
Nil
Nil
154,204 ordinary shares beneficially held
317,715 performance rights
18
MaxiPARTS Limited
REPORT Of ThE DIRECTORS CONTINUED
INfORMATION Of DIRECTORS (CONTINUED)
Name:
Mr. Gino Butera
Title:
Qualifications:
Experience & Expertise:
Independent Non‑Executive Director (appointed 17 September 2021)
CPA
Bachelor Economics, Accounting & Finance, Monash University
Member, AICD
Mr Butera is an experienced executive with a distinguished career at Cummins Inc., one of the
world’s largest manufacturers and providers of diesel engines, alternative fuel powertrains and
associated spare parts over multiple industrial end markets. Mr. Butera’s final role was based in the
USA, leading the Global Power Generation business for Cummins. During his career he has also
worked in Australia, Africa, the Middle East and the USA, including periods leading regions with
some of Cummins largest spare parts distribution businesses.
Special Responsibilities:
Chair of the Remuneration & Human Resources Committee
Member of:
Audit and Risk Management Committee
Nomination Committee.
Other Current Directorships
(ASX Listed Companies):
Former Directorships (ASX Listed
Companies previous 3 years):
Nil
Nil
Interest in Shares:
Interest in Options:
Name:
Title:
Qualifications:
Experience & Expertise:
50,000 ordinary shares beneficially held
Nil
Ms. Debra Stirling
Independent Non‑Executive Director (appointed 29 August 2022)
Honorary Fellowship, Engineering, Monash University
Graduate, AICD
Bachelor of Arts, Government and Journalism, University of Queensland
Ms. Stirling’s executive career saw her hold various senior executive roles related to Corporate
Affairs, Investor Relations, People, Communications and Environment at Newcrest Mining, Rinker,
CSR, and Coles Myer.
Ms. Stirling is currently a Director of Scotch College and is a Director & Chair of the People,
Culture and Remuneration Committee of Mission Australia. Ms. Stirling previously sat on the
Boards of Vicinity Centres Limited, Monash University Mining and Resources Advisory Board
(Chair), MegaRail, the PNG Government, Lae Technical Training Centre of Excellence Task Force,
and the Victorian Government Resources Roundtable.
Special Responsibilities:
Member of:
Remuneration & Human Resources Committee
Audit & Risk Management Committee
Nomination Committee.
Other Current Directorships
(ASX Listed Companies):
Former Directorships (ASX Listed
Companies previous 3 years):
Interest in Shares:
Interest in Options:
Nil
Nil
Nil
Nil
Annual Report 2023
19
REPORT Of ThE DIRECTORS CONTINUED
INfORMATION Of DIRECTORS (CONTINUED)
Name:
Mr. Frank Micallef
Title:
Qualifications:
Experience & Expertise:
Independent Non‑Executive Director (appointed 24 February 2023)
Fellow, CPA Australia
Fellow, Australian Institute of Company Directors
Master of Accountancy, University of New England (AU)
Graduate Diploma of Education, Melbourne University
Bachelor of Business, Accounting, RMIT University
Mr Micallef has 25 years of Senior Management experience in various senior executive
roles at several ASX 100 companies where he has been responsible for a range of functions
including finance, legal and company secretarial, procurement, IT, and investor relations.
Mr Micallef is currently a non‑executive director at Interplast Australia Ltd, an Australian and
New Zealand charity focusing primarily on delivering reconstructive plastic surgery procedures and
training in the Asia Pacific. Former director of Fabchem Ltd (SGX) and Queensland Nitrates Pty Ltd.
Special Responsibilities:
Chair of the Audit and Risk Management Committee
Member of:
Remuneration & Human Resources Committee
Nomination Committee.
Other Current Directorships
(ASX Listed Companies):
Former Directorships (ASX Listed
Companies previous 3 years):
Nil
Nil
Interest in Shares:
Interest in Options:
Name:
Title:
21,000 ordinary shares beneficially held
Nil
Ms. Liz Blockley
Company Secretary
Qualifications:
Bachelor Commerce, CPA, GIA (Affiliated)
Appointed to the position of Company Secretary on 19 May 2022.
Details of attendances by directors at Board and committee meetings during the year are as follows:
Directors’
Meetings (i)
Audit & Risk
Management Committee
Remuneration
Committee
Nomination
Committee
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Rob Wylie
Mary Verschuer
Gino Butera
Debra Stirling
Frank Micallef
Peter Loimaranta
12
13
13
10
5
13
12
13
13
10
5
13
7
7
7
5
1
7
7
7
7
5
1
7
2
3
3
2
1
3
2
3
3
2
1
3
3
3
3
2
1
3
3
3
3
2
1
3
20
MaxiPARTS Limited
REPORT Of ThE DIRECTORS CONTINUED
REMUNERATION REPORT – AUDITED
Dear Shareholders,
On behalf of the Board, I am pleased to present the FY23 Remuneration Report. This report sets out the remuneration information for our
Key Management Personnel (“KMP”) and describes our approach to remuneration. Our remuneration approach has been set to align with
our broader business strategy to grow the business and deliver shareholder value. Through short and long‑term variable reward programmes,
it aims to reward Executives for delivering target financial outcomes and improved shareholder value.
As we moved into FY23 and divested the Trailer Solutions business and looked to execute the plan for the simpler MaxiPARTS business,
the Remuneration and Human Resources Committee updated the Group’s objectives, priorities and conditions of the remuneration of our
KMPs to focus on the growth objectives of the MaxiPARTS business.
Gino Butera
Chair, Remuneration & Human Resources Committee
1. Approach to remuneration
MaxiPARTS’ remuneration approach is set in line with the business and talent strategy, in order to ensure MaxiPARTS attracts and retains the
right talent to drive the business forward. The Executive package is based on three remuneration components that make up the Total Remuneration
Package (details of each component are explained in the table below). Our approach is reviewed every year to ensure that it is still relevant and
competitive. During FY23 the approach was as follows:
Remuneration
Component
Fixed
Description
Includes fixed pay
and superannuation.
Objectives
Priorities & Conditions
Intended to be market competitive
to attract and retain
talented executives.
Short Term Incentive
(STI)
A variable, at‑risk cash incentive
calculated by reference to
current year performance
(for continuing operations).
Designed to drive performance
across Company priorities
year‑on‑year.
Long Term Incentive
(LTI)
An annual grant of Performance
Rights which, if they vest on the
achievement of specific long‑term
performance hurdles, give the
right to be issued a number of
ordinary shares in the Company.
Designed to incentivise executives
to manage the business in a way
that drives sustainable long‑term
growth in shareholder value.
Based on skills and experience.
Recognises level of the executive’s
contribution based on the size
of the organisation.
3 key priorities were set around
profit, cashflow and safety. This
program is subject to the Group
meeting its budgeted net profit
after tax (“NPAT”) (MaxiPARTS
continuing operations) before
any incentive is payable.
An Economic Value Added (EVA)
target for the 3 year period from
date of grant.
See section 3 below for
further detail.
Annual Report 2023
21
REPORT Of ThE DIRECTORS CONTINUED
2. Alignment of FY23 variable remuneration outcomes to performance
Rem Component & Conditions
Link to Company Performance
STI – Drives annual Company performance against 3 priorities –
Profit, Cashflow and Safety
LTI – A return on invested capital “ROIC” and Economic Value added
“EVA” targets are set to drive Executives to manage the business in a
way that creates long‑term shareholder value
The net profit after tax hurdle was set on the MaxiPARTS continued
operations and was achieved, leading to all performance targets
being assessed on their actual result to target. Discretion was
considered but there were no matters warranting a change to the
formulaic calculation.
The performance rights granted in FY21 are due to vest this year.
The target ROIC was reset to 12.5% following the sale of the Trailer
Solutions business, and the Managing Director is the only participant
remaining on this scheme. The actual ROIC was 13.86%. Therefore,
the Performance Rights granted in FY21 will vest at 100% of grant.
3. Long Term Incentive Program (LTI Program)
(a) Who participates?
At the discretion of the Board, senior managers and executive directors of the Company are invited to participate in the LTI Program.
(b) What type of awards are granted?
Performance rights are granted to participants. Each performance right will, on vesting and its exercise, entitle the holder to receive one fully paid
ordinary share in the Company, which will rank equally with all other existing fully paid ordinary shares. The vesting and exercise of a performance
right is subject to certain performance hurdles being met.
(c) How is the size of the award calculated?
An award of performance rights is calculated by reference to a participant’s remuneration package. In FY23 the Managing Director received
performance rights equal to 33.3% of their total fixed remuneration package. For other participating executives, the value of their performance
rights was 17.5% of their total fixed remuneration package.
(d) How is the number of rights to be awarded calculated?
The number of performance rights a participant receives is calculated on a “face value” basis by dividing the participant’s performance right
entitlement by the Company’s share price. The share price is determined using the volume weighted average price (VWAP) over the first month
of the financial year in which the rights are granted (i.e. for rights granted with a FY23 base, the July 2022 VWAP is used). This is on the basis
that the start of the financial year is the starting point for measuring the achievement of the LTI Program target.
(e) What is the performance period?
Performance rights are tested over a three year period. Awards made in FY23 will be tested over the period 1 July 2022 to 30 June 2025.
(f) What is the performance hurdle?
The performance rights will vest and be exercisable only if the performance hurdle attached to the performance rights is satisfied.
For FY22 and FY23 grants, the performance hurdle for all performance rights on issue is Economic Value Added (EVA). The Performance
Rights target set is to achieve a cumulative EVA result for the FY22 issue of $6.2m and for the FY23 issue of $6.6m over the respective three
year vesting period. The target and result are measured on continuing operations, and the target was set to reflect a 6.0% and 6.5% compound
annual improvement, over the respective periods.
A sliding scale will apply for partial attainment of the performance hurdle. The minimum target is 67% of the targeted improvement in EVA
that must be achieved before any of the Performance Rights will vest, at which point 50% of the Performance Rights will vest. 100% of the
Performance Rights will vest where the target EVA is fully achieved or exceeded.
22
MaxiPARTS Limited
REPORT Of ThE DIRECTORS CONTINUED
The Vesting Date for the Performance Rights will be no later than one month after the announcement of the result for the year ended
30 June 2024 and 30 June 2025, or such other date as the Company determines.
For the FY21 issue, the performance hurdle for all performance rights on issue is return on invested capital (“ROIC”). ROIC is calculated by
taking a company’s net operating profit less adjusted taxes (“NOPLAT”) and dividing it by the invested capital. Following the sale of the Trailer
Business, the Board exercised its discretion to increase the performance hurdle to one more relevant to the MaxiPARTS business, the previous
ROIC target for FY21 issue was 6.95%, with the new ROIC target for the FY21 issue of 12.50% and is based on continuing operations. A sliding
scale will apply for partial attainment of the performance hurdle. The minimum target is 67% of the targeted improvement in ROIC, which must be
achieved before any of the performance rights vest, at which point 50% of the performance rights will vest. 100% of the performance rights will
vest if the target ROIC is fully achieved or exceeded.
Any unvested performance rights will lapse.
(g) Other key features
The Board has discretion to determine award outcomes for participants in certain circumstances, such as when an executive retires or when
exceptional circumstances exist.
4. FY23 LTI Outcomes
Performance rights granted in FY21 were tested against the ROIC performance hurdle over the period 1 July 2020 to 30 June 2023 with a ROIC
target in FY23 of 12.50%. The actual ROIC for FY23 was 13.86%. Therefore, the Performance Rights granted in FY21 will vest at 100% of grant.
5. Managing Director Remuneration mix
The Managing Director’s, Mr P Loimaranta, total annualised available remuneration of $891,278 (“TAR”) consists of:
•
Fixed component of $467,249 (Total employment cost ‘TEC’ inclusive of superannuation and allowances) with
• STI component, comprising 57.5% of TEC; and
•
LTI component, comprising 33.3% of TEC.
6. FY23 Managing Director STI Outcomes
The Managing Director’s, Mr P Loimaranta, STI for FY23 are summarised below:
Objective
Measure
STI Weighting
Performance
Overall hurdle
Deliver target NPAT for the Group (MaxiPARTS continuing operations)
NPBT
Cash
Safety
NPBT exceeding set target (continuing operations)
Cash generated from Operating activities (continued operations) exceeds the target
Implementation of an approved MaxiPARTS safety improvement plan
Hurdle
67%
23%
10%
Met
50%
23%
10%
Mr P Loimaranta, Managing Director, has been awarded an STI of 83% of target and will be paid $223,449 in relation to FY23.
