SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT 2005
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WWW.SUPERCHEAPAUTO.COM.AU
ABN 81 108 676 204
CONTENTS
Chairman's Report
07
Managing Director's Report
10
Board of Directors
18
Senior Management Team
20
Corporate Governance Statement
33
Financial Report
37
Directors' Report
38
45
Special Purpose Report
Statement of Financial Performance 50
51
Statement of Financial Position
52
Statement of Cash Flow
53
Notes to the Financial Statements
83
Directors' Declaration
84
Independent Audit Report
87
Shareholder Information
NAME OF ENTITY
Super Cheap Auto
Group Limited
ABN OR EQUIVALENT
COMPANY REFERENCE
81 108 676 204
REGISTERED OFFICE
751 Gympie Road
Lawnton QLD 4501
Telephone (07) 3205 8511
Facsimile (07) 3205 8522
SHARE REGISTRY
ASX Perpetual Registrars Limited
Level 8, 580 George Street
SYDNEY NSW 2000
BANKERS
Australia and New Zealand
Banking Group Limited
AUDITORS
Grant Thornton
SOLICITORS
Redmond Van De Graaff
Mallesons Stephen Jacques
STOCK EXCHANGE LISTING
Super Cheap Auto Group Limited
shares are quoted on the
Australian Stock Exchange.
THE ANNUAL GENERAL MEETING
The Annual General Meeting of the
Shareholders of Super Cheap Auto
Group Limited will be held at the Pine
Rivers Memorial Bowls Club, Cnr.
Sparkes and Francis Roads, Bray Park,
Queensland on Thursday 20 October
2005 at 2.00 pm.
Formal notice of this meeting and proxy
form are enclosed with this report.
WELCOME TO THE 2005 SUPER CHEAP
AUTO GROUP LIMITED ANNUAL REPORT.
THIS YEAR HAS BEEN AN EXCITING
ONE WITH FURTHER STORE EXPANSION
AND THE OPPORTUNITY FOR US TO
COMPLEMENT OUR EXISTING AUTOMOTIVE
BUSINESS WITH THE UPCOMING LAUNCH
OF OUR NEW BOATING, CAMPING AND
FISHING BUSINESS, BCF.
ONCE AGAIN, WE RECOGNISE OUR
TEAM MEMBERS AND THEIR VALUABLE
CONTRIBUTION TO THE SUCCESS OF
OUR COMPANY.
WE THANK ALL OUR SHAREHOLDERS
AND CUSTOMERS FOR THEIR CONTINUED
INTEREST AND SUPPORT IN OUR
COMPANY.
WE LOOK FORWARD TO SEEING YOU
IN THE STORES.
SCA2005/1
JULY 04
COMPANY LISTS ON AUSTRALIAN STOCK EXCHANGE
DECEMBER 04
CELEBRATED OPENING OF 200TH STORE (STOKE, NZ)
AND OPENED 5 ADDITIONAL STORES IN NZ ON THE SAME DAY
JAN 05
ACQUIRED THE BUSINESS AND TRADING ASSETS OF THE
QUEENSLAND CAMPING AND OUTDOOR LEISURE PRODUCTS RETAILER,
CAMPMART (4 QUEENSLAND STORES)
ANNOUNCES EXCITING NEW PARTNERSHIP WITH THE DYNAMIC
TWO CAR SUPER CHEAP AUTO RACING V8 SUPERCAR TEAM AND
AGREEMENT TO ACT AS NAMING RIGHTS SPONSOR FOR THE
BATHURST 1000 FOR THE NEXT THREE YEARS.
JULY 05
ANNOUNCED THE LAUNCH OF BCF – PLANS TO REBRAND THE
RECENTLY ACQUIRED CAMPMART BUSINESS TO BCF ALONG WITH PLANS
TO OPEN FURTHER STORES ACROSS AUSTRALIA AND NEW ZEALAND.
SCA2005/2
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SCA2005/3
GROUP SALES AT $470.1 MILLI
THE PRIOR PERIOD, SUPPORTED
SALES GROWTH AC
SCA2005/4
ON WERE 22.8% HIGHER THAN
BY ENCOURAGING LIKE FOR LIKE
ROSS AUSTRALIA.
SCA2005/5
GROUP EARNINGS
GROUP EARNINGS BEFORE INTEREST,
BEFORE INTEREST, TAX,
TAX, DEPRECIATION AND AMORTISATION
DEPRECIATION AND
AT $40.8 MILLION GREW BY 27.5%
AMORTISATION AT
OVER THE PRIOR PERIOD.
$40.8 MILLION GREW
BY 27.5% OVER THE
PRIOR PERIOD.
SCA2005/6
CHAIRMAN'S REPORT
Fellow Shareholder,
I am pleased to be able to confirm that Super Cheap
Auto has realised the goals we set for the Company in
the first year following its listing on the ASX. We have
maintained high growth rates, exceeded prospectus
profit forecasts, and embarked on the strategy to extend
our customer offering with an acquisition that will form
the basis of our presence in the leisure and outdoor
market. This combination of achievements and initiatives
provides us with an excellent base for future growth.
Super Cheap Auto maintained its status as a high
growth company by expanding its retail network by 32
stores and delivering sales growth of 22.8% in a market
where consumer spending began to wane in the latter
part of the year. These outcomes were achieved without
reducing sales and profit margins. More importantly,
like for like growth was delivered despite the expanded
presence in both Australia and New Zealand.
Profit exceeded the prospectus forecast before and
after the required changes to accounting standards.
This reflects well on the management team’s capacity
to manage growth without weakening the underlying
economics of the business. Bob Thorn, Peter Birtles
and the whole team deserve credit for delivering
these outcomes.
The acquisition of CampMart, and its imminent
transformation into BCF, is an exciting initiative. It will
underpin the extension of our customer base, and be a
platform for future growth. The focus on leisure goods
which supplement the interest that our customers have
in cars and outdoor activities will take considerable
advantage from the infrastructure and knowledge
already available within Super Cheap Auto operations.
None of this means that Super Cheap Auto is without
challenges. A substantial investment in the systems
and capacity required by the Company’s distribution
and logistics effort will be required as it deals with the
ongoing expansion of its operations. We will also need
to be mindful of the funding required by the additional
inventory, and the store roll-out planned for the Super
Cheap Auto and BCF retail networks.
The Board remains committed to maintaining growth.
This will constrain the Company’s capacity to
substantially increase the dividends paid to shareholders
within the near term. Nevertheless, we have decided to
declare a final dividend of 4.5 cents for a full year
payment of 6.5 cents per share. This is 0.7 cents above
the amount foreshadowed in the prospectus.
Finally, I need to recognise the contribution of my fellow
directors. We have a relatively small board which adds
to the load when the Company couples rapid organic
growth with a strategy to expand its operations through
the acquisition and development of new markets.
At all times, your Directors have responded quickly and
have acted cohesively to ensure that all stakeholders
benefit from an aggressive, innovative, and customer
focussed business.
Dick McIIwain
Chairman
Super Cheap Auto Group Limited
SCA2005/7
FROM THE COMMENCEMENT OF ITS AUTOMO
THE SUPER CHEAP AUTO GROUP HAS GROWN TO
IN AUSTRALIA AND
SCA2005/8
TIVE ACCESSORIES RETAIL BUSINESS IN 1974,
215 STORES ACROSS EVERY STATE AND TERRITORY
IN NEW ZEALAND.
SCA2005/9
Our first year as a public company is one of which
all of our team members can be proud. It is the year
where we achieved the milestone of 200 stores across
Australia and New Zealand. In addition to this and in
spite of tough retail conditions, we have delivered
profits and dividends strongly ahead of our IPO
prospectus forecasts. Continuing to invest for future
growth, we opened another 28 stores in our Super
Cheap Auto business and have laid the foundations
for the rollout of our new and exciting format, BCF.
Building the business for the future
Retailing is at the heart of Super Cheap Auto Group.
Our capabilities across retail management, category
management, procurement and marketing supported
by our supply chain, property management and our
systems have driven the rapid growth of Super Cheap
Auto. We have a team of very strong retail managers
who have brought to the business experience of
working in leading retail businesses not only in
Australasia but in other countries. It is these capabilities
that will be critical in growing the Group over the
coming years. We have always said that we are in the
business of creating and rolling out successful retail
concepts and we have proven this in the ’05 year.
As has been stated previously, our goal is to develop
the Super Cheap Auto business to one of around 300
stores across Australia and New Zealand. At the date
of this report, we have 212 stores trading of which 32
stores are in New Zealand. In less than 2 years, we
have created a business in New Zealand of the size
it took us 25 years to create in Australia. As well as
growing sales through store expansion, we need to
ensure that our existing stores continue to deliver
growth in sales and we can only do this by creating
an offer that attracts our target customers not only
today but into the future. 2005 has seen an increased
MANAGING DIRECTOR’S REPORT
SCA2005/10
Our New Concept – BCF
Boating, Camping, Fishing
The launch of BCF our new Boating, Camping and
Fishing products and accessories business in July
was an exciting time for the business. In January 2003,
we identified a number of retail categories in which
no company held a dominant position in the Australian
market and in which we believed there was an
opportunity to leverage our retail capabilities to build
a successful business. We identified that the Camping
and Outdoor products market was one of those
opportunities. We started to conduct research into this
market and we identified that many people who
camped also fished and that many people who fished
also owned a boat or went boating. Yet no one retailer
provided a full offer of boating, camping and fishing
products. This led to the creation of a unique retail offer
which we have called ‘BCF’.
To enable us to create a foothold in the market and to
accelerate our understanding of the customers and
suppliers, we completed the $7 million acquisition of
the CampMart business in January 2005. The
CampMart business had been trading for around 25
years and had established 4 successful stores in
Brisbane. We are converting these stores to the new
BCF format as this Annual Report is issued.
Our research indicated that the market for Boating,
Camping and Fishing products and accessories is
around $2 billion. At this stage, we plan to open 10
new stores in the 2005/06 financial year to add to the
four converted CampMart stores. These stores will be
based in Queensland and northern New South Wales.
In time, we see the potential to open at least 60 stores
across Australia and New Zealand, with a total
annualised turnover of at least $300 million.
Our plans to grow the BCF business, will require
around $27.5 million investment in the 2005/06 year
of which $5 million represents set up costs and launch
advertising which we will expense against pre tax profits
in line with our standard conservative accounting policy.
emphasis on the “auto” focus in Super Cheap Auto.
We are continuing to build our impressive range of
products across automotive, spare parts, handyman
items, tools and equipment based around products
for the car, the house, the boat and the yard and at
the same time, we are placing an emphasis on our
automotive roots. Over the coming year, you will see
some changes in our stores and in our marketing to
reflect this.
As we grow the business, we need to continually review
our supply chain arrangements to ensure that these
meet the needs of the business in a cost effective
manner. We have determined that as a result of the
growth of the business in Victoria and South Australia,
we plan to reduce our overall cost of doing business by
channelling stock through a logistics facility in
Melbourne for the stores in the Southern states rather
than freighting stock from our facility in Queensland.
The Melbourne operation commences later this year.
We continue to work in conjunction with our suppliers
to reduce costs associated with handling product
through our distribution centres and we are considering
the establishment of a consolidation centre for
imported product in China. This will allow us to pre-
pack and hold stock ready for stores in China, thus
avoiding the need to hold some imported lines in our
Australian distribution centres.
Super Cheap Auto has had an association with Motor
Sport for close to 10 years and we are extremely
pleased to be taking this to a whole new level with not
only our sponsorship of the highly competitive Super
Cheap Auto V8 Racing Car team but also through
securing the naming rights sponsorship for the Bathurst
1000 for the next three years. Motor Sport and,
particularly the V8 Super Cars, are a passion shared by
many of our target customer group. We have found our
sponsorship of V8 Super Cars as a way of connecting
with our customers and particularly in building
awareness of our brand in new markets.
The sponsorship of a successful two car V8 team means
that our brand is in the camera eye for much longer
during the races and we were particularly pleased with
our lead driver, Greg Murphy and the team’s clean
sweep at Pukekohe in New Zealand in March. Our
connection with the Bathust 1000 is one that
demonstrates the seriousness of our brand across
automotive in Australia and New Zealand. We have
identified a number of promotional opportunities to
drive sales through the Bathurst sponsorship and we
are looking forward with excitement to October 9th –
the date of the Super Cheap Auto 1000!
SCA2005/11
MANAGING DIRECTOR’S REPORT
CONTINUED
Review of Operations
2004/05 has been another record year for the
business. Total Group sales grew by 22.8%, Group
EBIT grew by 29.4% and Group Earnings (before non
recurring items) by 31.1%. We are particularly pleased
that in a tough retail market, we have been successful
in managing gross profit and controlling expenses to
grow earnings at a higher rate than sales.
The much publicised general decline in retail spending
did have some impact on sales resulting in lower 2nd
half sales growth but we were successful in maintaining
sales growth through increasing our advertising
programme rather than through aggressive price
discounting activity. We believe that this strategy
enabled us to improve our margins and to achieve an
earnings result some 10% ahead of our IPO Prospectus.
Super Cheap Auto delivered total sales of $465 million
and operating profit (earnings before interest, tax and
amortisation) of $33 million. In Australia, sales
performance was pleasing in most parts of the country
with sales from like for like stores growing by 3.7%
throughout the year.
In New Zealand, we have made excellent progress
in rolling out our business and acceptance by new
customers has given us confidence with our New
Zealand expansion. Our research has indicated that
unprompted awareness of our brand in the New
Zealand market had achieved a scoring of 47% within
15 months of opening our first stores. We continue to
finetune our customer offer and our marketing as we
grow the business and we have also identified a
number of opportunities to increase the average sale
from our New Zealand stores in the coming year.
As part of our growth strategy we have continued to
introduce new products into our stores during the year
and, as a result, our car care, car audio/visual and
leisure and outdoor categories performed particularly
strongly. The continual introduction of new product
that attracts and excites our customers and the ongoing
development of consistent and credible own brand
products are key initiatives to drive sales growth into
the future.
