ANNUAL REPORT
2021
FY21 was a watershed year in
the life of NTAW – the change
in scale and diversity of its
operations was profound
iii
Contents
Chairman’s letter
Managing Director’s letter
Director’s report
Auditor’s independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report
Shareholder information
Corporate directory
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vi
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73
Chairman’s letter
Dear Shareholder
The 2021 financial year has been a year of significant growth and transformation for your Company. I am
proud that National Tyre & Wheel Limited (NTAW) is now the largest independent tyre and wheel importer
and wholesale distributor in Australia and New Zealand with a leading market share in multiple industry
segments, providing a full service offering of over 100 brands and 50,000 SKUs to over 3,000 customers with a
headcount of over 600 employees.
The acquisition of the Tyres4U business in August 2020 substantially increased the diversity of NTAW’s
business, allowing revenue to be generated from new sources including:
New products, including truck and bus tyres, agricultural (e.g. tractor) and off-the-road tyres (e.g.
earthmoving vehicles), industrial tyres (e.g. forklifts), original equipment tyre and wheel packages
(e.g. for truck trailers);
New distribution channels including tyre and wheel retailing and vehicle fleet operators; and
New services including national account management with local fulfilment capabilities as well as
mechanical and tyre fitting services.
The successful implementation of several strategic decisions (near source manufacture of some key products,
new budget tyre products and new wheel products, excellent returns on the investment from expanding into
Western Australia, organisational changes in Tyres4U (Australia) and structural changes to sales management
and operations), along with favourable trading conditions, resulted in improved profitability.
Your Company generated revenue of $461.5 million in the 2021 financial year (representing over 2.5 million
tyres and wheels sold), including 11 months trading of the Tyre4U businesses. This activity was converted to a
Reported EBITDA of $46.1 million and an Operating EBITDA of $35.7 million as shown on page 5.
Your Company’s balance sheet is strong with a net debt position of $16.0 million at 30 June 2021 and a net
debt to equity + debt ratio of 11.7%.
To better manage the new scale and diversity of NTAW, executive level managers for Innovation and
Technology, People and Culture, Marketing, and Supply Chain and Logistics were recruited. Along with existing
Finance and Administration managers, a new leadership group was formed to offer shared services to NTAW’s
businesses.
Directors were pleased to declare a FY21 interim dividend of 3.00 cents per share and a FY21 final dividend of
5.00 cents per share (both fully franked) which were paid to shareholders on 9 April and 15 October 2021,
respectively. The full year dividend represents a payout ratio of 43% of net profit after tax but before
amortisation (NPATA), which is in line with Company policy of paying out 40% - 60% of NPATA.
Your Board and management have worked diligently and constructively during the year and that effort is
appreciated.
Your Board and management will continue to guide your Company with confidence that recent earnings and
shareholder returns can be maintained despite COVID related uncertainty. Your Company is expected to
benefit from further organisational initiatives, synergies arising from the Tyres4U acquisition, the overall
resilience shown by the tyre and wheel industry over the past 18 months and an ongoing interest in
acquisitions and strategic alliances.
iv
I would like to thank our staff, customers, suppliers and shareholders for the support they have delivered over
the past year.
Yours faithfully
Murray Boyte
Chairman
Dear Shareholder
The 2021 financial year has been a year of significant growth and transformation for your Company. I am
proud that National Tyre & Wheel Limited (NTAW) is now the largest independent tyre and wheel importer
and wholesale distributor in Australia and New Zealand with a leading market share in multiple industry
segments, providing a full service offering of over 100 brands and 50,000 SKUs to over 3,000 customers with a
headcount of over 600 employees.
The acquisition of the Tyres4U business in August 2020 substantially increased the diversity of NTAW’s
business, allowing revenue to be generated from new sources including:
New products, including truck and bus tyres, agricultural (e.g. tractor) and off-the-road tyres (e.g.
earthmoving vehicles), industrial tyres (e.g. forklifts), original equipment tyre and wheel packages
(e.g. for truck trailers);
New distribution channels including tyre and wheel retailing and vehicle fleet operators; and
New services including national account management with local fulfilment capabilities as well as
mechanical and tyre fitting services.
The successful implementation of several strategic decisions (near source manufacture of some key products,
new budget tyre products and new wheel products, excellent returns on the investment from expanding into
Western Australia, organisational changes in Tyres4U (Australia) and structural changes to sales management
and operations), along with favourable trading conditions, resulted in improved profitability.
Your Company generated revenue of $461.5 million in the 2021 financial year (representing over 2.5 million
tyres and wheels sold), including 11 months trading of the Tyre4U businesses. This activity was converted to a
Reported EBITDA of $46.1 million and an Operating EBITDA of $35.7 million as shown on page 5.
Your Company’s balance sheet is strong with a net debt position of $16.0 million at 30 June 2021 and a net
debt to equity + debt ratio of 11.7%.
To better manage the new scale and diversity of NTAW, executive level managers for Innovation and
Technology, People and Culture, Marketing, and Supply Chain and Logistics were recruited. Along with existing
Finance and Administration managers, a new leadership group was formed to offer shared services to NTAW’s
businesses.
Directors were pleased to declare a FY21 interim dividend of 3.00 cents per share and a FY21 final dividend of
5.00 cents per share (both fully franked) which were paid to shareholders on 9 April and 15 October 2021,
Chairman’s letter (cont)
respectively. The full year dividend represents a payout ratio of 43% of net profit after tax but before
amortisation (NPATA), which is in line with Company policy of paying out 40% - 60% of NPATA.
Your Board and management have worked diligently and constructively during the year and that effort is
appreciated.
Your Board and management will continue to guide your Company with confidence that recent earnings and
shareholder returns can be maintained despite COVID related uncertainty. Your Company is expected to
benefit from further organisational initiatives, synergies arising from the Tyres4U acquisition, the overall
resilience shown by the tyre and wheel industry over the past 18 months and an ongoing interest in
acquisitions and strategic alliances.
I would like to thank our staff, customers, suppliers and shareholders for the support they have delivered over
the past year.
Yours faithfully
Murray Boyte
Chairman
National Tyre & Wheel Limited
is now the largest
independent tyre and wheel
importer and wholesale
distributor in Australia and
New Zealand
v
Managing Director’s report
Introduction
In 2013 NTAW embarked on a mission to diversify by importing a wider array of products, targeting
more vehicle segments, expanding supplier and customer bases and distributing through more sales
channels.
Part of the way into that journey, the Company listed on the ASX in FY18 with revenue of $147 million
and earnings per share of 5.25 cents.
Today, NTAW is generating annual revenue of $480 million, with earnings per share in FY21 of 18 cents.
A fully franked full year FY21 dividend of 8 cents per share was paid in 2021.
With the mission of building diversity and scale essentially accomplished, NTAW is aiming to be the tyre
and wheel industry leader in digital transformation. During FY22, this new mission involves structural
changes to the organisation of the Group, capturing economies of scale and investment in a new IT
platform.
These activities are designed to enhance customer experiences, underpinning maintainable earnings
growth in future years. In addition, NTAW remains on the lookout for further bolt on acquisitions to
expand its product portfolio and market share.
Operations - Overview
NTAW carries on the business of importing and distributing over 2.5 million tyres and wheels in
Australia, New Zealand and South Africa, employing over 600 people and selling to over 3,000
customers. Group businesses have a leading market share in the following industry segments:
Truck and bus tyres;
4WD tyres;
Agricultural and off-the-road tyres;
4WD wheels;
Original equipment tyres and wheels (for caravans, truck trailers and farm equipment); and
Budget tyres (in Western Australia and South Australia).
Industrial tyres;
Separate operating subsidiaries of NTAW are focused on targeting these segments and offering a “one
stop shop” for tyres and wheels for almost all vehicles.
vi
Managing Director’s report (cont)
Delivering tyre and wheel solutions for
all segments, with a focus on commercial
vehicles – trucks, buses, agricultural
vehicles, off-the-road and construction
vehicles skid steer equipment and other
small machinery.
Building Leading Brands
Delivering passenger, SUV, light truck and
4WD tyre solutions, supporting an array of
re-sellers with value adding services and
addressing all consumer segments.
Delivering original equipment tyre and wheel
solutions to manufacturers – focused on
caravans and truck trailers.
Delivering wheel and tyre and management
solutions for industrial vehicles (e.g. forklifts
of various sizes).
Supplying budget tyre solutions for all
vehicle types in Western Australia and South
Australia.
Delivering wheel solutions to an array of
re-sellers, with a focus on 4WD wheels and
expert advice.
Delivering passenger, SUV and 4WD tyre and
wheel solutions in South Africa.
64 company owned and licensed retail stores
operating throughout Australia with a focus
on delivering value to commercial customers
and consumers.
Customers are serviced from the largest network of warehouses in Australia and New Zealand.
The Group sells over 100 brands (more than 50,000 SKUs) supplied by a wide range of exclusive and
non-exclusive suppliers.
vii
Managing Director’s report (cont)
FY21 Supplier Mix by Revenue
Cooper family (ex. MT)
Key exclusive supplier relationships have existed for decades and
are underpinned by both parties expectations of performance being
consistently met rather than formal, long term Agreements.
Other suppliers
Mickey Thompson
IMPORTANT FITTING INFORMATION
READ BEFORE FITTING TYRES
WHEELS WILL NOT BE ACCEPTED FOR RETURN UNDER ANY CIRCUMSTANCE AFTER TYRES HAVE BEEN
FITTED. BEFORE MOUNTING TYRES ON WHEELS, INSTALL THE WHEEL ON HUB AND BRAKE DRUM TO CHECK
FOR INTERFERENCE AND OFFSET. WE RECOMMEND THAT THE WHEEL NUTS BE RE(cid:31)TIGHTENED AFTER THE
FIRST 100 KILOMETRES. IT IS THE RESPONSIBILITY OF THE FITTER TO ENSURE COMPLIANCE WITH ALL
RELEVANT STATE LAWS ARE FOLLOWED.
MADE IN CHINA
Proprietary brands
Other exclusive brands
Products are distributed through all industry channels.
Products are distributed through all industry channels.
Bringing Motorsports Performance to Street Tyres
Building Leading Brands
B2B
B2B
End User
End User
B2B
Re-Seller
Customer Mix
Customer Mix
• Caravan, truck trailer and farm equipment manufacturers
• Caravan, truck trailer and farm equipment manufacturers
• Commercial truck and bus fleet operators
• Commercial truck and bus fleet operators
• Hire car fleet operators
• Hire car fleet operators
• Forklift and industrial equipment operators
• Forklift and industrial equipment operators
• Large scale farmers
• Large scale farmers
Customer Mix
• Tyre speciality retail stores (chains and independents)
• Mechanical service businesses
• Car dealers
• Online re-sellers
B2C
Retail
Consumers (enthusiasts,
adventurers, downsizers,
commuters,traditional
consumers, do it for
me segments) and
commercial customers.
Operations – 2021 Financial Year
Operations – 2021 Financial Year
In FY21 NTAW business units successfully executed various strategic and tactical initiatives, including:
Note – some business units operate in more than one distribution channel.
In FY21 NTAW business units successfully executed various strategic and tactical initiatives, including:
Re-organisation of ETD and Tyres4U (Australia) sales teams;
Re-organisation of ETD and Tyres4U (Australia) sales teams;
Near-sourced manufacture of some Cooper Tires® brand products resulted in lower prices,
driving higher sales volume and revenue;
Near-sourced manufacture of some Cooper Tires® brand products resulted in lower prices,
New wheel products delivered higher volumes and revenue;
driving higher sales volume and revenue;
The February 2020 purchase of Industrial Tyre Service in Western Australia (integrated into
New wheel products delivered higher volumes and revenue;
Statewide) was a success with revenue growing by 19% in FY21; and
The February 2020 purchase of Industrial Tyre Service in Western Australia (integrated into
Budget tyre sales in the eastern states (underpinned by the Dynamo brand) exceeded
Statewide) was a success with revenue growing by 19% in FY21; and
expectations.
Budget tyre sales in the eastern states (underpinned by the Dynamo brand) exceeded
expectations.
viii
Managing Director’s report (cont)
The Group also benefitted from favourable trading conditions, including:
Less intense price competition as competitors rebuilt inventories run down in Q4 of FY20 and
focussed on profitable cash flows in response to the COVID pandemic;
Favourable movements, and stability, in the value of the Australian Dollar against currencies
paid to suppliers;
Robust regional economies with record harvests;
Strong consumer demand for motor vehicle accessories; and
Consistent truck movements underpinning sustained sales of industrial and truck tyres.
NTAW purchased the business assets of Tyres4U in Australia and New Zealand in August 2020. The price
paid resulted in a gain on bargain purchase of $0.6 million.
The contribution of the Tyres4U businesses to the Group’s net profit before tax in FY21 (11 months) was
$8.7 million and this represented a meaningful turn around in Tyres4U’s financial performance from
FY19 and FY20. This turn around can largely be attributed to synergies derived from the purchase by
Tyres4U of Tyre & Tube Australia in October 2019, as well as the favourable trading conditions and some
of the tactical decisions outlined above.