6.1 Other KMP FY23 STI outcome:
STIs were awarded to all KMPs (excluding non‑executive) in relation to their performance during the FY23 period. The total of STIs awarded
to KMP’s (other than the Managing Director) for the FY23 performance is $89,456.
7. Relationship between remuneration and Company performance
We aim to align our executive remuneration to our strategic and business objectives and the creation of shareholder wealth. The table below
shows measures of the Group’s financial performance over the last five years as required by the Corporations Act 2001. However, these are not
necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to KMPs, see the above table.
Annual Report 2023
23
REPORT Of ThE DIRECTORS CONTINUED
Consequently, there may not always be a direct correlation between the statutory key performance measures and the variable
remuneration awarded.
Reported NPAT ($’000)
NPAT (continuing operations and excluding
significant items ($’000)
STI awarded to MD*
Basic and Diluted earnings per share
(cents per share) – Continuing operations
Share price at financial year end ($)
Total dividends declared (cents per share)
FY23
$5,977
$7,719
83.2%
15.53
$2.65
6.39
FY22
($4,932)
$5,923
56.7%
11.99
$1.88
65.00
FY21
$4,584
$10,487
137.5%
15.37
$2.38
0.00
FY20
FY19
($35,492)
($27,040)
$486
Nil
4.87
$0.57
0.00
$4,809
Nil
(13.76)
$1.44
0.00
Note: FY19‑FY21 years represents the MaxiTRANS Group including the Trailer Solutions business. The Trailer Solutions business was disposed on the 31 August 2021.
*
STI payments as a % of the maximum payment.
8. Non‑Executive Directors
Total remuneration for all Non‑Executive Directors, last voted upon by shareholders at the 2012 AGM, is not to exceed $600,000 per annum
and directors’ fees are reviewed with reference to fees paid to Non‑Executive Directors of comparable companies.
Directors’ base fees (inclusive of superannuation) for the year were $80,000 per annum for non‑executive directors (other than the Chair an
increase from $75,000 in January 2023) and $127,500 for the Chair (increase from $120,000 in January 2023). Total fees paid for the year of
$347,749 for Non‑Executive Directors.
Non‑Executive Directors do not receive performance related remuneration and are not entitled to participate in the STI or LTI programs.
Directors’ fees cover all main board activities and membership or chairing of all committees. Non‑Executive Directors are not entitled to any
retirement benefits.
9. Details of remuneration and service contracts
It is the Group’s policy that Employment agreements for Executive Directors and Senior Executives be unlimited in term, but capable of termination
on up to six months’ notice, and that the Group retains the right to terminate the contract immediately, by making payment of up to six months’ pay
in lieu of notice.
The Group has entered into employment agreements with each Executive Director and Senior Executive that entitle those Executives to receive,
on termination of employment, their statutory entitlements of accrued annual and long service leave, together with any superannuation benefits.
The employment contract outlines the components of remuneration paid to the Executive Director and Senior Executives, but does not prescribe
how remuneration levels are modified year to year. Remuneration levels are reviewed each year and take into account cost‑of‑living changes,
any change in the scope of the role performed by the Senior Executive, and any changes required to meet the principles of the Group’s Executive
Remuneration Policy, including performance related objectives if applicable.
Mr Peter Loimaranta, Managing Director, has a contract of employment with the Company dated 6 September 2021. The contract specifies
the duties and obligations to be fulfilled by the Managing Director and provides that the Board and Managing Director will, early in each financial
year, consult and agree objectives for achievement during that year. The employment agreement can be terminated either by the Company
or Mr Loimaranta providing six months’ notice. The Company may make a payment in lieu of notice of six months, equal to base salary, motor
vehicle allowance and superannuation. This payment is consistent with general market practice. The Managing Director has no entitlement to
a termination payment, other than those minimal entitlements required by law (including any leave entitlements and superannuation) in the event
of removal for misconduct or breach of any material terms of his contract of employment.
Ms Liz Blockley, Chief Financial Officer, has a contract of employment with the Company dated 6 September 2021. The contract can be
terminated either by the Company providing six months’ notice or by Ms Blockley providing three months’ notice. The Company may make a
payment in lieu of notice of six months, equal to base salary and superannuation. The Chief Financial Officer has no entitlement to a termination
payment, other than those minimal entitlements required by law (including any leave entitlements and superannuation) in the event of removal
for misconduct or breach of any material terms of her contract of employment.
24
MaxiPARTS Limited
REPORT Of ThE DIRECTORS CONTINUED
10. Amounts of remuneration
Details of the nature and amount of each major element of remuneration for each Director of the Company and other Key Management Personnel
of the Group:
Short Term Benefits
Post-
Employment
Benefits
Equity
Other (x)
Total
Proportion
of rem
performance
related
Value
of PRs as
proportion
of rem
Salary
& fees
$
76,033
68,493
90,105
113,782
70,136
55,848
53,167
24,968
STI (i)
Super-
annuation
PRs (ii)
$
–
–
–
–
–
–
–
–
$
7,783
6,849
10,188
11,378
7,164
5,585
5,583
2,622
$
–
–
–
–
–
–
–
–
Year
(iii)
2023
2022
(iv)
2023
2022
2023
2022
2023
(v)
(vi)
(vii)
2023
2023
422,850
223,449
44,399
130,073
$
–
–
–
–
–
–
–
–
–
$
%
%
83,816
75,342
100,293
125,160
77,300
61,433
58,750
27,590
820,771
43.1%
15.8%
(viii)
2022
restated
408,056
131,633
41,253
56,866
4,477
642,285
29.3%
8.9%
2023
324,349
89,456
34,057
28,844
(ix)
2022
restated
257,420
67,959
31,348
12,308
–
–
476,706
24.8%
6.1%
369,035
21.8%
3.3%
DIRECTORS
Non-executive
Ms M Verschuer
Chair
Mr R Wylie
Former Chair
Mr G Butera
Ms D Stirling
Mr F Micallef
Executive
Mr P Loimaranta
Managing Director
EXECUTIVES
Ms L Blockley
Chief Financial Officer
(i) FY23 STI entitlement is 57.5% of total fixed remuneration for the Managing Director, Mr P Loimaranta and 30% of total fixed remuneration for Ms L Blockley.
The short‑term cash incentives disclosed above are for the amounts to be paid within 12 months of year‑end relating to services received during the year.
The amounts were determined after performance reviews were completed.
(ii) Performance rights (PRs) grants are calculated by using a face value allocation methodology, i.e. by reference to the volume weighted average MaxiPARTS
share price (“VWAP”) and allocated to each reporting period evenly over the period from grant date to vesting date, adjusted for any changes in the probability
of performance and service targets being achieved. The value disclosed is the portion of the fair value recognised in this reporting period. An adjustment
may result in a negative value to reflect the change from the prior period of the number estimated to vest. Further details in respect of PRs are contained
in section 3 of the Remuneration Report. Details of PRs granted and vested during the period are contained in Note 14 – Share Based Payments.
(iii) Ms M Verschuer was appointed Chair on 12 May 2023.
(iv) Mr R Wylie retired on 12 May 2023.
(v) Mr G Butera was appointed on 17 September 2021.
(vi) Ms D Stirling was appointed on 29 August 2022.
(vii) Mr F Micallef was appointed on 24 February 2023.
(viii) Mr P Loimaranta was appointed on the 6 September 2021 and prior to this held the KMP position of Group GM MaxiPARTS and New Zealand.
(ix) Ms L Blockley position was appointed on the 6 September 2021 (salary reported from date appointed as KMP).
(x) Other payments for the year ended 30 June 2022 for Mr P Loimaranta relates to a car allowance prior to appointment as Managing Director on
6 September 2021.
Annual Report 2023
25
REPORT Of ThE DIRECTORS CONTINUED
Share based payments granted as remuneration
Details of the vesting profile of the Performance Rights granted as remuneration to each of the Company directors and other key management
personnel of the Group at the report date are set out below.
Mr P Loimaranta
Ms L Blockley
Financial
year
granted
2023
2022
2021
2023
2022
Opening
balance
–
49,965
190,723
Granted
77,027
–
–
Vested/
(Forfeited)
Closing Bal
(unvested)
Vesting
Date
Fair value at
grant date
–
–
77,027
19 Oct 2025
49,965
31 Oct 2024
190,723
–
22 Nov 2023
–
31,050
19,182
–
–
–
31,050
19 Oct 2025
19,182
31 Oct 2024
Maximum
value yet to
vest ($)
90,134
64,122
–
36,334
24,617
$2.01
$3.63
$1.80
$2.01
$3.63
The performance rights held by Mr Loimaranta from FY21 has had the performance hurdles updated to acknowledge the different expectations
of the MaxiPARTS business. See section 3 above in relation to the terms of Performance Rights.
The estimated maximum value of Performance Rights on issue for future years is the current share price. This is subject to future movements
in the share price. The estimated minimum value is $nil. The maximum value of the performance rights yet to vest has been determined as the
amount of the grant date fair value of the rights that is yet to be expensed. The minimum value of deferred shares yet to vest is nil, as the shares
will be forfeited if the vesting conditions are not met.
Unissued shares under rights
At the date of this report there are 445,138 unissued ordinary shares of the Company relating to Performance Rights granted but not vested.
KMP shareholdings
The movements in holdings of shares in the Company held directly, indirectly or beneficially at the reporting date are set out below:
2023 Shares
MaxiPARTS Limited
Directors:
Ms M Verschuer
Mr P Loimaranta
Mr G Butera
Ms D Stirling
Mr F Micallef
Mr R Wylie**
Held at
30 June 2022*
Purchases
Exercised of PR
Sales
Other
Held at
30 June 2023
20,046
65,868
50,000
–
–
60,431
–
–
–
–
21,000
–
–
85,682
–
–
–
–
–
–
–
–
–
–
516
2,654
–
–
–
765
20,562
154,204
50,000
–
21,000
61,196
* Or at date of appointment as a director.
** Mr R Wylie retired on 12 May 2023 and is no longer KMP as at 30 June 2023.
Voting and comments made at the company’s 2022 Annual General Meeting (‘AGM’)
At the 2022 AGM, 93.74% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2022.
The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Use of remuneration consultants
During the financial year ended 30 June 2023, the consolidated entity did not engage the services of a remuneration consultant.
End of Audited Remuneration Report
26
MaxiPARTS Limited
REPORT Of ThE DIRECTORS CONTINUED
AUDIT AND RISK MANAGEMENT COMMITTEE
As at the date of this report, the Company had an Audit and Risk Management Committee of the Board of Directors that met seven times during
the year. The details of the functions and memberships of the committees of the Board are presented in the Corporate Governance Statement.
INDEMNITY AND INSURANCE Of OffICERS
The Company has indemnified the Directors and Executives of the Company for costs incurred, in their capacity as a Director or Executive,
for which they may be held personally liable, except where there is a lack of good faith.
During the year the Company has paid premiums in respect of Directors’ and Executive Officers’ insurance. The contracts contain prohibitions
on disclosure of the amount of the premiums and the nature of the liabilities under the policies.
INDEMNITY AND INSURANCE Of AUDITORS
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related
entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure
the auditor of the company or any related entity.
ShARE OPTIONS
No options were granted to any of the directors or key management personnel of the Company or Group as part of their remuneration during
or since the end of the financial year.
ShARES ISSUED ON ThE EXERCISE Of OPTIONS
No options were exercised during the financial year.
Further details on the Group’s Performance Rights Plan are detailed in Note 14 to the consolidated financial statements and in the
Remuneration Report.
NON‑AUDIT SERVICES
The Board has considered the non‑audit services provided during the year by the previous auditor and in accordance with written advice provided
by resolution of the Audit and Risk Management Committee, is satisfied that the provision of those non‑audit services during the year by the
previous auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
• All non‑audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the Audit
and Risk Management Committee to ensure they do not impact the integrity and objectivity of the auditor; and
•
The non‑audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or
decision‑making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act is included in, and forms part of this
Report of the Directors on page 29.
Annual Report 2023
27
REPORT Of ThE DIRECTORS CONTINUED
Details of the amounts paid to the auditors of the Company for audit and non‑audit services provided during the year are set out below.
