Annual Report 2019
For personal use only Contents
Chairman’s Letter
Managing Director’s report
Directors’ report
Auditor’s independence declaration
Financial statements
Notes to the financial statements
Directors’ declaration
Independent Auditor’s report
Shareholder information
Corporate Directory
Page
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vi
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ii
For personal use only
4WD & SUV
For personal use only Chairman’s Letter
Dear Shareholder
Over the past few years, your
Company has been pursuing
strategies to diversify into new
tyre and wheel segments and
to build scale that will deliver
operating synergies. Being a
larger, more diversified business
enhances our ability to build brands
as well as deliver outstanding experiences and value to
our customers.
During the 2019 financial year, and in pursuit of these objectives,
the Company:
•
•
•
•
•
Introduced upgraded and new products;
Advanced the development of further products for release
in the 2020 financial year;
Expanded its wheel distribution into New Zealand and
South Africa;
Leased new premises in Melbourne, blending logistics for
Exclusive Tyre Distributors and Dynamic Wheel Company
in Victoria;
Moved customer service operations to Brisbane, investing
in people and technology to enhance the value of those
services; and
•
Launched the Dynamix customer loyalty program in South Africa.
Unfortunately, the positive impact of these initiatives was offset
by adverse trading conditions. In particular:
•
•
•
•
Import prices rose because of higher raw material costs and
a falling AUD:USD exchange rate;
Gross profit margins fell with competitor responses to
higher import prices being unusually erratic and supplier
assistance to competitiveness concerns being less than
we expected;
Consumer sentiment deteriorated, reducing demand for
tyres generally and for premium products in particular; and
The South African business was adversely impacted when
the production of a key product suddenly ceased during
the year.
During the 2019 financial year, the Company generated annual
revenue of $168.4 million from its business base covering tyre
and wheel importing and original equipment supplying, with a
sectoral focus on 4WD, SUV and cars. The Company converted
this activity to an EBITDA of $12.8 million.
The Company’s balance sheet is strong with net cash at
30 June 2019 of $6.2 million and a debt to equity ratio of 19%.
Directors declared a final dividend of 2.05 cents per share and
a special dividend of 1.5 cents per share (both fully franked)
which were paid to shareholders on 13 September 2019,
bringing the full year dividend to 4.8 cents (fully franked). The
full year dividend (including the special dividend) represents a
payout ratio of 62% of net profit after tax but before amortisation
(NPATA), which is slightly higher than the Company’s policy of
paying out 40% - 60% of NPATA.
The Company now employs more than 180 people in three
countries (Australia, New Zealand and South Africa), operates
11 distribution centres and utilises another seven third-party
distribution facilities. The business now sells more than
1,000,000 tyres and wheels annually to over 2,000 customers.
The difficult trading environment encountered in the 2019
financial year is likely to continue. The Company remains
committed to delivering diversity and scale. Rather than
changing course, the 2019 financial year result has brought
about an acceleration of existing plans to return the Company
to a growth trajectory. These initiatives include:
•
•
•
increasing the scope of our new product development
program to have more affordable offerings in all our target
segments;
continuing to shift the source of the product mix to match
the source of competing products;
accelerating the rate at which these new products are
released;
• more refined promotional activity in the SUV category;
• accessing new distribution channels;
• driving synergies within the different business units;
•
•
increased investment in technology; and
increasing the range and sophistication of value adding
services offered to customers, especially as they relate to
contemporary consumer purchase pathways.
The Company remains committed
to delivering diversity and scale
iv
v
For personal use only The Company expects the 2020 financial year to deliver profits
similar to the 2019 financial year with the strategic initiatives
forecast to provide a foundation for a return to growth in the
2021 financial year.
While the Company continues to engage with potential acquisition
targets, given current market conditions and the Company’s
share price, potential acquisitions would have to pass a very
rigorous risk assessment and be capable of execution without
distracting management’s attention from completing essential
organic growth projects.
I would like to welcome Mr. Colin Skead who joined Exclusive
Tyre Distributors Australia as Chief Operating Officer in
April 2019. Staff and management have worked diligently
and constructively during a difficult period and that effort
is appreciated.
I would also like to thank our customers, suppliers and
shareholders, as well as my co-directors, for the support they
have delivered over the past year.
Yours faithfully
Murray Boyte
Chairman
v
For personal use only Managing Director’s Report
Introduction
FY19 was
the Company’s
first full year as an Australian
listed public company (ASX
Code NTD). The Company
completed an
initial public
offering (IPO) and was first listed
on the ASX in December 2017.
Operations - Overview
The Company carries on the business of importing and
wholesaling tyres and wheels in Australia, New Zealand and
South Africa. We employ over 180 people and sell to over
2,000 customers. The Company did not change the nature of
its business during the 2019 financial year.
Figure A (below) describes our distribution footprint.
During the year, we leased premises in Melbourne to combine
the warehouse operations of Dynamic Wheel Company and
Exclusive Tyre Distributors in Victoria.
The Group is engaged in the following businesses:
•
•
•
importing and wholesaling
wheel
Company);
(Dynamic Wheel
supplying tyres and wheels as original equipment to
caravan manufacturers (MPC); and
broad based and budget tyre importing and wholesaling
(Statewide).
Figure B (right) illustrates these entities, the brands they sell
and some logos used in connection with promotions:
The Company focuses on addressing the needs of the
following segments within the broad tyre and wheel industry:
• premium 4WD, SUV and passenger tyres;
• steel and alloy wheels for 4WD vehicles;
•
original equipment wheels and tyres for caravans and
trailers; and
•
lower priced tyres.
The Company is dedicated to being a value adding, trusted
supplier to its customers.
•
premium 4WD, SUV and passenger tyre importing and
wholesaling (Exclusive Tyre Distributors in Australia and
New Zealand, as well as TyreLife Solutions in South Africa,
which is referred to as Top Draw Tyres in the accompanying
financial report);
Extensive Distribution Platform
Senior Management team with
over 200 years combined tyre
and wheel industry experience
Over 185 employees in 3
countries
Figure A
vi
vii
14
For personal use only A diversified tyre and wheel wholesaler
Figure B
Operations – 2019 Financial Year
The Group has been executing various projects to respond
to changes in our operating environment (e.g. the rise of SUV
vehicles, the growing number of 4WD tyre choices, changes to
consumer purchase pathways, surplus capacity in the industry
and the emergence of retailers challenging incumbent tyre
specialty stores).
During FY19, the Group:
released an upgraded version of the popular Cooper AT3
all-terrain 4WD tyre;
launched the new Cooper ATT SUV tyre;
continued the development of more new products to be
released in FY20;
launched the new “Trilogy” and “Dirty Life” wheels;
commenced selling wheels in South Africa and expanded
the range of wheels sold in New Zealand;
consolidated customer service activities (e.g. call centres) in
Brisbane, recruited experienced call centre personnel and
invested in relevant new technology;
re-organised some sales team structures with some related
cost savings;
launched Dynamix, a new customer loyalty program in
South Africa;
•
•
•
•
•
•
•
•
•
•
grew membership of existing customer loyalty programs,
including the movement of many customers to higher levels
within those programs;
• grew our overall customer base; and
•
increased the volume of cross sold products.
The benefits that might have otherwise flowed from the
completion of these tasks in the FY19 result were diminished
by the following changes to our operating environment:
•
•
•
•
•
Import prices rose with AUD falling ≈ 10% against the USD
and factory prices rising with the increased cost of some
raw materials (especially carbon black);
US sourced products became more expensive relative to
products sourced from Asian manufacturers as those near
sourced producers elected to absorb more of the higher
raw material costs;
Inventory building throughout the industry in calendar
2018 maintained pressure on wholesale prices, despite the
falling AUD;
Negative consumer sentiment in Australia and South Africa,
with sales of premium products particularly affected;
Changing consumer preferences – demand for premium
mud tyres shifting to all terrain and rugged terrain tyres,
with challenges exacerbated by the wide array of 4WD
tyres now available with various price/quality levels; and
completed a consumer segmentation project to better
inform promotional choices, especially in the SUV category;
•
The discontinuation of a key product in South Africa (due to
a factory closure).
vii
For personal use only Managing Director’s Report cont...
FY19 Results
This FY19 Annual Report contains some comparison of the
FY19 results to the FY18 pro forma results published last
year. The FY18 pro forma results were prepared to provide a
normalised basis for comparing that year’s results to financial
information included in the IPO prospectus.
The Company acquired Statewide Tyre Distribution
(Statewide) in May 2018 and the FY19 results include a full
year’s trading from that business that was not included in
the FY18 pro forma results. Apart from the inclusion of the
Statewide business, the FY19 financial statements do not
include any business that was not included in the FY18 pro
forma financial statements.
Results summary:
Tyre Units
$’000
Revenue
Gross Profit
Gross Profit (%)
Operating Costs as % of
total revenue
EBITDA
EBITDA Margin
NPAT
NPATA attributable to
shareholders
FY18
Pro forma
FY19
Actual
776,123
982,696
153,402
168,376
50,078
48,418
32.6%
21.8%
28.8%
21.2%
16,940
12,821
11.0%
9,741
10,740
7.6%
6,676
7,967
viii
ix
For personal use only The key financial outcomes in FY19 were:
•
Volumes and revenue (excluding Statewide) were both
lower than the FY18 pro forma due to falls in premium
product sales, weakness in truck and budget products and
issues arising from a key product being discontinued in
South Africa.
• Total revenue for FY19 was $168.4 million.
•
•
•
•
Gross Profit (excluding Statewide) fell with higher import
prices, falling volumes and despite price increases.
Concerns about competitiveness meant the Group had to
absorb higher cost of sales, with gross margin falling to
28.8% compared to 32.6% in the FY18 pro forma.
Expenses in FY19 (allowing for Statewide) were
approximately the same as the FY18 pro forma.
FY19 EBITDA was $12.8 million compared to a FY18 pro
forma EBITDA of $16.9 million.
FY19 NPATA was $7.97 million compared to FY18 pro forma
NPATA of $10.7 million.
• At 30 June 2019, the Group had:
- Net assets of $70.7 million;
- Net tangible assets of $50.4 million; and
- Cash of $19.5 million and net cash of $6.2 million.
•
•
•
Continuing investment in IT platforms as part of offering
additional services and to tap into new consumer purchase
pathways;
Focussing more on brand building promotional activity to
build consumer awareness and consideration;
Increasing revenue from cross selling within the group and
identifying cost synergies.
The Group is not expecting profit growth in FY20 because:
•
•
•
•
Market conditions are not likely to improve. In particular,
pressure on the supply side (surplus capacity, import
pricing from Asia and USA import prices decoupling from
Asia together with continued discounting by competitors)
as well as sluggish consumer demand (impacting premium
products) will continue to affect volume and margins;
The Group’s solutions (new products, near source
procurement, operating improvements and accessing new
distribution channels) will take time to implement;
Customer gains and losses are expected as the Group
seeks customers willing to distribute an expanded array of
products, with the full benefit of the expanded distribution
footprint likely to contribute more in FY21; and
Additional costs associated with the accelerated execution
of various projects will be incurred in FY20 but will not
generate returns until Q4 of FY20 and into FY21.
•
The Company has paid a final dividend of 2.05 cents per
share and a special dividend of 1.5 cents per share (both
fully franked) to shareholders on 13 September 2019,
bringing the full year dividend to 4.8 cents (fully franked).
The Group is therefore treating FY20 as a year of transition to
a broader product and customer base substantially reducing
dependency on premium products and positioning all
businesses for more robust and sustainable growth after FY20.
Outlook
The following activities represent the Group’s response to the
operating environment that emerged in FY19:
•
•
•
With the use of pricing levers for premium products
apparently diminished by other market forces, the Group
will accelerate the reconfiguration of the product mix to
more affordable alternatives in all segments;
Changing the product mix will include a focus on near
sourced manufacturing, with supplies coming from the
same countries as our competitors;
Enhanced value adding services for our customers to
encourage the adoption of new products and to attract
new customers;
ix
The Company has paid a final
dividend of 2.05 cents per share
and a special dividend of 1.5 cents
per share (both fully franked) to
shareholders on 13 September
2019, bringing the full year
dividend to 4.8 cents (fully franked).
For personal use only
Managing Director’s Report cont...
Acknowledgements
FY19 was a disappointing year. While the Group has been
executing various strategies in response to a changing
operating environment, the headwinds experienced in FY19
negated the expected growth from those measures.
Our people, suppliers and customers continued to support
the Group in FY19 and we remain grateful for those
contributions.
During FY19, the Group consolidated
customer service activities (e.g.
call centres) in Brisbane, recruited
experienced call centre personnel and
invested in relevant new technology
Peter Ludemann
Managing Director
WHY CHOOSE COOPER®
SUV TYRES?
WHY CHOOSE COOPER®
4WD TYRES?
1300 COOPER (266 737) coopertires.com.au
Effective as at August 2019
1300 COOPER (266 737) coopertires.com.au
Effective as at August 2019
x
For personal use only
Financial Report 2019
For personal use only Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of National Tyre & Wheel Limited (referred to hereafter as the 'Company', 'NTAW' or 'parent entity')
and the entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of National Tyre & Wheel Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Murray Boyte
(John) Peter Ludemann
Terence (Terry) Smith
William (Bill) Cook
Robert Kent
Non-Executive Chairman
Chief Executive Officer and Managing Director
Executive Director
Non-Executive Director
Non-Executive Director
Principal activities
The principal activity of the Group during the financial year ended 30 June 2019 was the distribution and marketing of
motor vehicle tyres, wheels, tubes and related products in Australia, New Zealand and South Africa.
NTAW is the holding company for the following operating subsidiaries:
●
●
●
●
●
●
Exclusive Tyre Distributors Pty Ltd (“ETD”);
Exclusive Tyre Distributors (NZ) Limited (“ETDNZ”);
Dynamic Wheel Co Pty Ltd (“Dynamic”);
M.P.C. Mags and Tyres Pty Ltd (“MPC”);
Statewide Tyre Distribution Pty Ltd (“Statewide”); and
Top Draw Tyres Proprietary Limited (“Top Draw Tyres”)
The tyre and wheel industries are large with retail revenue in Australia estimated to exceed $5bn. NTAW segments the tyre
and wheel market by vehicle type, geography and consumer behaviour. The subsidiary entities seek to operate in
segments with products and business models that offer competitive advantages.
ETD and ETDNZ are the exclusive importers and wholesale distributors of Cooper, Mickey Thompson, Starfire and
Mastercraft branded 4WD, SUV and passenger tyres in Australia and New Zealand. They also import Federal branded
tyres in Australia (excluding Queensland) and New Zealand. Cooper and Mickey Thompson products are well known to
consumers for their reliability and performance. ETD and ETDNZ offer value adding services to retail customers and these
services underpin strong retail support for the promotion of their products.
Dynamic has a leading position in Australia for the importation and wholesale distribution of steel wheels, including the
proprietary Dynamic brand.
MPC specialises in supplying wheel and tyre packages for caravan and trailer manufacturers in Australia including the
proprietary MPC brand.
Statewide Tyre Distributors has a leading position in South Australia for the importation and wholesale distribution of tyres
and wheels, supplying less expensive products than the Group’s other wholesale businesses and operating in the truck
and bus tyre segment.
Top Draw Tyres is the exclusive importer and wholesale distributor for Cooper and Mickey Thompson branded 4WD, SUV
and passenger tyres in South Africa and neighbouring countries.
In addition to the results from the operation of these well established businesses, the Group is executing growth strategies
described below under the heading “Review of Operations”.
NTAW management believes there have been no significant changes in the nature of the Group’s activities during this
period.