NTAW businesses (excluding Tyres4U) contributed the remaining net profit before tax of $20.2 million,
which was $14.0 million or 225% higher than FY20.
In February 2021, NTAW was advised that Cooper Tire & Rubber Company (the Group’s largest supplier
accounting for 14% of total revenue) had been acquired by Goodyear Tire & Rubber Company, a
traditional competitor of Cooper’s. NTAW (via a subsidiary) has a long-term agreement (expiring in
2027) pursuant to which it has the exclusive right to import and distribute Cooper Tires® and
Mastercraft passenger, SUV and 4WD products. The change of ownership of Cooper Tires® does not
affect the status of this agreement.
FY21 Financial Results
NTAW has reported total revenue of $461.5 million (2020: $158.9 million) for the financial year, an
increase of $302.6 million (190.5%) on the prior year resulting from the Tyres4U acquisition in August
2020 and improved trading conditions.
The Group has reported an EBITDA of $46.1 million (2020: $12.2 million). The result for FY21 includes a
gain on bargain purchase of $0.6m related to the Tyres4U acquisition and $1.4 million of related
acquisition costs incurred in the year. Accounting of lease expenses in accordance with AASB 16 Leases
resulted in $11.0 million of lease expenses (FY20: $3.1 million) being classified “below” EBITDA, largely
as depreciation (of the right-of-use assets recognised on the statement of financial position). Unrealised
foreign exchange gain on foreign exchange contracts and foreign currency denominated suppliers of
$0.3 million (2020: loss of $0.5 million) was recognised during the year.
NTAW’s statutory profit for the Group after providing income tax and non-controlling interest amounted
to $20.5 million (2020: $4.2 million).
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Managing Director’s report (cont)
NTAW has a strong balance sheet with net assets of $91.8 million (Jun-20: $68.8 million). The net debt
position was $16.0 million (Jun-20: net cash of $13.6 million, prior to the acquisition of Tyres4U) and a
‘net debt to equity + debt’ ratio of 11.7%.
The key operating metrics for the Company in FY21 compared to FY20 were:
Key Operating Metrics
Gross profit margin
Operating costs as a % of revenue
EBITDA margin
NPATA ($ million)
Earnings per share* (cents)
Dividend per share (full year) (cents)
Operating cash flow ($ million)
Interest cover
FY21
29.8%
19.8%
10.0%
21.1
18.7
8.0
22.7
15.4x
FY20
26.0%
16.9%
7.7%
5.7
5.5
1.3
15.5
12.0x
* Basic earnings per share calculated on NPATA attributable to NTAW shareholders
Comments:
FY21 result includes 11 months of the Tyres4U businesses.
FY21 NPATA includes $0.6 million gain on Tyres4U purchase and $1.4 million non-recurring
acquisition costs associated with that purchase.
AASB 16 Leases has been adopted in the reported result.
NPATA attributable to NTAW shareholders excludes non-controlling interests (representing the
residual 50% interest in TLS) and is adjusted for amortisation.
NTAW had cash of $28.9 million at 30 June 2021, up from $25.9 million at 30 June 2020. Net tangible
assets per ordinary share of 64.8 cents at 30 June 2021 shows significant growth compared to 49.8 cents
at 30 June 2020.
A new banking facility was negotiated to fund the Tyres4U transaction, ongoing working capital and
capital expenditure requirements.
The Group is adequately funded within existing debt facilities to continue to fund future growth
initiatives.
x
Managing Director’s report (cont)
NTAW currently has $20.65m available franking credits.
Share price post IPO (Dec, 2017)
NTAW Dividend History
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
e
r
a
h
s
r
e
p
s
t
n
e
c
FY18
FY19
FY20
FY21
Interim
Final
Special
Restructuring
NTAW is now organised into business units targeting specific industry segments and shared services
units providing centralised support in marketing, supply chain/logistics, people & culture, finance and
administration and IT/innovation. The Group’s leadership team has been expanded to include business
founders and managers from business units and shared services units.
The re-organisation of operating businesses will continue during FY22 to align customer relationship
management programs, unify sales management and implement cross-selling incentives (e.g. the
merger of Tyres4U and MPC original equipment businesses into “Integrated OE”).
The Group’s distribution platform is also being re-organised with warehouse consolidations and logistics
improvements in Sydney and Melbourne occuring in 1H22 and Brisbane and Perth in 1H23.
The Group’s IT systems are being completely upgraded during FY22, using the Microsoft Dynamics ERP
system as the platform for single Group wide finance and administration management, a state of the
art, adaptable IT system that can deliver value adding services from data driven marketing solutions,
augmented/virtual reality, machine learning/artificial intelligence, information via the internet of things
and e-commerce from transactional partnerships, VoIP and other remote mechanisms.
FY22 IT project costs are estimated to be $3.1 million, with extensions for state of the art value adding
customer services (VR, AI, data analytics, supply chain management) to be built in FY23 for an estimated
additional cost of $2.5 million.
The Group is also changing procurement processes with the introduction of a Sales and Operations
Planning system in 1H22 designed to improve demand and supply forecasting, with resulting working
capital and inventory management benefits for the Group and customers.
These restructuring initiatives are expected to deliver profit growth from 4Q22.
xi
Managing Director’s report (cont)
Strategy
NTAW aims to be the tyre and wheel industry leader in digital transformation, targeting innovations that
will deliver better customer experiences, including:
Improvements in inventory management – more sophisticated data analytics informing
forecasts;
Integrating re-seller point of sale data informing real time decisions on procurement, model
stock and incentives;
Real time tracking of deliveries from factory order to arrival at re-seller/consumer;
Improved treadwear monitoring and cents per kilometre calculations;
Insights from data collection and analytics informing product mix and promotional activity –
shopping behaviour, internet usage, demographics, market sizing (by vehicle, pattern, size,
population), market share (by re-seller), spending patterns, geofenced promotions, ROI
measurement (independent of social media and search platforms) – delivered internally and to
customers in real time;
Flexible pricing models;
Augmented and virtual reality POS – holographic imagery on permanent display, virtual imagery
immersing customers in products – removing the present lack of sensory engagement in tyre
and wheel purchasing, more sophisticated virtual pre purchase experience; and
Seamless e-commerce customer experience in the real and virtual worlds – a “phygital” platform
(combining the physical and digital worlds).
Digital leadership also means that NTAW can sponsor a more contemporary “ecosystem” providing
additional value adding benefits to customers.
xii
Managing Director’s report (cont)
Digital
transformations
– VR, AI, data
analytics, payment
systems, rewards
and incentives
Customers enjoying
dealing with one or
more NTAW business
units
Customers enjoying
a one stop shop for
tyre and wheel supply
Industry partners
joining the
ecosystem –
mutuality of benefit
Exclusive suppliers
receiving brand
building support
Building Leading Brands
Non-Exclusive
suppliers receiving
logistics support
Other service
providers providing
benefits to
participants
Customers receiving
value adding (digital)
services – building
their goodwill
Outlook
The tyre and wheel industry, and NTAW, proved to be resilient when confronted with economic disruption
arising from the COVID pandemic in FY21.
In the short term, businesses will continue to be disrupted by community lockdowns. While consumers
responded well in FY21 when restrictions were reduced, it is not certain that a similar response will
occur when they are next eased. NTAW does not expect these disruptions to have any material adverse
effect in the medium to long term. To the contrary, NTAW’s focus on digital transformation is based on
the premise that COVID induced changes in B2B and B2C buying behaviour will be a source of growth.
xiii
Managing Director’s report (cont)
In summary, NTAW’s confidence that recent earnings and shareholder returns can be maintained over
the next few years, despite disruption from the pandemic, is underpinned by:
The resilience shown by the industry in FY21;
Operating efficiencies and effectiveness arising from organisational changes to business units
and shared services – especially those directed at improving relatively low profit margins in the
Tyres4U business in Australia;
Benefits from the FY22 initiatives described earlier;
Increased sales and lower costs to serve from the digital transformation program; and
NTAW’s ongoing interest in acquisitions and strategic alliances provides an upside case to this
outlook.
Acknowledgements
FY21 was a watershed year in the life of NTAW – the change in scale and diversity of its operations was
profound. Financial performance and operational outcomes have exceeded expectations by a significant
margin without any material contribution from business improvement programs that are designed to
improve earnings.
The Group, guided by an expanded leadership team of experienced executives, has embraced a new
vision – to be the tyre and wheel industry leader in digital transformation. This is a bold endeavour,
requiring large investments and effective change management.
NTAW is ready to bring this vision to life because of the support it has received from employees,
customers, suppliers and the communities that have sustained everyone through recent difficulties.
NTAW employees, in particular, have again proven to be dedicated and hard working.
The Board and senior management team is very grateful for the support received from all stakeholders.
Peter Ludemann
Managing Director
xiv
Managing Director’s report (cont)
The Group has a leading
market share in the following
industry segments: Truck and
bus tyres; 4WD tyres;
Agricultural and OTR tyres;
Industrial tyres; 4WD wheels;
Original equipment tyres and
wheels; and Budget tyres
xv
xvi
FINANCIAL REPORT
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
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', 'NTD' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2021.
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
Peter Ludemann
Terry Smith
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 2021 was the distribution and marketing of motor vehicle
tyres, wheels, tubes and related products throughout 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 Limited (“Dynamic”);
Integrated OE Pty Ltd (“OE”), previously M.P.C. Mags and Tyres Pty Ltd;
Statewide Tyre Distribution Pty Ltd (“Statewide”);
Top Draw Tyres Proprietary Limited t/a Tyrelife Solutions (“TLS”);
Tyres4U Pty Ltd (“T4UAU”);
Tyres4U (NZ) Ltd (“T4UNZ”);
Tyreright Operations Pty Ltd (“TRT”); and
NTAW Holdings (NZ) Ltd.
Apart from the Tyres4U acquisition, detailed below, which substantially altered the scale and diversity of the Group’s activities, there
have been no other significant changes in the nature of the Group’s activities during the year.
Dividends
Dividends paid during the financial year were as follows:
Final dividend
Special dividend
Interim dividend
Consolidated
2021
$'000
2020
$'000
-
-
3,425
2,573
1,080
1,286
3,425
4,939
At the date of signing these financial statements, the Company has declared a fully franked final dividend of 5.00 cents per share with
a record date of 20 September 2021 and a payment date of 15 October 2021. The total dividend payable is $5,715,000. The financial
effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2021 and will be
recognised in subsequent financial reports.
2
2
Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Operating and financial review
Review of operations
In August 2020, NTAW acquired the business assets of Tyres4U in Australia and New Zealand. The value of the net tangible assets
acquired in the transaction was $49.3m, for consideration consisting of $43.8m in cash and $4.9m in NTAW shares, resulting in a gain
on bargain purchase of $0.6m. The cash component of the acquisition was funded by Group cash holdings and a new debt facility from
Commonwealth Bank of Australia.
The Tyres4U acquisition substantially increased the scale of the Group’s business:
•
Tyres4U businesses contributed $264.6m to Group revenue in FY2021;
• Group inventory increased by $48.5m (117%) on the closing date of the transaction;
•
•
•
the number of people employed by the Group increased by 468 (214%);
the number of distribution centres operated by the Group grew by 12, to a total of 30, during FY2021; and
during FY2021, the Group sold 2.5m tyres and wheels to over 3,000 customers. Together with services and accessories, the Group
generated revenue of $461.5m, compared to $158.9m in FY2020.
The Tyres4U acquisition also substantially increased the diversity of the Group’s business, allowing revenue to be generated from new
sources including:
• New products, including truck and bus tyres, agricultural (e.g. tractor) and off-the-road tyres (e.g. earthmoving vehicles), industrial
tyres (e.g. forklifts), original equipment tyre and wheel packages (e.g. for truck trailers);
• New distribution channels including tyre and wheel retailing and vehicle fleet operators, including national account management
and local fulfilment services; and
•
Services related to tyre and wheel businesses (e.g. mechanical and fitting services).
All the Group’s businesses benefited from favourable trading conditions throughout FY2021, particularly:
•
•
•
•
•
Less intense price competition as competitors rebuilt inventories run down in Q4 of FY2020 in response to the COVID pandemic;
Favourable movements, and stability, in the value of the Australian Dollar against currencies paid to suppliers;
Strong consumer demand for motor vehicle accessories;
Consistent goods movements underpinning sustained sales of industrial and truck tyres; and
Strong demand for agricultural, off-the-road and 4WD tyres as farm output and regional economic activity reached levels not seen
for many years.
Most of the profit growth experienced in FY2021 came from Group businesses other than Tyres4U. In addition to favourable trading
conditions, this improvement arose from the successful execution of various strategic decisions made after a disappointing result in
FY2019 and FY2020. These strategies included near source manufacture of some key products, new tyre products in the budget
category, excellent returns on the investment made to expand Statewide into Western Australia, organisational changes in Tyres4U
(Australia), structural changes to sales management and operations and the introduction of new wheel products.
During FY2021, the Group recruited people to better manage the new scale and diversity of operations, including executive level
managers for Innovation & Technology, People & Culture, Marketing and Supply Chain & Logistics. Along with existing executive level
management of Finance & Administration, a new leadership group was formed to offer shared services to the Group’s businesses.