Overall gross profit margin improved from 38.4% to
39.0% during the year, through initiatives in improving
trading terms, through reducing the cost of product
returns and shrinkage and through improvements in
supply chain operations. We have also been successful
in reducing underlying operating costs in many areas of
the business which assisted us to fund the increase in
advertising costs without a significant increase in overall
operating costs.
The performance of our supply chain was particularly
pleasing during the key promotional periods at
Christmas and Easter. However, we have more to do to
achieve the consistent level of in stock availability that
we need to provide to our customers all year round. We
also have further work to do to ensure that we are
holding the right amount of inventory in the business to
maximise sales and margin whilst also achieving
required return on capital.
Whilst we have improved our supply chain operations
during the year, a major step forward was the
implementation of a Distribution Requirements
Planning system in February. This, combined with our
demand planning and forecasting initiatives, allowed us
to better determine customer requirements and ensure
SCA2005/12
Team Members
As I mentioned at the start of my review, 2004/05 was
a year of which all of our team members can be proud.
We now have over 3,500 team members across the
Group and I am incredibly proud to be leading such a
committed group of people. There are always plenty of
challenges that arise when you grow a business at the
rate we have with the Super Cheap Auto Group but
whatever challenges arise our people always take them
on and smash through. We will continue to place
substantial emphasis on the core values that make up
the Super Cheap Auto Culture and the importance of
our Team Framework Principles. In line with one of our
Team Framework Principles, we always try to recognise
and celebrate major achievements. Many Team
Members are worthy of recognition, as you will see
later in this report, but I would like to thank all team
members for their contribution.
Looking ahead
These are exciting times for the Super Cheap Auto
Group. Whilst Super Cheap Auto is on track to establish
itself as the clear leader in the retailing of auto parts
and accessories across Australia and New Zealand, we
look forward to the successful launch of our BCF
business. We will continue to improve the functions and
systems that support our retail businesses and we will
continue to look for further retail opportunities. There is
much to do but that is what makes working in this
business so enjoyable and rewarding. I look forward to
sharing our future successes with you.
that we are carrying the right amount of stock in
every store. Following implementation, we identified
that we needed to embark on a nine month exercise
to rebalance stock across our Stores and Distribution
Centres. This exercise has meant that average stocks
per store are running at just over $550,000 per store
at year end as opposed to our target of $500,000.
We are planning to reduce inventory and be in line
with targets during the ‘06 financial year.
Review of Financial Condition
We have continued to fund our investment in the
growth of the business through debt. During the year,
we have negotiated increases in our funding facilities
to support the acquisition of CampMart and we are
currently in the process of establishing increased
facilities to service the requirements of the Group over
the next three years. It is envisaged that these new
facilities will include a combination of term debt and
working capital facilities.
Net debt for the Group has increased from $37 million
to $74.85 million during the year. Much of this
increase is attributable to the timing of our year end
balance date, being 2 July 2005. This has resulted in
$21.8 million in payments made to vendors and
landlords on 1 July 2005 being included in net
debt at the end of the year. These payments would
normally fall into the beginning of the following
financial year. Despite the increase in net debt, the
Group has remained comfortably within its facility
covenant arrangements.
Cash flow from operations was an inflow of
$4.1 million and was impacted by the timing issues
referred to above. During the year, the Company
successfully renegotiated its trading terms with its major
inventory suppliers with a resultant benefit of a
$15 million reduction in working capital requirements.
This benefit offset the increased investment in inventory
referred to above.
Overall Group capital expenditure was $16.7 million
with $5.6 million in new store fit-out, $7.7 million in
Supply Chain and IT projects and $3.4 million in
ongoing maintenance projects across the Group.
SCA2005/13
“BCF – IT’S LIKE A MATE WITH THE
MOST AWESOME SHED I’VE EVER
SEEN... WELL ORGANISED WITH
EVERYTHING I NEED FOR MY BOATING,
CAMPING OR FISHING EXPERIENCE.”
As outlined in our IPO Prospectus, we believe that the
capabilities that we have developed in growing the Super
Cheap Auto business can be successfully applied to growing
other retail formats.
In early 2003, we identified camping and outdoor leisure
products as a retail category in which we believed there was
an opportunity to develop a new and innovative retail
format. This led to the birth of BCF – the one retail format in
Australia offering everything you need for your boating,
camping and fishing experience. This business will open to
the public later this year.
As part of the development of BCF, we made the decision to
purchase the four store CampMart business in January
2005. The acquisition of this business, which had been
successfully run for 20 years, presented the opportunity to
accelerate our understanding of the camping market and its
customers’ expectations. We have used this experience to
fine tune our BCF concept.
SCA2005/14
SCA2005/15
THERE ARE NOW 3,604 TEAM MEMBERS
THE DEDICATION OF THE SUPER CHEAP AUTO
DRIVER OF SUPER CHEAP AUTO’S GROWTH.
CAN BE FOUND AT ALL LEVELS OF
SCA2005/16
ACROSS AUSTRALIA AND NEW ZEALAND.
TEAM MEMBERS CONTINUES TO BE A KEY
A STRONG SENSE OF PRIDE AND TEAMWORK
THE SUPER CHEAP AUTO TEAM.
SCA2005/17
BOARD OF DIRECTORS
DICK MCILWAIN (1), BA, FAICD
Independent Non-Executive Chairman
Dick McIlwain, aged 58, was appointed a Director
of the Company on 19 May 2004. Dick has been the
Chief Executive of UNiTAB Limited since 1989 and
the Managing Director and Chief Executive since 1999.
Prior to joining UNiTAB Limited, Dick held operational
roles at Australian Airlines (now the domestic arm of
Qantas) and a human resources and industrial
relations role at coal miner Utah Development
Company. He is a Fellow of the Australian Institute
of Company Directors.
BOB THORN (4)
Managing Director
Bob Thorn, aged 50, was appointed a Director of the
Company on 8 April 2004. Bob joined Super Cheap
Auto Pty Ltd in 1993 as General Manager and in 1996
was appointed Managing Director. He has almost 30
years of retailing experience across a range of retail
formats, from high profile department store
management to more specialised retail outlets.
Prior to joining Super Cheap Auto, Bob was a senior
executive with the Lincraft chain and commenced his
retail career and held management positions with
David Jones Limited.
REG ROWE (5)
Non-Executive Director
Reg Rowe, aged 61, was appointed a Director of
the Company on 8 April 2004. Reg and Hazel Rowe
founded an automotive accessories mail order business
in 1972 which they ran from their Queensland home.
In 1974 they commenced retail operations of the
business which evolved into Super Cheap Auto. Reg
served as Managing Director of Super Cheap Auto Pty
Ltd until 1996 and then Chairman from 1996 to 2004.
Prior to this, Reg had 13 years experience in various
retail roles at Myer Department Stores.
DARRYL MCDONOUGH (3), BBus (Acty),
LLB (Hons), SJD, FCPA, FAICD
Independent Non-Executive Director
Darryl McDonough, aged 54, was appointed a
Director of the Company on 19 May 2004. Darryl is
a practicing solicitor with over 20 years of corporate
experience. He is the Chairman of Cellnet Group Limited
and the Chair of the Queensland Competition Authority.
He has served as a director of a number of public
companies in the past including Bank of Queensland
Limited. Darryl is a Past-President of the Australian
Institute of Company Directors, Queensland Division.
ROBERT WRIGHT (2), BCom, FCPA, MAICD
Independent Non-Executive Director
Mr Robert Wright, aged 56, was appointed a Director
of the Company on 19 May 2004. Robert has 30 years’
financial management experience, having held
a number of chief financial officer positions, including
finance director of David Jones Limited. He is currently
the Chairman of Dexion Limited and a director of
Australian Pipeline Limited, SAI Global Limited and
the reconstructed Harris Scarfe Australia Pty Limited.
Robert is the Chairman of the Audit and Risk
Management Committee.
SCA2005/18
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SCA2005/20
SENIOR MANAGEMENT TEAM
GETTING TO GRIPS WITH SOME OF THE COMPANY'S
BEST SELLING PRODUCTS
PETER BIRTLES (1) – Chief Financial Officer
and Company Secretary
Peter is a chartered accountant with over 19 years
experience. Prior to joining Super Cheap Auto in 2001,
Peter spent 12 years working with The Boots Company
in the United Kingdom and Australia in a variety of
senior finance and information technology roles where
he ultimately held the position of Head of Finance and
Planning. Prior to joining The Boots Company, Peter
worked for Coopers & Lybrand.
Peter is responsible for the Company’s financial
accounting, planning and reporting, treasury, tax,
finance systems, payroll, internal audit and has overall
responsibility for business systems.
STEVE DOYLE (5) – General Manager – BCF
Steve joined Super Cheap Auto in 2002 as Marketing
Manager. He subsequently held the positions of
General Manager - Retail and General Manager –
Merchandising. Earlier this year, following the
acquisition of CampMart, Steve was appointed General
Manager - CampMart. CampMart was relaunched as
BCF in July this year.
Steve has 16 years of retail experience in Australia and
overseas. Prior to joining Super Cheap Auto, Steve was
a National Business Manager in Woolworths Limited’s
merchandise team. In 2004, Steve received the
Australian Institute of Management Young Manager of
the Year Award for Brisbane.
DAVID AJALA (3) – General Manager
Merchandising – Super Cheap Auto
David has over 25 years’ retail experience in Coles
Myer. Prior to joining the Super Cheap Auto Group in
July 2005, David held a number of senior management
positions across several States in Australia, including
National buyer, National Promotions Manager, Area
and Regional Operations Manager and more recently
as a National Business Manager for CML Food and
Liquor division, responsible for both the Coles brand
and the Bi Lo discount format.
David has completed Post Graduate studies with
Deakin University as part of his MBA. David’s key
responsibilities at Super Cheap Auto include
merchandising, procurement, inventory, demand
planning and marketing.
MARK GRAHAME (2) – Group Procurement
Manager
Mark joined the Super Cheap Auto Group in May
2005. He is responsible for establishing cost effective
and consistent forecasting, replenishment and
procurement processes across the Group. In this role,
Mark works closely with our Merchandising, Supply
Chain and Business Systems teams and with our
vendors, both in Australia and Asia.
Mark has over twenty years experience in sales,
marketing and procurement in information technology,
industrial chemicals, automotive tyres, footwear and
automotive parts.
Mark holds a B Commerce and an MBA (Hons).
NICK BINNS (8) – Business Systems Manager
Nick joined the Super Cheap Auto Group in 2001.
Prior to joining the Company, he had spent seven years
at Cambridge Management Consulting with a focus on
process, system and change management.
Nick has responsibility for process development and
information technology across the Group. Recent
projects include the implementation of an Advanced
Planning and Optimisation application to help improve
in-stock position at store and reduce overall inventory
holdings and the implementation of a Business
Intelligence solution to provide improved analysis
capability to assist in satisfying customer needs at a
local market level. Nick reports to Peter Birtles.
PAM PUGSLEY (6) – General Manager Retail
Operations – Super Cheap Auto
Pam joined Super Cheap Auto in November 2004.
Pam has 22 years of retail experience in Coles Myer
Limited. Prior to joining Super Cheap Auto, Pam was
a Regional Manager for Coles Supermarkets and
Pick’n’Pay, and previously held positions in
Merchandising, Store Development, and State Services
Management in a variety of locations across Australia.
In 2002, Pam completed a Post Graduate qualification
through Deakin University in Melbourne. Pam has the
responsibility for the day-to-day operations of our
stores and for set up of new stores.
ROBERT DAWKINS (4) – Property Services
Manager
Robert has 15 years experience in property
management. Prior to joining the Super Cheap Auto
Group in 2001, Robert was the Property Manager for
the Bank of Queensland Limited.
Robert’s key responsibilities include property and
facilities management, property leasing and
development, project and contract management and
asset acquisition and disposal.
STEVE TEWKESBURY (7) – Supply Chain Manager
Steve joined Super Cheap Auto in 2004. He has in
excess of 23 years experience in sales, marketing and
logistics. Prior to joining Super Cheap Auto, Steve
worked on Global Supply Chain and E-Commerce
Strategy for Reckitt & Colman. He holds a degree
qualification in E-Commerce from Monash University.
Steve is responsible for the Company’s complete
supply chain function which spans across Australia
and New Zealand.
SCA2005/21
SCA2005/22
GROUP EARNINGS BEFORE INTEREST
AND TAX OF $29.5 MILLION GREW BY
29.4% OVER THE PRIOR PERIOD.
SCA2005/23
2004 ANNUAL AWARDS
SUPER CHEAP AUTO CELEBRATES THE ACHIEVEMENTS
OF ITS TEAM MEMBERS
Each year Super Cheap Auto (“SCA”) celebrates
the achievements of its team members at its annual
Managers’ Meeting. Throughout the year, team members
are nominated by their peers and supervisors as having
gone that extra mile, whilst outstanding stores are
nominated by their Area Manager leading up to the
awards announcement.
opened and they needed a casual with experience so
Luke transferred stores. In November 2003, after
completing school, Luke was offered a full-time position
at Kangaroo Flat and quickly accepted. In October 2004,
Luke was appointed Assistant Manager at the Bendigo
store and in November, attended and successfully
completed SCARMA.
As always the awards are decided with great difficulty
and this year, for the first time, the award for Manager of
the Year was presented to two exceptional team members
and a special recognition award was presented to a team
member for her tireless work throughout the year.
The 2004 award winners were:
RALDA GROVE (3), Manager of the Year
Ralda joined SCA in February 2002 as a Trainee Manager
at Caboolture. She quickly climbed the promotion ladder
and by December 2002 was appointed Manager of the
Deception Bay store. In January 2003, Ralda transferred
to the new Burpengary store as Manager and then to our
larger store at Chermside in June 2004. In August 2004,
Ralda took on the role of Manager of our training
academy, SCARMA, giving her the opportunity to share
her knowledge and experience with new Managers during
the course of their training. Ralda is now responsible for
managing the Call Centre at our Head Office.