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2018 of 2.30 cents per ordinary share
Interim dividend for the year ended 30 June 2019 of 1.25 cents per ordinary share
Final dividend for the year ended 30 June 2017 (declared and paid prior to the IPO)
Interim dividend for the year ended 30 June 2018 of 1.00 cents per ordinary share
Dividends to non-controlling interests
Consolidated
2019
$'000
2018
$'000
2,353
1,283
-
-
-
-
-
15,000
1,011
656
3,636
16,667
At the date of signing these financial statements, the Company has declared a fully franked final dividend of 2.05 cents per
share and a fully franked special dividend of 1.50 cents per share with a record date of 3 September 2019 and a payment
date of 13 September 2019. The total dividends payable are $2.1 million and $1.5 million. The financial effect of these
dividends have not been brought to account in the financial statements for the year ended 30 June 2019 and will be
recognised in subsequent financial reports.
Review of operations
NTAW’s Board and management are pleased to report that the result for the financial year is ahead of the FY2019 trading
update issued to the market on 2 May 2019.
Results highlights
Statutory results
NTAW has reported total revenue of $168.4 million (2018: $146.3 million) for the financial year, an increase of $22.1 million
(15.1%) on the prior year resulting from the acquisition of several entities during the prior period.
NTAW’s statutory profit for the Group after providing for income tax and non-controlling interest amounted to $6.4 million
(30 June 2018: $4.5 million).
The FY2019 year results are representative of a full reporting period for the Group in its current operating structure. The
result for the previous year was impacted by the one-off costs associated with the initial public offer (“IPO”) of NTAW, pre-
IPO acquisition expenses, recognition of share-based payment expenses relating to the former option plan and other items
as described the in FY2018 accounts.
NTAW has a strong balance sheet with net assets of $70.7 million (2018: $66.7m). The shareholders’ funds to total assets
is 59.8% (2018: 54.8%) and net cash of $6.2 million (2018: $5.2 million).
Pro forma results
In addition to the statutory results, pro forma financial information for the prior year is presented below to enable the result
for the year to be compared to the financial information contained in NTAW’s Prospectus and prior year result. The pro
forma information is provided on an unaudited basis and Table 3 provides a reconciliation between the statutory and pro
forma performance information.
NTAW’s result for the year was a profit after providing for income tax and non-controlling interests and excluding
amortisation (‘NPATA’) of $8.0 million compared with an actual pro forma NPATA for the prior year of $10.7 million.
Pro forma adjustments were made in the prior year to reflect the inclusion of the acquired interests in Cotton and Top Draw
Tyres with effect from 1 July 2017, and to reflect the cost structure of the Group as a listed entity. Statewide’s results are
included in the statutory results for the year but have been excluded from the prior year pro forma results in each of the
following tables as it was not acquired until 31 May 2018.
Overall performance
The results have been adversely affected by sluggish consumer demand, import price rises and increased price
competition which has had a consequential effect on gross margins.
3
For personal use only
Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
NTAW management has proactively responded to changing market conditions and introduced a number of new initiatives
and growth strategies that are expected to have a positive impact in the future. These include:
●
●
●
●
●
●
●
●
●
●
●
New products to both replace existing models and target new segments (based on vehicle type, consumer
characteristics and/or price (value) position);
NTAW is accelerating the pace at which new products are released. Examples include Cooper’s AT3, ATT and
Evolution MT tyres, the Dick Cepek EXP, Dirty Life Alloy wheels, Dynamic’s Liberty wheel and the Momo tyre brand in
South Africa;
Promoting a new range of SUV and passenger tyres launched in Australia in 2016 targeting an increase in the
Group’s share of these markets from a low base;
Customer loyalty programs to support value adding relationships with existing customers and provide a platform for
developing new customers;
A communication plan and a distribution model compatible with contemporary consumer purchase pathways;
Introducing new wheel products from the Dynamic stable of products to New Zealand and South Africa;
Expanding the business presently only operated by Statewide in South Australia and the NT;
Various business improvement initiatives, including:
- Upgrading customer contact centres with new technology and the recruitment of people who specialise in customer
contact services;
- Having field sales teams concentrate more on key accounts and business development;
- Harmonising financial reporting and enterprise management throughout the Group;
- Accelerating the movement of inventory; and
- Increasing the range and depth of value adding services supplied by each business.
Seeking access to near source manufacture from our suppliers;
Achieving synergies within the group from cross selling and shared services;
Continuing to seek diversity and scale by building a pipeline of other tyre and/or wheel importers NTAW could
potentially acquire.
NTAW’s core business is very sound and well positioned to capitalise on market opportunities. Management is working on
a number of strategic initiatives covering supply chain management and new product development (especially in the SUV
segment) that will enhance the future development of NTAW’s core business.
Key operating metrics of NTAW
Table 1 below shows some of the key operating metrics and ratios for NTAW for the financial year.
NTAW sold 982,696 tyre units in the financial year compared with 776,123 in the 2018 financial year. While the Group
achieved year on year growth, 4WD tyre unit sales growth in Australia was below expectations due to sluggish consumer
demand and intense price competition. FY2019 volumes include units that were not included for a full year in the FY2018
accounts because Statewide was not a subsidiary for all of FY2018.
The Group has reported a full year gross profit margin of 28.8% (2018: 32.6% pro-forma) and an EBITDA margin of 7.6%
(2018: 11.0% pro-forma). The gross profit margin reduction was driven by higher than expected USD import prices, less
favourable than expected exchange rates between the AUD and USD and price discounting by competitors. The Group’s
operating costs as a percentage of sales were 21.2%, down from 21.8% in the prior year.
Table 1
Number of tyres sold
Gross profit margin
Operating costs as % of total revenue
EBITDA margin
Pro forma Statutory
Statutory
Actual
FY2018
Actual
FY2018
Actual
FY2019
776,123
-
982,696
32.6%
21.8%
11.0%
32.6%
24.8%
7.8%
28.8%
21.2%
7.6%
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Pro forma Historical Income Statements, Pro forma Forecast and Statutory Forecast Income Statements
Table 2 below compares the result for the year with the Pro forma Actual FY2018 result.
NTAW has reported full year sales revenue of $168.4 million (FY2018 pro forma actual $153.4 million) and gross profit on
sales of $48.4 million (FY2018 pro forma actual $50.1 million). The Group has reported a full year EBITDA of $12.8 million
(FY2018 pro forma actual $16.9 million).
The result for FY2019 contains an unrealised foreign exchange gain on foreign exchange contracts and foreign currency
denominated suppliers of $0.1 million, a share-based payment expense for shares gifted to employees by key
management personnel of $0.13 million (refer to note 36) and one off due diligence costs of $0.15 million resulting in an
underlying EBITDA for the year of $13.0 million.
Pro forma Statutory
Statutory
Actual
FY2018
Actual
FY2018
Actual
FY2019
153,402
(103,324)
146,158
(98,507)
168,376
(119,958)
50,078
227
(16,826)
(5,761)
(3,749)
(7,029)
16,940
(707)
(1,639)
14,594
-
(357)
14,237
(4,496)
9,741
(427)
9,314
1,426
47,651
11
(18,357)
(5,094)
(3,657)
(9,166)
11,388
(696)
(1,431)
9,261
133
(339)
9,055
(3,700)
5,355
(878)
4,477
1,280
48,418
43
(18,088)
(5,813)
(4,410)
(7,329)
12,821
(774)
(1,854)
10,193
-
(542)
9,651
(2,975)
6,676
(286)
6,390
1,577
10,740
5,757
7,967
Table 2
$'000
Sales revenue1
Cost of sales
Gross profit
Other revenue
Employee benefits expense
Advertising & promotions
Occupancy expense
Other expenses
EBITDA
Depreciation
Amortisation of intangibles
EBIT
Share of net profit of associate
Interest (net)
Profit before tax
Income tax expense
NPAT
Non-controlling interests
NPAT attributable to NTAW
Amortisation [addback]
NPATA attributable to NTAW
Notes to Table 2:
1
Revenue from sale of goods only, excluding interest income, share in associates and other revenue.
5
For personal use only
Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Table 3 provides a reconciliation between the prior year statutory and pro forma performance information.
Table 3
$'000
Pro forma amount
Acquired businesses
- Cotton
- Top Draw Tyres
- Statewide
Inter-company eliminations
Equity accounting Top Draw Tyres
Unrealised FX Translation
Offer costs
Public company costs
Share based payments
Other pro forma adjustments
Net interest
Taxation adjustment
Statutory amount
FY2018
Actual
Notes
Revenue
FY2018
Actual
NPAT
153,402
9,741
1
1
1
2
3
4
5
6
7
8
9
10
(3,193)
(8,804)
1,968
2,785
-
-
-
-
-
-
-
-
(140)
(414)
-
-
133
(628)
(1,455)
28
(2,057)
(44)
18
172
146,158
5,354
Notes to Table 3:
1
Revenue and NPAT relating to acquired businesses - reflects the trading of the Group from 1 July 2017 to the dates on which they became controlled (to the extent such trading was
not already included in the FY2018 statutory financials for NTAW).
Inter-company eliminations – reflects transactions by NTAW with the acquired businesses from 1 July 2017 to the dates on which they became controlled which are required to be
eliminated (to the extent such trading was not already included in the FY2018 statutory financials for NTAW)
Equity accounting Top Draw Tyres - reflects the equity accounted share of Top Draw Tyres’ profit for the period from 1 November 2017 until the date of control 13 December 2017.
Unrealised FX translations – reflects the non-cash accounting for foreign exchange translations at 30 June 2018 in accordance with AASB 121.
Offer costs – reflects the amounts expensed in FY2018 in relation to the IPO. $1.475 million of the offer costs were tax effected and netted off against issued capital.
Public company costs – reflects the increase in corporate costs expected as a consequence of the Company becoming ASX listed.
Share based payments – reflects a share based payments remuneration expense based upon the LTI scheme operating prior to the IPO.
Other pro forma adjustments – includes one-off costs that are considered to be non-recurring as well as Group elimination entries.
Interest (net) – Interest (net) reflects the expense on the corporate debt facility and finance leases at completion of the IPO, offset by interest income on cash.
Taxation adjustment – Net taxation effect of other residual items between forecast pro forma taxation expense (including recurring non-deductible items) and taxation statutory
expense.
2
3
4
5
6
7
8
9
10
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Financial position
Key financial information in relation to the Group’s financial position at year end is shown below:
Total Assets ($’000)
Net Assets ($’000)
Cash and cash equivalents ($’000)
Debt ($’000)
Shares on issue (’000)
30 Jun 2019 30 Jun 2018
118,205
70,744
19,554
13,335
102,891
121,588
66,663
19,608
14,435
102,321
Dividends per security (cents) – post IPO only, including final dividend declared
4.8
3.3
Significant balance sheet movements during the financial year were as follows:
●
Total assets decreased by $3.3 million, driven by the amortisation of intangibles in the period of $1.85 million and a
decrease in trade and other receivables of $1.1 million.
Total liabilities decreased by $7.4 million driven by a reduction in trade creditors of $5.6 million and a decrease in net
borrowings of $1.1 million.
Issued capital increased by $0.5 million which included the issue of new shares under the DRP.
●
●
6
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Matters subsequent to the end of the financial year
Apart from the dividend declared as disclosed above and the lapsing of 1.63 million options as noted in the Remuneration
Report and note 36, no other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may
significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial
years.
Likely developments and expected results of operations
The Group will continue to pursue growth in revenue in the next financial year as it seeks to further diversify its business
and build the scale of its operations in the importation and wholesale distribution of tyres and wheels in Australia, New
Zealand and South Africa. Focus areas will include organic growth in the markets within which it operates, including
capitalising on the opportunities for revenue and cost synergies associated from the businesses already acquired, and
considering further acquisition growth over time. The Group is not expecting profit to grow in FY2020 because it will be
investing in new products and other operational improvements that are expected to deliver returns that will grow profits
after FY2020.
Material business risks
The Board is committed to monitoring and mitigating business risks faced by the Group, including the following key risks
that have the potential to materially impact its financial prospects:
●
●
●
●
●
●
Supplier risk - the Group is reliant on long-term formal distribution and licence agreements with key suppliers,
including Cooper Tire and Mickey Thompson for the supply of many products it wholesales. The Group owns
customer relationships and controls the marketing of brands, but it relies on rights under formal long-term agreements
granted by Cooper Tire and other suppliers to access those brands. The Group proactively engages in maximising its
key relationships to mitigate such risks.
Foreign exchange risk - a significant proportion of the Group’s costs and expenses are transacted in foreign
currencies. Adverse movements between the Australian dollar, New Zealand dollar and South African Rand against
the US dollar may increase the price at which the Group acquires its trading stock and result in volatility in profitability
to the extent that the Group may or may not be able to pass on price changes to its customers (after allowing for the
impact inventory cycles have on the time it takes for exchange rate movements to impact on cost of goods sold and
the behaviour of competitors). The Company also seeks to use foreign exchange contracts to mitigate its foreign
exchange exposures. The effect of foreign currency translation on operating results from offshore operations remains
inherent in the Group’s business.
Business integration risk – the Group has acquired interests in several businesses during the FY2018 year.
Successfully integrating and extracting synergies from acquisitions and managing growth is critical to the Group’s
continued performance and earnings from the acquisitions. The Group’s Board and management is experienced in
acquiring and integrating businesses, conducts comprehensive due diligence and ensures an integration plan is
followed.
Retention of key personnel - the Group’s future success is significantly dependent on the expertise and experience of
its key personnel and management. The loss of services of key members of management, and any delay in their
replacement, or the failure to attract additional key managers to new roles could have a material adverse effect on
NTAW’s financial performance and ability to deliver on its growth strategies.
Customer risk – the Group is dependent on its ability to retain its existing customers and attract new customers.
Although customer concentration is low, sales revenue would be adversely affected if all members of a chain or group
decided not to purchase products from the Group. The Group proactively manages its customer relationships and has
established value adding customer loyalty programs.
Risk of competition - the tyre and wheel wholesale market is highly competitive. Competition is based on factors
including price, service, quality, performance standards, range and the ability to provide customers with an
appropriate range of quality products in a timely manner. A failure by the Group to effectively compete with its
competitors may adversely affect the Group’s future financial performance and position.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
7
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Information on directors
Name:
Title:
Experience and expertise:
Other current directorships:
Murray Boyte
Independent, Non-Executive Chairman
Mr Boyte has over 35 years' experience in merchant banking and finance,
undertaking company reconstructions, mergers and acquisitions in Australia, New
Zealand, North America and Hong Kong. In addition, he has held executive positions
and Directorships in the transport, horticultural, financial services, investment, health
services and property industries.
Abano Healthcare Group Limited (NZX); Eureka Group Holdings Limited (ASX: EGH);
Hillgrove Resources Limited (ASX: HGO)
Former directorships (last 3 years): Unity Pacific Group (ASX: UPG)
Special responsibilities:
Interests in shares:
Interests in options:
Member of Audit and Risk Committee; Member of Remuneration and Nominations
Committee
156,237 ordinary shares
Nil
Experience and expertise:
Name:
Title:
Qualifications:
John (Peter) Ludemann
Chief Executive Officer ('CEO') and Managing Director
Degrees in Law and Commerce (Marketing) from University of New South Wales
('UNSW')
Mr Ludemann joined the Group as a director in 2012 and become full time CEO of
NTAW in July 2013. He has worked as a commercial lawyer, a director of numerous
private companies, the Managing Director of a Life Science Investment firm and as a
Private Equity Investment Manager at AMP Capital. He has been the driving force
behind the evolution of NTAW from a closely held family trust carrying on a niche
4WD tyre wholesale business to a more widely held entity operating in the car, SUV
and 4WD tyre segments. He has managed the acquisition and integration of
Dynamic, MPC, National Tyre Wholesalers, Statewide and Top Draw. Mr Ludemann
has been responsible for the execution of a succession plan for NTAW founders that
has included the distribution of retained earnings, the creation of a public company
corporate structure, the IPO and listing of NTAW as well as generational change
within the Group.