Synergies are expected to arise from the acquisition of Tyres4U. For example, the additional costs of forming a new executive team
were offset, to some extent, by redundancies in other roles. With all businesses in the Group operating at capacity to meet demand for
products, and with the executive suite being established, the capture of other synergies from integrating sales, logistics, marketing and
administrative activities was deferred to FY2022 and beyond.
2
3
3
Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Results highlights
NTAW has reported total revenue of $461.5m (2020: $158.9m) for the financial year, an increase of $302.6m (190.5%) on the prior year
resulting from the Tyres4U acquisition in August 2020 and improved trading conditions throughout the Group.
NTAW’s statutory profit for the Group after providing income tax and non-controlling interest amounted to $20.5m (2020: $4.2m).
NTAW has a strong balance sheet with net assets of $91.8m (Jun-20: $68.8m). The net debt position was $16.0m (Jun-20: net cash of
$13.6m, prior to the acquisition of Tyres4U) and a ‘net debt to equity + debt’ ratio of 11.7%.
Key operating metrics
Gross profit margin
Operating costs as % of total revenue
Reported EBITDA1 margin
Operating EBITDA2 margin
1 EBITDA means earnings before interest, tax, depreciation and amortisation.
2 Refer to reconciliation between Reported EBITDA and Operating EBITDA below.
FY2021
29.8%
19.8%
10.0%
7.7%
FY2020
26.0%
16.9%
7.7%
7.4%
NTAW has reported a gross profit margin of 29.8% and an Operating EBITDA margin of 7.7%, with gross profit margin and Operating
EBITDA margin surpassing that achieved in the prior year resulting from increased customer demand and favourable exchange rates
between the AUD and USD. The Group’s operating costs as a percentage of sales of 19.8% was greater than prior years due to the
change in the business structure (Tyres4U acquisition) and investment made to enable the Group to leverage its diversity and scale into
increased market share.
Key financial results
$'000
Sales revenue
Gross profit
Reported EBITDA
Operating EBITDA
NPATA attributable to NTAW 1
FY2021
FY2020
461,533
137,510
46,145
35,653
21,142
158,857
41,263
12,184
11,786
5,665
1
NPATA excludes non-controlling interest and amortisation on a tax effected basis.
Operating EBITDA
The Group has reported an EBITDA of $46.1m (2020: $12.2m). The result for FY2021 includes a gain on bargain purchase of $0.6m
related to the Tyres4U acquisition and $1.4m of acquisition costs incurred in the year. Accounting of leases expenses in accordance
with AASB 16 Leases resulted in $11.0m of lease expenses (FY20: $3.1m) being classified “below” EBITDA, largely as depreciation (of
the right-of-use assets recognised on the Statement of financial position). Unrealised foreign exchange gain on foreign exchange
contracts and foreign currency denominated suppliers of $0.3m (2020: loss of $0.5m) was recognised during the year.
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Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
After taking into account the above items, an Operating EBITDA of $35.7m was earned in FY2021 (FY2020: $11.8m) as shown in the
following table:
$'000
FY2021
FY2020
Net profit after tax
Depreciation and amortisation
Finance costs (net)
Income tax expense
Reported EBITDA
Impact on Occupancy costs due to adopting AASB 16
Gain on bargain purchase
Acquisition costs
Impairment charges on intangible assets related to South African subsidiary
Unrealised foreign exchange (gains)/losses
Operating EBITDA
Financial Position
20,540
14,278
2,949
8,378
46,145
(11,024)
(596)
1,449
-
(321)
35,653
4,228
5,121
828
2,007
12,184
(3,082)
-
2,210
474
11,786
Key financial information in relation to the Group’s financial position at year end is shown below:
Total assets ($’000)
Net assets ($’000)
Net (debt)/cash ($’000)
Shares on issue (‘000)
Dividends per security (cents)
30 June 2021
30 June 2020
268,438
91,813
(15,989)
114,295
8.00
125,195
68,845
13,636
102,891
1.25
Significant balance movements during the financial year were as follows:
• Net debt has increased $29.6m and 11.3m shares were issued as part of the Tyres4U acquisition;
•
Total assets have significantly increased due to the expanded operations of the Group; and
• A final dividend of 5.00 cents has been declared in respect of the year (FY2020: nil), with an interim dividend of 3.00 cents being
declared during FY2021 (FY2020: 1.25 cents).
Outlook
The tyre & wheel industry, and NTAW, proved to be resilient when confronted with economic disruption arising from the pandemic.
NTAW’s primary goal leading up to the Tyres4U acquisition was to build diversity and scale, seeking economies of scale to improve
customer service levels and reduce overhead costs due to higher import prices and lower sell out prices – the by-product of global
surplus manufacturing capacity for most types of tyre. The Tyres4U acquisition delivered the diversity and scale NTAW had been
seeking.
NTAW’s new vision is to be the tyre and wheel industry leader in digital transformation. The Group will achieve this goal by harnessing
technology to deliver innovative value-adding solutions for all stakeholders. At the same time, NTAW will bring about an alignment of
culture within the Group based on core aspirations of decency, innovation, collaboration and energy.
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The following measures have, and will, be taken in pursuit of NTAW’s vision:
• A new executive team (described earlier), together with the creation of a new Chief Operating Officer role, with the required skill
and experience will drive various projects described below;
• A new enterprise resource planning and IT platform will be installed with financial & administrative functionality by FY2023 and
value adding customer services rolled out throughout FY2023 and beyond;
•
•
•
•
Leveraging the new IT platform to reduce overheads in FY2023;
Integrating and improving sales and operations planning;
Capturing other supply chain and logistics efficiencies (e.g. consolidating warehouses, better delivery fleet management);
Integrating the Group’s passenger and light truck sales and marketing activities, allowing the Tyres4U Commercial team to focus
on truck, bus, agricultural and off-the-road business;
• Offering more incentives to customers to increase their purchasing from the Group and providing an outstanding, seamless, one
stop purchasing experience for those customers across the entire array of the Group’s products and services; and
•
Continuous refinement of the Group’s product mix and distribution capabilities to meet supplier and customer expectations.
Significant changes in the state of affairs
Other than the acquisition of Tyres4U, there were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
Apart from the dividend declared as disclosed above, no other matter or circumstance has arisen since 30 June 2021 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 leverage the diversity and scale built up in
recent years in addition to the realisation of revenue and cost synergies throughout the Group in FY2022 and beyond.
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 party to a long-term formal distribution and licence agreement with Cooper Tire & Rubber Company
(“Cooper Tires”) for the supply of Cooper and Mastercraft branded products in passenger, SUV and 4WD segments. The Group
owns customer relationships and controls the marketing of brands, but it relies on rights under formal long-term agreements
granted by Cooper Tires to access the Cooper brand. Goodyear Tire and Rubber Company purchased Cooper Tires during the year
and there is some risk that the change in ownership will impact the Group’s long-term relationship with Cooper Tires. The
acquisition of Tyres4U introduces the Group to many new suppliers, significantly reducing the risk of supplier dependency on
Cooper Tires with the Cooper family of brands (excluding Mickey Thompson) accounting for approximately 14% of revenue and
18% of gross profit for FY21. The Group exclusively imports 29 brands in various product segments and many of these exclusive
importation and distribution agreements have existed for more than 20 years. As these agreements do not have long-term tenure,
the Group relies on meeting or exceeding supplier expectations. This strategy has served the Group well, with all supplier
relationships surviving decades despite there being no formal long-term tenure.
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30 June 2021
●
●
●
●
●
●
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 Group 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 in recent years with the successful integration
and capturing of synergies from the acquisitions and managing growth being critical to the Group’s continued performance and
earnings. 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. Although this risk has been further reduced as a consequence of the Tyres4U acquisition, 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.
COVID-19 pandemic – the Group is subject to the current and potential economic impacts due to the COVID-19 pandemic and
government imposed responses (e.g. mandatory trading shutdowns). Management monitored operating activities to ensure that
the appropriate level of working capital (including cash) was maintained to meet customer demand and continues to do so. The
Group continue to enforce the safe working practices implemented during the year to mitigate risks to employees and other
stakeholders.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on Directors
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
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.
Eureka Group Holdings Limited (ASX: EGH); Hillgrove Resources Limited (ASX: HGO); Eumundi
Group Limited (ASX: EBG)
Abano Healthcare Group Limited (NZX: ABA)
Member of Audit and Risk Committee; Member of Remuneration and Nominations Committee
203,163 ordinary shares
Nil
6
7
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Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Peter Ludemann
Chief Executive Officer ('CEO') and Managing Director
Degrees in Law and Commerce (Marketing) from University of New South Wales
Mr Ludemann joined the Group as a director in 2012 and became 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 tyre and wheel segments. He has managed the acquisition and
integration of Dynamic, M.P.C Mags and Tyres, National Tyre Wholesalers, Statewide, TLS and
Tyres4U. 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
Nil
Nil
2,759,928 ordinary shares
350,000 options
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
Nil
Member of Remuneration and Nominations Committee
27,255,297 ordinary shares
Nil
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
Nil
Chair of Audit and Risk Committee; Member of Remuneration and Nominations Committee
403,132 ordinary shares
Nil
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Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Robert 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.
Robert 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.
Nil
Nil
Chair of Remuneration and Nominations Committee; Member of Audit and Risk Committee
282,133 ordinary shares
Nil
'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 over 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 was the joint Company Secretary during part of FY2021. 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
positions in several listed and unlisted companies. Mrs Fanning resigned as joint Company Secretary on 26 November 2020.
Hugh McMurchy
Mr McMurchy is the joint Company Secretary, being appointed 1 July 2021. Mr McMurchy is a Chartered Accountant with over 10
years’ experience in public accounting before joining NTAW in 2020.
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 2021, and the number of meetings attended by each director were:
Full Board
Remuneration and Nominations
Committee
Attended
Held
Attended
Held
Audit and Risk Committee
Attended
Held
Murray Boyte
Peter Ludemann
Terry Smith
Bill Cook
Robert Kent
*
Attended by invitation only
19
20
20
18
20
20
20
20
20
20
9
9
5
4*
5
5
5
5
5*
5
5
5
4
4*
4*
4
4
4
4*
4*
4
4
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Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration Report (audited)
The remuneration report details the key management personnel (“KMP”) remuneration arrangements for the Group, in accordance
with the requirements of the Corporations Act 2001 and Corporations Regulations 2001.
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)
(b)
(c)
(d)
(e)
(f)
(g)
Principles used to determine the nature and amount of remuneration
Details of remuneration
Relationship between remuneration and Company performance
Service agreements
Share-based compensation
Equity instruments held by key management personnel
Other transactions with 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.
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.
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National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration report (audited) (continued)
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. The 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 (i.e. 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. 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. Total annual
fees payable to non-executive directors for FY2021 is $250,000 (FY2020: $250,000).
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 of the Remuneration Report.
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 executive remuneration 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;
Short-term incentive (“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 include a financial gateway hurdle and non-financial key performance indicators (“KPIs”).
The percentage of fixed remuneration received is capped, but may vary, between individuals and depending on the level of
performance achieved; and
Long-term incentive (“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.
The combination of these comprises an executive's total remuneration. The Board believes this remuneration framework ensures that
remuneration outcomes link to Company performance and the long-term interests of Shareholders.
2021 STI Program
During FY2021, 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; and
Stakeholder satisfaction.
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Directors’ report 30 June 2021
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Directors' report
30 June 2021
Remuneration report (audited) (continued)
Actual performance criteria varied between executives, having regard to their roles and responsibilities.
The Board applies the following general principles when determining and measuring performance targets and any STI
incentive:
STI Pool
The size of the STI pool is determined by the Board, upon advice from the Remuneration and Nominations
Committee, having regard to individual employment contracts. In consultation with the Remuneration and
Nominations Committee, the Board assesses the Group’s financial performance and the performance of key
management personnel against agreed performance objectives.
The STI available is split between the achievement of financial gateway hurdles (at a group and/or individual
operating entity level) and non-financial KPIs. The proportion of the STI between financial and non-financial varies
between key management personnel.
The financial gateway hurdles are based on Operating EBITDA which the Board believes is an acceptable proxy for
overall operating performance. Operating EBITDA is calculated by adjusting Reported EBITDA for the impact of the
adoption of AASB 16 Leases and non-operational related items, which included a gain on bargain purchase and
one-off acquisition costs and unrealised foreign exchange gains/losses for FY2021.
The achievement of financial and non-financial KPIs vary between key management personnel. The Board retains
discretion in relation to the impact that non-recurring or unusual items may have on achievement of the STIs.
Structure
Achievement
The actual amount received by key management personnel, as a result of achieving the pre-determined financial hurdles and non-
financial KPIs, are listed in the remuneration tables below.