Remuneration of auditor
Remuneration of the auditor for:
– auditing and reviewing the financial statements – Group (KPMG)
– auditing and reviewing the financial statements – Group (HLB Mann Judd)
– auditing and reviewing the financial statements – controlled entities (HLB Mann Judd)
– taxation and advisory (KPMG)
Overseas KPMG Firms:
– taxation and advisory
Consolidated
2023
$
2022
$
72,645
150,000
30,900
112,726
366,271
7,408
7,408
370,969
–
–
80,596
451,565
9,261
9,261
Total auditor remuneration
373,679
460,826
PROCEEDINGS ON BEhALf Of COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company
is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party
to any such proceedings during the year.
ROUNDING Of ACCOUNTS
The parent entity has applied the relief available to it in ASIC Corporations (Rounding in Financial/Directors Reports) Instruments 2016/191
and, accordingly, amounts in the financial statements and Report of the Directors have been rounded to the nearest thousand dollars unless
specifically stated to be otherwise.
This report has been made in accordance with a resolution of the Board of Directors.
Ms Mary Verschuer, Director
Dated this 24 day of August 2023
Mr. Peter Loimaranta, Director
28
MaxiPARTS Limited
LEAD AUDITOR’S
INDEPENDENCE DECLARATION
under Section 307C of the Corporations Act 2001
Auditor’s independence declaration
As lead auditor for the audit of the consolidated financial report of MaxiPARTS Limited (“the
Company”) and its controlled entities (“the Group”) for the year ended 30 June 2023, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation
to the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
This declaration is in relation to the Company and the entities it controlled during the period.
HLB Mann Judd
Chartered Accountants
Melbourne
24 August 2023
Jude Lau
Partner
hlb.com.au
HLB Mann Judd (VIC Partnership) ABN 20 696 861 713
Level 9, 550 Bourke Street, Melbourne VIC 3000 | GPO Box 2850, Melbourne VIC 3001
T: +61 (0) 3 9606 3888 F: +61 (0) 3 9606 3800 E: mailbox@hlbvic.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
HLB Mann Judd (VIC Partnership) is a member of HLB International, the global advisory and accounting network
Annual Report 2023
29
DIRECTOR’S DECLARATION
For the year ended 30 June 2023
In the opinion of the directors of MaxiPARTS Limited (“the Company”):
(a)
the consolidated financial statements and notes as set out on pages 31 to 70, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the financial year ended on
that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.
There are reasonable grounds to believe that the Company and the Group entities identified in Note 17 will be able to meet any obligations or
liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those Group entities
pursuant to ASIC Class Order (2016/785).
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and
Chief Financial Officer for the financial year ended 30 June 2023.
The directors draw attention to Note 1 to the consolidated financial statements, which includes a statement of compliance with International
Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Board of Directors.
Ms Mary Verschuer, Director
Dated this 24 day of August 2023
Mr. Peter Loimaranta, Director
30
MaxiPARTS Limited
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Continuing Operations
Sale of goods
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Other income
Employee and contract labour expenses
Depreciation and amortisation expenses
Finance costs
Other expenses
Profit before income tax from continuing operations
Income tax expense
Profit from continuing operations
Profit/(Loss) from discontinued operations net of tax
Profit/(Loss) for the year
Items that may subsequently be re‑classified to profit or loss:
Net exchange difference on translation of financial statements of foreign operations
Cashflow hedge reserve
Related tax
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income/(loss) for the year
Profit/(Loss) attributable to:
Equity holders of the parent
Non‑controlling interests
Total comprehensive income/(loss) attributable to:
Equity holders of the parent
Non‑controlling interests
Earnings/(Loss) per share:
Basic and Diluted earnings per share (cents per share) – Total
Basic and Diluted earnings per share (cents per share) – Continuing operations
Basic and Diluted earnings per share (cents per share) – Discontinued operations
Weighted average number of shares:
Number for basic earnings per share
Number for diluted earnings per share
Note
2(a)
2(b)
2(c)
2(c)
3(b)
24(a)
12
12
12
Note
12
12
2023
$’000
2022
$’000
201,677
6,635
(149,554)
361
(30,832)
(5,608)
(2,000)
(10,146)
10,533
(3,160)
7,373
(1,396)
5,977
–
–
–
–
152,767
2,013
(110,756)
116
(22,609)
(4,553)
(1,419)
(8,222)
7,337
(2,429)
4,908
(9,840)
(4,932)
(64)
218
(65)
89
5,977
(4,843)
5,938
39
5,938
39
2023
12.51
15.53
(2.94)
(4,932)
–
(4,843)
–
2022
(11.83)
11.99
(24.04)
Number
Number
47,470,515
47,470,515
40,928,976
40,928,976
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes to the
consolidated financial statements.
Annual Report 2023
31
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
For the year ended 30 June 2023
AS AT 30 JUNE 2023
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Other
Financial asset
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Right of use asset
Financial asset
Deferred tax assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Current tax liability
Provisions
Lease liability
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Provisions
Lease liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Other reserves
Accumulated Loss
Profits Reserve
Equity attributable to equity holders of the parent
Non‑controlling interests
Total Equity
Note
4
5
3(d)
24(c)
6
7
20(a)
24(c)
3(c)
8
3(d)
10
20(b)
9
10
20(b)
11
26
30 Jun 23
$’000
30 Jun 22
$’000
13,952
31,086
51,759
–
1,823
4,000
11,852
28,190
45,124
743
327
–
102,620
86,236
4,201
18,801
32,797
–
14,842
70,641
173,261
31,848
347
5,733
4,166
42,094
15,000
694
30,585
46,279
88,373
84,888
81,766
2,825
(74,956)
73,784
83,419
1,469
84,888
3,360
9,026
23,265
4,000
19,741
59,392
145,628
25,819
–
5,460
4,491
35,770
10,000
319
19,980
30,299
66,069
79,559
81,288
2,688
(74,956)
70,539
79,559
–
79,559
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial statements.
32
MaxiPARTS Limited
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2023
Issued
capital
$’000
Note
Accum-
ulated
loss
$’000
Profits
reserve
$’000
Other
reserves
$’000
Non-
controlling
interests
$’000
Total
$’000
Total
equity
$’000
Balance at 30 June 2022
81,288
(74,956)
70,539
2,688
79,559
–
79,559
Comprehensive income for the year
Profit for the year
Total comprehensive income for the year
Transactions with owners recorded
directly in equity
Dividend reinvestment
Share‑based payment transactions
14
Dividends paid
Acquisition of non‑controlling interests
Total transactions with owners
Balance at 30 June 2023
–
–
478
–
–
–
478
–
–
–
–
–
–
–
5,938
5,938
(478)
–
(2,215)
–
(2,693)
81,766
(74,956)
73,784
–
–
–
137
–
–
137
2,825
5,938
5,938
–
137
(2,215)
–
(2,078)
83,419
39
39
–
–
–
1,430
1,430
1,469
Note
Issued
capital
$’000
56,386
Asset
revaluation
reserve
$’000
Accum-
ulated
loss
$’000
Profits
reserve
* $’000
Other
reserves
$’000
13,719
(52,005)
61,936
2,464
82,500
(4,932)
–
(4,932)
Balance at 30 June 2021
Comprehensive income for the year
Loss for the year
Other comprehensive income
Net exchange differences on translation of
financial statements of foreign operations
Cashflow hedge reserve (net of tax)
Total comprehensive income for the year
Transactions with owners recorded
directly in equity
Dividend reinvestment
Issue of share capital
Share‑based payment transactions
14
Transfer of Asset revaluation reserve to
profits reserve on disposal of properties
Transfer to accumulated losses
Dividends paid
Total transactions with owners
Balance at 30 June 2022
–
–
–
–
1,167
23,735
–
–
–
–
–
–
–
–
–
–
–
(13,719)
–
–
–
–
–
–
–
–
–
–
(22,951)
–
–
(4,932)
(1,167)
–
–
13,719
22,951
(64)
153
89
–
–
135
–
–
–
–
(21,968)
24,902
81,288
(13,719)
–
(22,951)
(74,956)
13,535
70,539
135
2,688
5,977
5,977
–
137
(2,215)
1,430
(648)
84,888
Total
$’000
(64)
153
(4,843)
–
23,735
135
–
–
(21,968)
1,902
79,559
*
Amounts transferred to/from the profits reserve characterise profits available for distribution as dividends in future years and reflects the amounts transferred
by individual entities in the Group and is therefore not necessarily equivalent to the consolidated Group loss for the year.
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial statements.
Annual Report 2023
33
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2023
Note
2023
$’000
2022
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Income tax refund
Interest and other costs of finance paid
Net cash provided by/(used in) operating activities
19
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds on sale of property, plant and equipment
Dividends received
Acquisition of new business
Acquisition of Trout River, net of cash
Proceeds from sale of Trailer Solutions business, net of cash
Proceeds from sale of land and buildings
Net cash provided by/(used in) investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Proceeds from issue of share capital
Dividends paid
Payment of leases
Net cash used in financing activities
Net decrease in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
220,219
(204,758)
272
(659)
15,074
217,241
(228,639)
–
(334)
(11,732)
(1,606)
14
–
(8,960)
–
–
–
(10,552)
(5,000)
10,000
_
(2,215)
(5,207)
(2,422)
2,100
11,852
13,952
(822)
–
385
(18,288)
(472)
4,973
25,500
11,276
(17,250)
10,000
23,735
(21,968)
(4,651)
(10,134)
(10,590)
22,442
11,852
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial statements and includes cash
flows from both continuing and discontinued operations. Refer to note 24 for the cash flows relating to discontinued operations.
34
MaxiPARTS Limited
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the year ended 30 June 2023
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES
MaxiPARTS Limited (the ‘Company’) is a company domiciled in Australia and its registered office is 22 Efficient Drive, Truganina, Victoria.
The consolidated financial statements of MaxiPARTS Limited as at and for the year ended 30 June 2023 comprise the Company and its
subsidiaries (together referred to as the ‘Group’). The Group is a for‑profit entity.
Basis of preparation
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (‘AASBs’)
adopted by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. The financial report also complies with International
Financial Reporting Standards (‘IFRSs’) adopted by the International Accounting Standards Board (‘IASB’).
The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money
values or, except where stated, current valuations of non‑current assets. Cost is based on the fair values of the consideration given in exchange
for assets. These accounting policies have been consistently applied to all periods presented in the consolidated financial report by each entity
in the Group and are consistent with those of the previous year. The financial report contains comparative information that has been adjusted to
align with the presentation of the current period, where necessary.
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.
The Group has applied the relief available to it in ASIC Corporations (Rounding in Financial/Directors Reports) Instruments 2016/191 and,
accordingly, amounts in the financial statements and Report of the Directors have been rounded to the nearest thousand dollars unless
specifically stated to be otherwise.
The financial report was approved by the board of directors on 24 August 2023.
Going Concern
The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to pay its debts
as and when they become due and payable.
Accounting policies
The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report.
(a) Principles of consolidation
The consolidated financial report comprises the financial statements of MaxiPARTS Limited and all its subsidiaries. A subsidiary is any entity
controlled by MaxiPARTS Limited or any of its subsidiaries. Control exists where MaxiPARTS Limited is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of subsidiaries is
contained in Note 17 to the financial statements.
All inter‑company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated
on consolidation.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred
to the Group.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with
a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it
is not remeasured, and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration
are recognised in profit or loss.
Annual Report 2023
35
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
Where subsidiaries have entered or left the Group during the year, their operating results have been included from the date control was obtained
or until the date control ceased. The accounting policies of subsidiaries have been changed when necessary to align them with the policies
adopted by the Group.
Non‑controlling interest are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in
the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
(b) Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year‑end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
(c) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is assigned on a weighted average basis and
comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated
costs necessary to make the sale.
(d) Property, plant and equipment
Items of plant and equipment are stated at cost less accumulated depreciation and impairment losses (see accounting policy (i)). The cost
of self‑constructed assets includes the cost of materials, direct labour, and an appropriate proportion of production overheads. The cost of
self‑constructed assets and acquired assets includes (i) the initial estimate, at the time of installation and during the period of use, when relevant,
of the costs of dismantling and removing the items and restoring the site on which they are located, and (ii) changes in the measurement of
existing liabilities recognised for these costs resulting from changes in the timing or outflow of resources required to settle the obligation or
from changes in the discount rate.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant
and equipment.
(i) Leased assets
Lease assets are accounted for as described in accounting policy (y).
(ii) Depreciation
Depreciation is charged to the consolidated profit and loss on a straight‑line basis over the estimated useful lives of each part of an item of plant
and equipment when it’s ready for use. Land is not depreciated. The estimated useful lives are reflected in the following rates in the current and
comparative periods:
Plant and equipment
IT software
Leased plant and equipment
2023
2022
2‑20 years
5‑10 years
2‑20 years
5‑10 years
3.33‑10 years
3.33‑10 years
The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.