Nil
Other current directorships:
Former directorships (last 3 years): Nil
Nil
Special responsibilities:
2,759,928 ordinary shares
Interests in shares:
Nil
Interests in options:
Name:
Title:
Experience and expertise:
Terence (Terry) Smith
Executive Director
Mr Smith has over 40 years' experience in tyre importing, wholesaling and retailing.
Terry’s career is one of successful entrepreneurship, as he and wife Susanne, were
responsible for taking Exclusive Tyre Distributors ('ETD') from a start-up business to
one of the largest independent national tyre wholesalers in Australia.
Nil
Other current directorships:
Former directorships (last 3 years): Nil
Special responsibilities:
Interests in shares:
Interests in options:
Member of Remuneration and Nominations Committee
27,255,297 ordinary shares
Nil
8
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National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Name:
Title:
Experience and expertise:
William (Bill) Cook
Independent, Non-Executive Director
Mr Cook is an Independent Non-Executive Director of NTAW. Mr Cook commenced
his career at Ford Motor Company in finance. He worked for Consolidated Press
Holdings with the late Kerry Packer from 1983 to 1996 as Head of M&A and
worldwide reporting. After two years as General Manager of Qantas Flight Catering’s
Sydney business he undertook Private Equity investment consulting roles, and
subsequently joined AMP Capital as an investment manager in the Private Equity
team. Since leaving AMP, Mr Cook has served as non-executive director for a
number of companies, including NTAW since 2013.
Nil
Other current directorships:
Former directorships (last 3 years): Nil
Special responsibilities:
Chair of Audit and Risk Committee; Member of Remuneration and Nominations
Committee
303,132 ordinary shares
Nil
Interests in shares:
Interests in options:
Experience and expertise:
Name:
Title:
Qualifications:
Robert (Rob) Kent
Independent, Non-Executive Director
Bachelor of Business degree (Marketing) from the Queensland University of
Technology and is a Graduate of the Australian Institute of Company Directors.
Mr Kent was the Managing Director of Publicis Mojo (Queensland), part of a global
advertising firm, from 2000 to 2017. He was also a member of the Publicis National
Board of Management. Rob is an experienced marketing executive who has
managed many campaigns involving sales, promotion and brand building. He was
also Managing Director of Personalised Plates Queensland from 2013 to 2017. Under
his management, sales grew by 34% over 4 years with internet traffic providing 75%
of revenue. Mr Kent was a Director of ACT for Kids (a charity) from 2001 to 2013 and
member of the Board of South Bank Business Association in Brisbane from 2002 to
2009.
Nil
Other current directorships:
Former directorships (last 3 years): Nil
Special responsibilities:
Chair of Remuneration and Nominations Committee; Member of Audit and Risk
Committee
204,901 ordinary shares
Nil
Interests in shares:
Interests in options:
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretaries
Jason Lamb
Mr Lamb is the Chief Financial Officer and joint Company Secretary. Mr Lamb has nearly 20 years’ accountancy
experience. He is a Certified Practicing Accountant with a Bachelor of Commerce (Accounting) and a Bachelor of
Economics from the University of Queensland. Mr Lamb was responsible for setting up the financial accounting systems for
NTAW. He has also been responsible for all financial due diligence work relating to business acquisitions and the
establishment of financial reporting systems for those operating entities. He participates in all Board meetings for NTAW
and each operating entity as well as overseeing the production of financial reports for all entities.
Laura Fanning
Mrs Fanning is the joint Company Secretary and was appointed on 8 February 2018. Mrs Fanning is a Chartered
Accountant and Chartered Secretary with more than 20 years’ financial, governance and commercial experience. She has
held Company Secretary and senior finance position positions in several listed and unlisted companies.
9
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30 June 2019
Directors' report
30 June 2019
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2019, and the number of meetings attended by each director were:
Full Board
Remuneration and
Nominations Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Murray Boyte
John Peter Ludemann
Terence Smith
William Cook
Robert Kent
15
15
15
14
14
15
15
15
15
15
1
1*
2
2
2
2
1*
2
2
2
4
1*
3*
4
4
4
1*
3*
4
4
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
*
Attended by invitation only
Remuneration report (audited)
The Board is pleased to present the Company’s remuneration report.
The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance
with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
(a) Principles used to determine the nature and amount of remuneration
(b) Details of remuneration
(c) Relationship between remuneration and Company performance
(d) Service agreements
(e) Share-based compensation
(f)
(g) Other transactions with key management personnel
Equity instruments held by key management personnel
(a) Principles used to determine the nature and amount of remuneration
The objective of the Group's executive remuneration framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive remuneration with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform with accepted market practice for
remuneration and reward. The Board of Directors ('the Board') ensures that executive remuneration satisfies the following
key criteria for good remuneration governance practices:
●
●
●
●
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation; and
transparency.
The Remuneration and Nominations Committee is responsible for reviewing remuneration arrangements for its directors
and executives and making recommendations to the Board for consideration and approval. The performance of the Group
depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high
performance and high quality personnel.
The Remuneration and Nominations Committee has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the Group, as determined by the Board.
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30 June 2019
Directors' report
30 June 2019
The reward framework is designed to align executive reward to shareholders' interests. The Board considers that it should
seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design;
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and
attracting and retaining high calibre executives.
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and
providing a clear structure for earning rewards.
Since the Group’s listing on the ASX, in accordance with best practice corporate governance, the structure of non-
executive director and executive director remuneration is separate.
Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Remuneration and Nominations Committee. The chairman's
fees are determined independently to the fees of other non-executive directors based on comparative roles in the external
market. The chairman is not present at any discussions relating to the determination of his own remuneration. Since the
Group’s IPO, non-executive directors do not receive share options or other incentives.
Under NTAW’s constitution, the directors decide the total amount paid to all directors as remuneration for their services.
However, under the ASX listing rules, the aggregate non-executive directors' remuneration (ie excluding the Managing
Director and executive directors, if any) for a financial year must not exceed the amount fixed by the Company in general
meeting. This amount has been fixed at $750,000 per annum. Any changes to the aggregate remuneration will be put to a
general meeting where the shareholders will be asked to approve a maximum annual aggregate remuneration.
The annual base non-executive director fees paid by the Company are $90,000 per annum for the chairman and $70,000
per annum for other non-executive Directors. From 1 July 2018, an additional fee of $10,000 per annum has been paid to
the chairman of each Board committee. Directors may also be reimbursed for all travelling and other expenses incurred in
connection with their Company duties.
Executive director remuneration
Fees and payments to executive directors reflect the demands and responsibilities of their role. Executive directors' fees
and payments are reviewed annually by the Remuneration and Nominations Committee. Details of executive director
remuneration are contained in section (d) Service Agreements.
Executive remuneration
The Group aims to reward executives based on their position and responsibilities, with a level and mix of remuneration
which has both fixed and variable components.
The Board adopted a new executive remuneration framework, including new short term incentive (STI) and long term
incentive (LTI) programs with effect from and including the financial year ending 30 June 2019. The new framework
includes the following components:
●
Fixed remuneration – comprising base salary, superannuation contributions and other benefits, having regard to
comparable market benchmarks. Executives may receive their fixed remuneration in the form of cash or other fringe
benefits (for example motor vehicle benefits) where it does not create any additional costs to the Group and provides
additional value to the executive;
●
●
STI program – an ‘at risk’ component of remuneration where, if individual, business unit and Group performance
measures are met, senior executives will be awarded cash bonuses equal to a percentage of their fixed remuneration.
Performance measures will include a financial gateway hurdle and non-financial KPIs. The percentage of fixed
remuneration received as an STI will be capped, but may vary, between individuals and depending on the level of
performance achieved; and
LTI program – an ‘at risk’ component of remuneration where senior executives are awarded options which are subject
to an earnings per share (EPS) performance condition and a service condition. The number of options to be awarded
will be determined by the Board having regard to the overall amount of executive remuneration and the annual profit
impact of the options awarded.
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30 June 2019
Directors' report
30 June 2019
The combination of these comprises the executive's total remuneration. The Board believes that this remuneration
framework ensures that remuneration outcomes link to Company performance and the long-term interests of Shareholders.
2019 STI Program
During FY2019, senior executives’ entitlement to an STI was based on achievement of agreed performance objectives
including:
●
●
●
●
●
Financial performance
Operational performance
Strategy and innovative initiatives
Workplace health and safety
Stakeholder satisfaction.
Actual performance criteria varied between executives, having regard to their roles and responsibilities.
No STIs were awarded to key management personnel during the year pursuant to this program as the financial gateway
hurdle was not satisfied. Two discretionary bonuses were awarded for specific business unit achievements.
2019 LTI Program
Options may be granted under the Employee Share Option Plan which was adopted on 6 November 2017. Each option
entitles the participant to subscribe for one ordinary share in the Company. The specific terms relevant to the grant of
options are set out in an offer from the Company to the Eligible Person which contains details of the application price (if
any) (which must not be for more than nominal consideration), the expiry date, the exercise price, the vesting date, any
applicable performance conditions and other specific terms relevant to those options.
During FY2019, 1.63 million options were granted to senior executives, including certain members of the key management
personnel, pursuant to the ESOP on the specific key terms:
●
The Vesting Date of the options was 30 September 2021 or three years from the Grant Date, whichever is earlier,
subject to meeting the Performance Conditions.
The Performance Period for the Performance Conditions is the period from the Grant Date until the Vesting Date
(inclusive of each of those dates).
The performance conditions were as follows:
●
●
1) Earnings per share condition – the Company’s earnings per share (EPS) for the year ended 30 June 2019 was to
be at least 10% higher than its EPS for the year ended 30 June 2018.
Calculation of the EPS growth rate is based upon the EPS results reported in NTAW’s audited financial statements
for the above years. The Basic EPS reported may be adjusted for items which the Board, in its discretion, considers
should be included in, or excluded from, the result.
The Board determined that the FY2018 base EPS for the Options would be 11.5 cents per share. This was based
upon the Company’s pro forma NPATA attributable to NTAW shareholders, adjusted for the pro forma impact of the
impact of Statewide.
2) Service condition – continuous employment of the employee with NTAW or one of its subsidiaries from the Grant
Date until the Vesting Date.
●
●
The Expiry Date of the options was 30 September 2023 which is two years after the Vesting Date, if not lapsed earlier.
If the Performance Conditions are not met before the end of the Performance Period, the options will lapse.
The options granted in FY2019 have now lapsed because the EPS condition was not met. As at the date of this report,
there were no options outstanding (2018: nil).
It is the Board’s intention to grant options to senior executives for the FY2020 LTI. The specific terms of the grant are
expected to be finalised in September 2019, and, in the case of the Managing Director, will be subject to shareholder
approval.
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30 June 2019
Directors' report
30 June 2019
(b) Details of remuneration
The key management personnel of the Group in FY2019 consisted of the following directors of National Tyre & Wheel
Limited:
●
●
●
●
●
Murray Boyte - Chairman
John Peter Ludemann - Chief Executive Officer and Managing Director
Terence Smith - Executive Director
William Cook - Non Executive Director
Robert Kent - Non Executive Director
And the following persons:
●
●
●
●
●
Jason Lamb - Chief Financial Officer and Joint Company Secretary
Chris Hummer - Managing Director, Dynamic
Georg Schramm - Managing Director, Top Draw Tyres (South Africa)
Trevor Wren - Managing Director, Statewide
Roshan Chelvaratnam - Managing Director, MPC
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
Short-term benefits
Cash
bonus
FY193
$
Cash
bonus
FY181
$
Cash salary
and fees4
$
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled2
$
Total
$
82,192
73,060
55,000
83,014
464,215
-
-
-
-
-
-
-
-
-
-
-
7,808
6,940
25,000
-
-
-
-
138,806
-
7,059
8,192
25,000
-
16,522
278,627
151,502
364,054
165,312
157,944
1,874,920
-
-
20,488
20,000
-
40,488
65,506
-
-
-
-
204,312
-
-
20,119
-
-
27,178
25,000
15,502
-
16,594
16,461
146,497
13,673
10,614
-
16,755
3,998
61,562
-
-
-
-
-
90,000
80,000
80,000
91,206
651,602
382,806
-
177,618
-
404,661
-
218,661
-
-
178,403
- 2,354,957
2019
Non-Executive
Directors:
M Boyte
W Cook
R Kent
Executive
Directors:
T Smith
J Ludemann
Other Key
Management
Personnel:
J Lamb
C Hummer
G Schramm
T Wren
R Chelvaratnam
1
2
3
4
Bonuses accrued in FY2018 and paid in FY2019. The 2018 STIs were determined by the Board, having regard to the Company’s strategy and ability to achieve the pro forma net
profit targets contained in the Prospectus.
All options issued during the year and outstanding as at 30 June 2019 lapse as at the date of this report as the performance conditions were not met (therefore no expense was
recorded).
Discretionary cash bonus resulting from specific business unit achievements which were accrued in FY2019.
Including movement in annual leave provisions.
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30 June 2019
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled4
$
Total
$
55,953
68,650
48,191
-
-
-
-
-
-
5,316
6,522
2,910
-
-
-
-
98,000
-
61,269
173,172
51,101
125,965
366,613
50,068
-
227,858
-
15,417
12,329
-
11,764
25,000
4,659
235,490
174,268
199,449
181,147
1,505,794
104,678
-
-
50,790
383,326
12,830
-
-
-
40,576
32,283
14,897
179
22,894
126,424
(38,946)
114,200
7,612 1,331,839 1,971,251
55,640
913
-
-
7,929
3,276
-
4,411
572,708
192,441
199,628
259,242
(14,805) 1,609,337 3,650,652
179,498
-
-
-
2018
Non-Executive Directors:
M Boyte1
W Cook
R Kent1
Executive Directors:
T Smith
J Ludemann
S Smith2
Other Key Management
Personnel:
J Lamb
C Hummer
G Schramm3
R Chelvaratnam
1
2
3
4
Remuneration is from date of appointment to 30 June 2018
Remuneration is from 1 July 2017 to date of resignation
Remuneration is from 31 December 2017 (date of Top Draw Tyres consolidation) to 30 June 2018
Equity settled share based payments comprise the options that vested and were exercised prior to the IPO
The proportion of remuneration linked to performance and the fixed proportion (at target performance levels) are as
follows:
Name
Non-Executive Directors:
M Boyte
W Cook1/2
R Kent
Executive Directors:
T Smith
J Ludemann1
S Smith
Other Key Management
Personnel:
J Lamb1
C Hummer
G Schramm
T Wren
R Chelvaratnam
Fixed remuneration
2018
2019
At risk - STI
2019
2018
At risk - LTI
20193
2018
100%
100%
100%
100%
77%
-
80%
80%
100%
87%
82%
100%
43%
100%
100%
21%
100%
51%
100%
100%
-
80%
-
-
-
-
23%
-
20%
20%
-
13%
18%
-
-
-
-
11%
-
18%
-
-
-
20%
-
-
-
-
-
-
-
-
-
-
-
-
57%
-
-
68%
-
31%
-
-
-
-
1
2
3
2018 LTI comprises the options that vested and were exercised prior to the IPO, and does not reflect the current LTI program.
Fixed remuneration comprised 100% of amounts received from the date of listing to 30 June 2018.
2019 LTI have no expensed value as the performance conditions have not been met.
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30 June 2019
Directors' report
30 June 2019
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
P Ludemann
Other Key Management Personnel:
J Lamb
C Hummer
G Schramm
T Wren
R Chelvaratnam
1
Forfeited 2019 cash bonuses are not accrued in the FY2019 result.