Ralda is a high achiever having won the Manager of the
Month award in September 2002 and December 2003.
In June 2004, Ralda was again nominated for this award
and was successful because of her consistently high
results, her strength to influence and motivate the team,
her enthusiasm and commitment to the Company and
those she works with. Ralda’s June 2004 award led her to
win the 2004 Manager of the Year award.
DAVID HOCKINGS (1), Manager of the Year
David joined SCA in March 2002 as Manager of the
Ayr store. In May 2003, David played an integral role
as Training Manager in Western Australia during the
Marlows/Rocca Bros acquisition (SEP 7). David remained
in Western Australia following the SEP 7 transition
continuing to build the SCA offer we know today. In March
2005, David was promoted to Area Manager for South
Australia.
In December 2003, whilst working as Manager of the
Midland store, David won Manager of the Month. His
nomination was the result of a number of achievements –
the huge role he played in SEP 7, including conversion of
existing stores to SCA layouts, recruitment and training
and because of his efforts in leading and developing his
Team at Midland store to become one of WA’s top 3 stores
in trade.
LUKE OXLADE (2), Team Member of the Year
Luke joined SCA in September 2001 at the tender age of 15
whilst still at school. Luke worked as a casual at the newly
opened Bendigo store and as his knowledge of cars and
products grew so did the demand for him to be regularly
in store. In December 2002, the Kangaroo Flat store
SCA2005/24
Since 2001, Luke has been nominated 3 times for Team
Member of the Month. His successful nomination in July
2003 led to his winning 2004 Team Member of the Year.
His award is the result of his self-motivation, dependability,
and his tremendous support and commitment to his
Kangaroo Flat team.
MACKAY STORE (4), Store of the Year
In December 1995, Mackay opened as the 21st Super
Cheap Auto store.
Mackay Store was nominated along with 14 others as the
outstanding store in 2004. Mackay won the award
because of its consistent performance, both financially and
in standard of presentation. The store came in 2% over
sales budget, and 7% over on the previous year sales. The
Mackay team scored very well at 92%, 12% over the
minimum requirement, during its Store Operating
Standards audit. With these results the store was well
deserving of the award.
This store could not have come to where it is today,
without its team including: Eric Petersen (Manager),
Tim Pratt (Asst. Manager), Christine Lavis, Simone Nash,
Della Bartlett, Hayley Sbravati, Danielle Fitzgerald, Laura
Calvert, Luke Sydmonds-Smith, Grant Eddy, Dustin
Cavanagh, Heather Davies, Daniel Thomas, Sarah
Edwards, Emma Marshall and Jack Simpson.
SONIA IRWIN (5), Special Recognition Award
In March 2000, Sonia joined SCA as a Casual Team
Member at one of our larger stores of the day, Toowoomba
City. Within 4 weeks she became a full-time team member
and spent the next 12 months in various roles from
cashiering, becoming a 3IC and acting Assistant Manager.
In March 2001, Sonia was asked to join the New Store
Opening team and eventually became a leader during
the conversion of the Marlows/Rocca’s stores to the SCA
format. Not long after, Sonia was asked to be a Set-Up
Manager when SCA launched in New Zealand. In January
2004, Sonia was overwhelmed to be asked to take on the
role of New Store Opening Manager for SCA and
accepted it with great enthusiasm.
Sonia has previously won two Team Member of the
Month awards and in June 2004 was nominated for
Manager of the Month award. This nomination was as
a result of the success that Sonia and her team had in
meeting challenges and setting new benchmarks –
able to do a fantastic set-up in only 5 days and leaving
the store in great condition. Sonia has been described as
a “powerhouse and an exemplary role model”. Her role is
not typical of a SCA manager and it is for these reasons
that Sonia was presented with a Special Recognition Award.
1
2
3
4
5
SCA2005/25
SUPER CHEAP AUTO, STOCK
EVERY STORE, PRIDES ITSELF O
ITS PRODUC
SCA2005/26
ING OVER 10,000 ITEMS IN
N THE BREADTH AND VALUE OF
T OFFERING.
SCA2005/27
LOCATION: GYMPIE QLD AUSTRALIA ADDRESS: 19 WICKHAM STREET GYMPIE
TEN
STORE BUILDDAY
START DATE: 09-05-05 FINISH DATE: 19-05-05 GRAND OPENING: 28-05-05
GYMPIE IS SUPER CHEAP AUTO’S 211TH STORE
PHOTOGRAPHED BY TEAM MEMBER JO WILLEY
SCA2005/28
DAY1 GYMPIE
DAY 02 GYMPIE
DAY 03 GYMPIE
DAY 05 GYMPIE
DAY 06 GYMPIE
DAY 07 GYMPIE
DAY 08 GYMPIE
DAY 09 GYMPIE
DAY 10 GYMPIE
DAY 04 GYMPIE
OPENING DAY!!!!!
STORE OPENINGS ARE A CULMINATION OF TEAMWORK
ACROSS MANY DEPARTMENTS THROUGHOUT THE BUSINESS
STARTING AT PROPERTY THEN WORKING THROUGH FINANCE,
MERCHANDISING, BUSINESS SYSTEMS AND
TECHNOLOGY, HUMAN RESOURCES, LOGISTICS AND RETAIL.
WORKING FROM A PROVEN PROCESS, DEVELOPED OVER TIME,
ALL AREAS OF THE BUSINESS INTERLINK WITH EACH
OTHER TO ENSURE DEADLINES ARE REACHED AND STORES OPEN
8.00 AM SHARP ON THE DESIGNATED DAY.
THE PHYSICAL STORE OPENING PROCESS IS ACHIEVED THROUGH
THE OUTSTANDING EFFORTS OF A DEDICATED STORE OPENING
TEAM THAT COMPRISE A MANAGER AND 8 OTHERS.
AT PRESENT, THERE ARE TWO PERMANENT STORE SET-UP TEAMS,
ONE FOR SUPER CHEAP AUTO AND THE OTHER FOR BCF.
ADDITIONAL TEAMS ARE CREATED AS REQUIRED TO ASSIST
WITH MULTIPLE STORE OPENINGS.
SCA2005/29
V8 SUPERCAR
MUSCLE CAR MANIA
Since 1995, sponsorship of Motorsport has played an
important role in the growth of the Super Cheap Auto
business. Involvement in the V8 Supercar series, which
is one of the most widely watched sporting events in
Australia, has ensured that the Super Cheap Auto
brand name is recognised by its target customers,
many of whom are motor sport enthusiasts. This
coverage has been a good introduction even in areas
where the business has had no stores. This has allowed
the business to quickly build customer numbers as it
extended its store network.
This year the Company has taken its involvement to
a whole new level with sponsorship of the 2 car
Super Cheap Auto Racing team and becoming the
naming rights sponsor of the Bathurst 1000 for the
next three years.
The Super Cheap Auto Racing team, with its two gifted
drivers Greg Murphy and Paul Weel, provides the best
opportunity yet to win races and become a dominant
force on the track.
The Bathurst 1000 is one of Australia’s iconic events
which will put the Super Cheap Auto brand name in
front of audiences around the world.
SCA2005/30
SCA2005/31
SCA2005/32
CORPORATE GOVERNANCE
THE COMPANY'S APPROACH TO ESTABLISHING AN EFFECTIVE SYSTEM
OF CORPORATE GOVERNANCE EXPLAINED
Super Cheap Auto Group Limited (“the Company”)
and the Board are committed to achieving and
demonstrating high standards of corporate governance.
The Directors of Super Cheap Auto Group Limited are
accountable to shareholders for the proper management
of the business and affairs of the Company.
A description of the Company’s main corporate
governance practices is set out below. All these
practices were established in the three months
following the Company’s incorporation.
The Board of Directors
The Board of Directors, working with senior
management, is responsible to shareholders
for the overall management of the Company’s business
and affairs. The Directors’ overriding objective is to
increase shareholder value within an appropriate
framework which protects the rights and interests of
company shareholders and ensures the Company and
its controlled entities are properly managed.
The Board delegates responsibility for day-to-day
management of the Company to the Managing
Director.
Composition of the Board
The constitution of the Company provides that the
number of Directors is to be not less than three nor
more than eight. The Board is currently comprised of
five Directors, four of whom (including the Chairman)
hold their positions in a non-executive capacity.
The Board operates in accordance with the broad
principles set out in its charter which is available from
the Corporate Governance information section of the
Company website at www.supercheapauto.com.
The composition of the Board is reviewed annually by
the Board Nomination and Remuneration Committee
to ensure that it has available an appropriate mix of
skills and experience to ensure the interests of
shareholders are served.
Details of the members of the Board, their experience,
expertise, qualifications and independent status
are profiled in the Directors' Report section on pages
38 to 44.
Responsibilities
The responsibilities of the Board include:
(cid:127) approving the Company’s goals and
strategic direction;
(cid:127) monitoring financial performance, including adopting
annual budgets and approving
Super Cheap Auto’s financial statements;
(cid:127) ensuring that adequate systems of internal control
exist and are appropriately monitored for
compliance;
(cid:127) selecting the Managing Director and review the
performance of senior management; and
(cid:127) ensuring significant business risks are identified
and appropriately managed.
Directors’ Independence
As stated there are five Directors, three of whom
are Independent Non-Executive Directors (including
the Chairman). The predominance of Independent
Non-Executive Directors clearly separates the Board
from the Company’s executive management and
enshrines board independence. The structure also
provides the Company with the benefit of a diverse
range of experience, qualifications and professional skills.
The Board has adopted the independence definition
suggested by the ASX Corporate Governance Council
and as such three of Super Cheap Auto’s Directors
(namely Mr Dick McIlwain, Dr Darryl McDonough and
Mr Robert Wright) are considered to be independent by
reference to that definition.
Independent Professional Advice
The Board (and each individual Director)
is entitled to seek independent professional advice
consistent with Corporate Governance Practices at the
Company’s expense (subject to the reasonableness of
the costs and Board consent) in the conduct of its duties
for the Company.
Performance Assessment
The Board shall undertake an annual performance
evaluation of itself that compares the performance of
the Board with the requirements of the Board Charter,
sets the goals and objectives of the Board for the
upcoming year and effects any improvements to
the Board Charter that are necessary or desirable.
This evaluation is conducted by the Board and
includes consideration of the annual assessment of
the effectiveness of the Board as conducted by the
Board Nomination and Remuneration Committee.
SCA2005/33
CORPORATE GOVERNANCE
CONTINUED
Financial Reporting
The Board is provided with monthly reports from
management on the financial performance of the
Company. The monthly reports include details of
all key financial measures reported against budgets
approved by the Board. The Company’s financial
report preparation and approval process for the
2005 financial year involved both the Managing
Director and the Chief Financial Officer making
the following certifications to the Board that:
(cid:127) the Company’s financial reports and accompanying
notes represent a true and fair view in all material
respects of the Company’s financial condition and
operational results and are in accordance with
relevant accounting standards;
(cid:127) the above statement is founded on a sound system
of risk management and internal compliance and
control which implements the policies adopted by
the Board; and
(cid:127) the Company’s risk management and internal
compliance and control system is operating efficiently
and effectively in all material respects.
Board Committees
The Board has established two Committees to
assist it in carrying out its responsibilities, the Board
Nomination and Remuneration Committee and the
Audit and Risk Committee.
Each Committee has its own written charter setting
out its role and responsibilities, composition, structure,
membership requirements and the manner in which
the Committee is to operate. All matters determined
by Committees are submitted to the full Board as
recommendations for Board decision.
Board Nomination and
Remuneration Committee
The current composition of the Board Nomination
and Remuneration Committee is the full Board. The
Chairman is the Chairman of the Board. The Managing
Director does not have voting rights.
The Committee operates in accordance with its charter
which is available on the Company’s website.
SCA2005/34
The Board has charged the Board Nomination and
Remuneration Committee with responsibility to:
(cid:127) assist the Board in ensuring that it is comprised
of Directors with the appropriate mix of skills,
experiences and competencies to discharge its
mandate effectively;
(cid:127) establish procedures for the selection and
recommendation of candidates suitable for
appointment to the Board;
(cid:127) ensure that the Company has in place appropriate
remuneration policies designed to meet the needs
of the Company and to enhance corporate and
individual performance;
(cid:127) reviews the succession planning for the Board and
senior management and reports to the Board on
such issues.
Audit and Risk Committee
The existence of the Audit and Risk Committee is
considered by the Company to be a key element of
its corporate governance program and part of the
Company’s commitment to best practice in the area
of corporate governance.
The Audit and Risk Committee consists of the following
Non-Executive Independent Directors:
R J Wright (Chairman)
R D McIlwain
D D McDonough
All members of the Audit and Risk Committee are
financially literate and have the requisite financial
expertise. Some members have an understanding
of the industry in which the Company operates.
The Audit and Risk Committee operates in accordance
with a charter which is available on the Company’s
website. The Audit and Risk Committee supports the
full Board and essentially acts in a review and advisory
capacity. The Committee is considered to be a more
efficient forum than the full Board for focusing
on particular issues relevant to:
(cid:127) verifying and safeguarding the integrity of the
Company’s financial reporting including the review,
assessment and approval of the half-year financial
report, the annual report and all other financial
information published by the Company or released
to the market;
(cid:127) establishing a sound system of risk oversight and
management, and, internal control;
(cid:127) establishing a sound system of compliance
with laws and regulations, internal compliance
guidelines, policies, procedures and control systems
and prescribed internal standards of behaviour.
This committee provides ongoing assurance
in the areas of:
(cid:127) financial administration and reporting;
(cid:127) audit control and independence;
(cid:127) legal compliance;
(cid:127) accounting policies and standards;
(cid:127) internal controls; and
(cid:127) risk oversight and management.
External Auditors
The Company’s and Audit and Risk Committee’s policy
is to appoint external auditors who clearly demonstrate
quality and independence.