36
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
(e) Intangibles
(i) Goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill represents the difference between the consideration
transferred for the acquisition and the net recognised amount (generally fair value of the identifiable assets acquired and liabilities assumed),
all measured as of acquisition date.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash‑ generating units and is tested annually for
impairment (see accounting policy (h)). In respect of joint ventures, the carrying amount of goodwill is included in the carrying amount of the
investment in the joint venture.
Negative goodwill arising on an acquisition is recognised directly in profit or loss.
(ii) Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
(iii) Amortisation
Amortisation of intangibles other than goodwill and indefinite life intangibles is charged to the profit and loss on a straight‑line basis over the
estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are tested
for impairment at least at each annual reporting date. Other intangible assets are amortised from the date that they are available for use.
The estimated useful lives are reflected in the following rates in the current and comparative periods:
Förch Distribution agreement
2023
14 years
2022
n/a
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
(f) Trade and other receivables
The Group measures trade and other receivables at their amortised cost less impairment losses (see accounting policy (h)) if both of the following
conditions are met:
•
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank overdrafts that are
repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for
the purpose of the statement of cash flows.
(h) Impairment
The carrying amounts of the Group’s assets, other than inventories (see accounting policy (c)) and deferred tax assets (see accounting policy (m)),
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in the profit and loss unless the asset has previously been revalued, in which case the impairment
loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the profit and loss.
Annual Report 2023
37
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
Impairment losses recognised in respect of cash‑generating units are allocated first to reduce the carrying amount of any goodwill allocated to the
cash‑generating unit (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
For trade and other receivables, the Group applies a simplified approach in calculating expected credit losses. Therefore, the Group does not
track changes in credit risk, but instead recognises a loss allowance at each reporting date, based on known issues on collectability of
outstanding debt and review of history/previous trends.
(i) Calculation of recoverable amount
The recoverable amount of the Group’s receivables carried at amortised cost is calculated as the present value of estimated future cash flows,
discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets).
Receivables with a duration of less than 12 months are not discounted.
The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a post‑tax nominal discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the cash‑generating unit to which the asset belongs.
(ii) Reversals of impairment
An impairment loss in respect of receivables carried at amortised cost is reversed if the subsequent increase in recoverable amount can be
related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(i) Interest‑bearing borrowings
Interest‑bearing borrowings are recognised initially at fair value less attributable transaction costs.
Subsequent to initial recognition, interest‑bearing borrowings are stated at amortised cost with any difference between cost and redemption
value being recognised in the profit or loss over the period of the borrowings on an effective interest basis.
(j) Employee benefits
(i) Defined contribution superannuation funds
Obligations for contributions to defined contribution superannuation funds are recognised as an expense in the profit or loss as incurred.
(ii) Long service leave benefits
The liability for long service leave is measured as the present value of the estimated future cash outflows to be made by the employer for services
provided by employees up to the reporting date. By applying the actuary method to discount the liability, the Group determines the best estimates
of the variables that will determine the ultimate cost.
(iii) Share based payments transactions
MaxiPARTS Limited grants performance rights from time to time to certain employees under the Performance Rights Plan.
The fair value of performance rights granted is recognised as an employee expense with a corresponding increase in equity recorded over the
vesting period.
The fair value of the performance rights is calculated at the date of grant using a Monte Carlo simulation model and allocated to each reporting
period over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the performance rights allocated to
this reporting period.
38
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
(iv) Wages, salaries, annual leave, sick leave and non‑monetary benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting from employees’ services
provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as
at reporting date including related on‑costs, such as workers compensation insurance and payroll tax. Non‑accumulating non‑monetary benefits,
such as medical care, housing, cars and free or subsidised goods and services, are expensed based on the net marginal cost to the Group as
the benefits are taken by the employees.
(k) Provisions
A provision is recognised in the consolidated statement of financial position when the Group has a present legal or constructive obligation as
a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre‑tax rate that reflects current market assessments of the time
value of money and, when appropriate, the risks specific to the liability.
(l) Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data
and known warranty claims and may be subsequently adjusted accordingly.
(m) Income tax
Income tax expense comprises current and deferred tax. Income tax is recognised in the profit or loss except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date,
and any adjustment to tax payable in respect of previous years.
In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions. The Group believes
that its accruals for tax liabilities are adequate for all open tax years. This assessment relies on estimates and assumptions and may involve
judgements about future events.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided
for: goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted
at the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can
be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.
(n) Tax consolidation
The Company and its wholly‑owned Australian resident entities have formed a tax‑consolidated group with effect from 1 July 2003 and are
therefore taxed as a single entity from that date. The head entity within the tax consolidated group is MaxiPARTS Limited.
Due to the existence of a tax contribution agreement between the entities in the tax consolidated group, the parent entity recognises the tax
effects of its own transactions and the current tax liabilities and the deferred tax assets arising from unused tax losses and unused tax credits
assumed from the subsidiary entities.
Annual Report 2023
39
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
Current tax benefit/expense, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the
tax‑consolidated group are recognised in the separate financial statements of the members of the tax consolidated group using the ‘separate
taxpayer within group’ approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity
and the tax values applying under tax consolidation.
In accordance with the tax contribution agreement, the subsidiary entities are compensated/charged for the assets and liabilities assumed by the
parent entity as intercompany receivables and payables and for amounts which equal the amounts initially recognised by the subsidiary entities.
(o) Earnings per share
Basic earnings per share (“EPS”) is calculated by dividing the net profit attributable to members of the parent entity for the reporting period,
by the weighted average number of ordinary shares of the Company.
Diluted EPS is calculated by dividing the basic earnings, adjusted by the after tax effect of financing costs associated with dilutive potential
ordinary shares and the effect on revenues and expenses of conversion to ordinary shares associated with dilutive potential ordinary shares,
by the weighted average number of ordinary shares and dilutive potential ordinary shares.
(p) Revenue
(i) Revenue from the sale of goods
Revenue from the sale of goods is recognised at a point in time upon satisfaction of the performance obligation by transferring control of the
promised goods to the customer.
(ii) Other income
Interest income is recognised in the profit and loss as it accrues, using the effective interest method.
(q) Goods and services tax
Revenues, expenses, assets and liabilities are recognised net of the amount of goods and services tax (GST), except where the amount of GST
incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the consolidated balance sheet.
Cash flows are included in the statements of cash flows on a gross basis. The GST components of cash flows arising from investing and
financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(r) Trade and other payables
Liabilities are recognised for amounts to be paid in the future for goods or services received. Trade accounts payable are normally settled within
30‑60 days.
(s) Expenses
(i) Finance costs
Finance costs comprise interest payable on borrowings calculated using the effective interest method, foreign exchange losses, and losses on
hedging instruments that are recognised in the profit and loss. Borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised as part of the cost of the asset. All other borrowing costs are recognised in the profit and loss
using the effective interest method.
40
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
(t) Derivative financial instruments
The Group from time to time uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from
operational, financing and investment activities. The Group does not hold or issue derivative financial instruments for trading purposes.
Derivatives are initially recognised at fair value. Subsequent to initial recognition, derivative financial instruments are stated at fair value, and
changes therein are recognised in profit or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or
loss depends on the nature of the item being hedged. The Group does not currently have any derivatives that qualify for hedge accounting.
(u) Accounting estimates and judgements
Management discussed with the Board Audit and Risk Management Committee the development, selection and disclosure of the Group’s critical
accounting policies and estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Impairment of goodwill and intangibles
The Group assesses whether goodwill and intangibles with indefinite useful lives are impaired at least annually in accordance with accounting
policy (h).
These calculations involve an estimation of the recoverable amount of the cash‑generating units to which the goodwill and intangibles with
indefinite useful lives are allocated. Refer note 7.
(ii) Provisions
The calculation of the provisions for warranty claims and impairment provisions for inventory and receivables involves estimation and judgement
surrounding future claims and potential losses and exposures based primarily on past experience, the likelihood of claims or losses, management
knowledge and experience together with a detailed examination of financial and non‑financial information and trends. Refer accounting policy (l)
for details of the recognition and measurement criteria applied.
(iii) Income Tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the
provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate
tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity’s
current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will
impact the current and deferred tax provisions in the period in which such determination is made.
(iv) Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
(v) Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its distribution agreement
based on known facts & circumstances regarding past renewal pattern. The useful lives could change should the licensor elects not to renew
the agreement. The amortisation charge will increase where the useful lives are less than previously estimated lives.
(vi) Business Combinations
Business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities
assumed are initially estimated by the consolidated entity taking into consideration all available information at the reporting date. Fair value
adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination
occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported.
Annual Report 2023
41
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
(v) Financial risk management
(i) Overview
The Group has exposure to credit, market and liquidity risks associated with the use of financial instruments.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk controls, and to monitor
risks and adherence to limits. The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
The Group’s activities expose it primarily to the financial risks associated with changes in foreign currency exchange rates and interest rates.
The carrying value of financial assets and financial liabilities recognised in the accounts approximate their fair value with the exception of
borrowings which are recorded at amortised cost.
(ii) Capital risk 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 monitors the earnings per share and the levels of dividends to ordinary shareholders together with the net debt/equity ratio, which
at 30 June 2023 was 1% (2022: ‑2%). The Board seeks to maintain a balance between higher returns that might be possible with higher levels
of borrowings and the advantages afforded by a more conservative capital position.
(w) Segment reporting
Operating segments are identified, and segment information disclosed on the basis of internal reports that are regularly provided to or reviewed
by the Group’s chief operating decision maker which, for the Group, is the Managing Director. In this regard, such information is provided using
different measures to those used in preparing the consolidated statement of profit or loss and consolidated balance sheet. At reporting date, the
Group had the following operating segments: MaxiPARTS Operations and Förch Australia, though Förch Australia does not meet the qualitative
thresholds to require a segment report as at 30 June 2023. The Group will continue to assess this requirement each reporting period.
(x) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non‑financial assets
and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable,
further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(i) Derivatives
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair
value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity
of the contract.
Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and counterparty
when appropriate.
(ii) Non‑derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date.
42
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
1. STATEMENT Of SIGNIfICANT ACCOUNTING POLICIES continued
(y) Leases
The Group recognises a right‑of‑use asset and a lease liability at the lease commencement date. The right‑of‑use asset is initially measured
at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain remeasurements of the
lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost and decreased by lease payments made. It is remeasured when there is a change
in future lease payments, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate,
changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably
certain not to be exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options.
(z) Discontinued operation
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from
the rest of the Group and represents a separate major line of business or geographic area of operations, is part of a single co‑ordinated plan to
dispose of a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with the view to resale.
Classification as a discontinued operation occurs at the earlier of the disposal or when the operation meets the criteria to be classified as
held‑for‑sale.
When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re‑presented as if the
operation had been discontinued from the start of the comparative year.
(aa) Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets
are acquired. The consideration transferred for the acquisition of an acquiree comprises the fair values of the assets transferred, the liabilities
incurred and the equity interests issued. The consideration transferred also includes the fair value of any asset or liability resulting from a
contingent consideration arrangement and the fair value of any pre‑existing equity interest in the subsidiary.
Acquisition‑related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values at the acquisition‑date. On an acquisition‑by‑acquisition basis, any
non‑controlling interest in the acquiree is recognised either at fair value or at the non‑controlling interest’s proportionate share of the acquiree’s
net identifiable assets.
The excess of the consideration transferred and the amount of any non‑controlling interest in the acquiree over the fair value of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and
the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the
date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in profit or loss.
Annual Report 2023
43
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
2. NOTES TO ThE STATEMENT Of PROfIT AND LOSS
(a) Revenue
In the following table, revenue from customers (excluding revenue related to discontinued operations) is classified by major products and services
lines and primary geographical market.