Cash bonus paid/payable
2019
2018
Cash bonus forfeited
20191
2018
-
100%
100%
-
-
100%
78%
-
100%
-
-
-
100%
100%
100%
-
22%
100%
-
-
-
-
-
-
(c) Relationship between remuneration and Company performance
The table below summarises the Group’s performance and correlates it to the total key management personnel
remuneration for the financial year:
Metric
Sales revenue ($)
Statutory net profit after tax attributable to shareholders ($)
Pro forma net profit after tax attributable to shareholders ($)
Change in share price (%)2
Earnings per share (cents)
Total dividends paid ($)
Key management personnel remuneration ($)
30 June 2019 30 June 2018
168,376,000 153,402,0001
4,477,000
9,314,0001
23
5.25
1,011,121
3,650,6523
6,390,000
6,390,000
(70)
6.22
3,636,561
2,354,957
1
2
3
Pro forma results are as presented on page 5 of the Directors’ Report.
NTAW listed on the ASX on 15 December 2017 with a share price of $1.00. Closing price as at 29 June 2018 was $1.23. Closing price as at 28 June 2019 was $0.37.
Including the cost of options granted and exercised prior to the IPO ($1,609,337).
(d) Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements with
no fixed tenure requirements. Details of these agreements for the FY2019 year are as follows:
Name:
Title:
Details:
John Peter Ludemann
Chief Executive Officer and Managing Director
Mr Ludemann has an annual total fixed remuneration (TFR) of $503,700 consisting of
base salary, superannuation and other benefits. Under the terms of his employment
contract, he is eligible to receive short term incentives (STI) with a maximum
opportunity of 50% of TFR per annum (at maximum performance levels). The STI will
be in the form of an annual cash bonus, subject to the achievement of key
performance indicators as determined by the Board. Subject to shareholder
approval, Mr Ludemann will also be awarded long term incentives (LTI) under
NTAW’s Employee Share Option Plan. He has statutory leave entitlements and is
entitled to 5 weeks annual leave per year. Either party may terminate the contract on
6 months’ notice. In the case of termination by NTAW, NTAW may provide payment
in lieu of notice. Mr Ludemann’s employment contract does not contain any express
redundancy provisions. Mr Ludemann’s contract contains a 5 year non-compete
restraint within Australia and New Zealand and a 12 month non-solicitation of
employees, contractors and clients who deal with NTAW.
15
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Name:
Title:
Details:
Name:
Title:
Details:
Name:
Title:
Details:
Name:
Title:
Details:
remuneration package
Terry Smith
Executive Director
inclusive of statutory
fixed
Mr Smith’s
superannuation contribution and a car allowance of $22,300. He has statutory leave
entitlements. Mr Smith is employed on a part time basis. Either party may terminate
the contract on 6 months’ notice. In the case of termination by NTAW, NTAW may
provide payment in lieu of notice. Mr Smith is entitled to redundancy pay in
accordance with the NTAW’s legal obligations. Mr Smith’s contract contains a 6
month non-compete restraint within Australia and a 6 month non-solicitation of
employees, contacts and clients with whom he has contact with, or influence over.
is $70,000
Jason Lamb
Chief Financial Officer and joint Company Secretary
Mr Lamb has an annual total fixed remuneration (TFR) of $303,644 consisting of base
salary, superannuation and other benefits. Under the terms of his employment
contract, he is eligible to receive short term incentives (STI) with a maximum
opportunity of 40% of TFR per annum (at maximum performance levels). The STI will
be in the form of an annual cash bonus, subject to the achievement of key
performance indicators as determined by the Board. Mr Lamb will also be awarded
long term incentives (LTI) under NTAW’s Employee Share Option Plan. He is eligible
for short term incentives as determined by the Board. Mr Lamb has statutory leave
entitlements. Either party may terminate the contract on 6 months’ notice. In the case
of termination by NTAW, NTAW may provide payment in lieu of notice. He is entitled
to redundancy pay in accordance with NTAW’s legal obligations. Mr Lamb’s contract
contains a 6 month non-compete restraint within Australia and a 6 month non-
solicitation of employees, contacts and clients with whom he has contact with, or
influence over.
Chris Hummer
Managing Director, Dynamic
Mr Hummer has an annual total fixed remuneration (TFR) of $181,770 consisting of
base salary, superannuation and other benefits. Under the terms of his employment
contract, he is eligible to receive short term incentives (STI) with a maximum
opportunity of 40% of TFR per annum (at maximum performance levels). The STI will
be in the form of an annual cash bonus, subject to the achievement of key
performance indicators as determined by the Board. Mr Hummer will also be awarded
long term incentives (LTI) under NTAW’s Employee Share Option Plan. He has
statutory leave entitlements. Either party may terminate the contract on 3 months’
notice. In the case of termination by Dynamic, Dynamic may provide payment in lieu
of notice. Mr Hummer is entitled to redundancy pay in accordance with the
Company’s legal obligations. Mr Hummer’s contract contains a 12 month non-
compete restraint within as specified geographical area and a 12 month non-
solicitation of employees, contacts and clients with whom he has contact with, or
influence over.
Georg Schramm
Managing Director, Top Draw (South Africa)
Mr Schramm’s employment contract is governed by South African law. His fixed
remuneration package is R278,000 per month and he is entitled to car and mobile
phone allowances totalling R22,300 per month. Either party may terminate the
contract on 6 months’ notice. Where Mr Schramm is terminated due to operational
requirements, the termination will be governed by Top Draw (South Africa) policies or
practices or, if no policy or practice exists, in accordance with the law.
16
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Name:
Title:
Details:
Name:
Title:
Details:
Trevor Wren
Managing Director, Statewide
Mr Wren has an annual total fixed remuneration (TFR) of $171,915 consisting of base
salary, superannuation and other benefits. Under the terms of his employment
contract, he is eligible to receive short term incentives (STI) with a maximum
opportunity of 20% of TFR per annum (at maximum performance levels). The STI will
be in the form of an annual cash bonus, subject to the achievement of key
performance indicators as determined by the Board. Mr Wren will also be awarded
long term incentives (LTI) under NTAW’s Employee Share Option Plan. He has
statutory leave entitlements. Either party may terminate the contract on 3 months’
notice. In the case of termination by Statewide, Statewide may provide payment in
lieu of notice. Mr Wren is entitled to redundancy pay in accordance with the
Company’s legal obligations. Mr Wren’s contract contains a 6 month non-compete
restraint within as specified geographical area and a 6 month non-solicitation of
employees, contacts and clients with whom he has contact with, or influence over.
Roshan Chelvaratnam
Managing Director, MPC
Mr Chelvaratnam has an annual total fixed remuneration (TFR) of $181,770
consisting of base salary, superannuation and other benefits. Under the terms of his
employment contract, he is eligible to receive short term incentives (STI) with a
maximum opportunity of 25% of TFR per annum (at maximum performance levels).
The STI will be in the form of an annual cash bonus, subject to the achievement of
key performance indicators as determined by the Board. Mr Chelvaratnam will also be
awarded long term incentives (LTI) under NTAW’s Employee Share Option Plan. He
has statutory leave entitlements. Either party may terminate the contract on 6 months’
notice after the expiry of the initial term of 3 years (from 1 April 2017). In the case of
termination by MPC, MPC may provide payment in lieu of notice. He may not
terminate within the first 3 years of his employment. Mr Chelvaratnam is entitled to
redundancy pay
legal obligations. Mr
Chelvaratnam’s contract contains a 6 month non-compete restraint within Australia
and a 12 month non-solicitation of employees, contacts and clients with whom he has
contact with, or influence over.
in accordance with
the Company’s
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
All key management personnel are required to keep information obtained during their employment confidential, both during
their employment and after their employment ends. Employment contracts contains an assignment of intellectual property
created during the course of their employment.
17
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
(e) Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2019.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
J Ludemann
J Lamb
C Hummer
R Chelvaratnam
T Wren
Number of
options
granted
Grant date
Vesting date and
exercise date
Expiry date
Exercise
price1
Fair value
per option
at grant date
180,000 7 Dec 18
160,000 7 Dec 18
140,000 7 Dec 18
110,000 7 Dec 18
100,000 7 Dec 18
30 Sep 21
30 Sep 21
30 Sep 21
30 Sep 21
30 Sep 21
30 Sep 23
30 Sep 23
30 Sep 23
30 Sep 23
30 Sep 23
$1.1724
$1.1724
$1.1724
$1.1724
$1.1724
$0.081
$0.081
$0.081
$0.081
$0.081
1
All options outstanding at 30 June 2019 have lapsed as at the date of this report as the performance conditions have not been met.
(f) Equity instruments held by key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at
the start of
the year
Received as
part of
remun-
eration
Additions
Disposals
Balance at
the end of
the year
Ordinary shares
Murray Boyte
John Peter Ludemann
Terence Smith
William Cook
Robert Kent
Jason Lamb
Chris Hummer
Roshan Chelvaratnam
Trevor Wren
112,500
2,589,928
27,032,371
203,132
100,000
358,602
4,261,714
3,929,250
655,737
39,243,234
-
-
-
-
-
-
-
-
-
-
53,737
170,000
505,000
100,000
104,901
5,120
428,400
-
-
(10,000)
-
156,237
2,759,928
(282,074)1 27,255,297
303,132
204,901
363,722
4,652,522
3,929,250
655,737
-
-
-
(37,592)1
-
-
1,367,158
(329,666) 40,280,726
1
Personally owned shares gifted to employees during the year
(g) Other transactions with key management personnel
Related party leases
During the financial year, a Group entity leased business premises owned by a closely related party of Chris Hummer on
commercial terms. The lease expired on 30 April 2017 and the parties are ‘holding over’ until new premises are
available. Rent payments for the financial year totalled $126,421 (2018: $123,598), with $nil outstanding at 30 June 2019
(2018: $nil).
During the financial year, a Group entity leased business premises owned by a closely related party of Trevor Wren on
commercial terms. The lease expired on 30 May 2023 and has two by 5-year renewal options. Rent payments for the
financial year totalled $203,497 (2018: $14,167), with $nil outstanding at 30 June 2019 (2018: $nil).
18
For personal use only
Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
During the year, Terry and Susanne Smith (co-founders of Exclusive Tyre Distributors Australia Pty Ltd) and Chris and
Christine Hummer (co-founders of Dynamic Wheel Co Pty Ltd), transferred a total of 319,666 of their personally owned
National Tyre & Wheel Limited (NTD) shares to a number of employees of the Group. The gifts were made as a gesture of
thanks and appreciation for the employees’ efforts and support for the business, prior to NTD’s listing on the ASX in
December 2017. The transfers occurred following the release of the shares from voluntary escrow during the year and
were valued at 45 cents per share at that time.
Loans to key management personnel
There were no loans to key management personnel and their related parties during the financial year.
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of National Tyre & Wheel Limited under option outstanding at the date of this
report. 1.63 million options over unissued ordinary shares that were outstanding at 30 June 2019 have now lapsed.
Shares issued on the exercise of options
There were no ordinary shares of National Tyre & Wheel Limited issued on the exercise of options during the year ended
30 June 2019 and up to the date of this report.
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 financial year, the Company paid a premium in respect of a contract to insure the directors and executives of
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
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.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to 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 part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 25 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 25 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the Company who are former partners of Pitcher Partners
There are no officers of the Company who are former partners of Pitcher Partners.
19
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Directors’ Report
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' report
30 June 2019
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
Pitcher Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Murray Boyte
Chairman
23 August 2019
Brisbane
20
For personal use only
The Directors
National Tyre & Wheel Limited
30 Gow Street
MOOROOKA QLD 4105
Auditor’s Independence Declaration
As lead auditor for the audit of National Tyre & Wheel Limited for the year ended 30 June
2019, I declare that, to the best of my knowledge and belief, there have been:
(i) no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of APES 110 Code of Ethics for Professional Accountants.
This declaration is in respect of National Tyre & Wheel Limited and entities it controlled during
the year.
PITCHER PARTNERS
Warwick Face
Partner
Brisbane, Queensland
23 August 2019
21
For personal use only Statement of profit or loss and other comprehensive income
National Tyre & Wheel Limited and its controlled entities
For the year ended 30 June 2019
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue from contracts with customers
5
168,462
146,300
Interest revenue calculated using the effective interest method
123
120
Note
Consolidated
2019
$'000
2018
$'000
Expenses
Cost of goods sold
Employee benefits and other related costs
Depreciation and amortisation
Legal and professional fees
Marketing
Occupancy
Insurance
Listing
Other
Finance
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attributable to:
Non-controlling interest
Owners of National Tyre & Wheel Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of National Tyre & Wheel Limited
6
6
6
7
(119,846)
(18,088)
(2,628)
(791)
(5,813)
(4,479)
(797)
-
(5,827)
(665)
(98,595)
(18,357)
(2,127)
(807)
(5,094)
(3,699)
(540)
(2,078)
(5,609)
(459)
9,651
9,055
(2,975)
(3,700)
6,676
5,355
400
400
(446)
(446)
7,076
4,909
286
6,390
878
4,477
6,676
5,355
286
6,790
878
4,031
7,076
4,909
Basic earnings per share
Diluted earnings per share
Cents
Cents
35
35
6.22
6.22
5.25
5.05
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
22
For personal use only
Statement of financial position
National Tyre & Wheel Limited and its controlled entities
As at 30 June 2019
Statement of financial position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Income tax refund due
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits/(accumulated losses)
Equity attributable to the owners of National Tyre & Wheel Limited
Non-controlling interest
Total equity
Note
Consolidated
2019
$'000
2018
$'000
8
9
10
11
7
12
13
14
7
15
16
7
17
18
7
19
20
21
19,554
24,679
48,563
24
212
1,281
94,313
3,579
20,313
-
23,892
19,608
25,900
47,750
463
-
1,779
95,500
3,917
22,167
4
26,088
118,205
121,588
29,425
2,040
-
3,192
34,657
11,295
152
1,357
12,804
35,014
1,615
1,069
3,107
40,805
12,820
-
1,300
14,120
47,461
54,925
70,744
66,663
65,271
185
1,911
67,367
3,377
64,761
(215)
(974)
63,572
3,091
70,744
66,663
The above statement of financial position should be read in conjunction with the accompanying notes
23
For personal use only
Statement of changes in equity
National Tyre & Wheel Limited and its controlled entities
For the year ended 30 June 2019
Statement of changes in equity
For the year ended 30 June 2019
Consolidated
Foreign
currency
translation
reserve
$'000
Share-
based
payments
reserve
$'000
Issued
capital
$'000
Other
reserves
$'000
Accumu-
lated
losses
$'000
Non-
controlling
interest
$'000
Total
equity
$'000
Balance at 1 July 2017
18,942
231
2,092
(356)
16,025
6,439
43,373
Profit after income tax expense
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (note 20)
Options issued
Options exercised
Reversal of option forfeiture
Non-controlling interest on
acquisition of subsidiary
Acquisition of non-controlling
interest of existing subsidiaries
Transfers
Dividends paid (note 22)
-
-
-
-
(446)
(446)
-
-
-
39,907
-
5,912
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,657
(4,601)
400
-
-
(548)
-
-
-
-
-
-
-
-
-
4,477
878
5,355
-
-
(446)
4,477
878
4,909
-
-
-
-
-
-
-
-
-
39,907
2,657
1,311
400
2,828
2,828
-
356
-
(5,657)
192
(16,011)
(6,398)
-
(656)
(12,055)
-
(16,667)
Balance at 30 June 2018
64,761
(215)
-
-
(974)
3,091
66,663
Consolidated
Foreign
currency
translation
reserve
$'000
Share-
based
payments
reserve
$'000
Issued
capital
$'000
Other
Retained
reserves profits
$'000
$'000
Non-
controlling
interest
$'000
Total
equity
$'000
Balance at 1 July 2018
64,761
(215)
Profit after income tax expense
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Share-based payments (note
36)
Transfers
Dividends reinvested
Dividends paid (note 22)
-
-
-
-
-
510
-
-
-
-
-
-
400
400
-
-
-
-
132
(132)
-
-
Balance at 30 June 2019
65,271
185
-
-
(974)
3,091
66,663
-
-
-
-
-
-
-
-
6,390
286
6,676
-
-
400
6,390
286
7,076
-
132
-
(3,637)
-
-
-
-
132
-
510
(3,637)
1,911
3,377
70,744
The above statement of changes in equity should be read in conjunction with the accompanying notes
24
For personal use only
Statement of cash flows
National Tyre & Wheel Limited and its controlled entities
For the year ended 30 June 2019
Statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other finance costs paid
Income taxes paid
Note
Consolidated
2019
$'000
2018
$'000
186,025
(177,306)
162,009
(148,475)
8,719
123
(665)
(4,100)
13,534
120
(291)
(4,461)
Net cash from operating activities
34
4,077
8,902
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Final payments for prior year business acquisition
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Transfers from term deposits
Net cash from/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of shares
Listing costs
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
31
22
-
-
(721)
329
600
(13,355)
(2,051)
(845)
228
-
208
(16,023)
-
-
-
(1,577)
(3,127)
26,234
(3,552)
7,471
(1,583)
(16,667)
(4,704)
11,903
(419)
19,608
(112)
4,782
14,765
61
Cash and cash equivalents at the end of the financial year
8
19,077
19,608
The above statement of cash flows should be read in conjunction with the accompanying notes
25
For personal use only
27
27
38
39
39
40
41
42
43
43
43
44
44
45
47
47
47
48
49
50
51
51
52
56
57
57
58
58
59
59
60
62
62
65
65
66
69
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 1. General information
Note 2. Significant accounting policies
Note 3. Critical accounting judgements, estimates and assumptions
Note 4. Operating segments
Note 5. Revenue from contracts with customers
Note 6. Expenses
Note 7. Income tax
Note 8. Current assets - cash and cash equivalents
Note 9. Current assets - trade and other receivables
Note 10. Current assets - inventories
Note 11. Current assets - derivative financial instruments
Note 12. Current assets - other
Note 13. Non-current assets - property, plant and equipment
Note 14. Non-current assets - intangibles
Note 15. Current liabilities - trade and other payables
Note 16. Current liabilities - borrowings
Note 17. Current liabilities - provisions
Note 18. Non-current liabilities - borrowings
Note 19. Non-current liabilities - provisions
Note 20. Equity - issued capital
Note 21. Equity - reserves
Note 22. Equity - dividends
Note 23. Financial instruments
Note 24. Fair value measurement
Note 25. Remuneration of auditors
Note 26. Contingent liabilities
Note 27. Commitments
Note 28. Key management personnel disclosures
Note 29. Related party transactions
Note 30. Parent entity information
Note 31. Business combinations
Note 32. Interests in subsidiaries
Note 33. Deed of cross guarantee
Note 34. Cash flow information
Note 35. Earnings per share
Note 36. Share-based payments
Note 37. Events after the reporting period
26
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 1. General information
The financial statements cover National Tyre & Wheel Limited as a Group consisting of National Tyre & Wheel Limited
('Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ('Group' or "NTAW'). The
financial statements are presented in Australian dollars, which is National Tyre & Wheel Limited's functional and
presentation currency.