2021 LTI Program
Options may be granted under the Employee Share Option Plan (“ESOP”) 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 (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 FY2021, 1,680,000 options were granted to senior executives, including 930,000 issued to certain key management personnel,
pursuant to the ESOP on the specific key terms:
●
●
The Vesting Date of the options is 30 September 2023, 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 (“EPS”) condition – the Company’s earnings per share for the year ended 30 June 2021 is at least 10% higher
than its EPS for the year ended 30 June 2020 or if this is not achieved, the Company’s EPS for the year ended 30 June 2022 is at
least 10% higher than its EPS for the year ended 30 June 2020. Calculation of the EPS growth rate is based upon the EPS results
reported in NTAW’s financial statements for the above years.
The base EPS for the year ended 30 June 2020 will be 5.51 cents per share. This is based upon the Company’s 2020 net profit after
providing for income tax and non-controlling interests and excluding amortisation (NPATA) attributable to Shareholders of $5.665
million. The target EPS based on NPATA attributable to Shareholders for the 2021 year or if this is not achieved, the 2022 year is,
therefore, 6.06 cents per share.
The EPS results to be used for the 2021 and 2022 years will be based upon the Company’s audited financial statements for that
year. However, the EPS may be adjusted for items which the Board, in its discretion, considers should be included in, or excluded
from, this result.
The EPS condition will be measured over two years if required to allow for uncertainty regarding the ongoing impact of COVID-19
on execution of the Company’s growth strategies and the timing of synergies to be realised from the acquisition of Tyres4U in
August 2020.
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Directors' report
30 June 2021
Remuneration report (audited) (continued)
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 2025 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.
It is the Board’s intention to grant performance rights to senior executives for the FY2022 under a new LTI Plan. The Plan is expected
to be finalised in September 2021, and will be subject to shareholder approval.
(b) Details of remuneration
The key management personnel of the Group in FY2021 consisted of the following directors of National Tyre & Wheel Limited:
●
●
●
●
●
Murray Boyte – Chairman
Peter Ludemann – Chief Executive Officer and Managing Director
Terry Smith – Executive Director
Bill Cook – Non-Executive Director
Robert Kent – Non-Executive Director
And the following persons:
●
●
●
●
●
●
Jason Lamb – Chief Financial Officer and Joint Company Secretary
Colin Skead – Chief Executive Officer, ETD (appointed NTAW Chief Operating Officer on 1 July 2021)
Chris Hummer – Managing Director, Dynamic and Executive Chairman, OE
Georg Schramm – Managing Director, Top Draw Tyres (South Africa)
Trevor Wren – Managing Director, Statewide
Leslie DeCelis – Executive Director, T4UAU and T4UNZ
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 salary
and fees1
$
Cash
Bonus
$
Non-
monetary
$
Post-employment
benefits
Super-
annuation
$
Long-term
benefits
Long service
leave
$
Share-based
payments
Equity-
settled
$
Total
$
2021
Non-Executive Directors:
M Boyte
W Cook
R Kent
82,192
73,060
80,000
-
-
-
Executive Directors:
T Smith
P Ludemann
86,227
514,477
-
226,665
-
-
-
-
-
7,808
6,940
-
-
-
-
-
-
-
90,000
80,000
80,000
8,192
24,144
-
14,094
-
18,302
94,419
797,682
Other Key Management Personnel:
275,451
J Lamb
299,363
C Skead
335,666
C Hummer
316,543
G Schramm
197,573
T Wren
L Decelis2
525,901
2,786,453
136,640
141,666
133,844
-
87,302
-
726,117
-
-
-
-
11,575
-
11,575
24,491
24,471
24,215
-
24,548
23,214
168,024
5,059
2,605
15,557
-
5,506
15,423
58,245
16,770
15,964
15,964
8,470
15,964
-
91,434
458,411
484,068
525,246
304,161
342,469
564,538
3,841,846
1
2
Including movement in annual leave provisions.
Classified as key management personnel from 4 August 2020, when Tyres4U business was acquired.
12
13
13
Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration report (audited) (continued)
Short-term benefits
2020
Cash salary
and fees1
$
Cash
bonus
$
Non-
monetary
$
Post-
employment
benefits
Super-
annuation
$
Long-term
benefits
Share-based
payments
Long service
leave
$
Equity-
settled
$
Total
$
Non-Executive Directors:
M Boyte
W Cook
R Kent
82,192
73,093
56,350
-
-
-
Executive Directors:
T Smith
P Ludemann
86,227
507,181
-
126,415
-
-
-
-
-
7,808
6,944
23,650
-
-
-
-
-
-
90,000
80,037
80,000
8,192
25,000
-
15,283
-
5,603
94,419
679,482
Other Key Management Personnel:
277,710
J Lamb
275,631
C Skead
186,126
C Hummer
326,887
G Schramm
T Wren2
215,420
R Chelvaratnam3
174,880
2,261,697
86,426
8,213
63,694
-
53,438
3,960
342,146
-
-
-
-
11,575
-
11,575
25,000
24,982
21,830
-
22,094
16,461
181,961
5,367
1,402
4,446
-
47,000
3,317
76,815
4,980
4,825
4,825
-
4,825
4,825
29,883
399,483
315,053
280,921
326,887
354,352
203,443
2,904,077
1
2
3
Including movement in annual leave provisions.
Cash bonus includes a discretionary bonus of $50,000 resulting from specific business unit achievements which were accrued in FY2020.
Ceased being classified as key management personnel at 30 June 2020.
The relative proportion of the total remuneration opportunity of key management personnel of the Group is as follows:
Name
Non-Executive Directors:
M Boyte
W Cook
R Kent
Executive Directors:
T Smith
P Ludemann
Other Key Management Personnel:
J Lamb
C Skead
C Hummer
G Schramm
T Wren
L DeCelis
Fixed remuneration
2020
2021
At risk - STI
At risk - LTI
2021
2020
2021
2020
-
-
-
-
31%
30%
30%
28%
-
27%
-
-
-
-
-
30%
30%
29%
27%
-
26%
-
-
-
-
-
2%
4%
3%
3%
3%
5%
-
-
-
-
-
3%
5%
5%
7%
-
8%
-
100%
100%
100%
100%
67%
66%
67%
69%
97%
68%
100%
100%
100%
100%
100%
67%
65%
66%
66%
100%
66%
-
14
14
Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration report (audited) (continued)
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
P Ludemann
Other Key Management Personnel:
J Lamb
C Skead
C Hummer
G Schramm
T Wren
R Chelvaratnam
Cash bonus paid/payable
2021
2020
Cash bonus forfeited1
2020
2021
100%
56%
100%
100%
100%
-
100%
-
63%
6%
83%
-
78%
-
-
-
-
-
-
-
-
44%
37%
94%
17%
-
22%
-
1
Forfeited cash bonuses are not accrued in the relevant year’s result.
(c) Relationship between remuneration and Company performance
The table below summarises the Group’s performance and correlates it to the total key management personnel remuneration for the
financial year:
Metric
FY2021
FY2020
FY2019
FY2018
Sales revenue ($’000)
Net profit after tax attributable to shareholders ($’000)1
Operating EBITDA ($’000)
Share price at end of year ($)
Basic earnings per share (cents)
Dividends paid (cents per share)
Key management personnel remuneration ($)
461,533
20,255
35,653
1.06
17.90
8.00
3,841,846
158,857
4,551
11,786
0.38
4.12
1.25
2,904,077
168,365
6,391
12,728
0.37
6.22
4.80
2,354,957
153,402
9,314
12,016
1.23
5.25
3.30
3,650,352
1 FY2018 is the pro-forma net profit after tax attributable to shareholders as disclosed in the 2018 financial report.
(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 FY2021 year were as follows:
Name:
Title:
Details:
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 45% 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
15
14
Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration report (audited) (continued)
Name:
Title:
Details:
Name:
Title:
Details:
Name:
Title:
Details:
Name:
Title:
Details:
Terry Smith
Executive Director
Mr Smith’s fixed remuneration package is $70,000 inclusive of statutory superannuation
contribution and a car allowance of $22,300. 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.
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 a car allowance. Under the terms of his employment contract, he is
eligible to receive short term incentives (STI) with a maximum opportunity of 45% 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.
Colin Skead
Chief Executive Officer, ETD (appointed NTAW Chief Operating Officer on 1 July 2021)
Mr Skead has an annual total fixed remuneration (TFR) of $314,813 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 45% 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 Skead 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 ETD, ETD may provide payment in lieu of notice. Mr Skead is entitled
to redundancy pay in accordance with the Company’s legal obligations. Mr Skead’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.
Chris Hummer
Managing Director, Dynamic and Executive Chairman, OE
Mr Hummer has an annual total fixed remuneration (TFR) of $301,125 consisting of base
salary, superannuation and a car allowance. 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.
16
16
Directors’ report 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration report (audited) (continued)
Name:
Title:
Details:
Name:
Title:
Details:
Name:
Title:
Details:
Georg Schramm
Managing Director, TLS (South Africa)
Mr Schramm’s employment contract is governed by South African law. His fixed remuneration
package (in South African Rand) is R2,873,130 per annum and he is entitled to a car allowance
totalling R300,000 per annum. He is eligible to receive an annual bonus of R187,859 at the
discretion of the Company. 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 TLS policies or practices or, if no policy or practice exists, in accordance with the
law.
Trevor Wren
Managing Director, Statewide
Mr Wren has an annual total fixed remuneration (TFR) of $219,000 consisting of base salary,
superannuation and car allowance. 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 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.
Leslie DeCelis
Executive Director, T4UAU and T4UNZ
Mr DeCelis has an annual total fixed remuneration (TFR) of $553,000 consisting of base salary,
superannuation and other benefits. He has statutory leave entitlements. Either party may
terminate the contract on 4 weeks’ notice. In the case of termination by NTAW, NTAW may
provide payment in lieu of notice. Mr DeCelis is entitled to a termination payment of
$1,560,000 upon termination of employment. Mr DeCelis’ contract contains a 3 year non-
compete restraint within Australia and a 3 year non-solicitation of employees, contacts and
clients with whom he has contact with, or influence over.
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.
(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
2021 (2020: nil).
16
17
17
Directors’ report 30 June 2021
Directors’ report
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration report (audited) (continued)
30 June 2021
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 are as follows:
Name
P Ludemann1
J Lamb
C Skead
C Hummer
G Schramm
T Wren
Number of
options
granted
170,000
160,000
150,000
150,000
150,000
150,000
Grant date
Vesting date and
exercise date
25 Feb 21
25 Feb 21
25 Feb 21
25 Feb 21
25 Feb 21
25 Feb 21
30 Sep 23
30 Sep 23
30 Sep 23
30 Sep 23
30 Sep 23
30 Sep 23
Expiry date
30 Sep 25
30 Sep 25
30 Sep 25
30 Sep 25
30 Sep 25
30 Sep 25
Exercise
price
Fair value
per option
at grant date
$0.57
$0.57
$0.57
$0.57
$0.57
$0.57
$0.43
$0.43
$0.43
$0.43
$0.43
$0.43
1 Approval for the issue of these options was obtained in accordance with ASX Listing Rule 10.14.
(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:
Ordinary shares
Murray Boyte
Peter Ludemann
Terry Smith
Bill Cook
Robert Kent
Jason Lamb
Colin Skead
Chris Hummer
Trevor Wren
Leslie DeCelis1
Received as
Balance at
the start of
the year
part of
remun-
eration
Additions -
DRP
Additions -
Off-market
Balance at
the end of
the year
156,237
2,759,928
27,255,297
403,132
204,901
363,722
3,500
4,652,522
655,737
102,450
36,557,426
-
-
-
-
-
-
-
-
-
-
-
6,926
-
-
-
7,232
-
-
-
-
7,145
40,000
-
-
-
70,000
-
-
-
-
100,000
203,163
2,759,928
27,255,297
403,132
282,133
363,722
3,500
4,652,522
655,737
209,595
21,303
210,000
36,788,729
1 Shareholding at time of being classified key management personnel.
Options
The number of options over ordinary 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:
18
18
Directors’ report
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
Remuneration report (audited) (continued)
30 June 2021
Options
Murray Boyte
Peter Ludemann
Terry Smith
Bill Cook
Robert Kent
Jason Lamb
Colin Skead
Chris Hummer
Georg Schramm
Trevor Wren
Leslie DeCelis
Balance at
the start of
the year
Granted
Exercised
Lapsed
-
180,000
-
-
-
160,000
155,000
155,000
-
155,000
-
-
170,000
-
-
-
160,000
150,000
150,000
150,000
150,000
-
805,000
930,000
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
350,000
-
-
-
320,000
305,000
305,000
150,000
305,000
-
1,735,000
All options on issue remain unvested as at 30 June 2021.
(g) Other transactions with key management personnel
Related party leases
During the 2021 financial year, the Group leased business premises owned by a closely related party of a KMP member. The lease
expires on 30 May 2023 and has two 5 year renewal options. Rent payments for FY2021 totalled $176,694 (2020: $214,845 for two
premises, one which ceased during FY2020), with $nil outstanding at 30 June 2021 (2020: $nil).
Loans to key management personnel
At 30 June 2021, there was an unsecured loan receivable from a member of KMP of $82,032 (2020: $nil). No interest was paid on or
payable during FY2021 in relation to this loan. $9,065 of interest would have been charged if the loan was on an arms-length basis. No
write down or allowance for doubtful receivables has been recognised in relation to this loan. The loan is repayable on cessation of
employment of the KMP.