Type of Good or Service
Sale of parts (point in time sale)
Total Group Revenue
Geographical Market
Australia
Total Group Revenue
(b) Employee and Contract labour expenses
Employee and contract labour expenses:
Employee expenses
Superannuation expense
Contract labour expenses
Total employee and contract labour expenses
(c) Depreciation & Amortisation, Finance Costs and Other Expenses
Depreciation and Amortisation
Depreciation and Amortisation
Lease Depreciation
Total Depreciation and Amortisation
Finance Costs
Interest Expenses
Lease Interest
Total Finance Costs
Consolidated
2023
$’000
2022
$’000
201,677
201,677
201,677
201,677
152,767
152,767
152,767
152,767
Consolidated
2023
$’000
2022
$’000
27,276
2,376
1,180
30,832
Consolidated
2023
$’000
1,014
4,594
5,608
659
1,341
2,000
20,229
1,693
687
22,609
2022
$’000
583
3,970
4,553
327
1,092
1,419
44
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
2. NOTES TO ThE STATEMENT Of PROfIT AND LOSS continued
(d) The following specific items are included in other expenses
Net foreign exchange loss
Significant items
Share‑based payments expense
Inventory write‑off
3. TAXATION
(a) Income tax
Reconciliation of tax expense/(benefit)
Consolidated
2023
$’000
42
357
137
399
2022
$’000
225
1,381
135
141
Consolidated
2023
$’000
2022
$’000
Prima facie tax payable on profit/(loss) before tax at 30% (2022:30%)
2,854
(1,417)
Add/(deduct) tax effect of:
Non‑deductible expenditure
Under/(over) provision in prior year
Unrecoverable deferred tax asset write‑off (NZ entity)
Impact of tax rates in foreign jurisdictions
Income tax expense in consolidated profit or loss
Income tax expense attributable to the Group’s profit is made up of:
Current tax expense/(benefit)
Prior year under/(over) provision
Deferred tax expense
– origination and reversal of temporary difference
– prior year under/(over) – deferred differences
Income tax expense in consolidated profit or loss
(b) Income tax expense is made up of:
Income tax expense on continuing operations
Income tax benefit on discontinued operations
Income tax expense on consolidated profit or loss
260
421
–
–
681
3,535
3,070
375
44
46
3,535
3,160
375
3,535
754
(228)
1,208
(112)
1,622
205
(13,440)
(251)
13,873
23
205
2,429
(2,224)
205
Annual Report 2023
45
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
3. TAXATION continued
(c) Deferred tax assets/(deferred tax liabilities)
The deferred tax assets/(deferred tax liabilities) are made up of the following
estimated tax benefits/(cost):
– Provisions and accrued employee benefits
– Property, plant and equipment
– Leases
– Intangible assets
– Other
– Tax losses carried forward
Net deferred tax asset
Balance at beginning of year
Recognised in profit or loss
Deferred tax on acquisition
Tax losses raised
Tax losses utilised
Net deferred tax asset
Consolidated
2023
$’000
2022
$’000
3,142
(748)
571
(1,910)
559
13,228
14,842
19,741
(90)
(1,868)
–
(2,941)
14,842
2,823
(247)
362
–
634
16,169
19,741
20,924
(13,873)
–
14,885
(2,195)
19,741
(d) Current tax asset/(liability)
The Group’s current tax asset of nil (2022: $743k), and current tax liability of ($347k) (2022: nil) represents the amount of income taxes receivable/
(payable) in respect of current and prior financial periods.
4. TRADE AND OThER RECEIVABLES
(a) Trade and Other Receivables Aging
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Trade debtors
Not past due
Past due 0‑30 days
Past due 31‑60 days
Past due over 61 days
Trade receivables
Other receivables
Total trade and other receivables
Consolidated 2023
Consolidated 2022
Gross
$’000
Impairment
$’000
Total
$’000
Gross
$’000
Impairment
$’000
Total
$’000
26,320
1,867
222
60
28,469
–
–
(36)
(199)
(235)
26,320
1,867
186
(139)
28,234
2,852
31,086
24,635
1,220
245
(21)
26,079
–
–
(70)
(104)
(174)
24,635
1,220
175
(125)
25,905
2,285
28,190
46
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
4. TRADE AND OTHER RECEIVABLES continued
(b) Movements in expected credit loss
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
5. INVENTORIES
Finished goods – at cost
Less: provision for decrease to net realisable value
Total inventories
6. PRoPeRtY, PlaNt aNd eQUiPmeNt
Plant and Equipment
Plant and equipment at cost
Accumulated depreciation and impairment losses
Subtotal plant and equipment
Office equipment at cost
Accumulated depreciation and impairment losses
Subtotal office equipment
Leased property, plant and equipment
Accumulated depreciation and impairment losses
Subtotal leased property, plant and equipment
Capital work in progress
Total property, plant and equipment
Consolidated
2023
$’000
174
279
(218)
235
Consolidated
2023
$’000
52,581
(822)
51,759
Consolidated
2023
$’000
8,132
(5,536)
2,596
4,732
(3,918)
814
949
(189)
760
31
2022
$’000
476
64
(366)
174
2022
$’000
46,275
(1,151)
45,124
2022
$’000
6,776
(4,992)
1,784
4,011
(3,371)
640
531
(45)
486
450
4,201
3,360
Annual Report 2023
47
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
6. PROPERTY, PLANT AND EQUIPMENT continued
Reconciliations
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:
Plant and equipment
Carrying amount at the beginning of the financial year
Additions/Acquired
Transfers from capital works in progress
Disposals
Depreciation
Carrying amount at the end of the financial year
Office equipment
Carrying amount at the beginning of the financial year
Additions/Acquired
Transfers from capital works in progress
Disposals
Depreciation
Carrying amount at the end of the financial year
Leased property, plant and equipment
Carrying amount at the beginning of the financial year
Additions/Acquired
Amortisation
Disposals
Carrying amount at the end of the financial year
Capital works in progress
Carrying amount at the beginning of the financial year
Additions
Transfers to property, plant and equipment
Carrying amount at the end of the financial year
2023
$’000
1,784
1,176
106
–
(470)
2,596
640
205
344
–
(375)
814
486
411
(137)
–
760
450
31
(450)
31
2022
$’000
1,202
926
72
(66)
(350)
1,784
591
478
36
(248)
(217)
640
–
574
(16)
(72)
486
108
450
(108)
450
48
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
7. INTANGIBLES
Goodwill at cost
Impairment losses
Distribution agreement cost
Amortisation
Total intangibles
Goodwill
Carrying amount at the beginning of the financial year
Additions
Carrying amount at the end of the financial year
Distribution agreement
Carrying amount at the beginning of the financial year
Additions
Amortisation
Carrying amount at the end of the financial year
Consolidated
2023
$’000
21,498
(9,065)
12,433
6,400
(32)
6,368
18,801
9,026
3,407
12,433
–
6,400
(32)
6,368
2022
$’000
18,091
(9,065)
9,026
–
–
–
9,026
7,633
1,393
9,026
–
–
–
–
25
25
Impairment tests for Goodwill and Other Intangibles
Management has considered the requirements under the accounting standards with regards to the Förch Australia acquisition and concluded
that the business purchased will create a new and separate CGU from the existing MaxiPARTS Operations CGU.
The recoverable amount of the CGU’s to which goodwill and other intangible assets with indefinite useful lives are allocated is determined based
on value‑in‑use calculations. Value‑in‑use was determined by discounting the future cash flows expected to be generated from the continuing
use of the assets. Value‑in‑use as at 30 June 2023 was determined similarly to the 30 June 2022 goodwill impairment test and was based on
the following key assumptions:
CGU
Growth rate average
Terminal growth rate
Pre‑tax nominal discount rate
MaxiPARTS Operations
Förch Australia
2023
4.0%
2.00%
14.48%
2022
2.75%
2.00%
14.00%
2023
4.0%
2.00%
21.37%
2022
n/a
n/a
n/a
The values assigned to the key assumptions represent each CGU’s assessment of future trends in the industry and are based on historical data
from both external sources and internal sources. The recoverable amount of the MaxiPARTS Operations & Förch Australia CGU’s were found to
be in excess of their carrying value. Management believe that a reasonable possible change in assumptions would not cause the carrying value
of either CGU to exceed its recoverable amount.
Annual Report 2023
49
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
8. TRADE AND OThER PAYABLES
Trade payables
Other payables and accruals
Total trade and other payables
Refer to note 22 for further information on financial instruments.
9. INTEREST BEARING LOANS AND BORROWINGS
Non-current
Bank loans – secured
Total non-current interest-bearing liabilities
Note
22(d)
Consolidated
2023
$’000
25,606
6,242
31,848
Consolidated
2023
$’000
15,000
15,000
2022
$’000
19,966
5,853
25,819
2022
$’000
10,000
10,000
Bank loans are subject to a floating interest rate. Refer to note 22(d) for details regarding the key terms and conditions attached to the loans.
Finance costs:
– Interest on bank loans
Total finance costs
Consolidated
2023
$’000
659
659
2022
$’000
327
327
50
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
10. PROVISIONS
(a) Provision balance
Current
Employee entitlements
Warranty MaxiPARTS
Warranty – discontinued operations
Total current provisions
Non-current
Employee entitlements
Warranty – discontinued operations
Total non-current provisions
Aggregate employee entitlements liability
Aggregate warranty provision
Note
24(d)
24(d)
Consolidated
2023
$’000
2022
$’000
3,785
248
1,700
5,733
394
300
694
4,179
2,248
3,131
329
2,000
5,460
319
–
319
3,450
2,329
The current provision for employee benefits includes all unconditional entitlements where employees have completed the required period of service
and also those where employees are entitled to pro‑rata payments in certain circumstances.
(b) Warranty – MaxiPARTS
The provision represents the estimated warranty claims in respect of products sold which are still under warranty at the reporting date. The provision
is estimated based on historical warranty claim information, sales levels and any recent trends that may suggest future claims could differ from
historical amounts. Refer to note 24(d) for information on warranty relating to discontinued operations.
Movements in Warranty – MaxiPARTS provision are set out below:
Warranty provision at 30 June 2023 is analysed as follows:
Carrying amount at 1 July 2022
Provisions made during the year
Provisions released during the year
Carrying amount at 30 June 2023
11. ISSUED CAPITAL
Balance at 30 June 2022
Dividend reinvestment
Performance rights vested and exercised
Balance at 30 June 2023
Annual Report 2023
Warranty
$’000
329
119
(200)
248
Number of
Ordinary
Shares
47,396,982
215,648
85,682
47,698,312
Issue Price
Share Capital
$’000
–
2.22
–
81,288
478
–
81,766
51
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
11. ISSUED CAPITAL continued
Ordinary shares
Subject to the Constitution of the Company, holders of ordinary shares are entitled to vote as follows:
• Every shareholder may vote;
• On a show of hands every shareholder has one vote; and
• On a poll every shareholder has one vote for each fully paid share.
The Company does not have authorised capital or par value in respect of its issued shares.
Subject to the Constitution of the Company, ordinary shares attract the right in a winding up to participate equally in the distribution of the assets
of the Company (both capital and surplus), subject only to any amounts unpaid on shares.
12. EARNINGS PER ShARE
Earnings reconciliation
Net profit/(loss) attributable to equity holders of the Company
5,938
(4,932)
Consolidated
2023
$’000
2022
$’000
Basic earnings/(loss)
From continuing operations
From discontinued operations
Diluted earnings/(loss)
From continuing operations
From discontinued operations
Weighted average number of shares
Number of ordinary shares for basic earnings per share
Number of ordinary shares for diluted earnings per share
7,334
(1,396)
5,938
7,334
(1,396)
5,938
4,908
(9,840)
(4,932)
4,908
(9,840)
(4,932)
2023
Number
2022
Number
47,470,515
47,470,515
40,928,976
40,928,976
52
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
13. DIVIDENDS
Dividends paid
Final dividend for 2022
Interim dividend for 2023
Total dividends paid
Dividends proposed
Final – ordinary
Cents Per
Share
Total Amount
$’000
Date of
Payment
Tax Rate for
Franking Credit
2.50
3.17
1,185
1,508
2,693
19‑Sep‑22
20‑Mar‑23
30%
30%
Percent
Franked
100%
100%
3.22
1,536
15‑Sep‑23
30%
100%
The above dividend was determined after the end of the financial year and will be paid on 15 September 2023. The financial effect of this dividend has
not been brought to account in the financial statements for the year ended 30 June 2023 and will be recognised in subsequent financial statements.
Dividend franking account
Franking credits available to shareholders of MaxiPARTS Limited for subsequent financial years
The ability to utilise the franking credits is dependent upon the ability to declare dividends.
The Company
2023
$’000
6,492
2022
$’000
7,918
The impact on the dividend franking account of dividends proposed after the reporting date but not recognised as a liability is to reduce it by $658k.
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
•
•
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date; and
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date.
14. ShARE BASED PAYMENTS
On 15 October 2010, the Group established the MaxiPARTS Performance Rights Plan (‘PRP’) that entitles executive directors and senior
management to receive a specified number of Performance Rights (‘PRs’) which upon vesting can be converted into a specified number
of ordinary shares in the Company.