National Tyre & Wheel Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
30 Gow Street
Moorooka QLD 4105
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 August 2019. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these
Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of
the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the Group.
27
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 9 Financial Instruments
The Group has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models
for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose
objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely
principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held
within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on
specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other
financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable
election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent
consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a
financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or
eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard
requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it
would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected
credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the
credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL
method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected
loss allowance is available.
AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue
recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised
goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a
measurement approach that is based on an allocation of the transaction price. This is described further in the accounting
policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with
customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a
receivable, depending on the relationship between the entity's performance and the customer's payment. Customer
acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over
the contract period.
Impact of adoption
AASB 9 and AASB 15 were adopted using the retrospective approach and as such comparatives have been restated.
There was no impact of the adoption on opening retained earnings as at 1 July 2018.
The impact of the new Accounting Standards compared with the previous Accounting Standards on the current reporting
period is as follows:
Current
standards
(as reported)
$'000
Previous
standards
Change
$'000
$'000
Statement of profit or loss (extract)
Revenue
Interest revenue calculated using the effective interest method
Profit before income tax expense
Income tax expense
Profit for the year
168,462
123
9,651
(2,975)
168,585
-
9,651
(2,975)
6,676
6,676
(123)
123
-
-
-
Changes to the significant accounting policies as a result of the new standards adopted are detailed below.
28
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 30.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of National Tyre & Wheel
Limited as at 30 June 2019 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses
incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
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.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
29
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be
delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is
generally at the time of delivery.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
30
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
National Tyre & Wheel Limited (the 'head entity') and its wholly-owned Australian subsidiaries (Exclusive Tyre Distributors
Pty Ltd, MPC Mags & Tyres Pty Ltd, Dynamic Wheel Co Pty Limited and Statewide Tyre Distribution Pty Ltd), have formed
an income tax consolidated group under the tax consolidation regime. The head entity and subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has
applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the
statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Inventories
Finished goods are stated at the lower of cost and net realisable value on a 'first in first out' basis. Cost comprises of
purchase and delivery costs, net of rebates and discounts received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
31
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group has not satisfied the documentation, designation and effectiveness tests required by Australian Accounting
Standards, as such they do not qualify for hedge accounting and gains or losses arising from changes in fair value are
recognised immediately in profit or loss.
Derivatives are classified as current or non-current depending on the expected period of realisation.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the
initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured
at either amortised cost or fair value depending on their classification. Classification is determined based on both the
business model within which such assets are held and the contractual cash flow characteristics of the financial asset
unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of
recovering part or all of a financial asset, it's carrying value is written off.
Impairment of financial assets (excluding trade and other receivables)
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at
amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has
increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected
credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a diminishing value basis to write off the net cost of each item of property, plant and
equipment over their expected useful lives as follows:
Leasehold improvements
Plant and equipment
Motor vehicles
Capital work in progress
2.5% to 15%
5% to 60%
13.5% to 25%
0% until in use
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
32
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Brand name
Brand names are assessed as having an indefinite useful life on the basis of brand strength, ongoing expected profitability
and continuing support. Brand names are not amortised, but are instead tested for impairment annually, or more frequently
if events or changes in circumstances indicate that it might be impaired.
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of 7 to 10 years.
Importation rights
Importation rights are amortised on a straight line basis over the term of the distribution agreement, being between 7 to 10
years. Importation rights are tested for impairment annually, or more frequently if events or changes in circumstances
indicate that it might be impaired.
33
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled wholly within 12 months of the reporting date
are measured at the present value of expected future payments to be made in respect of services provided by employees
up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting date on
high-quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future
cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services.
34
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
35
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of National Tyre & Wheel Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
36
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Comparative information
Comparatives have been reclassified, where applicable, to align with current year presentation. There was no impact on
the results or financial position of the Group.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2019. The Group's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group,
are set out below.
Accounting Standard
Nature of change
Impact on the financial statements
AASB 16 'Leases'
(effective for the
accounting period
starting 1 July 2019)
AASB 16 requires recognition of a right-of-use
asset along with the associated lease liability
where the entity is a lessee. An interest expense
will be recognised in the profit or loss using the
effective interest rate method, and the right-of
use asset will be depreciated. Lessor accounting
will largely remain unchanged.
On adoption, AASB 16 will have the following
impact from 1 July 2019, specifically:
- Right-of-use assets and lease liabilities on the
balance sheet will increase on 1 July 2019 by
approximately $7.6m and $8.2m, respectively;
and
- Retained earnings will reduce on 1 July 2019
by approximately $0.6m because the carrying
value of the assets reduce more quickly than
the carrying amount of the lease liabilities.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for annual
reporting periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities that have
public accountability that are required by legislation to comply with Australian Accounting Standards and other for-profit
entities that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework is yet to be released which will
impact for-profit private sector entities. The application of new definition and recognition criteria as well as new guidance on
measurement will result in amendments to several accounting standards. The issue of AASB 2019-1 Amendments to
Australian Accounting Standards – References to the Conceptual Framework, also applicable from 1 January 2020,
includes such amendments. Where the Group has relied on the conceptual framework in determining its accounting
policies for transactions, events or conditions that are not otherwise dealt with under Australian Accounting Standards, the
Group may need to revisit such policies. The Group will apply the revised conceptual framework from 1 July 2020 and is
yet to assess its impact.
37
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Business combinations
As discussed in note 2, 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 Group 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.
Recognition of identifiable intangible assets on acquisition
Brand names, importation rights and customer relationships have been recognised on the acquisition of subsidiaries. The
valuation of these assets is based on the present value of expected future cash flows associated with the brand and the
recurring current customers covering a period of 5 to 12 years. These cash flows have been calculated using sales growth
rates of between 3.8%-6.9% (2018: 3%-6.3%) and a pre-tax discount rate of between 16.3%-18.6% (2018:17%-20%).
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in
note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital
and growth rates of the estimated future cash flows.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at
each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment.
If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of
disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Binomial model taking into
account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact profit or loss and equity.
Share-based payments expense under the employee share option plan has been recognised over the expected vesting
period of the options. The share-based payment expense incurred is equal to the value of the options and management
have assessed the fair value of the options using a Binominal model with the following key criteria: pre-determined
exercise price, share price at grant date based on estimated enterprise value of the company, risk-free rate of 2% (2018:
1.5%), volatility of share price of 65% (2018: 60%) and assumed vesting period from grant date.
Income tax
The Group 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 Group recognises liabilities for anticipated tax
audit issues based on the Group'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.
38
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Warranty provision
In determining the level of provision required for warranties the Group has made judgements in respect of the expected
performance of the products, the number of customers who will actually claim under the warranty and how often, and the
costs of fulfilling the conditions of the warranty.
Note 4. Operating segments
Identification of reportable operating segments
The Group's operating segments are based on the internal reports that are reviewed and used by the Board of Directors
(who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the
allocation of resources.
The Directors are of the opinion that there is one reportable segment in the Group as the CODM reviews results, assesses
performance and allocates resources at a Group level.
As the information reported to the CODM is the consolidated results of the Group, the segment results are shown
throughout these financial statements and are not duplicated here.
Major customers
During the year ended 30 June 2019, none of the Group's external revenue was derived from sales of greater than 10% to
any customer (2018: none).
Note 5. Revenue from contracts with customers
Consolidated
2019
$'000
2018
$'000
168,376
146,158
86
142
168,462
146,300
Consolidated
2019
$'000
2018
$'000
136,726
16,417
15,233
123,193
14,704
8,261
168,376
146,158
168,376
146,158
Revenue from contracts with customers
Sale of goods
Other revenue
Other revenue
Revenue from contracts with customers
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Geographical regions
Australia
New Zealand
South Africa
Timing of revenue recognition
Goods transferred at a point in time
39
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Cost of sales
Cost of sales
Depreciation
Leasehold improvements
Plant and equipment
Motor vehicles
Total depreciation
Amortisation
Customer relationships
Importation rights
Other intangibles
Total amortisation
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable
Finance lease charges
Finance costs expensed
Net foreign exchange loss
Net foreign exchange loss
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
Bad debts
Bad debts expense
40
Consolidated
2019
$'000
2018
$'000
119,958
98,507
4
377
393
774
6
361
329
696
644
1,204
6
361
1,067
3
1,854
1,431
2,628
2,127
623
42
665
437
22
459
51
657
4,196
3,398
1,126
1,026
132
2,657
160
42
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Sundry items
Adjustment recognised for prior periods
Difference in overseas tax rates
Income tax expense
Amounts credited directly to equity
Deferred tax assets
Consolidated
2019
$'000
2018
$'000
3,066
156
(247)
4,623
(903)
(20)
2,975
3,700
156
(903)
9,651
9,055
2,895
2,717
360
1,035
3,255
(247)
(33)
3,752
(20)
(32)
2,975
3,700
Consolidated
2019
$'000
2018
$'000
-
(442)
41
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 7. Income tax (continued)
Deferred tax
Net deferred tax comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Capital raising costs
Employee benefits
Property, plant and equipment
Intangibles
Accruals and provisions
Other
Finance lease liability
Foreign currency exchange
Deferred tax asset/(liability)
Movements:
Opening balance
Credited/(charged) to profit or loss
Credited to equity
Additions through business combinations (note 31)
Closing balance
Income tax refund due/(payable)
Note 8. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial
year as shown in the statement of cash flows as follows:
Balances as above
Bank overdraft (note 16)
Balance as per statement of cash flows
42
Consolidated
2019
$'000
2018
$'000
690
787
(116)
(2,118)
604
(31)
63
(31)
(152)
4
(156)
-
-
(152)
837
789
(115)
(2,321)
567
60
67
120
4
(636)
903
442
(705)
4
Consolidated
2019
$'000
2018
$'000
212
(1,069)
Consolidated
2019
$'000
2018
$'000
2
19,552
2
19,606
19,554
19,608
19,554
(477)
19,608
-
19,077
19,608
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Receivable from employees
Consolidated
2019
$'000
2018
$'000
24,714
(35)
24,679
26,026
(127)
25,899
-
1
24,679
25,900
Allowance for expected credit losses
The Group has recognised a net loss of $160,000 (2018: net loss of $42,000) in 'other' expenses for the current year for
specific debtors for which such evidence exists. Trade receivables past due but not impaired amount to $4,535,000 (2018:
$6,356,000).
At 30 June 2019 an ageing analysis of those trade receivables are as follows:
Not overdue
1 to 30 days overdue
31 to 60 days overdue
61 plus days overdue
Refer to note 23 for further information on financial instruments.
Note 10. Current assets - inventories
Finished goods - at cost
Less: Provision for impairment
Stock in transit - at cost
Note 11. Current assets - derivative financial instruments
Forward foreign exchange contracts
Refer to note 24 for further information on fair value measurement.
43
Consolidated
2019
$'000
2018
$'000
20,144
4,038
315
182
19,543
5,096
813
447
24,679
25,899
Consolidated
2019
$'000
2018
$'000
37,252
(22)
37,230
32,652
(150)
32,502
11,333
15,248
48,563
47,750
Consolidated
2019
$'000
2018
$'000
24
463
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 12. Current assets - other
Prepayments
Other deposits
Other current assets
Note 13. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Capital works in progress - at cost
Consolidated
2019
$'000
2018
$'000
1,268
-
13
1,135
600
44
1,281
1,779
Consolidated
2019
$'000
2018
$'000
321
(266)
55
4,826
(3,067)
1,759
3,104
(1,395)
1,709
321
(262)
59
4,625
(2,761)
1,864
3,308
(1,314)
1,994
56
-
3,579
3,917
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Additions through business combinations (note
31)
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Leasehold
Plant and
improvements equipment
$'000
$'000
Motor
vehicles
$'000
Capital works
in progress
$'000
Total
$'000
1,717
315
221
(16)
(12)
(361)
1,864
268
(8)
12
(377)
1,463
738
344
(210)
(12)
(329)
1,994
397
(303)
14
(393)
1,759
1,709
-
-
-
-
-
-
-
56
-
-
-
56
3,245
1,053
565
(226)
(24)
(696)
3,917
721
(311)
26
(774)
3,579
65
-
-
-
-
(6)
59
-
-
-
(4)
55
44
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 13. Non-current assets - property, plant and equipment (continued)
Property, plant and equipment secured under finance leases
Refer to note 27 for further information on property, plant and equipment secured under finance leases.