This concludes the Remuneration Report, which has been audited.
18
19
19
Directors’ report
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
30 June 2021
Shares under option
There were 3,455,000 unissued ordinary shares of National Tyre & Wheel Limited under option outstanding at the date of this report.
These options were issued in two tranches (1,775,000 and 1,680,000), have an exercise price of $0.3735 and $0.5745, respectively and
expire on 07/11/2024 and 30/09/2025, respectively. The option holders have no right to participate in any share issue prior to exercising
the options.
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 2021
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 31 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 31 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 (including Independence Standards) 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.
20
20
Directors’ report
National Tyre & Wheel Limited and its controlled entities
Directors' report
30 June 2021
30 June 2021
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.
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
31 August 2021
Brisbane
20
21
21
Level 38, 345 Queen Street
Brisbane, QLD 4000
Postal address
GPO Box 1144
Brisbane, QLD 4001
p. +61 7 3222 8444
The Directors
National Tyre & Wheel Limited
30 Gow Street
MOOROOKA QLD 4105
Auditor’s Independence Declaration
In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and
belief there have been:
(i)
(ii)
No contraventions of the auditor independence requirements of the Corporations Act 2001;
and
No contraventions of APES 110 Code of Ethics for Professional Accountants (including
Independence Standards).
This declaration is in respect of National Tyre & Wheel Limited and the entities it controlled during the
year.
PITCHER PARTNERS
WARWICK FACE
Partner
Brisbane, Queensland
31 August 2021
Brisbane Sydney Newcastle Melbourne Adelaide Perth
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.com.au
NIGEL FISCHER
MARK NICHOLSON
PETER CAMENZULI
JASON EVANS
KYLIE LAMPRECHT
NORMAN THURECHT
BRETT HEADRICK
WARWICK FACE
COLE WILKINSON
SIMON CHUN
JEREMY JONES
TOM SPLATT
JAMES FIELD
DANIEL COLWELL
ROBYN COOPER
FELICITY CRIMSTON
CHERYL MASON
KIERAN WALLIS
MURRAY GRAHAM
ANDREW ROBIN
22
Statement of profit or loss and other comprehensive income for the year ended 30 June 2021
National Tyre & Wheel Limited and its controlled entities
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Revenue from contracts with customers
Other income
Gain on bargain purchase
Expenses
Cost of goods sold
Employee benefits and other related costs
Depreciation and amortisation
Occupancy
Marketing
Professional fees and acquisition costs
Insurance
Other
Finance costs
Impairment loss
Profit before income tax expense
Income tax expense
Note
2021
$'000
2020
$'000
5
6
30
7
7
15
461,533
158,857
1,357
596
1,313
-.
(324,023)
(58,612)
(14,278)
(7,984)
(6,178)
(3,530)
(3,070)
(13,887)
(3,006)
-
(117,594)
(17,106)
(5,121)
(1,692)
(3,691)
(739)
(739)
(4,046)
(997)
(2,210)
28,918
6,235
8
(8,378)
(2,007)
(98,595)
(18,357)
(5,609)
(459)
Profit after income tax expense for the year
20,540
4,228
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
740
740
(1,096)
(1,096)
21,280
3,132
285.
20,255.
(323)
4,551
20,540.
4,228
285.
20,995.
(323)
3,455
21,280.
3,132
Cents
Cents
Basic earnings per share
Diluted earnings per share
25
25
17.90
17.56
4.42
4.36
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
23
22
23
Statement of financial position
National Tyre & Wheel Limited and its controlled entities
Statement of financial position
As at 30 June 2021
as at 30 June 2021
Note
2021
$'000
2020
$'000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other financial assets
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Other financial liabilities
Current tax liability
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Equity attributable to the owners of National Tyre & Wheel Limited
Non-controlling interest
Total equity
9
10
11
12
13
14
15
12
8
16
17
18
19
12
17
18
19
20
21
28,905
71,807
101,025
835
4,265
206,837
10,167
33,544
15,698
116
2,076
61,601
25,859
23,215
41,487
-
1,580
92,141
3,615
11,800
16,739
-
900
33,054
268,438
125,195
82,335
2,954
9,496
11,904
-
1,138
107,827
41,940
24,472
2,386
68,798
24,930
-
3,298
3,652
943
902
33,725
12,223
9,172
1,230
22,625
176,625
56,350
91,813
68,845
70,204
62
18,208
88,474
3,339
65,272
(859)
1,378
65,791
3,054
91,813
68,845
The above statement of financial position should be read in conjunction with the accompanying notes
24
24
Statement of changes in equity
National Tyre & Wheel Limited and its controlled entities
Statement of changes in equity
For the year ended 30 June 2021
for the year ended 30 June 2021
Foreign
currency
translation
reserve
$'000
Share-based
payments
reserve
$'000
Issued
capital
$'000
Retained
earnings
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2019
65,272
182
Initial adoption of AASB 16
-
-
Balance at 1 July 2019 - restated
65,272
182
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 24)
Dividends paid (note 22)
-
-
-
-
-
-
(1,096)
(1,096)
-
-
Balance at 30 June 2020
65,272
(914)
-
-
-
-
-
-
55
-
55
1,912
3,377
70,743
(146)
-
(146)
1,766
3,377
70,597
4,551
(323)
4,228
-
-
(1,096)
4,551
(323)
3,132
-
(4,939)
-
-
55
(4,939)
1,378
3,054
68,845
Balance at 1 July 2020
65,272
(914)
55
1,378.
3,054
68,845
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:
Shares issued as consideration in acquisition
(note 20 and note 30)
Share-based payments (note 24)
Dividends paid (note 22)
-
-
-
-
740
740
-
-
-
20,255
285
20,540
-
-
740
20,255
285
21,384
4,858
-
74
-
-
-
-
181
-
-
-
(3,425)
-
-
-
4,858
181
(3,352)
Balance at 30 June 2021
70,204
(174)
236
18,208
3,339
91,813
24
25
The above statement of changes in equity should be read in conjunction with the accompanying notes
25
Statement of cash flows
National Tyre & Wheel Limited and its controlled entities
Statement of cash flows
For the year ended 30 June 2021
for the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Transfers from term deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividends paid
Net cash from/(used in) financing activities
Note
2021
$'000
2020
$'000
486,769
(454,286)
173,453
(155,221)
32,483
57
(2,859)
(7,015)
18,232
169
(997)
(1,881)
23
22,666
15,523
30
22
(36,496)
(2,554)
31.
(140)
-.
(1,265)
229.
-.
(39,159)
(1,036)
38,164.
(6,095)
(9,664)
(3,352)
-.
(360)
(2,558)
(4,939)
19,053
(7,857)
Net increase 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
2,560
25,859
32
6,630
19,077
152
(419)
19,608
(112)
Cash and cash equivalents at the end of the financial year
9
28,451
25,859
19,077
The above statement of cash flows should be read in conjunction with the accompanying notes
26
26
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
Notes to the financial statements
30 June 2021
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. Other income
Note 7. Expenses
Note 8. Income tax
Note 9. Cash and cash equivalents
Note 10. Trade and other receivables
Note 11. Inventories
Note 12. Derivative financial instruments
Note 13. Property, plant and equipment
Note 14. Right-of-use assets
Note 15. Intangible assets
Note 16. Trade and other payables
Note 17. Borrowings
Note 18. Lease liabilities
Note 19. Provisions
Note 20. Issued capital
Note 21. Reserves
Note 22. Dividends
Note 23. Cash flow information
Note 24. Share-based payments
Note 25. Earnings per share
Note 26. Key management personnel disclosures
Note 27. Related party transactions
Note 28. Financial instruments
Note 29. Fair value measurement
Note 30. Business combinations
Note 31. Remuneration of auditors
Note 32. Contingent liabilities
Note 33. Interests in subsidiaries
Note 34. Parent entity information
Note 35. Deed of cross guarantee
Note 36. Events after the reporting period
30 June 2021
28
28
36
38
38
38
39
40
41
41
41
42
42
43
44
45
46
47
48
49
50
50
51
52
55
55
56
56
60
61
62
62
62
63
64
65
26
27
27
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 1. General information
30 June 2021
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 (‘AUD’), 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 31 August 2021. 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
financial assets and liabilities at fair value through profit or loss 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.
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 34.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of National Tyre & Wheel Limited as at 30
June 2021 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.
28
28
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
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 translation reserve in equity.
The foreign currency translation reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
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.
28
29
29
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
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.
Services revenue
Revenue from services performed is recognised when the services are rendered. No services performed include multiple deliverables.
Other income
Interest income
Interest income 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 income
Other income is recognised when it is received or when the right to receive payment is established.
Government grants
Government grants are recognised when conditions attached to the grants have been complied with and the right to receive the
grant has been established. Government grants received during the financial year were limited to funds received from the Australian
Government under the JobKeeper Payment scheme. These have been classified as other income.
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.
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,
Dynamic Wheel Co Pty Limited, Integrated OE Pty Ltd, Statewide Tyre Distribution Pty Ltd, Tyres4U Pty Ltd and Tyreright Operation 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.
30
30
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
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 under AASB 9 Financial Instruments 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.
Expected credit losses are based on a review of receivable balances and identification of specific debtors, based on historical credit
loss experience, and adjusted for factors that are specific to the receivable balance, as well as current and forward-looking economic
conditions affecting the ability of the customers to settle the receivables.
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.
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.
30
31
31
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
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.
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 30%
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 shorter of the unexpired period of the lease or the estimated useful life of the assets.
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.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net
of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the
asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the
depreciation is over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease
liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12
months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
32
32
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
Lease liabilities
The Group has adopted AASB 16 Leases from 1 July 2019. As of this date, a lease liability is recognised at the commencement date of a
lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing
rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index
or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the
option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on
an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty
of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-
of-use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
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 10 years.
Importation rights are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might
be impaired.
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 (“CGU”)
to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
32
33
33
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
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, which are provided to employees in exchange for the rendering
of services.
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.
34
34
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
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.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
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.
34
35
35
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
30 June 2021
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.
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
No Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have
been early adopted by the Group for the annual reporting period ended 30 June 2021. These Standards and Interpretations are not
expected to have a material impact on the Group in the current of future reporting periods and on foreseeable future transactions.
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.
Recognition of identifiable intangible assets on acquisition
Brand names, importation rights and customer relationships have been recognised on the acquisition of subsidiaries in prior years. The
valuation of these assets is based on the acquisition date present value of expected future cash flows associated with the brand and
the recurring current customers covering a period of 5 to 12 years (2020: 5 to 12 years). These cash flows have been calculated using
annual growth rates of between 3.0%-6.3% (2020: 3.0%-6.3%), a terminal growth rate of 2.5% (2020: 2.5%) and a pre-tax discount rate
between 17.0%-20.0% (2020: 17.0%-20.0%).
36
36
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 3. Critical accounting judgements, estimates and assumptions (continued)
30 June 2021
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 (refer to note 15).
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 value-in-use calculations, which incorporate a number of key
estimates and assumptions. No impairment trigger is present in the 2021 financial year. In the 2020 financial year, the Group recognised
an impairment loss on goodwill, customer relationships and importation rights belonging to a particular CGU (refer to note 15).
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, volatility of share price and assumed vesting period from grant date (refer
to note 24 for further details of each group of options issued).
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 (refer to note 19).
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 (refer to note 8).
36
37
37
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 4. Operating segments
30 June 2021
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.
Non-current assets
As at 30 June 2021, $49,614,000 (2020: $29,299,000) of the Group's non-current assets (excluding deferred taxes) were held in
Australia, with $9,605,000 held in New Zealand (2020: $2,603,000) and $306,000 (2020: $252,000) held in South Africa, respectively.
Major customers
During the year ended 30 June 2021, none of the Group's external revenue was derived from sales of greater than 10% to any customer
(2020: none).
Note 5. Revenue from contracts with customers
Sale of goods and services revenue
Disaggregation of revenue
The disaggregation of revenue from contracts with customers by geographic region is as follows:
Australia
New Zealand
South Africa
2021
$'000
2020
$'000
461,533
158,857
461,533
158,857
378,593
70,968
11,972
130,642
16,193
12,022
461,533
158,857
During the 2021 and 2020 financial years, all revenue from sale of goods was recognised as the goods were transferred at a point in
time and revenue from services was recognised as the service was performed over time.
Note 6. Other income
Government grants
Interest income
Other income
2021
$'000
2020
$'000
973
57
327
1,072
169
72
1,357
1,313
38
38
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Motor vehicles
Right-of-use assets
Total depreciation
Amortisation
Customer relationships
Importation rights
Total amortisation
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable for financial liabilities
Interest and finance charges paid/payable for lease liabilities
Other interest and finance charges paid/payable
Finance costs expensed
Net foreign exchange (gain)/loss
Net foreign exchange (gain)/loss
Expense relating to leases
Expense relating to short-term leases
Expense relating to leases of low value assets
Superannuation expense
Defined contribution superannuation expense
Bad debts
Bad debts expense
30 June 2021
2021
$'000
2020
$'000
70
1,331
966
10,870
35
391
341
2,990
13,237
3,757
512
529
558
806
1,041
1,364
14,278
5,121
1,877
1,099
30
3,006
570
427
-.