The Audit Committee:
(cid:127) recommends to the Board the appointment
of External Auditors and their fee;
(cid:127) reviews the performance of the External Auditors;
(cid:127) establishes processes to ensure the independence
and competence of the External Auditors' Audit
Managers;
(cid:127) oversees and appraises the quality of audits
conducted by the External Auditors;
(cid:127) approves External Audit yearly audit plans for the
Company and its subsidiaries and oversees the scope
of audits to be conducted;
(cid:127) ensuring that no management restrictions
are placed upon access to relevant information
or personnel by External Auditors.
The performance of the External Auditor is reviewed
annually.
An analysis of fees paid to the External Auditors, including
a break-down of fees for non-audit services is provided
in Note 27 to the financial statements. It is the policy of
the External Auditors to provide an annual declaration
of their independence to the Audit and Risk Committee.
The External Auditor is requested to attend the
annual general meeting and be available to answer
shareholder questions about the conduct of the audit
and the preparation and content of the audit report.
Code of Conduct
The Company has developed a statement of Corporate
Governance Principles and a Code of Conduct ("the
Code") which has been fully endorsed by the Board and
applies to all Directors and team members.
In summary, the Code requires that at all times all
Company team members act with the utmost integrity,
objectivity and in compliance with the letter and the
spirit of the law and company policies.
A copy of the Code is available on the Company’s
website.
Dealing in Shares
The Company has a formal written policy for Directors
and officers with respect to trading in the Company’s
securities (“Trading Policy”). Directors and senior
management (and their associates) are prohibited from
engaging in short-term trading of Company securities.
The policy also restricts the selling of Company
securities to three “window” periods (between 24 hours
and 30 working days following the release of the
annual results, the release of the half-yearly results
and the close of the annual general meeting) and such
other times as the Board permits. In addition, Directors
and senior management must notify the Chairman
before they buy or sell Company securities
and confirm once the transaction is complete.
In all instances buying or selling Super Cheap Auto
shares is not permitted at any time by any person who
possesses price sensitive information not available to
the market.
A copy of the Trading Policy is available on the
Company’s website.
Continuous Disclosure and
Shareholder Communication
The Company has written policies and procedures
on information disclosure that focus on continuous
disclosure of any information concerning the Company
and its controlled entities that a reasonable person
would expect to have a material effect on the price of
the Company’s securities. These policies and
procedures also include the arrangements the
Company has in place to promote communication with
shareholders and encourage effective participation at
general meetings. A summary of these policies and
procedures is available on the Company’s website.
SCA2005/35
SCA2005/36
WWW.SUPERCHEAPAUTO.COM
AUSTRALIAN CAPITAL TERRITORY
Belconnen (02) 6253 5660
Fyshwick (02) 6239 2333
Tuggeranong (02) 6293 2233
NORTHERN TERRITORY
Alice Springs (08) 8952 7455
Berrimah (08) 8932 9866
Darwin (08) 8927 2888
QUEENSLAND
Acacia Ridge (07) 3274 6311
Ashmore (07) 5539 2033
Ayr (07) 4783 7377
Biloela (07) 4992 5299
Booval (07) 3282 6356
Browns Plains (07) 3806 8177
Bundaberg (07) 4151 1111
Burleigh (07) 5576 6000
Burpengary (07) 3888 9366
Caboolture (07) 5499 0488
Cairns (Earlville) (07) 4033 0600
Cannon Hill (07) 3395 8622
Capalaba (07) 3823 1677
Carseldine (07) 3261 4777
Chermside (07) 3359 4930
Cleveland (07) 3286 5777
Currimundi (07) 5437 7400
Dalby (07) 4662 2933
Deception Bay (07) 3204 8100
Enoggera (07) 3855 3188
Gladstone (07) 4976 9133
Goodna (07) 3818 0722
Gympie (07) 5482 7566
Hermit Park (07) 4721 6488
Hervey Bay (Pialba) (07) 4124 1211
Innisfail (07) 4061 4788
Ipswich (07) 3812 2366
Kallangur (07) 3204 4922
Kawana Waters (07) 5478 3555
Keperra (07) 3851 3611
Kingaroy (07) 4162 5733
Labrador (07) 5537 7977
Lawnton (07) 3881 2800
Loganholme (07) 3209 9322
Loganlea (07) 3805 2688
Macgregor (07) 3849 6822
Mackay (07) 4942 2344
Mackay City (07) 4951 0944
Manunda (07) 4053 6912
Maroochydore (07) 5479 4844
Maryborough (07) 4121 3332
Mermaid Beach (07) 5554 6233
Moorooka (07) 3892 2565
Mt Isa (07) 4749 3785
Nerang (07) 5527 3988
Noosa (07) 5455 5444
Nundah (07) 3256 7600
Redcliffe (07) 3284 2055
Rockhampton (07) 4922 5433
Smithfield (Cairns) (07) 4038 1588
Southport (07) 5527 0666
Stones Corner (07) 3394 4844
Taigum (07) 3265 7211
Taringa (07) 3871 3808
Thuringowa (07) 4773 9000
Toowoomba City (07) 4632 0799
Toowoomba South (07) 4635 7577
Townsville (Garbutt) (07) 4725 6866
Underwood (07) 3841 3400
Warwick (07) 4661 7633
Windsor (07) 3857 0677
Yamanto (07) 3294 1033
NEW SOUTH WALES
Albury (02) 6041 1866
Auburn (02) 9648 5722
Bankstown (02) 9709 6500
Bathurst (02) 6331 7122
Blacktown (02) 9676 1444
Bondi Junction (02) 9389 3968
Brookvale (02) 9905 5666
Campbelltown (02) 4625 9000
Coffs Harbour (02) 6651 8550
Dubbo (02) 6882 0611
Erina (02) 4367 4850
Fairy Meadow (02) 4225 2366
Glendale (02) 4954 6066
Goulburn (02) 4822 9190
Grafton (02) 6642 7222
Griffith (02) 6962 9566
Inverell (02) 6722 5466
Kotara (02) 4965 5488
Lake Haven (02) 4392 7077
Lake Road (02) 6581 5778
Lakemba (02) 9740 9999
Lismore (02) 6622 7797
Liverpool (02) 9600 7100
Maitland (02) 4933 5133
Mcgraths Hill (02) 4577 8822
Menai (02) 9543 3577
Mt Druitt (02) 9677 1400
Mudgee (02) 6372 7055
Narellan (02) 4647 4533
Newcastle (02) 4968 9833
Nowra (02) 4422 9700
Orange (02) 6369 1066
Penrith (02) 4733 3322
Port Macquarie (02) 6583 2099
Queanbeyan (02) 6299 4099
Rockdale (02) 9567 0966
Shellharbour (02) 4297 6899
Singleton (02) 6571 5955
Tamworth (02) 6762 4433
Taree (02) 6551 6211
Tweed Heads (07) 5524 8911
Ulladulla (02) 4455 3488
Villawood (02) 9632 0877
Wagga Wagga (02) 6921 6922
Warwick Farm (02) 9822 7299
Wentworthville (02) 9896 0166
West Gosford (02) 4323 2044
Wetherill Park (02) 9604 9622
Designed by emeryfrost, Sydney
www.emeryfrost.com
Photography by Craig Voevodin, Ray Parslow
Printing by Lindsay Yates & Partners
SOUTH AUSTRALIA
Darlington (08) 8358 3566
Elizabeth (08) 8287 6533
Kilkenny (08) 8347 2214
Marion (08) 8296 2210
Noarlunga (08) 8384 2833
Para Hills (08) 8258 2760
Salisbury (08) 8258 4811
Thebarton (08) 8354 0666
TASMANIA
Devonport (03) 6424 3244
Glenorchy (03) 6272 9200
Launceston (03) 6333 0511
VICTORIA
Bairnsdale (03) 5153 2799
Ballarat (03) 5339 9455
Bendigo (03) 5442 7877
Broadmeadows (03) 9309 2799
Carrum Downs (03) 9782 8305
Cranbourne (03) 5995 7299
Dandenong (03) 9706 7788
Echuca (03) 5480 6788
Epping (03) 9408 4288
Essendon (03) 9379 3600
Frankston (03) 9781 2288
Hoppers Crossing (03) 9748 7277
Kangaroo Flat (03) 5447 9144
Keysborough (03) 9798 8466
Knox City (03) 9800 4722
Maribyrnong (03) 9318 8444
Mentone (03) 9585 0399
Mildura (03) 5022 2588
Moe (03) 5126 1755
North Geelong (03) 5272 3277
Preston (03) 9484 6006
Ringwood (03) 9847 0055
Rowville (03) 9764 1677
Sale (03) 5144 3466
Shepparton (03) 5831 3944
Sunbury (03) 9746 3610
Sunshine (03) 9310 2488
Thomastown (03) 9466 3699
Traralgon (03) 5174 9755
Wangaratta (03) 5722 3244
Warragul (03) 5623 5699
Warrnambool (03) 5561 7660
Watergardens (03) 9390 9699
Waurn Ponds (03) 5241 8947
Werribee (03) 9748 0055
Yarraville (03) 9318 9928
WESTERN AUSTRALIA
Balcatta (08) 9240 1566
Belmont (08) 9477 5699
Bunbury (08) 9721 9977
Canning Vale (08) 9455 3411
Fremantle (08) 9335 8633
Gosnells (08) 9398 4822
Joondalup (08) 9300 0744
Kalgoorlie (08) 9021 7145
Mandurah (08) 9581 8588
Midland (08) 9274 5422
Morley (08) 9375 6933
Myaree (08) 9317 7699
O’Connor (08) 9314 3822
Osborne Park (08) 9443 3711
Rockingham (08) 9592 7999
Spearwood (08) 9494 2144
Victoria Park (08) 9361 8422
NEW ZEALAND
Albany 0011 64 9 448 2461
Alicetown 0011 64 4 569 1576
Cambridge 0011 64 7 823 7618
Dunedin 0011 64 3 477 2590
Feilding 0011 64 6 323 2074
Gisborne 0011 64 6 868 3760
Hamilton 0011 64 7 834 3586
Hastings 0011 64 6 870 4521
Hawera 0011 64 6 278 3641
Highland Park 0011 64 9 533 3201
Invercargill 0011 64 3 214 4385
Kelston 0011 64 9 813 2091
Manukau 0011 64 9 250 4392
Masterton 0011 64 6 370 3308
Mt Maunganui 0011 64 7 574 1593
Mt Wellington 0011 64 9 574 6435
Napier 0011 64 6 842 1461
New Plymouth 0011 64 6 758 3882
Palmerston North 0011 64 6 354 1743
Paraparaumu 0011 64 4 298 1523
Porirua 0011 64 4 238 2641
Riccarton 0011 64 3 341 5087
Rotorua 0011 64 7 348 5275
Stoke 0011 64 3 547 8394
Tauranga 0011 64 7 579 5436
Tory Street 0011 64 4 801 6072
Upper Hutt 0011 64 4 528 0278
Wairau Park 0011 64 9 442 1905
Wanganui 0011 64 6 348 9407
Whakatane 0011 64 7 308 9072
Whangarei 0011 64 9 459 6440
Woolston 0011 64 3 389 1249
BCF (CAMPMART) QUEENSLAND
Capalaba (07) 3245 2220
Keperra (07) 3851 4625
Lawnton (07) 3889 2911
Springwood (07) 3808 2405
SUPER CHEAP AUTO
GROUP LIMITED
751 Gympie Road
Lawnton Qld 4501
Telephone (07) 3205 8511
Facsimile (07) 3205 8522
www.supercheapauto.com.au
FINANCIAL STATEMENTS
–––––––––––––––––––––––––––––––––––––––––––––
Super Cheap Auto Group Limited
For the period from:
–––––––––––––––––––––––––––––––––––––––––––––
27 JUNE 2004
TO
2 JULY 2005
–––––––––––––––––––––––––––––––––––––––––––––
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/37
DIRECTORS' REPORT CONTINUED
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
FINANCIAL POSITION
A review of the financial position of the
consolidated entity is set out on pages 10 to 13.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 6 July 2004, the Company's shares were listed
on the Australian Stock Exchange.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL
PERIOD
In the opinion of the Directors, there were no
significant matters subsequent to the end of the
financial period.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF
OPERATIONS
Likely developments in the operations of the
consolidated entity in future financial years
are referred to in pages 10 to 13.
ENVIRONMENTAL REGULATION
The consolidated entity’s environmental obligations
are regulated under State, Territory and Federal
Law. The consolidated entity has a policy of at
least complying with its environmental performance
obligations. All environmental performance
obligations are monitored by the Board. No
environmental breaches have been notified
to the consolidated entity during the period
ended 2 July 2005.
DIRECTORS AND DIRECTORS’ INTERESTS
The Directors of Super Cheap Auto Group Limited
in office at the date of this report are listed
below together with details of their relevant
interest in the securities of the Company at
that date.
R D McIlwain, BA, FAICD. Independent Chairman –
non-executive. Age 58.
Experience and expertise
Independent non-executive Chairman for 15 months.
Chief Executive Officer of UNiTAB for 10 years
to 1999 and then Managing Director and Chief
Executive Officer of UNiTAB Limited for 6 years.
Fellow of the Australian Institute of
Company Directors.
Other current directorships
Managing Director of UNiTAB Limited since 1999.
Former directorships in the last 3 years
None.
Your Directors present their report on the
consolidated entity consisting of Super Cheap Auto
Group Limited and the entities it controlled at the
end of, or during, the period ended 2 July 2005.
DIRECTORS
The following persons were Directors of Super
Cheap Auto Group Limited during the financial year
and up to the date of this report.
R D McIlwain
R E Thorn
R A Rowe
D D McDonough
R J Wright
Information on qualifications and experience of
Directors is included on pages 38 to 39.
PRINCIPAL ACTIVITIES
During the period, the principal continuing
activities of the consolidated entity consisted of
the retailing of:
• auto parts and accessories, tools and equipment.
• camping and outdoor leisure products.