Note 14. Non-current assets - intangibles
Goodwill - at cost
Brand name - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Importation rights - at cost
Less: Accumulated amortisation
Other intangibles - at cost
Less: Accumulated amortisation
Consolidated
2019
$'000
2018
$'000
8,878
8,878
2,393
2,393
4,798
(1,062)
3,736
12,106
(6,800)
5,306
14
(14)
-
4,798
(418)
4,380
12,106
(5,596)
6,510
14
(8)
6
20,313
22,167
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions through business
combinations (note 31)
Amortisation expense
Balance at 30 June 2018
Amortisation expense
Goodwill
$'000
Brand
name
$'000
Customer
relation-
ships
$'000
Importation
rights
$'000
Other
intangibles
$'000
Total
$'000
3,094
2,393
2,894
6,201
5,784
-
8,878
-
-
-
2,393
-
1,847
(361)
4,380
(644)
1,376
(1,067)
6,510
(1,204)
9
-
(3)
6
(6)
-
14,591
9,007
(1,431)
22,167
(1,854)
20,313
Balance at 30 June 2019
8,878
2,393
3,736
5,306
45
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 14. Non-current assets - intangibles (continued)
Impairment testing
For the purpose of impairment testing, goodwill and brand names are allocated to the respective operating entity's cash
generating unit ('CGU'):
Goodwill
CGU:
- Tyres and wheels
- M.P.C Mags and Tyres Pty Ltd
- Top Draw Tyres Pty Ltd
Brand names
CGU:
- M.P.C Mags and Tyres Pty Ltd
Consolidated
2019
$'000
2018
$'000
5,228
2,339
1,311
5,228
2,339
1,311
8,878
8,878
2,393
2,393
The Group tests whether goodwill and brand names have suffered any impairment on an annual basis. For the 2019 and
2018 reporting period, the recoverable amount of the CGUs was determined based on value-in-use calculations which
require the use of assumptions. The calculations are conducted using a discount cash flow (DCF) methodology based on
financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are
extrapolated using the estimated growth rates stated below. These growth rates are consistent with forecasts included in
industry reports specific to the industry in which each CGU operates.
The following table sets out the key assumptions for those CGUs that have significant goodwill and brand names allocated
to them:
2019
Sales growth (%)
Terminal growth rate (%)
Pre-tax discount rate (%)
Tyres and
wheels
%
MPC
%
Top Draw
Tyres
%
3.80%
1.50%
16.30%
1.90%
1.50%
16.80%
6.90%
2.00%
18.60%
Management has determined the value assigned to each of the above key assumptions as follows:
Assumption
Approach used to determine values
Sales growth
Average annual growth rate over the five-year forecast period; based on past performance
and management’s expectations of market development.
Terminal growth rate
The growth rate used to extrapolate cash flows beyond the 5 year forecasted period based
off management's expectations of long-term growth.
Pre-tax discount rate
Reflect specific risks relating to the relevant segments and the countries in which they
operate based off management's expectations for the future.
Impact of possible changes in key assumptions
A sensitivity analysis was performed on key assumptions, which included increasing the discount rate by 2% and reducing
sales growth. Both scenarios did not result in an impairment.
46
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 15. Current liabilities - trade and other payables
Trade payables
GST payable
Other payables and accruals
Refer to note 23 for further information on financial instruments.
Note 16. Current liabilities - borrowings
Bank overdraft
Bank loans
Bank loan - equipment
Lease liability
Consolidated
2019
$'000
2018
$'000
27,383
197
1,845
32,536
133
2,345
29,425
35,014
Consolidated
2019
$'000
2018
$'000
477
1,438
17
108
-
1,436
-
179
2,040
1,615
Refer to note 18 for further information on assets pledged as security and financing arrangements.
Refer to note 23 for further information on financial instruments.
Note 17. Current liabilities - provisions
Employee benefits
Warranties
Consolidated
2019
$'000
2018
$'000
2,305
887
2,343
764
3,192
3,107
Warranties
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.
Amounts not expected to be settled within the next 12 months
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. The
entire amount is presented as current, since the Group does not have an unconditional right to defer settlement. Based on
past experience, the Group expects all employees to take the full amount of accrued leave or require payment within the
next 12 months.
47
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 18. Non-current liabilities - borrowings
Bank loans
Bank loan - equipment
Lease liability
Refer to note 23 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank overdraft
Bank loans
Bank loan - equipment
Lease liability
Consolidated
2019
$'000
2018
$'000
11,145
47
103
12,585
-
235
11,295
12,820
Consolidated
2019
$'000
2018
$'000
477
12,583
64
211
-
14,021
-
414
13,335
14,435
The bank loan facility has an expiry date of 21 May 2021.
Assets pledged as security
The bank loans are secured over the assets of National Tyre & Wheel Limited and the following subsidiaries - Exclusive
Tyre Distributors Pty Ltd, Exclusive Tyre Distributors (NZ) Ltd, MPC Mags & Tyres Pty Ltd, Statewide Tyre Distribution Pty
Ltd and Dynamic Wheel Co Pty Limited.
The lease liabilities are effectively secured as the rights to the leased assets, recognised in the statement of financial
position, revert to the lessor in the event of default.
48
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 18. Non-current liabilities - borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank loans
Bank loan - equipment
Bank guarantee
Used at the reporting date
Bank overdraft
Bank loans
Bank loan - equipment
Bank guarantee
Unused at the reporting date
Bank overdraft
Bank loans
Bank loan - equipment
Bank guarantee
Note 19. Non-current liabilities - provisions
Employee benefits
Warranties
Consolidated
2019
$'000
2018
$'000
477
12,583
64
4,157
17,281
477
12,583
64
2,892
16,016
-
-
-
1,265
1,265
-
14,021
-
4,157
18,178
-
14,021
-
2,466
16,487
-
-
-
1,691
1,691
Consolidated
2019
$'000
2018
$'000
272
1,085
291
1,009
1,357
1,300
Warranties
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.
Total warranty provision
The total warranty provision (current and non-current) are as follows:
Warranties
Consolidated
2019
$'000
2018
$'000
1,972
1,773
49
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 19. Non-current liabilities - provisions (continued)
Movements in provisions
Movements in each class of provision (current and non-current) during the current financial year, other than employee
benefits, are set out below:
Consolidated - 2019
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Carrying amount at the end of the year
Note 20. Equity - issued capital
Warranties
$'000
1,773
1,012
(813)
1,972
Consolidated
2019
Shares
2018
Shares
2019
$'000
2018
$'000
Ordinary shares - fully paid
102,891,313 102,321,143
65,271
64,761
Movements in ordinary share capital
Details
Date
Shares
Issue price
$'000
Balance
Consolidation of existing shares (pre-IPO)
Split of existing shares (pre-IPO)
Issue of shares on IPO capital raising
Issue of shares on acquisition of business
Issue of shares per Employee Option Plan
Issue of shares for acquisition of Statewide Tyre
Distribution Pty Ltd
Issue of shares for acquisition of Statewide Tyre
Distribution Pty Ltd
Share issue transaction costs, net of tax
1 July 2017
21 November 2017
21 November 2017
14 December 2017
14 December 2017
14 December 2017
68,000,002
(14,768,755)
833,495
24,922,767
14,541,654
7,582,964
$0.0000
$0.0000
$1.0000
$1.0000
$0.7800
18,942
-
-
24,923
14,542
5,912
31 May 2018
553,279
$1.2200
675
18 June 2018
655,737
-
$1.2200
$0.0000
Balance
Issue of shares per Dividend Reinvestment Plan
Issue of shares per Dividend Reinvestment Plan
30 June 2018
8 October 2018
4 April 2019
102,321,143
332,809
237,361
$1.1700
$0.5100
Balance
30 June 2019
102,891,313
800
(1,033)
64,761
389
121
65,271
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
50
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 20. Equity - issued capital (continued)
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment. The Group is actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The capital risk management policy remains unchanged from the 30 June 2018 Annual Report.
Note 21. Equity - reserves
Foreign currency reserve
Consolidated
2019
$'000
2018
$'000
185
(215)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Note 22. Equity - dividends
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2018 of 2.30 cents per ordinary share
Interim dividend for the year ended 30 June 2019 of 1.25 cents per ordinary share
Final dividend for the year ended 30 June 2017 (declared and paid prior to the IPO)
Interim dividend for the year ended 30 June 2018 of 1.00 cents per ordinary share
Dividends to non-controlling interests
Consolidated
2019
$'000
2018
$'000
2,353
1,283
-
-
-
-
-
15,000
1,011
656
3,636
16,667
Refer to note 20 for details of shares issued pursuant to the Company's Dividend Reinvestment Plan.
At the date of signing these financial statements, the Company has declared a fully franked final dividend of 2.05 cents per
share and a fully franked special dividend of 1.50 cents per share with a record date of 3 September 2019 and a payment
date of 13 September 2019. The total dividends payable are $2.1 million and $1.5 million. The financial effect of these
dividend have not been brought to account in the financial statements for the year ended 30 June 2019 and will be
recognised in subsequent financial reports.
51
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 22. Equity - dividends (continued)
Franking credits
Consolidated
2019
$'000
2018
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
15,350
14,831
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for franking
credits or debits that will arise from the payment or refund of the amount of the provision for income tax or income tax
refundable at the reporting date.
Note 23. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Group. The Group uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk
exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The
Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating
units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
In order to protect against exchange rate movements, the Group has entered into forward foreign exchange contracts.
These contracts are hedging highly probable forecasted cash flows for the ensuing financial year. Most of the Group’s
transactions are carried out in $AUD. Exposures to currency exchange rates arise from the Group’s overseas purchases,
which are primarily denominated in $US-Dollars ($USD). To mitigate the Group’s exposure to foreign currency risk, non-
$AUD cash flows are monitored, and forward exchange contracts are entered into in accordance with the Group’s risk
management policies. The usual length of forward contracts entered into are short term and cover known $USD
exposures. Where the amounts to be paid and received in a specific currency are expected to largely offset one another,
no further hedging activity is undertaken.
At 30 June 2019, the Group had forward foreign exchange contracts to acquire $15,900,000 of USD (2018: $15,355,000).
These are due to mature within 3 months of balance date. The fixed exchange rates on these contracts ranged from
0.6675 to 0.7154 (2018: 0.7335 to 0.8046).
The Group's exposure to foreign currency risk at the end of the reporting period, expressed in AUD, was as follows:
52
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 23. Financial instruments (continued)
Cash
Trade payables
Buy foreign currency (held for trading)
Consolidated
2019
$'000
2018
$'000
-
(20,094)
24
1
(29,984)
463
(20,070)
(29,520)
Based on this exposure, had the Australian dollar weakened or strengthened against these foreign currencies with all other
variables held constant, the Group's profit before tax for the year would have been affected as follows:
Consolidated - 2019
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
USD
10%
1,825
1,277
10%
(2,230)
(1,561)
Consolidated - 2018
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
USD
10%
2,681
1,877
(10%)
(3,277)
(2,294)
The percentage change is the expected overall volatility of the significant currencies, which is based on management's
assessment of reasonable possible fluctuations. The actual foreign exchange loss for the year ended 30 June 2019 was
$51,000 (2018: loss of $657,000).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the
Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.
As at the reporting date, the Group had the following variable rate borrowings outstanding:
Consolidated
Bank overdraft
Borrowings
Net exposure to cash flow interest rate risk
2019
2018
Balance
Balance
$'000
$'000
477
12,647
-
14,021
13,124
14,021
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
The weighted average interest rate on borrowings during the year ended 30 June 2019 was 1.30% (2018: 2.20%).
53
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 23. Financial instruments (continued)
For the Group the bank loans outstanding, totalling $12,647,000 (2018: $14,021,000), are principal and interest payment
loans. An official increase/decrease in interest rates of 50 (2018: 50) basis points would have an adverse/favourable effect
on profit before tax of $63,000 (2018: $70,000) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts forecasts. In addition, minimum principal repayments of $1,438,000 (2018:
$1,438,000) are due during the subsequent 12 month period.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The
Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank guarantee
Consolidated
2019
$'000
2018
$'000
1,265
1,691
The bank guarantee facilities may be drawn at any time and have an average maturity of 2.21 years (2018: 2.75 years).
54
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 23. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both principal cash flows disclosed as remaining contractual
maturities.
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Bank overdraft
Bank loans
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Derivatives
Forward foreign exchange contracts net settled
Total derivatives
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Bank loans
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
27,383
608
477
1,460
108
30,036
24
24
-
-
-
1,460
78
1,538
-
-
-
-
-
9,727
25
9,752
-
-
-
-
-
-
-
-
-
-
27,383
608
477
12,647
211
41,326
24
24
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
32,536
1,299
-
-
-
-
1,438
1,438
11,145
179
35,452
68
1,506
167
11,312
-
-
-
-
-
32,536
1,299
14,021
414
48,270
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
55
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 24. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2019
Assets
Forward foreign exchange contracts - derivatives
Total assets
Consolidated - 2018
Assets
Forward foreign exchange contracts - derivatives
Total assets
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
24
24
Level 2
$'000
Level 3
$'000
463
463
-
-
-
-
24
24
Total
$'000
463
463
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Derivative financial instruments have been valued using quoted market rates, adjusted as appropriate. This valuation
technique maximises the use of observable market data where it is available and relies as little as possible on entity
specific estimates.
56
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 25. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Pitcher Partners, the auditor of
the Company, and its network firms:
Audit services - Pitcher Partners
Audit or review of the financial statements
Other services - Pitcher Partners
Investigating Accountant’s Report
Transaction services
Tax compliance services
Audit services - network firms
Audit or review of the financial statements
Other services - network firms
Other assurance services
Note 26. Contingent liabilities
Consolidated
2019
$
2018
$
200,000
200,000
-
145,451
128,612
276,236
248,486
113,000
274,063
637,722
474,063
837,722
18,882
592
19,474
-
-
-
The Group has given bank guarantees as at 30 June 2019 of $2,892,000 (2018: $2,466,000) to various landlords and
suppliers for standby letters of credit.
57
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 27. Commitments
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Lease liability - current (note 16)
Lease liability - non-current (note 18)
Consolidated
2019
$'000
2018
$'000
283
-
2,279
2,874
3,178
4,196
5,153
7,374
116
109
225
(14)
211
108
103
211
194
253
447
(33)
414
179
235
414
Operating lease commitments includes contracted amounts for various warehouses and offices under non-cancellable
operating leases expiring within three years (2018: four years) with, in some cases, options to extend. The leases have
various escalation clauses. On renewal, the terms of the leases are renegotiated.
Finance lease commitments includes contracted amounts for various motor vehicles with a written down value of $197,000
(2018: $617,000) under finance leases expiring within one to two years (2018: one to three years). Under the terms of the
leases, the Group has the option to acquire the leased assets for predetermined residual values on the expiry of the
leases.
Note 28. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
58
Consolidated
2019
$
2018
$
2,146,898
146,497
61,562
-
1,929,696
126,424
(14,805)
1,609,337
2,354,957
3,650,652
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 29. Related party transactions
Parent entity
National Tyre & Wheel Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 32.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the
directors' report.
Transactions with related parties
During the financial year, a Group entity leased business premises owned by a closely related party of Chris Hummer on
commercial terms. The lease expired on 30 April 2017 and the parties are ‘holding over’ until new premises are available.
Rent payments for the financial year totalled $126,421 (2018: $123,598), with $nil outstanding at 30 June 2019 (2018:
$nil).