997
(848)
235
3,486
8
3,494
466
12
478
3,709
1,081
156
67
38
39
39
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 8. Income tax
Income tax expense
Current tax
Deferred tax
Under/(over) provision in prior years
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
Deferred tax
Net deferred tax comprises temporary differences attributable to:
Capital raising costs
Acquisition costs
Provisions
Property, plant and equipment
Intangibles
Right-of-use assets
Other
Lease liabilities
Foreign currency exchange
Deferred tax asset
Movements:
Opening balance
Recognition of deferred taxes on acquisition (note 30)
Adoption of AASB 16 Leases
Credited/(charged) to profit or loss
(Under)/over provision in prior year
Foreign exchange differences
Closing balance
40
40
30 June 2021
2021
$'000
2020
$'000
8,088
534.
(244)
3,059
(1,002)
(50)
8,378
2,007
534
(1,002)
28,918
6,235
8,675
1,871
55
204
8,730
2,075
(244)
(108)
(50)
(18)
8,378
2,007
354
128
3,662
(485)
(1,454)
(9,541)
(184).
9,678
(82).
441
-
1,528
(48)
(1,608)
(3,461)
159
3,668
221
2,076
900
900
2,302
-
(534)
(595)
3
2,076
(152)
-
65
1,002
-
(15)
900
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 9. Cash and cash equivalents
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 17)
Balance as per statement of cash flows
Note 10. Trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
30 June 2021
2021
$'000
2020
$'000
28,905
25,859
28,905
25,859
28,905.
(454)
25,859
-
28,451.
25,859
71,818
(448)
71,370
23,259
(44)
23,215
37,252
(22)
37,230
32,652
(150)
32,502
437
-
11,333
15,248
71,807
23,215
48,563
47,750
Allowance for expected credit losses
The Group has recognised a net loss of $156,000 (2020: $67,000) in profit or loss in respect of the expected credit losses for FY2021.
Trade receivables past due but not impaired amount to $7,169,000 (2020: $2,952,000).
At 30 June 2021 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 28 for further information on financial instruments.
Note 11. Inventories
Finished goods - at cost
Less: Provision for impairment
Stock in transit - at cost
64,201
4,209
1,499
1,461
20,263
2,528
149
275
71,370
23,215
88,745
(433)
88,312
30,594
(13)
30,581
37,252
(22)
37,230
32,652
(150)
32,502
12,713
10,906
11,333
15,248
101,025
41,487
48,563
47,750
40
41
41
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 12. Other financial assets and liabilities
Current
Forward foreign exchange contracts
Lease receivables
Term deposit
Non-Current
Lease receivables
Refer to note 29 for further information on fair value measurement of forward foreign exchange contracts.
Note 13. 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
30 June 2021
2021
$'000
2020
$'000
587
108
140
835
116
1,568
(1,136)
432
21,220
(15,204)
6,016
19,127
(15,408)
3,719
(943)
-
-
(943)
-
425
(66)
359
5,060
(3,334)
1,726
2,764
(1,234)
1,530
321
(266)
55
4,826
(3,067)
1,759
3,104
(1,395)
1,709
10,167
3,615
3,579
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Leasehold
improvements
$'000
Plant and
equipment
$'000
Motor
vehicles
$'000
Capital works
in progress
$'000
Total
$'000
Balance at 1 July 2019
Additions
Disposals
Transfers
Transfers to right-of-use assets
Depreciation expense
Exchange differences
Balance at 30 June 2020
Additions as part of acquisition (note 30)
Additions
Disposals
Depreciation expense
Exchange differences
Balance at 30 June 2021
1,759
431
(14)
-
(50)
(391)
(9)
1,726
4,610
1,074
(110)
(1,331)
47
1,709
552
(174)
-
(197)
(341)
(19)
1,530
1,943
1,454
(261)
(966)
19
6,016
3,719
56
-
-
(56)
-
-
-
-
-
-
-
-
-
-
3,579
1,266
(188)
-
(247)
(767)
(28)
3,615
6,660
2,552
(371)
(2,367)
78
10,167
55
283
-
56
-
(35)
-
359
107
24
-
(70)
12
432
42
42
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 14. Right-of-use assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Plant and equipment - right-of-use
Less: Accumulated depreciation
Motor vehicles - right-of-use
Less: Accumulated depreciation
30 June 2021
2021
$'000
2020
$'000
47,826
(15,993)
31,833
17,061
(5,575)
11,486
553
(146)
407
1,757
(453)
1,304
185
(70)
115
405
(206)
199
33,544
11,800
Reconciliations
Reconciliations of the written down values at the beginning and end of the current year are set out below:
Recognition of assets on adoption of AASB 16 on 1 July 2019
Transfers from property, plant and equipment
Additions
Lease modifications
Disposals
Depreciation expense
Foreign exchange differences
Balance at 30 June 2020
Additions as part of acquisition (note 30)
Additions
Lease modifications
Disposals
Depreciation expense
Foreign exchange differences
Balance at 30 June 2021
Land and
buildings
$'000
Plant and
equipment
$'000
Motor vehicles
$'000
Total
$'000
3,982
-
10,326
76
-
(2,862)
(36)
11,486
27,935
1,923
1,016
-
(10,529)
2.
31,833
109
50
10
-
-
(40)
(14)
115
52
308
-
-
(73)
5.
407
111
197
-
44
(44)
(88)
(21)
199
320
1,056
-
(12)
(266)
7.
4,202
247
10,336
120
(44)
(2,990)
(71)
11,800
28,307
3,287
1,016
(12)
(10,868)
14.
1,304
33,544
42
43
43
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 15. Intangible assets
Goodwill
Less: Accumulated impairment loss
Brand name
Customer relationships
Less: Accumulated amortisation and impairment loss
Importation rights
Less: Accumulated amortisation and impairment loss
30 June 2021
2021
$'000
2020
$'000
8,878
(1,311)
7,567
8,878
(1,311)
7,567
2,393
2,393
4,798
(2,343)
2,455
12,106
(8,823)
3,283
4,798
(1,831)
2,967
12,106
(8,294)
3,812
15,698
16,739
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 2019
Impairment loss
Amortisation expense
Balance at 30 June 2020
Amortisation expense
Balance at 30 June 2021
Goodwill
$'000
Brand
Name
$'000
Customer
relationships
$'000
Importation
rights
$'000
Total
$'000
8,878
(1,311)
-
7,567
-
2,393
-
-
2,393
-
3,736
(211)
(558)
2,967
(512)
5,306
(688)
(806)
3,812
(529)
20,313
(2,210)
(1,364)
16,739
(1,041)
7,567
2,393
2,455
3,283
15,698
Impairment of intangible assets – prior year
In FY2020, an impairment loss of $2,210,000 was recognised in relation to the Top Draw Tyres Pty Ltd CGU, which included goodwill,
customer relationships and importation rights intangible assets, all of which were impaired to $nil. The pre and post COVID-19 pandemic
performance of the CGU as well as continuing uncertainty of its future prospects resulted in the impairment being recognised in FY2020.
Impairment testing
For the purpose of impairment testing, goodwill and brand names are allocated to the respective cash-generating units:
Goodwill
CGU:
- Tyres and wheels
- Integrated OE Pty Ltd (“OE”)
Brand names
CGU:
- Integrated OE Pty Ltd (“OE”)
5,228
2,339
5,228
2,339
7,567
7,567
2,393
2,393
44
44
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 15. Intangibles assets (continued)
30 June 2021
The Group tests whether goodwill and brand names have suffered any impairment on an annual basis. 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 methodology based on financial budgets approved by the Board of Directors for the 2022 financial year. The 2022
cashflow budgets have then been extrapolated using estimated annual growth rates, together with terminal growth rates. These growth
rates are considered reasonable in light of the 2021 base cashflows and 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,
which have not been impaired during the year:
2021
Tyres and wheels
%
OE
%
2020
Tyres and wheels
%
OE
%
Average annual growth rate (%)
Terminal growth rate (%)
Pre-tax discount rate (%)
2.0%
2.0%
16.1%
2.0%
2.0%
16.0%
3.0%
2.0%
14.7%
3.0%
2.0%
15.8%
Management has determined the value assigned to each of the above key assumptions as follows:
Assumption
Approach used to determine values
Annual growth rate
Terminal growth rate
Discount rate
Average annual growth rate over the five-year forecast period beyond the 2022 financial year is based on the
cashflow budgets, past performance and management’s expectations of market development.
Terminal growth rate was based on the 2022 forecast cashflows and management’s expectations of long-
term growth.
A post-tax estimate based on NTAW’s weighted average cost of capital.
Significant estimate: Impact of possible changes in key assumptions
A sensitivity analysis was performed on key assumptions, as follows:
Average annual growth rates – reduction by 1% No impairment in either the Tyres & Wheels CGU or OE CGU
Terminal growth rate – reduction by 1%
No impairment in either the Tyres & Wheels CGU or OE CGU
Discount rate – increase by 1%
No impairment in either the Tyres & Wheels CGU or OE CGU.
In the prior year, the only reasonably possible change in any of the key assumptions that would have resulted in an impairment in any
CGU was if the discount rate increased by 1%, the OE CGU would have had to recognise a $700,000 impairment against the carrying
value of goodwill.
Note 16. Trade and other payables
Trade payables
GST payable
Accruals
Refer to note 28 for further information on financial instruments.
2021
$'000
2020
$'000
60,140
1,236
20,959
21,581
432
2,917
82,335
24,930
44
45
45
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 17. Borrowings
Current
Bank overdraft
Bank facility
Non-current
Bank facility
Total secured liabilities
The total secured liabilities are as follows:
Bank overdraft
Bank facility
The bank facility has an expiry date of 3 August 2023.
Refer to note 28 for further information on financial instruments.
30 June 2021
2021
$'000
2020
$'000
454
2,500
2,954
-
-
-
41,940
12,223
41,940
12,223
454
44,440
-
12,223
44,894
12,223
Assets pledged as security
The bank facility is secured over the assets of National Tyre & Wheel Limited and all subsidiaries except Top Draw Tyres Proprietary
Limited.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank facility
Bank guarantee
Used at the reporting date
Bank overdraft
Bank facility1
Bank guarantee
1 Includes lease liabilities which were funded by the bank facility.
Unused at the reporting date
Bank overdraft
Bank facility
Bank guarantee
46
46
5,454
56,500
7,692
69,646
454
45,445
7,692
53,591
5,000
11,056
-
16,056
-
12,223
4,157
16,380
-
12,223
1,945
14,168
-
-
2,212
2,212
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
30 June 2021
Note 18. Lease liabilities
Current
Property leases
Equipment leases
Motor vehicle leases
Non-current
Property leases
Equipment leases
Motor vehicle leases
2021
$'000
2020
$'000
8,889
129
478
3,162
51
85
9,496
3,298
3,107
23,353
262
857
9,016
58
98
24,472
9,172
764
-
47
103
150
The Group has leases for warehouse and office facilities, warehouse equipment and motor vehicles. Leases are either non-cancellable
or may only be cancelled by incurring a substantive termination fee. All variable payments are linked to an index. The lease liabilities
are secured by the related underlying asset.
Leasing activities
The table below describes the nature of the Group’s leasing activities by type of right-of-use asset.
Right-of-use asset
No. of
leases
Range of
remaining
term (yrs)
Average
remaining
term (yrs)
No. of leases
with extension
options
No. of leases
with purchase
options
No. of leases with
variable payments
linked to an index
No. of leases with
termination
options
Land and buildings
Plant and equipment
Motor vehicles
35
9
39
0.1 - 7.8
0.9 - 5.0
0.1 - 4.0
2.2
2.5
2.1
23
-
-
-
1
23
14
-
-
-
-
-
The total cash outflow for leases in the 2021 financial year was $9,664,000 (2020: $2,558,000).
No gain was recognised in the Statement of profit or loss and other comprehensive income in the 2021 financial year reflecting changes
in lease payments that arose from rent concessions received as direct consequence of the COVID-19 pandemic (2020: $130,000).
46
47
47
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
30 June 2021
Note 19. Provisions
Current
Employee benefits
Warranties
Make-good
Non-current
Employee benefits
Warranties
Make-good
2021
$’000
2020
$’000
10,139
964
801
2,748
904
-
2,343
764
11,904
3,652
3,107
617
1,105
664
230
1,000
-
272
1,085
2,386
1,230
1,357
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.
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
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:
Warranties
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Carrying amount at the end of the year
Make-good
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Carrying amount at the end of the year
48
48
2021
$'000
1,904
620
(455)
2,069
-
1,435
30
1,465
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 20. Issued capital
30 June 2021
Ordinary shares - fully paid
114,294,863
102,891,313
70,204
65,272
2021
Shares
2020
Shares
2021
$'000
2020
$'000
Movements in ordinary share capital
Details
Balance
Balance
Date
Shares
Issue price
$'000
1 July 2019
102,891,313
30 June 2020
102,891,313
Shares issued as consideration in acquisition (note 30)
Shares issued per Dividend Reinvestment Plan
4 August 2020
9 April 2021
11,315,903
87,647
$0.4293
$0.8500
Balance
30 June 2021
114,294,863
65,272
65,272
4,858
74
70,204
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.