DIVIDENDS – SUPER CHEAP AUTO GROUP LIMITED
The Directors recommended a fully franked dividend
of 4.5 cents per share be paid on 12 October 2005
(total dividend, fully franked - $4,789,333).
The following fully franked dividends of the
parent entity have also been paid, declared
or recommended since the end of the preceding
financial year:
Dividend
Payment Date
$
2005 interim fully
franked dividend
24 March 2005
2,128,592
REVIEW OF OPERATIONS
Revenue from trading operations for the period was
$470,061,000. During the period, the consolidated
entity opened 28 new stores of which 16 were in
Australia and 12 in New Zealand. In January 2005,
the entity acquired the CampMart business
comprising four stores which are located in the
Greater Brisbane area of Queensland. At the end
of the financial year, the consolidated entity was
trading from 215 stores.
The net profit of the consolidated entity for the
year ended 2 July 2005, after providing for income
tax, amounted to $20,563,000.
A review of the operations for the 53 weeks to
2 July 2005 is set out in pages 10 to 13 of this
report and in the Special Purpose Report on pages
45 to 48.
SCA2005/38
DIRECTORS' REPORT CONTINUED
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
Special responsibilities
Chairman of the Board
Chairman of the Nomination and Remuneration
Committee
Member of the Audit and Risk Committee.
Interests in shares and options
158,882 ordinary shares in Super Cheap Auto
Group Limited.
R E Thorn. Managing Director. Age 50.
Experience and expertise
Managing Director for 9 years. Previously General
Manager for 4 years.
Other current directorships
None.
Former directorships in the last 3 years
None.
Special responsibilities
Managing Director.
Member of the Nomination and Remuneration
Committee.
Interests in shares and options
4,899,078 ordinary shares in Super Cheap Auto
Group Limited.
1,000,000 options over ordinary shares in
Super Cheap Auto Group Limited.
R A Rowe. Non-Executive Director. Age 61.
Experience and expertise
Founder of the business in 1972. Non-executive
director for 15 months. Previously 8 years as
Chairman and 24 years as Managing Director.
Other current directorships
Director of a number of private family companies.
Former directorships in the last 3 years
None.
Special responsibilities
Member of the Nomination and Remuneration
Committee.
Interests in shares and options
52,402,159 ordinary shares in Super Cheap Auto
Group Limited.
D D McDonough, BBus (Acty), LLB (Hons), SJD, FCPA,
FAICD. Independent Non-Executive Director. Age 54.
Experience and expertise.
Independent Non-Executive Director for 15 months.
Partner of a major legal firm. Past President of
the Australian Institute of Company Directors
(Queensland Division).
Other current directorships
Chairman and non-executive director of Cellnet
Group Limited (director since 2002) and Queensland
Competition Authority (director since 1998).
Former directorships in the last 3 years
Trustee of Brisbane Cricket Ground Trust from
1997-2002.
Non-executive director of Bank of Queensland from
1997-2002.
Non-executive director of Bond University Limited
from 1998-2003.
Special responsibilities
Member of the Audit and Risk Committee.
Member of the Nomination and Remuneration
Committee.
Interests in shares and options
50,000 ordinary shares in Super Cheap Auto
Group Limited.
R J Wright, BCom, FCPA, MAICD. Independent
Non-Executive Director. Age 56.
Experience and expertise
Independent Non-Executive Director for 15 months.
Director of a number of major Retail companies
over the last 20 years. Member of the Australian
Institute of Company Directors.
Other current directorships
Chairman and non-executive director of Dexion
Limited (director since 2005). Non executive
director of Australian Pipeline Limited (director
since 2000), SAI Global Limited (director since
2003) and the reconstructed Harris Scarfe
Australia Limited (director since 2001).
Former directorships in the last 3 years
None.
Special responsibilities
Chairman of the Audit and Risk Committee.
Member of the Nomination and Remuneration
Committee.
Interest in shares and options
40,609 ordinary shares in Super Cheap Auto
Group Limited.
Company Secretary
The Company Secretary is Mr P A Birtles, BSc,
ACA. Mr Birtles is a Chartered Accountant who
has served as Chief Financial Officer since 2001
and was appointed Company Secretary in May 2004.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/39
DIRECTORS' REPORT CONTINUED
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
MEETINGS OF DIRECTORS
The number of meetings of the Company’s Board of Directors and each Board Committee held during the
period ended 2 July 2005
MEETINGS OF COMMITTEES
R D McIlwain
R E Thorn
R A Rowe
D D McDonough
R J Wright
Full meetings
directors
B
A
17
17
17
17
17
17
17
17
17
17
Audit & Risk
B
A
3
n/a
n/a
3
3
3
n/a
n/a
3
3
Nomination &
Remuneration
B
A
1
0
1
1
1
1
1
1
1
1
A=Number of meetings attended
B=Number of meetings held during the time the Director held office or was a member of the Committee
during the year
REMUNERATION REPORT
Principles used to determine the nature and amount of remuneration
The broad remuneration policy is to ensure remuneration properly reflects the relevant person’s duties
and responsibilities and that the remuneration is competitive in attracting, retaining and motivating
people of the highest quality.
The Board believes that the best way to achieve this objective is to provide Senior Executives with a
remuneration package consisting of fixed components (salary and superannuation) which reflect the
individual’s responsibilities, duties and personal performance and a blend of short and long term
incentives which reward both individual and company performance each year. The framework provides a mix
of fixed and variable pay. As executives gain seniority within the group, the balance of their mix shifts
to a higher proportion of "at risk" rewards.
Non-Executive Directors
Fees and payments to Non-Executive Directors
reflect the demands which are made on, and the
responsibilities of, the Directors. Non-Executive
Directors’ fees and payments are reviewed annually
by the Board. The Chairman’s fees are determined
independently to the fees of Non-Executive
Directors based on comparative roles in the
external market. The Chairman is not present at
any discussions relating to determination of his
own remuneration. Non-Executive Directors do not
receive share options. Non-Executive Directors may
opt each year to receive a percentage of their
remuneration in Super Cheap Auto Group Limited
shares, which would be acquired on-market.
Directors’ fees
The current base remuneration was established on
19 May 2004. The Directors’ fees are inclusive of
Committee fees.
Non-Executive Directors’ fees are determined
within an aggregate Directors’ fee pool limit
approved by shareholders.
Executive pay
The executive pay and reward framework has
four components:
SCA2005/40
• base pay and benefits
• short-term performance incentives
• long-term incentives through participation in the
Super Cheap Auto Executive Option Plan, and
• other remuneration such as superannuation.
The combination of these comprises the executive’s
total remuneration.
Base pay
Structured as a total employment cost package
which may be delivered as a combination of cash
and prescribed non-financial benefits at the
executives’ discretion.
Executives are offered a competitive base pay that
comprises the fixed component of pay and rewards.
External remuneration consultants provide analysis
and advice to ensure base pay is set to reflect
the market for a comparable role. Base pay for
senior executives is reviewed annually to ensure
the executive’s pay is competitive with the market.
An executive’s pay is also reviewed on promotion.
There are no guaranteed base pay increases
included in any senior executives’ contracts.
DIRECTORS' REPORT CONTINUED
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
Benefits
Executives receive benefits including car allowances and salary continuance insurance.
Short-term incentives
Should the Company achieve a pre-determined profit target set by the Nomination and Remuneration
Committee then a short-term incentive (STI) pool is available for allocation to executives during the
annual review. Cash incentives (bonuses) are payable in September each year. Using a profit target
ensures variable reward is only available when value has been created for shareholders and when
profit is consistent with the business plan. The incentive pool is leveraged for performance above
the threshold to provide an incentive for executive out-performance.
Each executive has a target STI opportunity depending on the accountabilities of the role and impact on
organisation of business unit performance. The maximum target bonus opportunity is between 40% and 70%
of total base salary dependent on the seniority of the executive.
Each year, the Nomination and Remuneration Committee considers the appropriate targets and key
performance indicators (KPIs) to link the STI plan and the level of payout if targets are met.
This includes setting any maximum payout under the STI plan, and minimum levels of performance to
trigger payment of STI.
For the period ended 2 July 2005, the KPIs linked to short term incentive plans were based on group,
individual business and personal objectives. Depending on the responsibilities of the executive, these
KPIs required performance in sales growth, gross profit improvement, reduction of operating costs and
improvement in operating procedures.
The Nomination and Remuneration Committee is responsible for assessing whether the KPIs are met.
To help make this assessment, the Committee receives reports on performance from management.
The STI target annual payment is reviewed annually.
Details of remuneration
Details of the nature and amount of each element of the emoluments of each Director of Super Cheap Auto
Group Limited for the period ended 2 July 2005 are set out in the following table.
Directors of Super Cheap Auto Group Limited
Primary
Cash
bonus
$
-
Cash salary
and fees
$
100,000
Post-
employment
Equity
Non-
monetary
benefits
$
Super-
annuation
$
Options
$
Total
$
-
-
-
100,000
548,076
275,000
9,342
31,520
270,326
1,134,264
188,745
54,600
54,600
-
-
-
-
-
-
5,400
5,400
5,400
-
-
-
194,145
60,000
60,000
946,021
275,000
9,342
47,720
270,326
1,548,409
Name
R D McIlwain
R E Thorn
R A Rowe1
D D McDonough
R J Wright
Total
(1) Mr R A Rowe resigned as an Executive Officer of the Company on 5 July 2004. Upon resignation he was paid unused leave
entitlements of $134,145. This is included in the table above in cash salary and fees.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/41
DIRECTORS' REPORT CONTINUED
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
Other executives of the Company and of the consolidated entity
The nature and amount of each element of the five officers of the consolidated entity receiving the
highest emoluments for the period ended 2 July 2005 are set out in the following table.
Primary
Cash
bonus
$
Cash salary
and fees
$
Post-
employment
Equity
Non-
monetary
benefits
$
Super-
annuation
$
Options
$
Total
$
291,150
135,000
3,396
11,585
63,502
504,633
225,038
75,000
20,221
11,585
160,650
-
18,481
11,585
150,288
44,000
232,000
-
-
-
11,585
-
-
-
-
-
331,844
190,716
205,873
232,000
Name
P A Birtles
Chief Financial Officer
and Company Secretary
S J Doyle
General Manager – BCF1
T Panic
Merchandising Manager – BCF2
N J Binns
Business Systems Manager
S R Tewkesbury
Supply Chain Manager
Total
1,059,126
254,000
42,098
46,340
63,502
1,465,066
(1) Mr S J Doyle served as General Manager – Retail Operations from 27 June 2004 to 3 October 2004, General Manager –
Merchandising from 4 October 2004 to 15 May 2005 and was appointed General Manager, BCF on 16 May 2005.
(2) Mr T Panic served as General Manager – Merchandising from 27 June 2004 to 3 October 2004 and was appointed BCF
Merchandising Manager on 4 October 2004.
CASH BONUSES
Cash bonuses are dependent on the satisfaction of performance conditions as set out in the section
headed “short term incentives” above. For each cash bonus included in the above tables, the percentage
of the available bonus that was paid and the percentage that was forfeited because the person did not
meet the performance criteria are set out below. No part of the bonuses are payable in future years.
Name
R E Thorn
P A Birtles
S J Doyle
N J Binns
Cash Bonus
Paid Forfeited
%
%
71
75
60
69
29
25
40
31
Service agreements
Remuneration and other terms of employment for the Managing Director and Chief Financial Officer are
formalised in service agreements. The agreements provide for the provision of performance-related cash
bonuses, other benefits including car allowances and participation, when eligible, in the Super Cheap
Auto Executive Option Plan.
R E Thorn, Managing Director
• Term of agreement – 5 years commencing 1 July 2004
• Base salary, inclusive of superannuation, for the year ended 30 June 2005 of $550,000 to be reviewed
annually by the Nomination and Remuneration Committee.
SCA2005/42
DIRECTORS' REPORT CONTINUED
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
• Payment of a termination benefit on early termination by the Company, other than for cause, equal to
33 months base salary if the termination is effective more than 12 months before the expiry date or
9 months base salary if the termination is effective within 12 months before the expiry date.
P A Birtles, Chief Financial Officer and Company Secretary
• Term of agreement – 3 years commencing 1 July 2004
• Base salary, inclusive of superannuation for the year ended 30 June 2005 of $300,000 to be reviewed
annually by the Nomination and Remuneration Committee.
• Payment of a termination benefit on early termination by the Company, other than for cause, equal to
the lesser of 6 months base salary or the base salary in respect of the remainder of the contract.
SHARE OPTIONS GRANTED TO DIRECTORS AND THE MOST HIGHLY REMUNERATED OFFICERS
Options are granted to Executive Directors and other executives under the Super Cheap Auto Executive
Option Plan, details of which are set out in Note 31 to the Financial Statements.
No options were issued or granted during the period.
SHARES UNDER OPTION
Unissued ordinary shares of Super Cheap Auto Group Limited under option at the date of this report
are as follows:
Date options
granted
19 May 2004
19 May 2004
19 May 2004
Exercise
date
1 July 2007
1 July 2008
1 July 2009
Issue
price of
shares
$1.97
$1.97
$1.97
Number
under
option
700,000
250,000
250,000
1,200,000
The exercise of the options is subject to the satisfaction of a qualifying hurdle. The qualifying hurdle
requires cumulative annual growth of 10% in Earnings Per Share pre amortisation from the IPO Prospectus
forecast Earnings Per Share pre amortisation for the year ending 30 June 2005 (being 17.2 cents) through
to each of the years prior to the options being exercised.
No option holder has any right under the options to participate in any other share issue of the Company
or of any other entity.
The amounts disclosed for emoluments relating to options above is the assessed fair value at grant date
of options granted to executive directors and other executives, allocated equally over the period from
grant date to vesting date. Fair values at grant date are independently determined using a Black-Scholes
option pricing model that takes into account the exercise price, the term of the option, the vesting and
performance criteria, the impact of dilution, the non-tradeable nature of the option, 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.