The terms and conditions relating to PRs currently on issue are as follows:
Period
Grant date
Total PRs issued
Total PRs forfeited
Total PRs remaining on issue
Target ROIC
Minimum % of ROIC target that must be achieved for Performance Rights to vest
Minimum Economic Value Add (EVA)
Target increase in EVA
Minimum % of EVA target that must be achieved for Performance Rights to vest
Minimum service requirement
1 July 2022
– 30 June 2025
1 July 2021
– 30 June 2024
1 July 2020
– 30 June 2023
20 Oct 2022
3 Nov 2021
23 Nov 2020
170,506
–
170,506
n/a
n/a
$4.42m
$6.60m
67.0%
113,349
29,439
83,910
n/a
n/a
$4.17m
$6.22m
67.0%
1,227,601
1,036,879
190,722
12.50%
67.0%
n/a
n/a
n/a
3 years from
grant date
3 years from
grant date
3 years from
grant date
Annual Report 2023
53
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
14. ShARE BASED PAYMENTS continued
Details of PRs exercised
Total PRs granted
Total PRs forfeited
Total PRs exercised
Total PRs remaining on issue
Measurement of fair value
1 July 2022
– 30 June 2025
1 July 2021
– 30 June 2024
1 July 2020
– 30 June 2023
170,506
–
–
113,349
29,439
–
1,227,601
1,036,879
–
170,506
83,910
190,722
The fair value of PRs is calculated at the date of grant by an independent external valuer, Grant Thornton, using the Monte Carlo simulation model
and allocated to each reporting period evenly over the period from grant date to vesting date. Expected volatility is estimated by considering
historic average share price volatility.
PRs are granted under a service condition and, for grants to key management personnel, non–market performance conditions. Non–market
performance conditions are not taken into account in the grant date fair value measurement of the services received.
The inputs used in the measurement of the fair values at grant date of the PRs on issue are as follows:
Fair value at grant date
Share price at grant date
Expected volatility
Expected dividend yield
Risk–free rate of return
Expense/(income) recognised in profit and loss
Share based payments expense recognised
Share based payments reversed
Total share based payment expense/(income) recognised as employee costs
2023
$2.01
$2.13
65.0%
2.0%
3.6%
2022
$3.63
$3.85
65.0%
2.0%
0.9%
Consolidated
2023
$’000
137
–
137
2021
$1.80
$1.80
65.0%
0.0%
0.1%
2022
$’000
135
–
135
54
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
15. RELATED PARTY DISCLOSURES
(a) Director and other key management personnel disclosures
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Group. Key management
personnel comprise the directors of the Company and executives for the Group.
The following were key management personnel of the Group at any time during the reporting period and unless otherwise indicated were key
management personnel for the entire period:
Non‑executive directors
• Mr R Wylie (Director since September 2008 – Chair since 30 June 2016, retired 12 May 2023);
• Ms M Verschuer (Director since 24 January 2019, Deputy Chair since 27 April 2022, Chair since 12 May 2023);
• Mr G Butera (appointed 17 September 2021);
• Ms D Stirling (appointed 29 August 2023); and
• Mr F Micallef (appointed 24 February 2023).
Executive directors
• Mr P Loimaranta (Managing Director appointed 6 September 2021).
Executives
• Ms L Blockley (Chief Financial Officer, appointed 6 September 2021).
Directors’ transactions in shares
Directors and their related entities acquired 109,852 (2022: 73,936) existing ordinary shares in MaxiPARTS Limited during the year.
(b) Director and other key management personnel transactions
Apart from the details disclosed in this note, no key management personnel have entered into a material contract with the Group since the end
of the previous financial year and there were no material contracts involving directors’ interests existing at year end.
(c) Key management personnel remuneration
The key management personnel remuneration (see Remuneration Report) is as follows:
Short‑term employee benefits
Post‑employment benefits
Share based payment benefits/(income)
(d) Parent entity
MaxiPARTS Limited is the parent entity.
(e) Subsidiaries
Interests in subsidiaries are set out in note 17.
Consolidated
2023
2022
1,374,513
3,045,163
111,796
158,916
230,156
69,174
1,645,225
3,344,493
Annual Report 2023
55
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
16. PARENT ENTITY
As at 30 June 2023 and throughout the financial year ending on that date, the parent company of the Group was MaxiPARTS Limited.
Results of the parent company
Loss for the year
Total comprehensive income
Financial position of the parent company
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent company comprising of:
Issued capital
Reserves
Retained earnings
Total equity
Company
2023
$’000
(5,931)
(5,931)
84,724
122,909
3,905
18,950
103,959
81,766
636
21,557
103,959
2022
$’000
(4,244)
(4,244)
89,645
125,736
3,734
13,768
111,968
81,288
498
30,182
111,968
(a) Parent company’s contingencies
At any given point in time, the parent company may be engaged in defending legal actions brought against it. The directors are not aware of any such
actions that would give rise to a material contingent liability to the parent company, other than what has already disclosed in the financial statements.
(b) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each company guarantees the debts of the
others. No deficiencies of assets exist in any of these subsidiaries. Refer to note 18.
(c) Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
(d) Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following:
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
56
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
17. CONTROLLED ENTITIES
MaxiPARTS Limited
Controlled entities of MaxiPARTS Limited
MaxiPARTS Operations Pty Ltd (formerly MaxiPARTS Pty Ltd)
– Colrain Queensland Pty Ltd
– Colrain (Albury) Pty Ltd
– MaxiPARTS (Qld) Pty Ltd
Förch Australia Pty Ltd
MaxiPARTS Australia Pty Ltd
(formerly MaxiTRANS Australia Pty Ltd) (i)
– ACN 159 813 733 Pty Ltd (i)
– MaxiPARTS Services Pty Ltd (i)
Transtech Research Pty Ltd (i)
MaxiPARTS Industries (N.Z.) Pty Ltd
(formerly MaxiTRANS Industries (N.Z.) Pty Ltd) (i)
ACN 073 705 263 PTY LTD (i)
(i) Dormant entity.
Country of
Incorporation
Class of
Shares
2023
%
2022
%
Interest Held
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
Annual Report 2023
57
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
18. DEED Of CROSS GUARANTEE
The Company, together with its subsidiaries, MaxiPARTS Australia Pty Ltd, Transtech Research Pty Ltd,
ACN 073 705 263 Pty Ltd, MaxiPARTS Industries (N.Z.) Pty Ltd and MaxiPARTS Operations Pty Ltd (effective 1 September 2008, previously
ineligible) and MaxiPARTS (Qld) Pty Ltd (effective 22 June 2012, previously ineligible) each of which are incorporated in Australia, entered into
a “Deed of Cross Guarantee” so as to seek the benefit of the accounting and audit relief available under Class Order (2016/785) made by the
Australian Securities & Investments Commission which was granted on 30 June 2006.
A consolidated statement of comprehensive income and consolidated balance sheet, comprising the Company and controlled entities which are
party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the year ended 30 June 2023 is set out
as follows:
Consolidated statement of comprehensive income
2023
$’000
2022
$’000
Continuing Operations
Total revenue
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Other income
Employee expenses
Depreciation and amortisation expenses
Finance costs
Other expenses
Profit before income tax from continuing operations
Income tax expense
Profit from continuing operations
Discontinued Operations
Loss from discontinued operations before income tax
Income tax benefit from discontinued operations
Profit/(Loss)for the year
Other comprehensive income
Items that may subsequently be re‑classified to profit or loss:
Net exchange difference on translation of financial statements of foreign operations
Cashflow hedge reserve
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
Profit/(Loss) attributable to: Equity holders of the Company
Total comprehensive income/(loss) attributable to: Equity holders of the Company
200,478
3,503
(145,927)
361
(30,510)
(5,576)
(1,999)
(10,041)
10,289
(3,077)
7,212
(1,021)
(375)
5,816
–
–
–
5,816
5,816
5,816
152,767
2,013
(110,756)
116
(22,609)
(4,553)
(1,419)
(8,222)
7,337
(2,429)
4,908
(12,299)
2,224
(5,167)
(64)
153
89
(5,078)
(5,167)
(5,078)
58
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
18. DEED Of CROSS GUARANTEE continued
Consolidated statement of financial position
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other
Financial asset
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Right of use asset
Financial asset
Investments in controlled entities
Deferred tax assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Current tax liability
Provisions
Lease liability
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Provisions
Lease liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained profits/(accumulated losses)
Equity attributable to equity holders of the parent
Total Equity
Annual Report 2023
Consolidated
2023
$’000
13,746
25,933
49,117
–
1,720
4,000
94,516
3,983
8,995
–
12,045
16,710
71,823
2022
$’000
11,852
24,461
45,124
743
325
–
82,505
3,360
9,026
23,265
4,000
2,919
19,741
62,311
166,339
144,816
30,636
–
5,839
4,166
40,641
15,000
394
27,878
43,272
83,913
82,426
81,766
2,825
(2,165)
82,426
82,426
25,819
–
5,460
4,491
35,770
10,000
319
19,980
30,299
66,069
78,747
81,288
2,688
(5,229)
78,747
78,747
59
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
19. NOTE TO ThE CONSOLIDATED STATEMENT Of CASh fLOWS
(a) Cash flows from operating activities
Reconciliation of cash flows from operating activities with operating profit/(loss) after tax
Consolidated
Profit/(loss) for the year
Non-cash items in operating profit
Depreciation and amortisation of assets
(Gain)/loss on sale of property, plant and equipment
Loss on sale of discontinued operations
Gain on sale of land and buildings
AASB16 Lease Interest
(Gain)/loss on derecognition of ROU asset
Share based payments expense
Change in assets and liabilities
(Increase)/decrease in receivables
(Increase)/decrease in other assets
(Increase)/decrease in inventories
Increase/(decrease) in trade payables and other liabilities
Increase/(decrease) in current tax assets
Increase/(decrease) in provisions
Increase/(decrease) in deferred taxes
Net cash provided by/(used in) operating activities
The reconciliation includes operating cash flows from both continued and discontinued operations.
(b) Non‑cash investing and financing activities
Additions to the right‑of‑use assets
Shares issued via dividend reinvestment plant
Shares issued under employee share plan
2023
$’000
5,977
5,608
(14)
–
–
1,341
20
137
(1,354)
(1,495)
(3,862)
4,384
826
475
3,031
15,074
Consolidated
2023
$’000
14,586
478
137
15,201
2022
$’000
(4,932)
4,553
141
3,623
(306)
1,648
(2)
135
879
(66)
(2,157)
(13,484)
(1,230)
1,552
(2,086)
(11,732)
2022
$’000
12,340
1,167
135
13,642
60
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
19. NOTE TO ThE CONSOLIDATED STATEMENT Of
CASh fLOWS continued
(c) Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2021
Net cash used in financing activities
Acquisition of leases
Other changes
Balance at 30 June 2022
Net cash from/(used in) financing activities
Acquisition of leases
Other changes
Balance at 30 June 2023
Bank loans
$’000
Lease liability
$’000
17,250
(7,250)
–
–
10,000
5,000
–
–
15,000
17,643
(4,651)
12,486
(1,007)
24,471
(5,207)
14,621
866
34,751
20. CAPITAL AND LEASING COMMITMENTS
(a) Right‑of‑use assets
Balance at 1 July 2022
Additions during the year
Disposals during the year
Depreciation charge for the year
Balance as at 30 June 2023
Balance at 1 July 2021
Additions during the year
Disposals during the year
Depreciation charge for the year
Balance as at 30 June 2022
Consolidated
Property leases
$’000
Other assets
$’000
21,509
13,640
(380)
(3,616)
31,153
1,756
946
(80)
(978)
1,644
Consolidated
Property leases
$’000
Other assets
$’000
15,289
11,253
(1,892)
(3,141)
21,509
1,556
1,087
(58)
(829)
1,756
Total
$’000
34,893
(11,901)
12,486
(1,007)
34,471
(207)
14,621
866
49,751
Total
$’000
23,265
14,586
(460)
(4,594)
32,797
Total
$’000
16,845
12,340
(1,950)
(3,970)
23,265
Annual Report 2023
61
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
20. CAPITAL AND LEASING COMMITMENTS continued
(b) Lease liabilities
Balance at 1 July 2022
Additions during the year
Interest expense
Payments
Disposals during the year
Balance as at 30 June 2023
Balance at 1 July 2021
Additions during the year
Interest expense
Payments
Disposals during the year
Balance as at 30 June 2022
(c) Amounts recognised in profit or loss
Depreciation expense of right‑of‑use assets
Interest expense on lease liabilities
Total
Consolidated
Total
$’000
24,471
14,621
1,341
(5,207)
(475)
34,751
Consolidated
Total
$’000
17,643
12,486
1,092
(4,651)
(2,099)
24,471
2022
$’000
3,970
1,092
5,062
Consolidated
2023
$’000
4,594
1,341
5,935
21. CONTINGENT LIABILITIES
At any given point in time the Group may be engaged in defending legal actions brought against it. In the opinion of the Directors such actions
are not expected to have a material effect on the Group’s financial position.