By way of a poll each share shall have one vote at a meeting.
Share buy-back
There is no current on-market share buy-back.
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 2020 Annual Report.
48
49
49
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 21. Reserves
Foreign currency translation reserve
Share-based payments reserve
30 June 2021
2021
$'000
2020
$'000
(174)
236.
(914)
55.
62.
(859)
Foreign currency translation 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.
Share-based payments reserve
The share-based payments reserve is used to recognise the value of equity benefits provided to employees as part of their
remuneration. Share-based payments reserve is transferred to share capital upon exercising of options and is transferred to retained
earnings upon lapsing or forfeiture of options.
Note 22. Dividends
Dividends paid during the financial year were as follows:
Final dividend
Special dividend
Interim dividend
-
-
3,425
2,573
1,080
1,286
2,353
-
1,284
3,425
4,939
3,637
Refer to note 20 for details of shares issued pursuant to the Company's Dividend Reinvestment Plan during the 2021 financial year.
At the date of signing these financial statements, the Company has declared a fully franked final dividend of 5.00 cents per share with
a record date of 20 September 2021 and a payment date of 15 October 2021. The total dividend payable is $5,715,000. The financial
effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2021 and will be
recognised in subsequent financial reports
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
20,651
15,811
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.
50
50
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 23. 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
Impairment of intangible assets
Gain on bargain purchase
Net loss/(gain) on disposal of property, plant and equipment
Share-based payments
Impairment of receivables
Foreign exchange differences
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in other assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in other provisions
Increase/(decrease) in provision for income tax
Decrease/(increase) in deferred tax assets
Net cash from operating activities
Liabilities from financing activities: Borrowings and Lease liabilities
Balance at the start of the year
Net cash flows
Recognition of lease liabilities
Lease liabilities assumed as part of acquisition (note 30)
Balance at the end of the year
Non-cash investing and financing activities disclosed in other notes are:
• Acquisition of right-of-use assets (note 14)
•
• Dividends satisfied by the issue of shares under the DRP (note 20)
• Options issued under the NTAW Employee Share Option Plan (note 24)
Shares issued as consideration in acquisition (note 30)
30 June 2021
2021
$'000
2020
$'000
20,540
4,228
14,278
-
(596)
(70)
181
156
5,121
2,210
-
(14)
55
67
(1,225)
(288)
(15,755)
(11,009)
(1,005)
15,304
504
237
1,126
1,434
7,075
(300)
(4,519)
328
1,114
(988)
22,666
15,523
24,693
20,971
4,426
28,625
12,858
(2,918)
14,753
-
78,715
24,693
50
51
51
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 24. Share-based payments
30 June 2021
Employee Share Option Plan (“ESOP”)
The Company adopted an 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.
●
●
●
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.
52
52
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 24 Share based payments (continued)
30 June 2021
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).
Set out below are summaries of options granted:
2021
Grant date
Expiry date
Exercise price
Balance at start
of year
Granted
Lapsed
Exercised
25/02/2021
08/11/2019
30/09/2025
07/11/2024
$0.5745
$0.3735
-
1,845,000
1,680,000
-
-
(70,000)
1,845,000
1,680,000
(70,000)
2020
Grant date
Expiry date
Exercise price
Balance at start
of year
Granted
Lapsed
Exercised
08/11/2019
07/12/2018
07/11/2024
30/09/2023
$0.3735
$1.1724
-
1,630,000
1,845,000
-
-
(1,630,000)
1,630,000
1,845,000
(1,630,000)
Balance at end
of year
1,680,000
1,775,000
3,455,000
Balance at end
of year
1,845,000
-
1,845,000
-
-
-
-
-
-
The weighted average remaining contractual life of options outstanding at the end of the financial year was 3.74 years (2020: 4.25
years).
Options lapsed during the 2021 financial year as the performance conditions were not met.
52
53
53
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 24 Share based payments (continued)
30 June 2021
The performance conditions for the options granted on 25 February 2021 were as follows:
1) Earnings per share (“EPS”) condition – the Company’s earnings per share for the year ended 30 June 2021 is at least 10% higher
than its EPS for the year ended 30 June 2020 or if this is not achieved, the Company’s EPS for the year ended 30 June 2022 is
at least 10% higher than its EPS for the year ended 30 June 2020.
Calculation of the EPS growth rate is based upon the EPS results reported in NTAW’s financial statements for the above years.
The base EPS for the year ended 30 June 2020 will be 5.51 cents per share. This is based upon the Company’s 2020 net profit
after providing for income tax and non-controlling interests and excluding amortisation (NPATA) attributable to Shareholders
of $5.665 million. The target EPS based on NPATA attributable to Shareholders for the 2021 year or if this is not achieved, the
2022 year is, therefore, 6.06 cents per share.
The EPS results to be used for the 2021 and 2022 years will be based upon the Company’s audited financial statements for
that year. However, the EPS may be adjusted for items which the Board, in its discretion, considers should be included in, or
excluded from, this result.
The EPS condition will be measured over two years if required to allow for uncertainty regarding the ongoing impact of COVID-
19 on execution of the Company’s growth strategies and the timing of synergies to be realised from the acquisition of Tyres4U
in August 2020.
2) Service condition – continuous employment of the employee with NTAW or one of its subsidiaries from the Grant Date until
the Vesting Date.
The performance conditions for the options granted on 8 November 2019 were as follows:
1) Earnings per share condition – Company’s EPS for the year ended 30 June 2021 was to be at least 10% higher than its EPS for
the year ended 30 June 2019.
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 FY2019 base EPS for the Options would be 7.74 cents per share. This was based upon the
Company’s 2019 NPATA attributable to NTAW shareholders. The target EPS for the 2021 financial year (based upon the
Company’s NPATA attributable to NTAW shareholders) is 8.51 cents per share.
2) Service condition – continuous employment of the employee with NTAW or one of its subsidiaries from the Grant Date until
the Vesting Date.
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
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
Fair value
interest rate at grant date
25/02/2021
08/11/2019
30/09/2025
07/11/2024
$0.8900
$0.4200
$0.5745
$0.3735
61.60%
58.90%
5.67%
7.40%
0.12%
0.88%
$0.4280
$0.1400
54
54
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 24 Share based payments (continued)
30 June 2021
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
Total expense recognised from share-based payment transactions
Note 25. Earnings per share
Profit after income tax
Non-controlling interest
2021
$'000
2020
$'000
181
181
55
55
20,540
(285)
4,228
323
Profit after income tax attributable to the owners of National Tyre & Wheel Limited
20,255
4,551
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Number
Number
113,173,063
102,891,313
2,185,780
1,439,071
Weighted average number of ordinary shares used in calculating diluted earnings per share
115,358,843
104,330,384
Basic earnings per share
Diluted earnings per share
Note 26. Key management personnel disclosures
Cents
Cents
17.90
17.56
4.42
4.36
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
2021
$
2020
$
3,524,144
168,024
58,244
91,434
2,639,068
158,311
76,815
29,883
3,841,846
2,904,077
54
55
55
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 27. Related party transactions
Parent entity
National Tyre & Wheel Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 33.
30 June 2021
Key management personnel
Disclosures relating to key management personnel are set out in note 26 and the remuneration report included in the directors' report.
Transactions with related parties
During the 2021 financial year, the Group leased business premises owned by a closely related party of a KMP member. The lease
expires on 30 May 2023 and has two 5 year renewal options. Rent payments for FY2021 totalled $176,694 (2020: $214,845 for two
premises, one which ceased during FY2020), with $nil outstanding at 30 June 2021 (2020: $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
At 30 June 2021 there was an unsecured loan receivable from a member of KMP of $82,032 (2020: $nil).
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates except for the loan detailed above which
is an interest-free loan.
Note 28. 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.
56
56
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 28. Financial instruments (continued)
30 June 2021
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 2021, the Group had forward foreign exchange contracts to acquire USD $19,698,000 (2020: USD $10,700,000). These are
due to mature within 5 months of balance date. The fixed exchange rates on these contracts ranged from 0.7463 to 0.7854 (2020:
0.5970 to 0.6972).
The Group's exposure to foreign currency risk at the end of the reporting period, expressed in AUD, was as follows:
Cash
Trade payables
Buy foreign currency (held for trading)
2021
$'000
2020
$'000
374
(31,440)
587
235
(12,405)
(943)
(30,479)
(13,113)
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:
2021
USD
2020
USD
AUD strengthened
Effect on profit
before tax
Effect on equity
AUD weakened
Effect on profit
before tax
% change
% change
Effect on equity
10%
2,771
1,940
10%
(3,387)
(2,371)
AUD strengthened
Effect on profit
before tax
Effect on equity
AUD weakened
Effect on profit
before tax
% change
% change
Effect on equity
10%
1,192
834
10%
(1,457)
(1,020)
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 gain for the year ended 30 June 2021 was $848,000 (2020: loss of
$235,000).
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.
56
57
57
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 28. Financial instruments (continued)
As at the reporting date, the Group had the following variable rate borrowings outstanding:
Bank overdraft
Bank facility
Net exposure to cash flow interest rate risk
30 June 2021
2021
$'000
2020
$'000
454
44,440
-
12,223
44,894
12,223
An analysis by remaining contractual maturities in shown in 'liquidity risk below.
The outstanding bank facility at 30 June 2021, totalling $44,440,000, is comprised of a trade finance facility ($33,190,000) and a loan
($11,250,000) (2020: $12,223,000 interest only repayment loan). An official increase/decrease in interest rates of 50 (2020: 50) basis
points would have an adverse/favourable effect on profit before tax of $222,000 (2020: $61,000) per annum. The percentage change
is based on the expected volatility of interest rates using market data and analysts forecasts. Minimum principal repayments of
$2,500,000 (2020: $nil) are due during the subsequent 12 month period, although in accordance with the facility agreement, the trade
finance facility limit will be increased equal to the value of the principal repayments made.
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.
Cash and cash equivalents are held with Commonwealth Bank of Australia, ASB Bank (NZ) and Nedbank Limited (South Africa), all of
which has a short term Standard & Poor’s credit rating of A-1+.
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 overdraft
Bank facility
Bank guarantee
5,000
11,056
-
-
-
2,212
16,056
2,212
58
58
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 28. Financial instruments (continued)
30 June 2021
The bank overdraft facility may be drawn at any time and terminates on 3 August 2021. The bank facility (trade finance facility) may be
drawn at any time and terminates on 3 August 2023. The bank guarantee facilities may be drawn at any time and have a weighted
average maturity of 2.62 years (2020: 2.24 years).
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 interest and principal cash flows disclosed as remaining contractual maturities and therefore these
totals may differ from their carrying amount in the Statement of financial position.
2021
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Bank overdraft
Bank facility
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
81,099
-
-
454
2,500
-
2,500
-
39,777
-
-
-
81,099
454
44,777
10,386
94,439
8,502
11,002
14,369
54,146
2,956
2,956
36,213
162,543
Derivatives
Forward foreign exchange contracts net settled
Total derivatives
587
587
-
-
-
-
-
-
587
587
2020
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Bank facility
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
24,498
-
-
-
-
12,233
-
-
24,498
12,233
3,731
28,229
3,409
3,409
5,537
17,770
880
880
13,557
50,288
Derivatives
Forward foreign exchange contracts net settled
Total derivatives
(943)
(943)
-
-
-
-
-
-
(943)
(943)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
58
59
59
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 29. Fair value measurement
30 June 2021
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
2021
Forward foreign exchange contracts - derivatives
Total liabilities
2020
Forward foreign exchange contracts - derivatives
Total assets
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
587
587
Level 2
$'000
Level 3
$'000
(943)
(943)
-
-
-
-
587
587
Total
$'000
(943)
(943)
There were no transfers between levels during the financial year.
The carrying amounts of cash, trade and other receivables and trade and other payables are assumed to approximate their fair values
due to their short-term nature. The carrying amounts of borrowings and lease liabilities are assumed to approximate their fair values
given they were entered into at market rates.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Derivative financial instruments have been valued using third party quoted 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.