During the financial year, a Group entity leased business premises owned by a closely related party of Trevor Wren on
commercial terms. The lease expires on 30 May 2023 and has two 5 year renewal options. Rent payments for the financial
year totalled $203,479 (2018: $14,167), with $nil outstanding at 30 June 2019 (2018: $nil).
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 30. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Parent
2019
$'000
2018
$'000
(524)
(2,203)
(524)
(2,203)
59
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 30. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Total equity
Parent
2019
$'000
2018
$'000
1,230
3,141
56,136
62,814
5,197
6,960
16,408
19,567
65,271
(25,543)
64,761
(21,514)
39,728
43,247
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had a deed of cross guarantee in place in relation to certain subsidiaries at 30 June 2019 and 30 June
2018.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 31. Business combinations
2018
Top Draw Tyres Proprietary Limited ('Top Draw Tyres')
On 30 September 2017, the Group acquired 34% of the ordinary shares in Top Draw Tyres, the importer and distributor of
tyres in South Africa. The Group subsequently acquired a further 16% on 13 December 2017. The Group now owns 50%
of Top Draw Tyres and the remaining shares are held by the Top Draw Tyres vendors. Total consideration for the
acquisition was $4,006,000 in cash. The acquired business has contributed revenue of $8,260,000 and profit before tax of
$735,000 to the Group from the date of acquisition to 30 June 2018. If the acquisition occurred on 1 July 2017, the full year
contributions would have been revenues of $17,060,000 and profit before tax of $1,190,000. NTAW recognised $133,000
as previously equity accounted profits for the period up until control was obtained.
S.N Tyre Wholesaler Pty Ltd ('Cotton')
On 31 October 2017, the Group acquired 100% of the business assets from Cotton, a distributor of tyres in South Australia
and Northern Territory. Total consideration for the acquisition was $6,220,000, including $3,732,000 in cash consideration
and $2,488,000 in Company shares, issued on 14 December 2017. The acquired business assets have been incorporated
in Exclusive Tyre Distributors. The acquired business assets have contributed revenue of $5,780,000 and profit before tax
of $920,000 to the Group from the date of acquisition to 30 June 2018. If the acquisition occurred on 1 July 2017, the full
year contributions would have been revenues of $8,980,000 and profit before tax of $1,170,000.
60
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 31. Business combinations (continued)
Statewide Tyre Distribution Pty Ltd ('Statewide')
On 31 May 2018, the Group acquired 100% of the ordinary shares in Statewide, the importer and distributor of tyres in
South Australia, New South Wales and the Northern Territory. Total consideration for the acquisition was $8,542,000,
including $7,067,000 in cash consideration and $1,475,000 in Company shares, issued on 31 May 2018 and 18 June
2018. The acquired business has contributed revenue of $1,970,000 and profit before tax of $170,000 to the Group from
the date of acquisition to 30 June 2018. Due to Statewide not maintaining accounting records in accordance with Australian
Accounting Standards prior to the acquisition, it is impracticable to disclose the impact to revenue and profit and loss of the
Group for the 2018 financial year if the acquisition had been at 1 July 2017.
The goodwill on the above acquisitions comprise the value of the workforce, future revenues from those customers which
are not current and expected and future synergies to be realised as part of the Group.
Details of the acquisitions are as follows:
Cash and cash equivalents
Trade and other receivables
Inventories
Plant and equipment
Motor vehicles
Customer relationships
Importation rights
Deferred tax asset
Trade payables
Deferred tax liability
Provisions
Other liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration
transferred
Representing:
Cash paid or payable to vendor
National Tyre & Wheel Limited shares issued to vendor
Non-controlling interest
Share of previous equity accounted profit
Pre-IPO
Top Draw
Pre-IPO
Post-IPO
Tyres
Cotton
Fair value
Fair value
Statewide
Fair value
Total
Fair value
$'000
$'000
$'000
$'000
1,246
1,812
6,266
35
44
327
1,376
55
(3,669)
(511)
(1,109)
(216)
5,656
1,311
-
1,415
2,181
106
102
1,109
-
-
(945)
(333)
(150)
-
3,485
2,735
204
2,819
4,300
80
198
411
-
206
(485)
(123)
(688)
(118)
6,804
1,738
1,450
6,046
12,747
221
344
1,847
1,376
261
(5,099)
(967)
(1,947)
(334)
15,945
5,784
6,967
6,220
8,542
21,729
4,006
-
2,828
133
3,732
2,488
-
-
7,067
1,475
-
-
14,805
3,963
2,828
133
6,967
6,220
8,542
21,729
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration
transferred
Less: cash and cash equivalents
Less: share of equity accounted profit from previous periods
Less: shares issued by Company as part of consideration
Less: non-controlling interest
6,967
(1,246)
(133)
-
(2,828)
6,220
-
-
(2,488)
-
8,542
(204)
-
(1,475)
-
21,729
(1,450)
(133)
(3,963)
(2,828)
Net cash used
2,760
3,732
6,863
13,355
61
For personal use only
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 31. Business combinations (continued)
Other
On 14 December 2017, the Group acquired the remaining 45.6% of the shares in Dynamic Wheel Co Pty Ltd, a previously
recognised controlled entity. Total consideration for the acquisition was $4,196,000 in Company shares.
On 14 December 2017, the Group acquired the remaining 50% of the shares in M.P.C Mags and Tyres Pty Ltd, a
previously recognised controlled entity. Total consideration for the acquisition of the remaining shares was $7,858,000 in
Company shares.
Note 32. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
Exclusive Tyres Distributors Pty Ltd
Exclusive Tyres Distributors (NZ) Ltd
Dynamic Wheel Co Pty Ltd
M.P.C Mags and Tyres Pty Ltd
Top Draw Tyres Proprietary Limited
Statewide Tyre Distribution Pty Ltd
Note 33. Deed of cross guarantee
Principal place of business /
Country of incorporation
Australia
New Zealand
Australia
Australia
South Africa
Australia
Ownership interest
2018
2019
%
%
100.00%
100.00%
100.00%
100.00%
50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
100.00%
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the
others:
National Tyre & Wheel Limited
Exclusive Tyres Distributors Pty Ltd
Exclusive Tyres Distributors (NZ) Ltd
By entering into the deed, the Australian wholly-owned entities have been relieved from the requirement to prepare
financial statements and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and
Investments Commission.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no
other parties to the deed of cross guarantee that are controlled by National Tyre & Wheel Limited, they also represent the
'Extended Closed Group'.
62
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 33. Deed of cross guarantee (continued)
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial
position of the 'Closed Group'.
2019
$'000
2018
$'000
110,442
107
(78,409)
(11,647)
(1,625)
(698)
(5,176)
(3,335)
(512)
-
(3,465)
(641)
113,283
183
(73,151)
(14,079)
(1,588)
(719)
(4,719)
(3,121)
(392)
(2,078)
(8,372)
(485)
5,041
(2,576)
4,762
(1,516)
2,465
3,246
132
132
(133)
(133)
2,597
3,113
2019
$'000
2018
$'000
2,374
2,465
(3,637)
-
-
14,947
3,246
(16,011)
548
(356)
1,202
2,374
Statement of profit or loss and other comprehensive income
Revenue
Interest revenue calculated using the effective interest method
Cost of goods sold
Employee benefits and other related costs
Depreciation and amortisation
Legal and professional fees
Marketing
Occupancy
Insurance
Listing
Other
Finance
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Equity - retained profits
Retained profits at the beginning of the financial year
Profit after income tax expense
Dividends paid
Transfer from share-based payments reserve
Transfer from other reserves
Retained profits at the end of the financial year
63
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2019
$'000
2018
$'000
14,747
16,883
26,299
19
225
543
58,716
33,567
2,575
7,922
1,363
45,427
15,896
20,691
26,710
557
-
420
64,274
33,567
2,897
9,010
1,764
47,238
104,143
111,512
21,631
1,458
-
2,077
25,166
11,213
1,291
12,504
25,755
1,529
1,289
1,990
30,563
12,716
1,230
13,946
37,670
44,509
66,473
67,003
65,271
-
1,202
64,761
(132)
2,374
66,473
67,003
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 33. Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Income tax refund due
Other
Non-current assets
Other financial assets
Property, plant and equipment
Intangibles
Deferred tax
Total assets
Current liabilities
Trade and other payables
Borrowings
Income tax payable
Provisions
Non-current liabilities
Borrowings
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
64
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 34. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net loss/(gain) on disposal of property, plant and equipment
Share-based payments
Listing costs recognised in profit after income tax
Profit recognised for equity accounted investments
Amortisation of capitalised borrowing costs
Impairment of receivables
Foreign exchange differences
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in inventories
Increase in income tax refund due
Decrease/(increase) in deferred tax assets
Increase in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provision for income tax
Increase in deferred tax liabilities
Increase/(decrease) in other provisions
Decrease in other operating liabilities
Consolidated
2019
$'000
2018
$'000
6,676
5,355
2,628
(44)
132
-
-
-
156
951
1,062
(813)
(212)
4
(102)
(5,586)
(1,069)
152
142
-
2,129
2
2,657
2,078
(132)
167
42
(2,166)
(546)
(3,572)
-
(902)
(884)
5,473
141
-
(892)
(48)
Net cash from operating activities
4,077
8,902
Non-cash investing and financing activities
Acquisition of plant and equipment by means of finance leases
-
211
Consolidated
2019
$'000
2018
$'000
Note 35. Earnings per share
Profit after income tax
Non-controlling interest
Consolidated
2019
$'000
2018
$'000
6,676
(286)
5,355
(878)
Profit after income tax attributable to the owners of National Tyre & Wheel Limited
6,390
4,477
65
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 35. Earnings per share (continued)
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
102,676,530 85,245,148
Options over ordinary shares
-
3,402,889
Weighted average number of ordinary shares used in calculating diluted earnings per share 102,676,530 88,648,037
Number
Number
Basic earnings per share
Diluted earnings per share
Note 36. Share-based payments
Cents
Cents
6.22
6.22
5.25
5.05
NTAW Senior Executive Option Plan ('SEOP')
The SEOP was used prior to the Company’s listing on the ASX to recognise senior executives contribution to the Group
and to allow them to share in the growth in value of the Group.
Under the terms of the SEOP, participants are granted options over ordinary shares of the Company which vest only if
certain events occur.
This plan has been discontinued following the IPO.
Employee Share Option Plan ('ESOP')
The Company adopted a new employee share option plan on 6 November 2017. The details of the ESOP are summarised
as follows:
Options may be granted under the ESOP to any person who is, or is proposed to be, a full-time or part-time employee, a
non-executive director, a contractor (40% full-time equivalent ('FTE')) or a casual employee (40% FTE) of the Company or
any of its associated bodies corporate, and whom the Board determines to be an eligible person for the purposes of
participation in the ESOP (referred to as an 'Eligible Person').
An option may not be granted under the ESOP if, immediately following its grant, the shares to be received on exercise of
the option, when aggregated with the number of shares which would be issued if each unvested option granted under the
ESOP or any other employee incentive scheme of the Company were to vest and be exercised and the number of shares
issued in the previous 3 years under the ESOP or any other employee incentive scheme of the Company, exceeds 5% of
the total number of issued shares at the time of grant (or any varied limit if permitted under the Corporations Act 2001, ASX
Listing Rules and ASIC instruments). Certain offers of options may be excluded from calculation as permitted under Class
Order 14/1000, including excluded offers under section 708 of the Corporations Act 2001 and offers under a disclosure
document.
Each option entitles the participant to subscribe for one ordinary share in the Company.
The specific terms relevant to the grant of options are set out in an offer from the Company to the Eligible Person which
contains details of the application price (if any) (which must not be for more than nominal consideration), the expiry date,
the exercise price, the vesting date, any applicable performance conditions and other specific terms relevant to those
options.
Unless otherwise specified in the offer of an option, if a “Change of Control Event” occurs before the vesting date of an
option, that option immediately vests and ceases to be subject to any performance condition to which it was subject. A
Change of Control Event means the occurrence of one or more of the following events:
●
a person who has offered to acquire all shares in the Company acquires Control (as defined in section 50AA of the
Corporations Act 2001) of the Company;
any other event occurs which causes a change in Control of the Company;
unless the Board determines otherwise, a takeover bid is recommended by the Board or a scheme of arrangement
which would have a similar effect to a full takeover bid is announced by the Company; and
any other event which the Board reasonably considers should be regarded as a Change of Control Event.
●
●
●
66
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 36. Share-based payments (continued)
Options may only be transferred:
●
●
to a legal personal representative on the death of the participant or to the participant’s trustee in bankruptcy on the
bankruptcy of the participant; or
pursuant to an off-market takeover bid, in various compulsory acquisition scenarios under Chapter 6A of the
Corporations Act 2001, under a creditor’s scheme of arrangement under section 411 of the Corporations Act 2001 or
if approved by the Board.
An option does not confer any rights to participate in a new issue of shares by the Company.
If the Company conducts a rights issue, the exercise price of options will be adjusted in accordance with the adjustment
formula for pro rata issues set out in the Listing Rules.
If the Company makes a bonus issue of securities to holders of shares, the rights of a holder in respect of an unexercised
option will be modified such that the participant will receive, upon exercise of an option, one Share plus such additional
securities which the participant would have received had the participant exercised the option immediately before the record
date for that bonus issue and participated in the bonus issue as the holder of the share.
If the Company’s issued capital is reorganised (including consolidation, subdivision, reduction, or return), then the number
of options, the exercise price or both or any other terms will be reorganised in a manner determined by the Board which
complies with the Listing Rules.
Any shares issued under the ESOP rank equally in all respects with the Shares of the same class on issue, subject to the
restrictions on the transfer of shares.
Shares issued on exercise of options are not transferable for the period (if any) specified in the offer from the Company to
the Eligible Person.
An unvested option lapses upon the first to occur of the following:
●
●
●
●
its expiry date;
any applicable performance condition not being satisfied prior to the end of any prescribed performance period;
a transfer or purported transfer of the option in breach of the rules;
30 days following the day the participant ceases to be employed or engaged by the Company or an associated body
corporate by resigning voluntarily and not recommencing employment with the Company or an associated body
corporate before the expiration of that 30 days;
30 days following the day the participant ceases to be employed or engaged by the Company or an associated body
corporate by reason of his or her death, disability, bona fide redundancy, or any other reason with the approval of the
Board and the participant has not recommenced employment with the Company or an associated body corporate
before the expiration of those 30 days, however the Board has a discretion to deem all or any of the options to have
vested; or
termination of the participant’s employment or engagement with the Company or an associated body corporate on the
basis the participant acted fraudulently, dishonestly, in breach of the participant’s obligations or otherwise for cause.
●
●
A vested but unexercised option lapses upon the first to occur of the following:
●
●
●
its expiry date;
a transfer or purported transfer of the option in breach of the rules; or
termination of the participant’s employment or engagement with the Company or an associated body corporate on the
basis the participant acted fraudulently, dishonestly, in breach of the participant’s obligations or otherwise for cause.
Subject to the ASX Listing Rules and the law, the Board may at any time by resolution amend or add to the rules of the
ESOP. However, the consent of a participant is required for any change to the rules or option terms which prejudicially
affects the rights of the participant in relation to the option (except for certain changes, including changes to benefit the
administration of the Plan or to comply with laws, ASX Listing Rules or regulations).
67
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 36. Share-based payments (continued)
Employee Gifted Shares
During the year, Terry and Susanne Smith (co-founders of Exclusive Tyre Distributors Australia Pty Ltd) and Chris and
Christine Hummer (co-founders of Dynamic Wheel Co Pty Ltd), transferred a total of 319,666 of their personally owned
National Tyre & Wheel Limited (NTD) shares to a number of employees of the Group. The gifts were made as a gesture of
thanks and appreciation for the employees’ efforts and support for the business, prior to NTD’s listing on the ASX in
December 2017. The transfers occurred following the release of the shares from voluntary escrow during the year and
were valued at 45 cents per share at that time.