Disclosure of the Supreme Court claim made by MaxiPARTS onto ATSG and the corresponding counter claim made by ATSG on MaxiPARTS
is included in notes 24c and 24d.
62
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
22. fINANCIAL INSTRUMENTS
Risk management framework/policies
The Group’s key activities include the sale and distribution of commercial parts, spare parts & workshop consumables. These activities expose
the Group to a variety of financial risks, including liquidity risk, credit risk and market risk such as currency and interest rate risk.
The Group’s financial risk management program seeks to minimise the potential adverse effects of the unpredictability of financial markets on the
financial performance of the Group by utilising derivative financial instruments for purchase of supplies and raw materials. The Group measures
risk exposure through sensitivity analysis in the case of currency risk, cash flow forecasting and ageing analysis for credit risk.
Market risk
(a) Interest rate risk
The Group is exposed to interest rate risk as it borrows at floating interest rates.
As at reporting date the interest rate profile of the Group’s interest‑bearing financial instruments were:
Borrowings – floating rate
Consolidated
2022
$’000
10,000
10,000
2023
$’000
15,000
15,000
As at reporting date, if interest rates on borrowings had moved as illustrated in the table below, with all other variables held constant, post tax
profit for the year would have been affected as follows:
100bp increase
100bp decrease
(b) Currency risk
2023
$’000
(105)
105
2022
$’000
(70)
70
The Group is exposed to foreign currency risk on purchases that are denominated in foreign currency. Derivative financial instruments (forward
exchange contracts) are used by the Group to economically hedge exposure to exchange rate risk associated with foreign currency transactions.
Forward exchange contracts
The following table summarises the forward exchange contracts outstanding as at the reporting date:
Average Exchange Rate
Foreign Currency
Contract Value
Fair Value
Buy
USD
EUR
CHN
JPY
2023
$’000
0.6651
0.6066
4.5990
2022
$’000
0.6892
0.6690
4.6618
90.5988
93.5020
2023
$’000
4,416
457
10,919
79,444
2022
$’000
4,121
53
11,746
3,817
2023
$’000
6,640
753
2,374
878
10,645
2022
$’000
5,979
79
2,520
41
8,619
2023
$’000
15
(3)
(100)
(41)
(129)
Annual Report 2023
2022
$’000
9
1
27
1
38
63
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
22. fINANCIAL INSTRUMENTS continued
As at reporting date, if the Australian Dollar had moved against the foreign currencies as illustrated in the table below, with all other variables held
constant, post tax profit for the year would have been affected as follows:
USD 10.0 cents increase
USD 10.0 cents decrease
EUR 10.0 cents increase
EUR 10.0 cents decrease
CNH 10.0 cents increase
CNH 10.0 cents decrease
JPY 10.0 cents increase
JPY 10.0 cents decrease
(c) Credit risk
Consolidated
2023
$’000
608
(823)
75
(104)
35
(37)
1
(1)
2022
$’000
530
(710)
7
(10)
37
(39)
–
–
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is
exposed to credit risk from its operating activities, primarily from trade and other receivables. The carrying amount of these financial assets at
year‑end represented the Group’s maximum exposure to credit risk. The Group has a policy of only dealing with credit worthy counterparties as
a means of mitigating the risk of financial losses from defaults. The Group does not have any significant credit risk exposure to any single counter
party. The majority of accounts receivable are due from entities within the broad road transport industry.
Guarantees
Performance guarantees of $2,420,307 (2022: $2,166,231) are held by Commonwealth Bank of Australia.
(d) 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 liquidity management policies
include Board approval of all changes to debt facilities as well as robust management practices in short and long‑term cashflow management.
The following table summarises the maturities of the Group’s financial liabilities based on the remaining earliest contractual maturities.
30 June 2023 – Consolidated
Trade and other payables and accruals
Borrowings
Lease Liability
Effect of derivative instruments
Forward exchange contracts
– inflow
– outflow
Carrying
amount
$’000
(31,848)
(15,000)
(34,751)
Total
$’000
(31,848)
(18,092)
(34,899)
6 months
or Less
$’000
(31,848)
(515)
(2,251)
6-12
Months
$’000
–
(515)
(2,376)
1-2
Years
$’000
–
(3,031)
(4,544)
2-5
Years
$’000
–
(14,031)
(12,143)
5+
Years
$’000
–
–
(13,585)
10,645
(10,515)
(81,469)
10,645
(10,515)
(84,709)
10,645
(10,515)
(34,484)
–
–
–
–
–
–
–
–
(2,891)
(7,575)
(26,174)
(13,585)
64
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
22. fINANCIAL INSTRUMENTS continued
30 June 2022 – Consolidated
Trade and other payables and accruals
Borrowings
Lease Liability
Effect of derivative instruments
Forward exchange contracts
– inflow
– outflow
Finance facilities
Carrying
amount
$’000
(25,819)
(10,000)
(24,471)
Total
$’000
(25,819)
(10,918)
(31,733)
6 months
or Less
$’000
(25,819)
(204)
(2,595)
6-12
Months
$’000
–
(204)
(2,453)
1-2
Years
$’000
–
(408)
(4,377)
2-5
Years
$’000
–
(10,102)
(10,732)
5+
Years
$’000
–
–
(11,576)
8,619
(8,656)
8,619
(8,656)
8,619
(8,656)
–
–
–
–
–
–
–
–
(60,327)
(68,507)
(28,655)
(2,657)
(4,785)
(20,834)
(11,576)
At year end, the Group had the following financing facilities in place with its bankers:
Consolidated
Loan facility
Overdraft facility
Multi‑option facility
Corporate card facility
Asset finance
Facility Amount
Utilised
Available
2023
$’000
20,000
1,000
2,600
250
1,000
2022
$’000
10,000
1,000
2,600
250
–
2023
$’000
15,000
–
2,420
117
–
2022
$’000
10,000
–
2,166
96
–
24,850
13,850
17,537
12,262
2023
$’000
5,000
1,000
180
133
1,000
7,313
2022
$’000
–
1,000
434
154
–
1,588
Commonwealth Bank of Australia is the Group’s banking partner.
The Group established a new bank facility agreement with the Commonwealth Bank of Australia on 1 September 2021, the facility was amended
on 29 May 2023 to increase the loan facility amount by $10.0m to facilitate the Group’s acquisition of 80% of Förch Australia Pty Ltd.
Australian loan facilities of $24.85m mature as follows, subject to continuing compliance with the terms of the facilities:
•
•
•
•
•
$1m overdraft facility subject to annual renewal and cancellable on demand;
$2.6m subject to annual renewal and cancellable on demand;
$0.25m corporate card facility subject to annual renewal;
$1m asset finance facility subject to annual renewal and cancellable on demand; and
$20m in May 2026 (loan facility). Interest only to 31 May 2024, amortising at $500k per quarter thereafter.
Interest rates are variable for the Group’s loan facilities.
The terms and conditions of the bank facilities contain covenants in relation to the minimum adjusted Earnings before interest, tax, depreciation
and amortisation and Tangible Asset ratio. With the new bank facility agreement, the covenants measures remain unchanged, with the exception
of an increase in EBITDA targets that are stepped up over the next 2 years to account for the acquired business growth.
The group was not in breach of any debt covenants in the financial reporting period ended 30 June 2023.
Annual Report 2023
65
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
22. fINANCIAL INSTRUMENTS continued
(e) Fair value
Determination of fair value
Net fair value has been determined in respect of financial assets and financial liabilities, with reference to the carrying amount of such assets and
liabilities in the consolidated balance sheet, determined in accordance with the accounting policies disclosed in Note 1 to the financial statements.
The carrying amount approximates estimated net fair value for the Group’s financial assets and liabilities.
Classification of fair value
Fair Value Measurement requires that financial and non‑financial assets and liabilities measured at fair value (being forward exchange contracts)
be disclosed according to their position in the fair value hierarchy. There were no transfers between levels within the fair value hierarchy at
30 June 2023.
•
•
•
Level 1 is based on quoted prices in active markets for identical items;
Level 2 is based on quoted prices or other observable market data not included in level 1; and
Level 3 valuations are based on inputs other than observable market data.
Forward exchange contracts and interest rate swaps are classified as Level 2 and their fair value is determined by reference to observable inputs
from active markets or prices from markets not considered active. They are priced with reference to an active yield or rate, but with an adjustment
applied to reflect the timing of maturity dates.
The fair value of forward exchange contracts and interest rate swaps at balance date is as follows:
Derivative assets
Derivative liabilities
23. REMUNERATION Of AUDITOR
Remuneration of auditor
Remuneration of the auditor for:
– auditing and reviewing the financial statements – Group (KPMG)
– auditing and reviewing the financial statements – Group (HLB Mann Judd)
– auditing and reviewing the financial statements – controlled entities (HLB Mann Judd)
– taxation and advisory (KPMG)
Overseas KPMG Firms:
– taxation and advisory
Total auditor remuneration
Consolidated
2023
$’000
–
(129)
2022
$’000
38
–
Consolidated
2023
$
2022
$
72,645
150,000
30,900
112,726
366,271
7,408
7,408
370,969
–
–
80,596
451,565
9,261
9,261
373,679
460,826
66
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
24. DISCONTINUED OPERATIONS
On 31 August 2021 the Group completed the transaction for the sale of the Trailer Solutions business and Ballarat property to Australian Trailer
Solutions Group Pty Ltd (ATSG), and subsequently completed the sale of both the Derrimut and Hallam properties, both utilised for Trailer
Solutions business, to another third party.
The results of the discontinued operations for the year ended 30 June 2023 are present below:
(a) Results of discontinued operation
Note
2023
$’000
2022
$’000
Discontinued operation
Revenue
Other income
Loss on sale of discontinued operations
Gain on sale of land and buildings
Lease interest
Other expenses
Loss before income tax
Income tax benefit/(expense)
Profit/(Loss) from discontinued operation, net of tax
(b) Cash flows from discontinued operation
Discontinued operation
Net cash outflows from operating activities
Net cash inflows from investing activities
Net cash outflows from financing activities
Net cash inflow/(outflows) discontinued operation
3(b)
–
–
41
–
–
(1,062)
(1,021)
(375)
(1,396)
2023
$’000
(1,062)
–
–
(1,062)
43,845
98
(3,623)
306
(556)
(52,134)
(12,064)
2,224
(9,840)
2022
$’000
(11,583)
29,927
(861)
17,483
(c) Other receivables in relation to the sale of the Trailer Solutions business
The consolidated statement of financial position as at 30 June 2023 includes a receivable (recognised within trade and other receivables) of
$2.4m in relation to the final sale price completion accounts process between MaxiPARTS and ATSG. The outstanding receivable amount of
$2.4m has been ruled upon by a jointly appointed independent accountant in accordance with the requirements under the Sale Agreement and
is payable by ATSG and the Group has pursued the outstanding receivable from ATSG. ATSG have not paid the outstanding amount on the basis
they believe they have offsetting Warranty claims related to the transaction that amount to approximately $5.0m. MaxiPARTS has filed a claim
with the Supreme Court for the $2.4m owed (further details provided in Note 24d).
The consolidated statement of financial position at 30 June 2023 also includes a deferred consideration receivable (recognised within financial
assets) from ATSG for $4.0m, the receivable has a maximum term of two years from the completion date of 31 August 2021, with interest
chargeable at 3% pa for the first 6 months, 5% pa for the next 6 months and 8% pa thereafter.
Annual Report 2023
67
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
24. DISCONTINUED OPERATIONS
(d) Other liabilities or contingent liabilities related to the sale of the
Trailer Solutions business
ATSG assumed all liabilities of the Trailer Solutions business with the exception of Trade Creditors which have subsequently been paid by the
Group, and a cap limiting the amount of Customer Warranties exposure to ATSG to $2.35m. The Group took an Statements for the year‑ended
30 June 2022, increasing the total estimated warranty expenditure to $4.35m. The additional provision was reported in the results of discontinued
operations. The provision amount was estimated based on analysis of the Trailer warranty expenditure incurred to date and applying the
expenditure profile to the Trailers for the remaining warranty period. The provision remained unchanged for the year ended 30 June 2023.