INSURANCE OF OFFICERS
During the financial year, Super Cheap Auto Group Limited paid a premium of $85,201 to insure the
directors and secretaries of the Company and its controlled entities, and the general managers of
each of the divisions of the consolidated entity.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings
that may be brought against the officers in their capacity as officers of entities in the consolidated
entity, and any other payments arising from liabilities incurred by the officers in connection with
such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of
duty by the officers or the improper use by the officers of their position or of information to gain
advantage for themselves or someone else or to cause detriment to the Company. It is not possible to
apportion the premium between amounts relating to the insurance against legal costs and those relating
to other liabilities.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/43
DIRECTORS' REPORT CONTINUED
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties
where the auditor’s expertise and experience with the Company and/or the consolidated entity are
important.
Details of the amounts paid or payable to the auditor (Grant Thornton) for audit and non-audit services
provided during the year are set out below.
The Board of Directors has considered the position and, in accordance with the advice received from the
Audit and Risk Committee, is satisfied that the provision of the non-audit services is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors
are satisfied that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact
the impartiality and objectivity of the auditor
• none of the services undermine the general principles relating to auditor independence as set out
in Professional Statement F1, including reviewing or auditing the auditor’s own work, acting in a
management or a decision-making capacity for the Company, acting as advocate for the Company or jointly
sharing economic risk and rewards.
A copy of the auditor’s independence declaration as required under section 307C of the Corporations
Act 2001 is set out on page 86.
Consolidated Entity
2004
$’000
2005
$’000
During the period the following fees were paid or payable for services provided by the auditor of the
parent entity, its related practices and non-related audit firms:
Assurance Services
Remuneration for audit services
Remuneration for other assurance services
Total remuneration for assurance services
Taxation Services
Total remuneration for taxation services
Advisory Services
Total remuneration for advisory services
175,000
0
84,000
28,000
175,000
112,000
4,000
1,000
0
37,000
Rounding of amounts
The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and
Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in
the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of the Directors.
R D McIlwain
Chairman
Brisbane
25 August 2005
SCA2005/44
R E Thorn
Director
Prospectus
SPECIAL PURPOSE REPORT
–––––––––––––––––––––––––––––––––––––––––––––
Comparison of Prospectus
Prospectus pro-forma
forecast results to pro-forma historical
results for the 53 weeks from:
–––––––––––––––––––––––––––––––––––––––––––––
27 JUNE 2004
TO
2 JULY 2005
–––––––––––––––––––––––––––––––––––––––––––––
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/45
SPECIAL PURPOSE REPORT CONTINUED
Super Cheap Auto Group Limited
For the 53 weeks to 2 July 2005
INTRODUCTION
Super Cheap Auto Group Limited was incorporated
on 8 April 2004. On 23 April 2004, the Company
acquired all of the shares in Super Cheap Auto
Pty Ltd. On 20 May 2004, the Company issued a
Prospectus inviting investors to apply for a total
of 41,507,568 shares (39% of the issued capital of
the Company). Pursuant to the offer of shares, the
Company listed on the Australian Stock Exchange on
6 July 2004.
The Prospectus included Super Cheap Auto Group
Limited’s pro-forma forecast results for the period
ended 2 July 2005. This Special Purpose Report
contains a comparison of Super Cheap Auto Group
Limited’s pro-forma historical results for the 2005
period, to both the pro-forma forecast results for
the 2005 year and the pro-forma historical results
for the 2001, 2002, 2003 and 2004 years.
The pro-forma results set out in this Special
Purpose Report are not a substitute for the Super
Cheap Auto Group Limited’s consolidated financial
report for the period from incorporation to 2 July
2005, which will be included in the Company’s
annual report.
BASIS OF PREPARATION
The pro-forma historical results for the 2001,
2002 and 2003 years have been prepared from the
adjusted historical financial information of Super
Cheap Auto Pty Ltd.
The pro-forma historical results for the 2004 year
are based on the unaudited actual historical
results of Super Cheap Auto Pty Ltd consolidated
group for the 43 weeks ended 23 April 2004 and
the audited actual consolidated historical results
of the Super Cheap Auto Group Limited for the
remaining nine weeks ended 26 June 2004.
The pro-forma historical results for the 2005 year
are based upon the audited actual consolidated
historical results of the Super Cheap Auto Group
for the remaining 53 weeks ended 2 July 2005.
The adjusted historical financial information
adjusts the statutory historical financial
information to promote comparability with the
pro-forma forecast and historical results for
the 2005 year.
DISCUSSION OF 2005 PRO-FORMA HISTORICAL VS
PRO-FORMA FORECAST RESULTS
Pro-forma net profit for Super Cheap Auto of $20.6
million was $5.2 million ahead of the Prospectus
forecast of $15.4 million.
Pro-forma sales revenue of $470.1 million was
slightly below the forecast of $474.3 million. The
major factors influencing sales performance were:
• The decline in consumer spending in the 2nd half
of the year depressing sales in Australian
stores. Like for like sales growth in Australian
stores was 3.7% versus a forecast of 4.5%.
• A number of more recently opened stores trading
below expected levels in both Australia and New
Zealand.
• The benefit of having opened six more Super
Cheap Auto stores than was expected in the
forecast. Five of these additional stores were
in New Zealand.
• The $5.1 million contribution from the four
CampMart stores acquired in January 2005.
Pro-forma EBITDA at $40.8 million was $1 million
(2.5%) above prospectus forecast with EBITDA
margins at 8.7% strongly ahead of the forecast of
8.4%. This improvement resulted from:
• a 0.4% point improvement in gross margin through
improvements in purchase costs and in supplier
trading terms. Supply chain costs as a % of sales
were reduced in line with forecast expectations.
• a 0.1% point increase in operating costs as a %
of sales arising from an increase in marketing
activity partly offset by savings across a number
of other key expense categories.
Pro-forma amortisation and depreciation of
$11.3 million was $0.9 million under forecast
mainly through the timing of investment in
information technology projects.
Pro-forma income tax at $8.4 million was higher
than prospectus forecast as a result of improved
profit before tax performance.
SCA2005/46
SPECIAL PURPOSE REPORT CONTINUED
Super Cheap Auto Group Limited
For the 53 weeks to 2 July 2005
Pro-forma cash flow from operating activities at $4.1 million was $23.2 million below forecast due to an
increase in working capital investment of $23.9 million.
• This was primarily the result of payments to stock vendors of $19.3 million and to landlords
of $2.5 million on 1 July not being included in the forecasts.
• Period end inventory was $14.3 million higher than forecast but this was offset by a $15 million
benefit from improved supplier payment terms negotiated during the year.
TABLE 1 - STATEMENT OF FINANCIAL PERFORMANCE
Adjusted Historical1
Pro-forma
Forecast
2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2004/
2005
$m
Sales
Super Cheap Auto Pty Ltd
- Australia
- New Zealand
BCF Australia Pty Ltd
Total
COGS
Gross Profit
Operating Expenses
EBITDA
Depreciation
EBITA
Amortisation
EBIT
Net Borrowing Costs
Income Tax
150.4
203.4
275.1
150.4
(90.4)
60.0
(42.9)
17.1
(1.3)
15.8
(1.8)
14.0
203.4
(128.3)
75.1
(57.0)
18.1
(2.6)
15.5
(1.8)
13.7
275.1
(166.9)
108.2
(82.1)
26.1
(4.3)
21.8
(2.0)
19.8
NPAT (Pre specific items)
After Tax Share Issue Costs2
After tax benefit arising from change
to inventory valuation methodology3
NPAT
Earnings per share pre amortisation
and share issue costs4
Total Sales Growth
Gross Margin
EBITA Margin
EBITA Growth
Store Numbers
NA
39.9%
10.5%
71
35.2%
36.9%
7.6%
-1.9%
97
35.2%
39.3%
7.9%
40.6%
144
366.7
16.0
382.7
(235.7)
147.0
(115.0)
32.0
(6.4)
25.6
(2.8)
22.8
(3.0)
(6.6)
13.2
(11.1)
2.1
15.0¢
39.1%
38.4%
6.7%
17.4%
183
417.6
47.4
5.1
470.1
(286.8)
183.3
(142.5)
40.8
(8.3)
32.5
(3.0)
29.5
(3.8)
(8.4)
17.3
0
3.3
20.6
19.1¢
22.8%
39.0%
6.9%
27.0%
215
424.9
49.4
0
474.3
(291.1)
183.2
(143.4)
39.8
(9.2)
30.6
(3.0)
27.6
(4.3)
(7.9)
15.4
0
0
15.4
17.2¢
25.2%
38.6%
6.5%
29.1%
205
(1) The Adjusted Historical Financial Information (issued in the Prospectus dated 20 May 2004) is based on the audited
results for the years ended 30 June 2001, 2002, 2003, 2004 and 2005. The Company has made various adjustments to the
statutory historical information to arrive at the Adjusted Historical Financial Information included in this Section.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/47
SPECIAL PURPOSE REPORT CONTINUED
Super Cheap Auto Group Limited
For the 53 weeks to 2 July 2005
(2) In the period ending 26 June 2004, the Company incurred share issue costs before tax of $15.8 million comprising of:
- Costs of $1.7 million associated with the implementation of the Senior Management Team Share Plan.
- Costs of $13.9 million associated with the repayment by Super Cheap Auto Pty Ltd of third party loans made to SCA
Equity Plan Pty Ltd, the trustee of the Senior Management Team Share Plan, and to Bob Thorn to assist with the purchase
of shares in Super Cheap Auto Pty Ltd; and
- Ancillary costs of $0.2 million associated with restructuring Super Cheap Auto in preparation for listing on the ASX.
These expenses did not recur in the year ending 2 July 2005.
(3) Change of methodology of trading stock valuation has resulted in a one-off credit to the Statement of Financial
Performance of $4.7 million pre-tax. The change concerns capitalisation of supply chain costs. This change ensures
consistency between accounting and taxable profits following the release of ATO Practice Statement LA 2003/13.
(4) Earnings per share pre amortisation and specific items is calculated by using 106,429,622 ordinary shares as the
denominator, being the number of shares on issue at the end of the period.
TABLE 2 – FINANCIAL CASH FLOWS
$m
For period ending 2 July 2005
EBITDA
Tax Paid
Investment in Working Capital
Investment in Other Assets
Cash Flows from Operating Activities
Capital Expenditure
Business Acquisition
Cash Flows from Investing Activities
Net Interest
Equity Issuance/(Buyback)
Debt Issuance/(Repayment)
Dividend Payment to Shareholders1
Management Share Loan
Cash Flows from Financing Activities
Net Change in Cash
Beginning Cash Balance2
Ending Cash Balance
Adjusted
Historical
2004/2005
Pro-forma
Forecast
2004/2005
40.8
(6.0)
(30.7)
0
4.1
(16.7)
(8.0)
(24.7)
(3.8)
0
31.5
(7.1)
(7.2)
13.4
(7.2)
13.6
6.4
39.8
(6.3)
(6.8)
0.6
27.3
(16.4)
0
(16.4)
(4.3)
0
7.6
(7.0)
(7.2)
(10.9)
0.0
5.0
5.0
(1) The dividend payment to shareholders includes the payment of a $5 million dividend payment by Super Cheap Auto Pty Ltd
to its shareholders. This dividend was declared prior to Super Cheap Auto Pty Ltd’s acquisition by Super Cheap Auto
Group Limited.
(2) The bank overdraft is reclassified as debt for balance sheet purposes. For purposes of the cash flow statement, it is
included as cash.
SCA2005/48
CONSOLIDATED FINANCIAL
STATEMENTS
–––––––––––––––––––––––––––––––––––––––––––––
Super Cheap Auto Group Limited
For the period from:
–––––––––––––––––––––––––––––––––––––––––––––
27 JUNE 2004
TO
2 JULY 2005
–––––––––––––––––––––––––––––––––––––––––––––
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/49
STATEMENT OF FINANCIAL PERFORMANCE
Super Cheap Auto Group Limited
For the period 27 June 2004 to 2 July 2005
Notes
Consolidated entity
Parent entity
2005
$000
2004
$000
2005
$000
2004
$000
Revenue from ordinary activities
Sale of goods
Other revenues from ordinary activities
470,061
290
70,757
167
Total revenues
3, 4
470,351
70,924
0
9,509
9,509
Expenses from ordinary activities
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Borrowing costs expense
Total expenses
Profit from ordinary activities before
related income tax expense
Income tax expense relating to
ordinary activities
Total changes in equity other
than those resulting from
transactions with owners as owners
Basic earnings per share
Diluted earnings per share
4
4
5
24
34
34
(281,135) (43,658)
0
(52,091)
(7,782)
(25,965) (2,532)
(4,212)
(29,139)
(47,032) (7,848)
(720)
(4,595)
(439,957) (66,752)
30,394
4,172
(9,831)
(1,405)
0
0
0
(785)
(1,180)
(1,965)
7,544
587
20,563
2,767
8,131
Cents
19.3
19.3
Cents
4.1
4.1
The above statement of financial performance must be read in conjunction with the accompanying notes.