Set out below are summaries of options granted under the plans:
2019
Grant date
Expiry date
Exercise price
Balance at
start of year
Granted
Option split
Exercised
Balance at
end of year1
07/12/2018
30/09/2023
$1.1724
-
1,630,000
-
-
1,630,000
1
All options outstanding at 30 June 2019 have lapsed as at the date of this report as the performance conditions have not been met.
2018
Grant date
Expiry date
01/07/2012
01/04/2014
01/07/2016
01/07/2016
01/07/2016
30/06/2017
01/07/2017
01/07/2017
01/07/2022
01/07/2022
01/07/2022
01/07/2022
01/07/2022
01/07/2022
01/07/2022
01/07/2022
Exercise price
Balance at
start of year
Granted
Option split
Exercised3
Balance at
end of year
$0.0000
$0.0000
$0.50222
$0.50222
$0.0000
$0.0000
$0.0000
$0.50222
1,487,945
77,305
220,000
2,150,000
1,324,339
1,000,000
-
-
-
-
-
-
-
-
1,006,470
200,000
23,298
1,210
3,445
33,665
20,737
15,658
15,760
3,132
(1,511,243)
(78,515)
(223,445)
(2,183,665)
(1,345,076)
(1,015,658)
(1,022,230)
(203,132)
6,259,589
1,206,470
116,905
(7,582,964)
-
-
-
-
-
-
-
-
-
2
3
The Exercise price was adjusted during the financial year as a result of the share consolidation and share split that occurred prior to the IPO.
All options were exercised just prior to the Group listing on the ASX. The weighted average share price on the exercise date is therefore considered to be $1.00.
The weighted average remaining contractual life of options outstanding at the end of the financial year was nil years (2018:
nil years).
Valuation model inputs
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
07/12/2018
30/09/2023
$0.4900
$1.1724
65.00%
8.70%
2.00%
$0.081
68
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Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Notes to the financial statements
30 June 2019
Note 36. Share-based payments (continued)
Expenses recognised from share-based payment transactions
The expense recognised in relation to the share-based payment transactions was recognised within employee benefit
expense within the statement of profit or loss as follows:
Options issued under the NTAW Employee Share Option Plan
Options issued under the NTAW Senior Executive Option plan
Employee gifted shares
Total expense recognised from share-based payment transactions in employee benefits
expense
Note 37. Events after the reporting period
Consolidated
2019
$'000
2018
$'000
-
-
132
-
2,657
-
132
2,657
Apart from the dividend declared as disclosed in note 22 and the lapsing of 1.63 million options as noted in the
Remuneration Report and note 36, no other matter or circumstance has arisen since 30 June 2019 that has significantly
affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in
future financial years.
69
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Directors’ Declaration
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Directors' declaration
30 June 2019
In the directors' opinion:
●
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2019 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed
Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed
of cross guarantee described in note 33 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Murray Boyte
Chairman
23 August 2019
Brisbane
70
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Independent Auditor’s Report
Independent Auditor’s Report
To the Shareholders of National Tyre & Wheel Limited
To the Shareholders of National Tyre & Wheel Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Opinion
Opinion
We have audited the financial report of National Tyre & Wheel Limited and controlled entities (“the
We have audited the financial report of National Tyre & Wheel Limited and controlled entities (“the Group”),
Group”), which comprises the consolidated statement of financial position as at 30 June 2019, the
which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement
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
of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
to the financial statements, including a summary of significant accounting policies, and the directors’
cash flows for the year then ended, and notes to the financial statements, including a summary of significant
declaration.
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
Act 2001, including:
including:
(a)
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
complying with Australian Accounting Standards and the Corporations Regulations 2001.
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(a)
(b)
(b)
Basis for Opinion
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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
independence requirements of the Corporations Act 2001 and the ethical requirements of the
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Accountants “the Code” that are relevant to our audit of the financial report in Australia. We have also
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
fulfilled our other ethical responsibilities in accordance with the Code.
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 Group, would be in the same terms if given to the directors as at the time
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
of this auditor’s report.
the directors of the Group, 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.
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
Key Audit Matters
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
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
a separate opinion on these matters.
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.
71
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Key audit matter
How our audit addressed the matter
Impairment of goodwill and separately identifiable intangible assets
Refer to Note 14: Intangibles
As part of business combinations completed
during prior years, the Group recognised
goodwill and other intangible assets valued at
$8,878,000 and $11,435,000, respectively.
These intangible assets relate to the acquisition
of various subsidiaries of National Tyre & Wheel
Ltd, with these subsidiaries being the basis of
management’s determination of Cash-
Generating Units (“CGU”) in the Group.
The carrying amount of Goodwill and the
intangible assets is supported by value-in-use
calculations prepared by management which
are based on budgeted future cash flows and
key estimates such as growth rate and discount
rate.
This is a key area of audit focus as the value of
the intangible assets is material and the
evaluation of the recoverable amount of these
assets requires significant judgement in
determining the key estimates supporting the
expected future cash flows of the CGUs and the
utilisation of the relevant assets.
Our audit procedures included:
Assessing management’s determination of
the Group’s CGUs based on our
understanding of the nature of the Group’s
business and the identifiable groups of cash
generating assets;
Comparing the cash flow forecasts used in
the value-in-use calculations to Board
approved budgets for the 2020 financial year
and the Group’s historic actual performance;
Assessing the significant judgements and key
estimates used for the impairment
assessment, in particular, those judgements
relating to the discount rate and cash flow
forecasts;
Checking the mathematical accuracy of the
impairment testing model and agreed
relevant data to the latest budgets;
Performing sensitivity analysis by varying
significant judgements and key estimates,
including the discount rate and growth rate
inputs, for the CGUs to which goodwill
relates; and
Assessing the adequacy of the Group’s
disclosures in respect of impairment testing
of goodwill and indefinite useful life intangible
assets.
Other Information
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 2019, 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 Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
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
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
72
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Key audit matter
How our audit addressed the matter
Impairment of goodwill and separately identifiable intangible assets
Refer to Note 14: Intangibles
As part of business combinations completed
Our audit procedures included:
during prior years, the Group recognised
goodwill and other intangible assets valued at
$8,878,000 and $11,435,000, respectively.
Assessing management’s determination of
the Group’s CGUs based on our
understanding of the nature of the Group’s
business and the identifiable groups of cash
These intangible assets relate to the acquisition
generating assets;
of various subsidiaries of National Tyre & Wheel
Comparing the cash flow forecasts used in
Ltd, with these subsidiaries being the basis of
the value-in-use calculations to Board
key estimates such as growth rate and discount
Checking the mathematical accuracy of the
management’s determination of Cash-
Generating Units (“CGU”) in the Group.
The carrying amount of Goodwill and the
intangible assets is supported by value-in-use
calculations prepared by management which
are based on budgeted future cash flows and
rate.
This is a key area of audit focus as the value of
the intangible assets is material and the
evaluation of the recoverable amount of these
assets requires significant judgement in
determining the key estimates supporting the
expected future cash flows of the CGUs and the
utilisation of the relevant assets.
approved budgets for the 2020 financial year
and the Group’s historic actual performance;
Assessing the significant judgements and key
estimates used for the impairment
assessment, in particular, those judgements
relating to the discount rate and cash flow
forecasts;
impairment testing model and agreed
relevant data to the latest budgets;
Performing sensitivity analysis by varying
significant judgements and key estimates,
including the discount rate and growth rate
inputs, for the CGUs to which goodwill
relates; and
Assessing the adequacy of the Group’s
disclosures in respect of impairment testing
of goodwill and indefinite useful life intangible
assets.
Other Information
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 2019, 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 Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
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
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
72
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our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Other Information
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
The directors are responsible for the other information. The other information comprises the information
a manner that achieves fair presentation.
included in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
and our auditor’s report thereon.
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
Our opinion on the financial report does not cover the other information and accordingly we do not express any
responsible for our audit opinion.
form of assurance conclusion thereon.
We communicate with the directors regarding, among other matters, the planned scope and timing of
In connection with our audit of the financial report, our responsibility is to read the other information and, in
the audit and significant audit findings, including any significant deficiencies in internal control that we
doing so, consider whether the other information is materially inconsistent with the financial report or our
identify during our audit.
knowledge obtained in the audit or otherwise appears to be materially misstated.
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
If, based on the work we have performed, we conclude that there is a material misstatement of this other
matters that may reasonably be thought to bear on our independence, and where applicable, related
information, we are required to report that fact. We have nothing to report in this regard.
safeguards.
Responsibilities of the Directors for the Financial Report
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
The directors of the Group are responsible for the preparation of the financial report that gives a true and fair
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
should not be communicated in our report because the adverse consequences of doing so would
and fair view and is free from material misstatement, whether due to fraud or error.
reasonably be expected to outweigh the public interest benefits of such communication.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
Report on the Remuneration Report
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
Opinion on the Remuneration Report
alternative but to do so.
We have audited the Remuneration Report included in pages 2 to 20 of the directors’ report for the
year ended 30 June 2019. In our opinion, the Remuneration Report of National Tyre & Wheel Limited,
for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001.
Auditor’s Responsibilities for the Audit of the Financial Report
Responsibilities
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.
The directors of the Group 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
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
Auditing Standards.
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
PITCHER PARTNERS
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
Warwick Face
Partner
Brisbane, Queensland
23 August 2019
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
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
74
74
For personal use only
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Other Information
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
The directors are responsible for the other information. The other information comprises the information
a manner that achieves fair presentation.
included in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
and our auditor’s report thereon.
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
Our opinion on the financial report does not cover the other information and accordingly we do not express any
responsible for our audit opinion.
form of assurance conclusion thereon.
We communicate with the directors regarding, among other matters, the planned scope and timing of
In connection with our audit of the financial report, our responsibility is to read the other information and, in
the audit and significant audit findings, including any significant deficiencies in internal control that we
doing so, consider whether the other information is materially inconsistent with the financial report or our
identify during our audit.
knowledge obtained in the audit or otherwise appears to be materially misstated.
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
If, based on the work we have performed, we conclude that there is a material misstatement of this other
matters that may reasonably be thought to bear on our independence, and where applicable, related
information, we are required to report that fact. We have nothing to report in this regard.
safeguards.
Responsibilities of the Directors for the Financial Report
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
The directors of the Group are responsible for the preparation of the financial report that gives a true and fair
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
should not be communicated in our report because the adverse consequences of doing so would
and fair view and is free from material misstatement, whether due to fraud or error.
reasonably be expected to outweigh the public interest benefits of such communication.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
Report on the Remuneration Report
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
Opinion on the Remuneration Report
alternative but to do so.
We have audited the Remuneration Report included in pages 2 to 20 of the directors’ report for the
year ended 30 June 2019. In our opinion, the Remuneration Report of National Tyre & Wheel Limited,
for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001.
Auditor’s Responsibilities for the Audit of the Financial Report
Responsibilities
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.
The directors of the Group 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
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
Auditing Standards.
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
PITCHER PARTNERS
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
Warwick Face
Partner
Brisbane, Queensland
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
23 August 2019
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
Shareholder information
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Shareholder information
30 June 2019
The shareholder information set out below was applicable as at 20 August 2019.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Number
of holders
of ordinary
shares
35
329
281
461
55
1,161
56
ST Corso Pty Ltd
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
J P Morgan Nominees Australia Pty Limited
Roshan Charles Chelvaratnam
BNP Paribas Nominees Pty Ltd (IB AU Noms Retailclient DRP)
Mr John Peter Ludemann
S.N. Tyre Wholesalers Pty Ltd
BNP Paribas Noms Pty Ltd (DRP)
Seymour Group Pty Ltd
BNP Paribas Nominees Pty Ltd (IOOF INSMT Mgmt Ltd DRP)
Mrs Christine Lorraine Hummer
Mrs Christine Lorraine Hummer
Mr Christopher John Hmmer
Mr Christopher John Hummer
Mr Craig Graeme Chapman (NAMPAC Discretionary A/Cc)
CS Third Nominees Pty Limited (HSBC Cust Nom AU Ltd 13 A/C)
Trevor John Wren
Mr John William Weeks
Mr Bradley Joseph Smith
Unquoted equity securities
There are no unquoted equity securities at the date of this report.
Ordinary shares
% of total
shares
issued
Number held
26,750,297
12,351,757
7,505,244
7,473,924
3,929,250
3,036,056
2,589,928
2,487,440
2,193,000
2,000,000
1,200,000
1,048,929
1,048,928
1,048,928
1,011,337
750,000
660,300
655,737
553,279
387,484
26.00
12.00
7.29
7.26
3.82
2.95
2.52
2.42
2.13
1.94
1.17
1.02
1.02
1.02
0.98
0.73
0.64
0.64
0.54
0.38
78,681,818
76.47
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
74
74
75
For personal use only
Shareholder information
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Shareholder information
30 June 2019
Substantial holders
Substantial holders in the Company are set out below:
Ordinary shares
% of total
shares
issued
Number held
ST Corso Pty Ltd atf the Smith Trading Trust, Terence Smith & Susanne Smith (together
Smith Group)
Pendal Group Limited (Pendal Fund Services Limited)
Forager Funds Management Pty Ltd
31,949,729
5,545,551
5,295,000
31.05
5.39
5.15
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities on issue at the date of this report.
Securities subject to voluntary escrow
Class
Ordinary shares
Ordinary shares
Ordinary shares
Expiry date
Earlier of five business days after the Company
releases to the ASX its final results for the year
ended 30 June 2019 and 7 November 2019
31 May 2020
31 May 2021
Number
of shares
4,257,274
218,579
218,579
4,694,432
76
For personal use only
Corporate directory
National Tyre & Wheel Limited and its controlled entities
30 June 2019
Corporate directory
30 June 2019
Directors
Murray Boyte - Chairman
John Peter Ludemann - Chief Executive Officer and Managing Director
Terence Smith
William Cook
Robert Kent
Company secretaries
Jason Lamb
Laura Fanning
Registered office and principal
place of business
Share register
Auditor
Solicitors
Bankers
30 Gow Street
Moorooka QLD 4105
Telephone: (07) 3212 0950
Facsimile: (07) 3212 0951
Computershare Investor Services Pty Limited
Level 4
60 Carrington Street
Sydney NSW 2000
Telephone: 1300 787 272
Pitcher Partners
Level 38
345 Queen Street
Brisbane QLD 4000
Dentons
77 Castlereagh Street
Sydney NSW 2000
Commonwealth Bank of Australia
Ground Floor
Tower 1
201 Sussex Street
Sydney NSW 2000
Stock exchange listing
National Tyre & Wheel Limited shares are listed on the Australian Securities
Exchange (ASX code: NTD)
Website
www.ntaw.com.au
Business objectives
National Tyre & Wheel Limited has used cash and cash equivalents held at the time
of listing, in a way consistent with its stated business objectives.
Corporate Governance Statement
The Company’s directors and management are committed to conducting the Group’s
business in an ethical manner and in accordance with the highest standards of
corporate governance. The Company has adopted and substantially complies with
the ASX Corporate Governance Principles and Recommendations (3rd Edition)
(‘Recommendations’) to the extent appropriate to the size and nature of the Group’s
operations.
The Company has prepared a Corporate Governance Statement which sets out the
corporate governance practices that were in operation since listing, identifies any
Recommendations that have not been followed, and provides reasons for not
following such Recommendations.
The Company’s Corporate Governance Statement and policies, which is approved at
the same time as the Annual Report, can be found on its website:
http://www.ntaw.com.au/Corporate-Governance/Corporate-Governance-
Statement.pdf
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