The Asset Sale Agreement for the sale of the Trailer Solutions business also included the customary warranties and indemnities, which are
subject to usual limitations. The Group’s liability for claims under the warranties is capped at the sale price.
As mentioned in note 24c, MaxiPARTS has filed a claim with the Supreme Court for the $2.4m owed. ATSG has filed a counter claim with the
Supreme Court for a proposed breach of Sellers Warranty. MaxiPARTS has submitted its reply and defence to ATSG’s counterclaim on 19th May
2023. MaxiPARTS denies the allegations in the counterclaim and is of the view that many items are unfounded, have already been determined
by another process or are grossly exaggerated in the value assigned to the item. Both parties are now workings towards submissions for further
discovery requests, with an expectation that the next step in the process will be a mediation process to be scheduled at the next directions
hearing on 6 October 2023.
25. BUSINESS COMBINATION
On 31 May 2023, the Group entered into a Share Sale (Purchase) Agreement to acquire 80% of Förch Australia Pty Ltd, a distributor of workshop
consumables, predominantly focused on automotive and commercial vehicle workshops. Förch Australia is an adjacent product opportunity for
MaxiPARTS providing immediate incremental improvements to both profit margins and earnings per share metrics with significant opportunity
to add further scale in the coming years. Förch Australia holds an exclusive Australian distribution agreement for all FÖRCH product with
Theo FÖRCH GmbH & Co KG of Germany through to April 2030 (“Australian Distribution Agreement”)
The purchase consideration was $9.1m, with $9.6m paid on the acquisition date, and $(0.5m) in working capital adjustments (recorded as
receivable at reporting date). The purchase price included the net asset value of $2.7m, and $6.4m ($4.5m net of tax) identifiable intangible asset
in relationship to the exclusive distribution agreement between Theo Förch GmbH (Förch Germany) & Co. KG & Förch Australia. The transaction
has resulted in the recognition of $3.4m of Goodwill and recorded a non‑controlling interest of ($1.4m) equating to 20% of net assets.
MaxiPARTS Limited meets the required definition of controlling party under the terms defined within the Shareholders agreement, with the
acquisition of 80% of Förch Australia Pty Ltd. The Group has elected to measure the non‑controlling interest in the acquiree at the proportionate
share of its interest in the acquiree’s identifiable net assets.
The acquired business contributed revenues of $1.2m and a new profit before tax, and before minority interests, of $0.27m to the Group for the
period from 1 June 2023 to 30 June 2023.
68
MaxiPARTS Limited
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
25. BUSINESS COMBINATION continued
The fair value of the identifiable assets and liabilities of Förch Australia Pty Ltd as at the date of acquisition were:
Cash & cash equivalents
Trade receivables
Inventories
Right to use asset
Property, plant and equipment
Identifiable intangible assets
Deferred tax asset
Total assets
Trade creditors
Lease liability
Other payables
Hire purchase
Employee entitlements
Tax provision
Deferred tax liability
Total Liabilities
Total identifiable net assets at fair value
Non‑controlling interest (20% of net assets)
Goodwill
Purchase consideration transferred
Purchase consideration transferred, net of cash
Fair value
recognised on
acquisition
$’000
166
1,543
2,773
2,707
217
6,400
52
13,858
(1,296)
(2,707)
(239)
(110)
(173)
(264)
(1,920)
(6,709)
7,149
(1,430)
3,407
9,126
8,960
The goodwill is attributable to Förch Australia being predominantly a Western Australia based business with a smaller (newer) site in Victoria that,
with MaxiPARTS support, can look to emulate the successful Western Australia model across the rest of Australia.
The identifiable intangible asset assigned to the Förch Distribution Agreement will be amortised over 14 years. None of the goodwill recognised
or identifiable intangible asset is expected to be deductible for tax purposes.
Management considers the Business Combination for the Förch Australia acquisition to be ‘closed’ at 30 June 2023 as the completion process
has been finalised.
Annual Report 2023
69
Notes to the CoNsolidated FiNaNCial statemeNts CoNtiNUed
26. NON‑CONTROLLING INTEREST
Refer to note 25 for details on non‑controlling interest.
Opening balance
80% acquisition – Förch Australia Pty Ltd
Non‑controlling interest profit for the financial year
Closing balance
2023
$’000
1,430
39
1,469
2022
$’000
–
–
–
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early
adopted by the consolidated entity for the annual reporting period ended 30 June 2023. The consolidated entity has not yet assessed the impact
of these new or amended Accounting Standards and Interpretations.
27. STANDARDS ISSUED BUT NOT YET EffECTIVE
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early
adopted by the consolidated entity for the annual reporting period ended 30 June 2023. The consolidated entity has not yet assessed the impact
of these new or amended Accounting Standards and Interpretations.
28. EVENTS SUBSEQUENT TO BALANCE DATE
On the 31 May 2023, MaxiPARTS acquired an 80% stake in Förch Australia Pty Ltd. Final completion processes were agreed between parties
on 9th August 2023 and included in the accounts at 30 June 2023. Management considers the Business Combination for the Förch Australia
acquisition to be ‘closed’ at 30 June 2023.
Apart from the dividend declared, there have been no other events subsequent to the reporting date which would have a material effect on the
Group’s financial statements for the year ended 30 June 2023.
70
MaxiPARTS Limited
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2023
Independent Auditor’s Report to the Members of MaxiPARTS Limited
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of MaxiPARTS Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30
June 2023, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its
financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of 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. We have
determined the matters described below to be the key audit matters to be communicated in our
report.
hlb.com.au
HLB Mann Judd (VIC Partnership) ABN 20 696 861 713
Level 9, 550 Bourke Street, Melbourne VIC 3000 | GPO Box 2850, Melbourne VIC 3001
T: +61 (0) 3 9606 3888 F: +61 (0) 3 9606 3800 E: mailbox@hlbvic.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
HLB Mann Judd (VIC Partnership) is a member of HLB International, the global advisory and accounting network
Annual Report 2023
71
INDEPENDENT AUDITOR’S REPORT CONTINUED
Key Audit Matter
How our audit addressed the key audit matter
Business Combination Accounting
Refer to Note 25 Business Combination
During the year, the Group acquired
Förch Australia Pty Ltd (“FA”) for a
purchase consideration of $9.126
million. This was considered a
significant purchase for the Group.
Accounting for this transaction is a
complex and judgemental exercise,
requiring management to determine
the fair value of acquired assets and
associated
liabilities
deferred
in
particular determining the allocation
of
to
goodwill and separately identifiable
the
intangible assets such as
distribution agreement.
the
implications,
consideration
purchase
and
tax
It is due to the size of the acquisition
and the estimation process involved
in accounting for it, that this is a key
area of audit focus.
Our procedures included, amongst others:
• we read the Share Sale Agreement and Business
Asset Sale Deed to understand key terms and
conditions
purchase
consideration;
nature
and
the
of
• we evaluated the assumptions and methodology
applied in management’s value in use model, such
as forecast revenues, operating costs and the
discount rate used to determine the value of the
distribution agreement;
• we used our valuation expert to evaluate the
assumptions and methodology applied with
reference to external benchmarks (for example
discount rates) and to consider the assumptions
based on our knowledge of the Group and its
industries;
purchase
• we evaluated the acquisition accounting, including
the
the
requirements of Australian Accounting Standards;
• we performed testing on the Group’s fair value
adjustments to confirm they aligned to the agreed
completion balance sheet;
consideration
against
• we recalculated the acquisition balance sheet as a
result of the transaction and compared it to the
amounts recognised by the Group; and
• we assessed
the Group’s
adopted disclosures
the
requirements of Australian Accounting Standards.
for compliance with
the adequacy of
Recognition and recoverability of deferred tax assets
Refer to Note 3 Taxation
The Group had recognised $14.8
million of net deferred tax assets as
June 2023, of which
at 30
is
$13.2 million
approximately
related to carry forward tax losses.
that sufficient
Australian Accounting Standards
require deferred tax assets to be
recognised only to the extent that it
future
is probable
taxable profits will be generated in
order for the benefits of the deferred
tax assets to be realised. These
benefits are realised by reducing tax
payable on future taxable profits.
We focussed on this matter because
of the impact on the financial report
and because significant judgement is
forecast
Our procedures included, amongst others:
• we obtained calculations of
taxable
income for the next five years and agreed these to
the latest Board approved budget and forecast;
• we compared the latest Board approved budget to
historical performance to assess the consistency
and accuracy of
to
budgeting as compared to prior periods;
the Group's approach
• we challenged management's key assumptions in
the cashflow budget and forecasts;
• we recalculated
the net deferred
tax asset
balances which comprise a combination of
temporary differences between tax and accounting
values and tax losses and taking into account the
the Business
related
associated
Combination accounting;
impact
to
• with input from our tax experts, we reviewed
management’s assessment of the continuity of
72
MaxiPARTS Limited
INDEPENDENT AUDITOR’S REPORT CONTINUED
required to assess whether there will
be sufficient future taxable profits to
utilise the recognised deferred tax
assets.
ownership test;
• we assessed whether deferred tax assets had
been appropriately recognised in the financial
report as at 30 June 2023 based on the extent to
which
future
they can be recovered against
taxable profits; and
• we assessed
the Group’s
adopted disclosures
the
requirements of Australian Accounting Standards.
for compliance with
the adequacy of
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2023, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do
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 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, 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.
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 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:
Annual Report 2023
73
INDEPENDENT AUDITOR’S REPORT CONTINUED
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 11 of the directors’ report for
the year ended 30 June 2023.
In our opinion, the Remuneration Report of the Group for the year ended 30 June 2023
complies with section 300A of the Corporations Act 2001.
74
MaxiPARTS Limited
INDEPENDENT AUDITOR’S REPORT CONTINUED
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.
HLB Mann Judd
Chartered Accountants
Melbourne
24 August 2023
Jude Lau
Partner
Annual Report 2023
75
AUSTRALIAN STOCK EXCHANGE
ADDITIONAL INFORMATION
For the year ended 30 June 2023
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report.
ShAREhOLDINGS
Substantial shareholders
The names of Company’s substantial shareholders and the number of shares in which each has a relevant interest, as disclosed in substantial
holding notices received by the Company as at 25 July 2023 are:
Name
NAOS Asset Management Ltd
James Curtis
HGT Investments Pty Ltd
Spheria Asset Management Pty Limited
Perpetual Limited
Voting rights
25 Jul 2023
% of Units
10,920,058
5,717,447
5,587,968
4,740,051
3,032,866
22.9%
12.0%
11.7%
9.9%
6.4%
As at 25 July 2023, there were 2,492 holders of ordinary shares of the Company.
Subject to the Constitution of the Company, holders of ordinary shares are entitled to vote as follows:
(a) every shareholder may vote;
(b) on a show of hands every shareholder has one vote;
(c) on a poll every shareholder has:
(i) one vote for each fully paid share; and
(ii) for each partly paid share held by the shareholder, a fraction of a vote equivalent to the proportion which the amount paid (not credited)
is of the total amounts paid and payable (excluding amounts credited) on the share.
As at 31 July 2023, there 190,723 unissued ordinary shares of the Company relating to vested Performance Rights.
Distribution of shareholders as at 25 July 2023
Category – no. of shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – over
Total
No. of
Shareholders
1,064
887
224
284
33
Units
423,422
2,230,961
1,649,848
7,351,838
36,042,243
2,492
47,698,312
% of Issued
Capital
0.89%
4.68%
3.46%
15.41%
75.56%
100.00%
Shareholders with less than a marketable parcel
As at 25 July 2023, there were 311 shareholders holding less than a marketable parcel of 191 ordinary shares (based on the closing share price
of $2.63 on 25 July 2023) in the Company totalling 20,821 ordinary shares.
On market buy‑back
There is no current on‑market buy‑back.
76
MaxiPARTS Limited
aUstraliaN stoCk exChaNge additioNal iNFormatioN CoNtiNUed
TWENTY LARGEST ShAREhOLDERS
Ordinary Shares as at 25 July 2023
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
NATIONAL NOMINEES LIMITED
HGT INVESTMENTS PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
TRANSCAP PTY LTD
CITICORP NOMINEES PTY LIMITED
TOROA PTY LTD
MAHATA PTY LTD
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