0
0
0
0
0
0
0
0
0
0
0
0
0
SCA2005/50
STATEMENT OF FINANCIAL POSITION
Super Cheap Auto Group Limited
As at 2 July 2005
Current assets
Cash assets
Receivables
Inventories
Tax Assets
Other
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non-current assets
Total non current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Current tax liabilities
Provisions
Total non-current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total Equity
Notes
Consolidated entity
Parent entity
2005
$000
2004
$000
2005
$000
2004
$000
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
24
6,426
6,607
123,183
0
4,725
13,640
5,394
92,513
1,633
1,206
45
62,119
0
0
860
0
0
0
1,678
0
140,941 114,386
63,024
1,678
0
45,016
49,294
3,509
395
0
36,257
45,349
5,006
440
84,234
0
0
3,142
67
84,233
0
0
4,876
0
98,214
87,052
87,443
89,109
239,155
201,438
150,467
90,787
46,417
81,251
696
4,032
46,857
36,184
0
8,643
132,396
91,684
0
341
984
21,600
355
797
1,325
22,752
201
59,650
467
0
60,318
0
174
0
0
0
6,199
0
0
6,199
0
355
0
355
133,721
114,436
60,492
6,554
105,434
87,002
89,975
84,233
84,233
0
21,201
84,233
2
2,767
84,233
0
5,742
84,233
0
0
105,434
87,002
89,975
84,233
The above statement of financial position must be read in conjunction with the accompanying notes.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/51
STATEMENT OF CASH FLOWS
Super Cheap Auto Group Limited
For the period from 27 June 2004 to 2 July 2005
Notes
Consolidated entity
2005
$000
2004
$000
Parent entity
2005
$000
2004
$000
Cash flows from operating activities
Receipts from customers
(inclusive of goods and services tax)
Payments to suppliers and employees
(inclusive of goods and services tax)
Rental payments – external
Rental payments – related parties
Income taxes paid
517,279
79,092
(470,187) (68,048)
(3,116)
(31,024)
(1,178)
(6,002)
(156)
(6,018)
Net cash inflow from operating activities
33
4,048
6,594
0
(588)
0
0
354
(234)
Cash flows from investing activities
Payments for business acquired
Cash acquired from purchase
of controlled entity
Payments for property, plant and equipment
Proceeds from sale of property, plant
and equipment
Proceeds from sale of Service Centres
in prior year
35
(8,019)
0
(6,699)
0
(17,812)
10,005
(1,781)
45
0
1,084
237
0
0
0
0
Net cash inflow/(outflow) from investing activities
(24,702)
8,461
(6,699)
Cash flows from financing activities
Proceeds from external borrowings
Repayment of borrowings
Advances to related parties
Repayments of advances to related parties
External interest paid
External interest received
Costs of IPO to be reimbursed
Dividend paid
Repayment of loans re shares
25
17,500
284,100
(253,450) (20,000)
0
7,496
(661)
45
(798)
(7,129) (5,000)
0
(7,183)
0
856
(3,751)
0
0
Net cash inflow (outflow) from financing activities
13,443
(1,418)
Net increase/(decrease) in cash held
Cash at the beginning of the financial period
Effects of exchange rate changes on cash
(7,211) 13,637
0
13,640
3
(3)
Cash at the end of the financial period
6
6,426
13,640
Refer Note 35 for details of non-cash financing and investing activities.
The above statement of cash flows must be read in conjunction with the accompanying notes.
220,350
(160,775)
(48,447)
0
(2,021)
0
0
(2,129)
0
6,978
45
0
0
45
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
SCA2005/52
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
01 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
This general purpose financial report has been
prepared in accordance with Accounting Standards,
other pronouncements of the Australian Accounting
Standards Board, Urgent Issues Group Consensus
Views and the Corporations Act 2001.
This financial report covers the consolidated
entity of Super Cheap Auto Group Limited and its
controlled entities, and Super Cheap Auto Group
Limited as an individual parent entity. Super
Cheap Auto Group Limited is a public company
listed on the Australian Stock Exchange and is
incorporated and domiciled in Australia.
This financial report is prepared on an accruals
basis in accordance with the historical cost
convention which, except for certain assets, as
noted, are at valuation.
(a) Principles of consolidation
The consolidated financial statements incorporate
the assets and liabilities of all entities
controlled by Super Cheap Auto Group Limited
(the “Company” or “parent entity”) as at 2 July
2005 and the results of its controlled entities
for the period then ended. Super Cheap Auto
Group Limited and its controlled entities comprise
the “consolidated entity”. The effects of all
transactions between entities in the consolidated
entity are fully eliminated. A list of controlled
entities is contained in Note 35 to the
financial statements.
Where control of an entity is acquired during a
financial period its results are included in the
consolidated statement of financial performance
from the date on which control commences. Where
control of an entity ceases during a financial
year its results are included for that part of
the period during which control existed.
(b) Income tax
The Company adopts the liability method of tax-
effect accounting whereby the income tax expense
is based on the operating profit adjusted for any
permanent differences.
Timing differences, which arise due to the
different accounting periods in which items of
revenue and expense are included in the
determination of accounting profit and taxable
income, are brought to account as either a
provision for deferred income tax or as a future
income tax benefit at the rate of income tax
applicable to the period in which the benefit will
be received or the liability will become payable.
Future income tax benefits are not brought to
account unless realisation of the asset is assured
beyond any reasonable doubt. Future income tax
benefits in relation to tax losses are not brought
to account unless there is virtual certainty of
realisation of the benefit.
The amount of benefits brought to account or which
may be realised in the future is based on the
assumption that no adverse change will occur in
income tax legislation, and the anticipation that
the Company will derive sufficient future
assessable income to enable the benefit to be
realised and comply with the conditions of
deductibility imposed by the law.
(c) Foreign currency translation
(i) Transactions
Foreign currency transactions are initially
translated into Australian dollars at the rate of
exchange at the date of the transaction. At
balance date amounts payable and receivable in
foreign currencies are translated to Australian
dollars at rates current at that date. Resulting
exchange differences are recognised in determining
the profit or loss for the year.
(ii) Specific commitments
Foreign currency forward exchange contracts are
undertaken in order to avoid or minimise the
possible adverse financial effects of movements in
exchange rates. Gains and losses arising upon
entry into a foreign exchange contract intended to
hedge the purchase or sale of goods or services,
together with the subsequent exchange gains and
losses resulting from those transactions are
deferred in the statement of financial position
from the inception of the forward exchange
contract up to the date of the purchase or sale
and included in the measurement of the purchase
or sale. The net amounts receivable or payable
under the forward exchange contract are also
recorded in the statement of financial position.
Any gains or losses arising on the forward
exchange contract after the recognition of the
hedged purchase or sale are included in the
statement of financial performance.
When anticipated purchase or sale transactions
have been hedged, actual purchases and sales
which occur during the designated forward exchange
contract period are accounted for as having been
hedged until the amounts of those transactions in
the designated period are fully allocated against
the amounts of the forward exchange contracts.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/53
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
(e) Receivables
All trade debtors are recognised at the amounts
receivable as the amounts are due for settlement
within thirty days of recognition.
Recognition of trade debtors is reviewed on an
ongoing basis. Known uncollectible debts are
written off as and when these become
uncollectible. A provision for doubtful debt is
raised when doubt as to collection exists and,
in any event, when the debt is more than sixty
days overdue.
(f) Inventories
Inventories are measured at the lower of cost
and net realisable value. Costs comprise direct
purchase costs and an appropriate proportion
of supply chain variable and fixed overhead
expenditure. Costs are assigned to individual items
of stock on the basis of weighted average costs.
(g) Property, Plant & Equipment
Each class of property, plant and equipment is
carried at cost, less, where applicable, any
accumulated depreciation or amortisation.
Plant and Equipment are measured on the cost basis.
The carrying amount of plant and equipment is
reviewed annually by Directors to ensure it is not
in excess of the recoverable amount from those
assets. The recoverable amount is assessed on the
basis of the expected net cash flows which will be
received from the assets employment and subsequent
disposal. The expected net cash flows have not
been discounted to present values in determining
recoverable amounts.
(h) Depreciation and amortisation of property, plant
and equipment
Depreciation and amortisation are calculated on a
straight line or diminishing value basis so as to
write off the net cost of an item of property,
plant and equipment over the expected useful life
of each asset to the consolidated entity. Estimates
of remaining useful lives are made on a regular
basis for all assets, with annual re-assessments
for major items. The depreciation rates used for
each class of assets are:
01 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONTINUED
Where a hedged transaction is not expected to
occur as originally designated, or if the forward
exchange contract is not expected to be effective,
any previously deferred gains or losses are
immediately recognised as revenue or loss. Where
a forward exchange contract is terminated prior to
its maturity date and the hedged transaction is
still expected to occur as designated, gains or
losses arising prior to termination continue to be
deferred and are included in the measurement of
the hedged transaction. In those circumstances
where a forward exchange contract is terminated,
as the hedged transaction is not expected to occur
as designated, any previously deferred gains and
losses are recognised in the statement of
financial performance on the date of termination.
Where a forward exchange contract is redesignated
as the hedge of another commitment because the
original purchase or sale transaction is no longer
expected to occur as designated, the gains or
losses that arise on the forward exchange contract
prior to the redesignation are recognised in the
statement of financial performance at the date
of redesignation.
(iii) Foreign controlled entity
The foreign controlled entity is self-sustaining
and, therefore, its assets and liabilities are
translated into Australian dollars at the rate of
exchange current at balance date and its revenues
and costs are translated at the average of the
rates during the period. Exchange differences
arising on the translation are taken to the
foreign currency translation reserve. Upon
disposal or part disposal of a self-sustaining
foreign operation the balance of the foreign
currency translation relating to the disposal is
transferred to retained profits.
(d) Revenue recognition
Amounts disclosed as revenue are net of returns,
trade allowances, duties and taxes paid. Revenue
from the sale of goods is recognised upon the
delivery of goods to customers pursuant to sales
orders and when the associated risks have passed
to the carrier or customer. Revenue from rendering
a service is recognised upon the delivery of the
service to the customer.
Interest revenue is recognised on a proportional
basis taking into account the interest rates
applicable to the financial assets.
SCA2005/54
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
(k) Trade and other creditors
Trade and other creditors are payables for goods
and services provided to the consolidated entity
prior to the end of the financial period and
which are unpaid at that date. The amounts are
unsecured and are normally paid within thirty
days of recognition.
(l) Interest bearing liabilities
Loans are carried at the amount that represents
the present value of the future cash flows
associated with servicing the debt. Interest is
accrued over the period it becomes due and is
recognised as other creditors.
(m) Dividends
Provision is made for the amount of any dividend
declared by the Directors on or before the end of
the financial period but not distributed at
balance date.
(n) Employee benefits
Provision is made for the economic entity’s
liability for employee benefits arising from
services rendered by employees to balance date.
A liability for employee benefits in the form of
bonus payments is recognised in other creditors
when the bonus criteria have been satisfied and
the amount of the bonus can be reliably
determined. Employee benefits expected to be
settled within one year, together with benefits
arising from wages and salaries and annual leave
which will be settled after one year, have been
measured at the amounts expected to be paid when
the liability is settled, plus related on-costs.
Other employee benefits payable later than one
year have been measured at the present value of
the estimated future cash outflows to be made for
those benefits.
01 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONTINUED
Plant and equipment
Capitalised leased
plant and equipment
Motor vehicles
Computer equipment
Depreciation rate
10% - 37.5%
10% – 37.5%
15%
25% – 37.5%
(i) Leased non-current assets
A distinction is made between finance leases,
which effectively transfer from the lessor to the
lessee substantially all the risks and benefits
incident to ownership of leased non-current
assets, and operating leases, under which the
lessor effectively retains substantially all such
risks and benefits.
Finance leases are capitalised by establishing a
lease asset and lease liability at the present
value of the minimum lease payments. Lease
payments are allocated between the principal
component of the lease liability and the interest
expense. The lease asset is amortised on a
straight line basis over the term of the lease
or, where it is likely that the consolidated entity
will obtain ownership of the asset, the life of
the asset. Lease assets at the reporting date are
being amortised at rates ranging from 10% to 37.5%.
Operating lease payments are charged to the
statement of financial performance in the periods
in which these are incurred, as this represents
the pattern of benefits derived from the
leased assets.
(j) Intangible assets and expenditure carried forward
(i) Goodwill and brand
Goodwill is recorded at the amount by which the
purchase price of an entity exceeds the fair value
attributed to the identifiable net assets at the
date of acquisition. Goodwill is amortised on a
straight line basis over a period of twenty years.
The balances are reviewed annually and any balance
representing future benefits, the realisation of
which is considered to no longer be probable, is
written off.
(ii) Other items of expenditure
Significant items of expenditure, such as
costs incurred in store set-ups, are expensed
in the financial period in which these costs
are incurred.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/55
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
(r) Tax consolidation legislation
Effective 1 July 2003, for the purposes of income
taxation, Super Cheap Auto Group Limited and its
wholly-owned Australian controlled entities formed
a tax consolidation group.
As a consequence, Super Cheap Auto Group Limited
as the head entity in the tax consolidated group,
recognises current and deferred tax amounts
relating to transactions, events and balances of
the wholly owned Australian controlled entities
in this group as if those transactions, events
and balances were its own, in addition to the
current and deferred tax amounts in relation to
its own transactions, events and balances.
Amounts receivable or payable under an accounting
tax funding agreement with the tax consolidated
entities are recognised separately as tax-related
amounts receivable or payable. Expenses and
revenues arising under the tax funding agreement
are recognised as a component of income tax
expenses (revenue).
(s) Financial year
As allowed under section 323D(2) of the
Corporations Act 2001, the Directors have
determined the financial year to be a fixed period
of 52 calendar weeks or 53 calendar weeks. For the
period to 2 July 2005, the Company is reporting on
the 53 week period that began 27 June 2004 and
ended 2 July 2005. For the period to 26 June 2004,
the company is reporting on the period commencing
8 April 2004, being date of incorporation to 26
June 2004.
(t) Rounding of amounts
The economic entity is of a kind referred to in
Class Order 98/0100, issued by the Australian
Securities and Investments Commission, relating
to the “rounding off” of amounts in the financial
report. Amounts in the financial report have been
rounded off in accordance with that Class Order
to the nearest thousand dollars.
01 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONTINUED
Equity based compensation benefit are provided
to certain employees via the Super Cheap Auto
Executive Option Plan. Information on this scheme
is set out in Note 31.
The amounts disclosed for remuneration of
Directors and executives in Note 31 include the
assessed fair value of options, using the Black-
Scholes option pricing model, at the date they
were granted.
Contributions are made by the economic entity to
an employee superannuation fund and are charged as
expenses when incurred.