60
60
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 30. Business combinations
30 June 2021
On 4 August 2020, the Group acquired 100% of the business assets and operations of Tyres4U in Australia and New Zealand. The primary
reason for the acquisition was to continue the Group’s strategic objective of diversification and seeking scale through acquisitions. Total
consideration for the acquisition was $48,678,000, including $43,820,000 in cash consideration and $4,858,000 in Company shares,
issued at time of the acquisition. The business assets were acquired by newly incorporated subsidiaries, Tyres4U Pty Ltd and Tyres4U
(NZ) Ltd. The acquired business has contributed revenue of $264,581,000 and profit before tax of $8,686,000 to the Group from the
date of acquisition to 30 June 2021. If the acquisition occurred on 1 July 2020, the full year contribution would have been revenue of
$289,286,000 and profit before tax of $8,551,000. The acquisition resulted in a gain on bargain purchase being recognised as the
vendors accepted the purchase consideration less than the fair value of the business assets. Transaction costs of $1,449,000 were
incurred during the year in relation to the acquisition. These costs are included in Professional fees and insurance expenditure in the
Statement of profit or loss and other comprehensive income. To assist with the acquisition, the Company renegotiated its debt facilities
with Commonwealth Bank of Australia increasing the total debt facility to $68,500,000 with total amount owing under this facility at
30 June 2021 being $52,990,000. Changes throughout the measurement period to the fair value of net assets acquired of $462,000
have been made from the disclosure included in the 31 December 2020 half-year financial report, resulting in an equal reduction to the
gain on bargain purchase recognised.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Property, plant & equipment
Right-of-use assets
Deferred tax asset
Trade and other payables
Lease liabilities
Provisions
Net assets acquired
Gain on bargain purchase
Acquisition-date fair value of total consideration
Representing:
Cash paid
Shares issued (note 20)
Total consideration
Cash used to acquire business, net of cash acquired:
Total consideration
Less: cash and cash equivalents acquired
Less: shares issued
Net cash used
Fair value
$'000
7,324
32,658
48,529
33
1,659
6,660
28,307
2,302
(42,104)
(28,625)
(7,470)
49,274.
(596)
48,678
43,820
4,858
48,678
48,678
(7,324)
(4,858)
36,496
60
61
61
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 31. Remuneration of auditors
30 June 2021
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
Transaction services
Tax compliance services
IT consulting services
Audit services - network firms
Audit or review of the financial statements
Other services - network firms
Tax compliance services
Note 32. Contingent liabilities
2021
$
2020
$
335,000
200,998
270,668
71,540
3,600
115,000
118,620
4,800
345,808
238,420
680,808
439,418
12,284
27,222
32,499
12,923
44,783
40,145
The Group has given bank guarantees as at 30 June 2021 of $7,692,000 (2020: $1,945,000) to various landlords and suppliers for standby
letters of credit.
Note 33. 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) Limited
Dynamic Wheel Co. Pty Limited
Integrated OE Pty Ltd
Top Draw Tyres Proprietary Limited
Statewide Tyre Distribution Pty Ltd
Tyres4U Pty Ltd
Tyres4U (NZ) Ltd
Tyreright Operations Pty Ltd
NTAW Holdings (NZ) Ltd
Ownership interest
2020
2021
%
%
100.00%
100.00%
100.00%
100.00%
50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
100.00%
-
-
-
-
Principal place of business /
Country of incorporation
Australia
New Zealand
Australia
Australia
South Africa
Australia
Australia
New Zealand
Australia
New Zealand
62
62
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 34. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Retained earnings/(accumulated losses)
Total equity
30 June 2021
Parent Entity
2021
$'000
2020
$'000
40,962
40,962
1,539
1,539
2,223
2,538
126,697
57,340
3,156
8,690
47,665
20,957
70,204
236
8,592
65,272
55
(28,944)
79,032
36,383
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 2021 and 30 June 2020. Refer to
note 35.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
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.
62
63
63
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 35. Deed of cross guarantee
30 June 2021
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) Limited;
Dynamic Wheel Co. Pty Limited (not party to the deed in the prior year);
Integrated OE Pty Ltd (not party to the deed in the prior year);
Statewide Tyre Distribution Pty Ltd (not party to the deed in the prior year); and
Tyres4U Pty Ltd (not party to the deed in the prior year).
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'.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial position of the
'Closed Group'.
Statement of profit or loss and other comprehensive income
Revenue
Other income
Gain on bargain purchase
Cost of goods sold
Employee benefits and other related costs
Depreciation and amortisation
Professional fees and insurance
Marketing
Occupancy
Other
Finance costs
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 earnings
Retained earnings at the beginning of the financial year
Opening retained earnings of entities joining the Closed Group
Profit after income tax expense
Dividends paid
Transfer from share-based payments reserve
Retained earnings at the end of the financial year
64
64
Closed Group
2021
$'000
2020
$'000
404,035
3,911
596
(284,942)
(49,372)
(11,743)
(5,888)
(4,980)
(6,477)
(11,292)
(2,446)
31,402
(8,564)
98,927
3,020
-
(73,184)
(10,686)
(3,800)
(1,101)
(3,322)
(435)
(2,826)
(804)
5,789
(1,845)
22,838
3,944
(49)
(49)
(89)
(89)
22,789
3,855
78
22,007
22,838
(3,425)
-
41,498
1,201
-
3,944
(4,939)
(129)
78
Notes to the financial statements
National Tyre & Wheel Limited and its controlled entities
Notes to the financial statements
30 June 2021
Note 35. Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets
Non-current assets
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Derivative financial instruments
Lease liabilities
Current tax liability
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
30 June 2021
Closed Group
2021
$'000
2020
$'000
19,143
60,660
76,243
694
2,940
159,680
61,410
4,919
28,365
6,546
2,526
103,766
18,803
14,728
19,068
-
538
53,137
33,567
2,667
10,694
7,233
1,870
56,031
263,766
109,168
65,966
2,500
10,109
-
7,981
835
87,391
41,940
20,735
1,475
64,150
15,253
-
2,290
740
2,894
894
22,071
12,223
8,451
1,159
21,833
151,541
43,904
111,905
65,264
70,204
203
41,498
65,272
(86)
78
111,905
65,264
Note 36. Events after the reporting period
Apart from the dividend declared as disclosed in note 22, no matter or circumstance has arisen since 30 June 2021 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.
64
65
65
Directors’ declaration
National Tyre & Wheel Limited and its controlled entities
Directors' declaration
30 June 2021
In the directors' opinion:
30 June 2021
●
●
●
●
●
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 2021 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 35 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
31 August 2021
Brisbane
66
66
Independent Auditor’s Report to the Shareholders of National
Tyre & Wheel Limited
Report on the Audit of the Financial Report
Opinion
Level 38, 345 Queen Street
Brisbane, QLD 4000
Postal address
GPO Box 1144
Brisbane, QLD 4001
p. +61 7 3222 8444
We have audited the financial report of National Tyre & Wheel Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial position as
at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes to the financial statements including a summary of significant accounting policies,
and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a)
(b)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) “the Code” that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report 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.
Brisbane Sydney Newcastle Melbourne Adelaide Perth
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.com.au
NIGEL FISCHER
MARK NICHOLSON
PETER CAMENZULI
JASON EVANS
KYLIE LAMPRECHT
NORMAN THURECHT
BRETT HEADRICK
WARWICK FACE
COLE WILKINSON
SIMON CHUN
JEREMY JONES
TOM SPLATT
JAMES FIELD
DANIEL COLWELL
ROBYN COOPER
FELICITY CRIMSTON
CHERYL MASON
KIERAN WALLIS
MURRAY GRAHAM
ANDREW ROBIN
66
67
Key Audit Matter
Acquisition of Tyres4U
Refer to Note 30: Business combinations
During the year the Group acquired 100% of
the business assets and operations of Tyres4U
in Australia and New Zealand for gross
purchase consideration of $48.678 million. This
was considered a significant purchase for the
Group.
Accounting for this transaction is a complex and
judgemental exercise, requiring management to
determine the fair value of acquired assets
liabilities.
As the acquisition date fair value of net assets
acquired exceeded the purchase consideration,
a gain on bargain purchase of $0.596 million
was recorded in the Statement of Profit or Loss
and Other Comprehensive Income.
It is due to the size of the acquisition and the
estimation process involved in accounting for it
that this is a key area of audit focus.
How our audit addressed the key audit matter
Our procedures included amongst others:
Understanding and evaluating management’s
processes and controls;
Reading the sale and purchase agreement to
understand key terms and conditions;
Evaluating the assumptions and methodology
used by management in determining the fair
values of net assets acquired;
Comparing the Group’s final fair value
adjustments at 30 June 2021 to the
previously reported values at 31 December
2020, and performing testing on certain fair
value adjustments to confirm that they related
to new information obtained about facts and
circumstances that existed on acquisition
date, therefore were eligible for recognition;
and
Assessing the adequacy of the Group’s
disclosures in respect of business
acquisitions.
Impairment of goodwill and separately identifiable intangible assets
Refer to Note 15: Intangibles
As part of business combinations completed
during prior years, the Group recognised
goodwill and other intangible assets valued at
$8.878 million and $19.297 million respectively.
These intangible assets relate to the acquisition
of various subsidiaries of National Tyre &
Wheel Limited, 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, key
estimates and significant judgements such as
the annual growth rates, discount rate and
terminal value growth 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 procedures included amongst others:
Understanding and evaluating management’s
processes and controls;
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 2022 financial year
and the Group’s historic actual performance;
Assessing the significant judgements and key
estimates used for the impairment
assessment, in particular, the annual growth
rates, discount rate and terminal value growth
rate;
Checking the mathematical accuracy of the
impairment testing model and agreeing
relevant data to the latest budgets;
Performing sensitivity analysis by varying
significant judgements and key estimates,
including the annual growth rates, discount
rate and terminal value growth rate, for the
CGUs to which goodwill and indefinite useful
life intangible assets relate; and
Assessing the adequacy of the Group’s
disclosures in respect of impairment testing of
goodwill and indefinite useful life intangible
assets.
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.
68
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 2021, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or 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
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.
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to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 - 20 of the directors’ report for the
year ended 30 June 2021. In our opinion, the Remuneration Report of National Tyre & Wheel Limited,
for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
PITCHER PARTNERS
WARWICK FACE
Partner
Brisbane, Queensland
31 August 2021
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.
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Shareholder information
National Tyre & Wheel Limited and its controlled entities
Shareholder information
30 June 2021
The shareholder information set out below was applicable as at 20 August 2021.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
30 June 2021
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:
ST Corso Pty Ltd
EM Australia 2021 Pty Ltd (TWA A/C)
Sandhurst Trustees Ltd (Collins St Value Fund A/C)
J P Morgan Nominees Australia Pty Limited
Roshan Charles Chelvaratnam
BNP Paribas Nominees Pty Ltd (IB AU Noms Retailclient DRP)
National Nominees Limited
Mr John Peter Ludemann
S.N. Tyre Wholesalers Pty Ltd
Strategic Value Pty Ltd (Tal Super A/C)
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Mrs Christine Lorraine Hummer
Mrs Christine Lorraine Hummer
Mr Christopher John Hummer
Mr Christopher John Hummer
Hidiv Pty Ltd
Exldata Pty Ltd
Tyre & Tube Australia (Services) Pty Ltd
Trevor John Wren
Number
of holders
of ordinary
shares
% of total
shares
issued
253
517
280
483
91
0.1
1.4
2.0
13.1
83.4
1,624
100.0
66
0.0
Ordinary shares
% of total
Number held
shares
issued
26,750,297
10,617,107
7,811,167
5,863,289
3,732,787
3,676,335
3,239,544
2,589,928
2,487,440
2,099,100
1,616,036
1,161,038
1,048,929
1,048,928
1,048,928
1,011,337
1,000,000
882,001
698,796
655,737
79,038,724
23.40
9.29
6.83
5.13
3.27
3.22
2.83
2.27
2.18
1.84
1.41
1.02
0.92
0.92
0.92
0.88
0.87
0.77
0.61
0.57
69.15
Unquoted equity securities
There are 3,455,000 unquoted unissued ordinary shares of National Tyre & Wheel Limited under option at the date of this report.
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Shareholder information
National Tyre & Wheel Limited and its controlled entities
Shareholder information
30 June 2021
Substantial holders
Substantial holders in the Company are set out below:
30 June 2021
Ordinary shares
% of total
Number held
shares
issued
ST Corso Pty Ltd atf the Smith Trading Trust, Terence Smith & Susanne Smith (together Smith Group)
National Tyre & Wheel Limited
EM Australia 2021 Pty Ltd (TWA A/C)
Sandhurst Trustees Ltd (Collins St Value Fund A/C)
38,571,200
11,315,903
10,617,107
7,811,167
33.75
9.90
9.29
6.83
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
By way of a poll each share shall have one vote at a meeting.
There are no other classes of equity securities on issue at the date of this report.
Securities subject to voluntary escrow
Class
Ordinary shares
Expiry date
4 February 2022
Number
of shares
11,315,903
11,315,903
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Corporate directory
National Tyre & Wheel Limited and its controlled entities
Corporate directory
30 June 2021
30 June 2021
Directors
Murray Boyte - Chairman
Peter Ludemann - Chief Executive Officer and Managing Director
Terry Smith
Bill Cook
Robert Kent
Company secretaries
Registered office and principal place of
business
Jason Lamb
Hugh McMurchy
30 Gow Street
Moorooka QLD 4105
Telephone: (07) 3212 0950
Facsimile: (07) 3212 0951
Share register
Auditor
Solicitors
Bankers
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
Bentleys Legal (NSW)
Level 14
60 Margaret 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
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 (4th 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:
https://www.ntaw.com.au/investors/corporate-governance/
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