(o) Borrowing costs
Borrowing costs are recognised in the period in
which these are incurred and are expensed in the
period to which the costs relate. Generally costs
such as discounts and premiums incurred in raising
borrowings are amortised on a straight line basis
over the period of the borrowing. Borrowing
costs include:
• interest on bank overdrafts and short-term and
long-term borrowings;
• amortisation of discounts or premiums relating
to borrowings;
• amortisation of ancillary costs incurred in
connection with the arrangement of borrowings;
• finance lease charges; and
• certain exchange differences arising from foreign
currency borrowings.
(p) Cash
For the purposes of the statement of cash flows,
cash includes cash on hand, cash at bank and at
call deposits with banks or financial institutions.
(q) Goods and Services Tax
Revenues, expenses and assets are recognised net
of the amount of goods and services tax, except
where the amount of goods and services tax
incurred is not recoverable from the Australian
Tax Office. In these circumstances the goods and
services tax is recognised as part of the cost of
acquisition of the asset or as part of the item of
expense. Receivables and payables in the statement
of financial position are shown inclusive of goods
and services tax.
SCA2005/56
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
02 SEGMENT INFORMATION
The consolidated entity is organised on a global basis into the following business segments.
Business Segments
The consolidated entity is organised on a global basis into the following divisions by product
and service type.
Super Cheap Auto; Retail and distribution of motor vehicle spare parts and accessories, tools
and equipment.
BCF (Boating, Camping and Fishing); Retail and distribution of boating, camping and fishing equipment.
The consolidated entity’s divisions are operated in two main geographical areas;
Australia
The home country of the parent entity. The areas of operation are automotive as well as boating,
camping and fishing.
New Zealand
Only Super Cheap Auto operates in New Zealand.
PRIMARY SEGMENT – BUSINESS SEGMENTS – 2 JULY 2005
Super Cheap Auto
2005
$’000
464,972
0
464,972
283
465,255
34,765
0
34,765
Inter-Segment
eliminations/
unallocated
2005
$’000
0
0
0
0
0
(3,836)
(3,836)
BCF
2005
$’000
5,089
0
5,089
7
5,096
(535)
0
(535)
Sales to external customers
Inter-segment sales
Total sales revenue
Other revenue
Total segment revenue
Segment result (pre interest)
Net borrowing costs
Segment result
Unallocated revenue less unallocated expenses
Profit from ordinary activities
before related income tax expense
Income tax expense
Net profit/(loss)
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
228,475
10,680
121,916
11,109
Acquisitions of property, plant and
equipment, intangibles and other
non-current segment assets
Depreciation and amortisation expense
Other non-cash expenses
16,232
10,799
0
7,635
175
0
0
0
0
Consolidated
2005
$’000
470,061
0
470,061
290
470,351
34,230
(3,836)
(30,394)
0
30,394
(9,831)
20,563
239,155
0
241,728
133,025
0
133,025
23,867
10,974
0
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/57
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
02 SEGMENT INFORMATION CONTINUED
PRIMARY SEGMENT – BUSINESS SEGMENTS – 26 JUNE 2004
Super Cheap Auto
Sales to external customers
Inter-segment sales
Total sales revenue
Other revenue
Total segment revenue
Segment result (pre-interest)
Net borrowing costs
Segment result
Unallocated revenue less unallocated expenses
Profit from ordinary activities before
related income tax expense
Income tax expense
Net profit/(loss)
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
2004
$’000
70,757
0
70,757
167
70,924
4,825
0
4,825
201,438
114,436
Acquisitions of property, plant and equipment,
intangibles and other non-current segment assets 83,114
Depreciation and amortisation expense
Other non-cash expenses
1,554
7,154
SECONDARY SEGMENT – GEOGRAPHICAL SEGMENTS – 2 JULY 2005
Inter-Segment
eliminations/
unallocated
2004
$’000
BCF
2004
$’000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(653)
(653)
0
0
0
0
0
0
Consolidated
2004
$’000
70,757
(0)
70,757
167
70,924
4,825
(653)
4,172
0
4,172
(1,405)
2,767
201,438
0
201,438
114,436
0
114,436
83,114
1,554
7,154
Segment revenues
sales to external
customers
2005
$’000
422,718
47,343
2004
$’000
65,760
4,997
Segment
Assets
2005
$’000
2004
$’000
233,090
26,541
187,058
14,380
Aquisitions of plant,
plant and equipment,
intangibles and other
non-current segment assets
2005
$’000
21,208
2,659
2004
$’000
79,81
3,197
470,061
70,757
259,631
201,438
23,867
83,088
Australia
New Zealand
Notes to and forming part of the segment information
Accounting policies
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in
Note 1 and accounting standard AASB 1005, Segment Reporting.
SCA2005/58
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
02 SEGMENT INFORMATION CONTINUED
Inter-segment transfers
Segment revenues, expenses and results include transfers between segments. Such transfers are priced
on an “arm’s-length” basis and are eliminated on consolidation.
03 REVENUE
Consolidated entity
Parent entity
2005
$000
2004
$000
2005
$000
2004
$000
Revenue from operating activities
Sale of goods
Revenue from outside the operating activities
Other revenue
Interest revenue – other corporations
Dividend – related party
Total revenue from outside the operating activities
470,061
70,757
72
218
0
290
122
45
0
167
Total revenue from ordinary activities
470,351
70,924
0
0
9
9,500
9,509
9,509
04 PROFIT FROM ORDINARY ACTIVITIES
Net gains and expenses
Profit from ordinary activities before income tax expense includes the following specific gains
and expenses:
Net gains
Net gain on disposal of property, plant and equipment
Net foreign exchange gains for the period
Change in methodology of inventory valuation
to incorporate attributable supply chain costs
Expenses
Net loss on disposal of property, plant and equipment
Depreciation
- Plant and equipment
- Capitalised leased plant and equipment
- Motor vehicles
- Computer systems
3,630
81
268
4,164
475
27
41
586
0
0
0
0
96
543
0
356
4,718
0
0
147
0
0
0
0
Total depreciation
Amortisation – goodwill
Other charges against assets
- write down of inventories to net realisable value
- scrapping of property, plant and equipment
- minor assets expensed on acquisition
Total other charges against assets
Borrowing costs – other corporations
- interest and finance charges
- lease finance costs
- amortisation of ancillary costs of borrowings
Total borrowing costs – other corporations
Rental expenses
- operating lease costs
- equipment hire
Total rental expenses
8,143
2,831
1,129
425
811
0
180
991
4,054
0
185
4,239
117
0
45
162
698
0
22
720
29,846
0
29,846
3,776
14
3,790
0
0
0
0
0
0
1,172
0
8
1,180
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/59
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
05 INCOME TAX
Income tax expense
The income tax expense for the financial period
differs from the amount calculated on the profit.
The differences are reconciled as follows:
Profit/(loss) from ordinary activities before
income tax expense
Income tax calculated at 30% (2004 – 30%)
Tax effect of permanent differences:
- amortisation of goodwill
- other non-allowable items
Dividend – related party
Tax consolidation adjustments re NZ branch
Difference in NZ tax rate
Income tax adjusted for permanent differences
Under/(over) provision from prior year
Aggregate income tax expense
06 CURRENT ASSETS - CASH ASSETS
Cash on hand
Cash at bank
Deposits at call
Total current assets – cash assets
07 CURRENT ASSETS - RECEIVABLES
Trade debtors
Sundry debtors
Security deposits
Related parties
Total current assets – receivables
08 CURRENT ASSETS - INVENTORIES
Finished goods, at cost
09 TAX ASSETS
Income tax receivable
10 CURRENT ASSETS
Prepayments
SCA2005/60
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
$'000
2004
$'000
30,394
4,172
9,118
1,252
849
35
0
(415)
47
9,634
197
9,831
127
26
0
0
0
1,405
0
1,405
373
6,001
52
727
12,863
50
6,426
13,640
5,988
448
127
44
2,840
1,481
113
960
6,607
5,394
7,544
2,263
0
0
(2,850)
0
0
(587)
260
(327)
0
45
0
45
0
3
0
62,116
62,119
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
123,183
92,513
0
0
1,633
0
1,678
4,725
1,206
860
0
The deposits at call bear interest at variable rates of between 5.2% and 5.6% (2004: 4.6% and 5.3%)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
11 NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS
Name of entity
Super Cheap Auto Pty Ltd
BCF Australia Pty Ltd
Total – non-current assets –
shares in controlled entities (refer Note 35)
12 NON CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Plant and equipment, at cost
Less accumulated depreciation
Net plant and equipment
Capitalised leased plant and equipment
Less accumulated depreciation
Net capitalised leased plant and equipment
Motor vehicles
Less accumulated depreciation
Net motor vehicles
Computer systems
Less accumulated depreciation
Net computer equipment
Total net property, plant and equipment
Reconciliations – consolidated entity
Carrying amounts at 27 June 2004
Additions
Disposals
Additions through acquisition
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 2 July 2005
Reconciliations – parent entity
Carrying amounts at 27 June 2004
Additions
Disposals
Additions through acquisition
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 2 July 2005
Plant and
equipment
$'000
24,616
7,750
(130)
175
(3,630)
0
28,781
0
0
0
0
0
0
0
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
$'000
2004
$'000
0
0
0
0
0
0
84,234
1
84,233
0
84,234
0
84,233
38,771
31,010
(9,990) (6,394)
28,781
24,616
1,039
(1,039)
1,039
(958)
0
81
1,139
(487)
996
(396)
652
600
26,610
17,825
(11,027) (6,865)
15,583
10,960
45,016
36,257
Capitalised
leased
plant and
Motor
equipment vehicles
$'000
$'000
81
0
0
0
(81)
0
0
0
0
0
0
0
0
0
600
353
(58)
25
(268)
0
652
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Computer
equipment
$'000
Total
$'000
10,960
8,785
(1)
3
(4,164)
0
36,257
16,888
(189)
203
(8,143)
0
15,583
45,016
0
0
0
0
0
0
0
0
0
0
0
0
0
0
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/61
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
13 NON CURRENT ASSETS – INTANGIBLES
Consolidated entity
Parent entity
Goodwill and brand, at cost
Less accumulated amortisation
Net goodwill
Trademarks, at cost
Less accumulated depreciation
Net trademarks
Total net intangibles
Reconciliations – consolidated entity
Carrying amounts at 27 June 2004
Additions
Disposals
Additions through acquisition
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 2 July 2005
Reconciliation – parent entity
Carrying amounts at 27 June 2004
Additions
Disposals
Additions through acquisition
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 2 July 2005
2005
$'000
2004
$'000
60,347
53,570
(11,067) (8,235)
49,280
45,335
14
0
14
14
0
14
49,294
45,349
2005
$'000
2004
$'000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Goodwill
$'000
Brand
names
$'000
Trade
marks
$'000
45,335
0
0
6,776
(2,831)
0
49,280
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
14
0
0
0
0
0
14
0
0
0
0
0
0
0
Totals
$'000
45,349
0
0
6,776
(2,831)
0
49,294
0
0
0
0
0
0
0
14 NON CURRENT ASSETS – DEFERRED TAX ASSETS
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
$'000
2004
$'000
Future income tax benefits
3,509
5,006
3,142
4,876
SCA2005/62
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
15 NON-CURRENT ASSETS – OTHER NON-CURRENT ASSETS
Consolidated entity
Parent entity
Borrowing costs, at cost
Less accumulated amortisation
Net borrowing costs
16 CURRENT LIABILITIES – PAYABLES
Trade creditors
Other creditors
Total current liabilities – payables
17 CURRENT LIABILITIES – INTEREST BEARING LIABILITIES
Secured
Commercial bill
Total current liabilities –
secured interest bearing liabilities
Unsecured
Related parties
Total current liabilities –
unsecured interest bearing Liabilities
Total current liabilities –
interest bearing liabilities
2005
$'000
2004
$'000
703
(308)
395
616
(176)
440
33,373
13,044
29,733
17,124
46,417
46,857
2005
$'000
2004
$'000
67
0
67
32
169
201
0
0
0
0
0
0
0
0
81,250
29,000
59,650
81,250
29,000
59,650
1
1
7,184
7,184
0
0
6,199
6,199
81,251
36,184
59,650
6,199
The details of the security for the secured liabilities are set out in Note 20.
18 CURRENT TAX LIABILITIES
Income tax payable
696
0
467
19 CURRENT LIABILITIES – PROVISIONS
Dividends (see Note 25)
Employee benefits (refer Note 30)
Total current liabilities – provisions
Movements in provisions – dividends
Carrying amount at the start of
the financial period
Provisions recognised as part of
acquisition of Super Cheap Auto Pty Ltd
Payments/other sacrifices of economic benefits
0
4,032
4,032
5,000
3,643
8,643
5,000
0
0
10,000
(5,000) (5,000)
Carrying amount at the end of the financial period
0
5,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/63
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
NON-CURRENT LIABILITIES –
20 INTEREST BEARING LIABILITIES
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
$'000
2004
$'000
Secured
Commercial bill
0
21,600
0
Secured liabilities
Total secured liabilities (current and non-current) are:
Commercial bills
Total current liabilities
81,250
50,600
81,250
50,600
59,650
59,650
0
0
0
The facilities are secured by first registered company charges over all the asssets and undertakings of
Super Cheap Auto Group Limited, Super Cheap Auto Pty Ltd, Super Cheap Auto (New Zealand) Pty Ltd and
BCF Australia Pty Ltd in favour of ANZ Banking Group Limited and by Cross guarantees and indemnities
between Super Cheap Auto Pty Ltd and Super Cheap Auto (New Zealand) Pty Ltd and between Super Cheap
Auto Group Limited, Super Cheap Auto Pty Ltd, SCA Equity Plan and BCF Australia Pty Ltd in favour of ANZ
Banking Group Ltd. Financial covenants are provided by Super Cheap Auto Group Ltd with respect to lease
adjusted debt to capitalisation, balance sheet debt to capitalisation, fixed charges cover and lease
adjusted debt to EBITDAL. In addition, Super Cheap Auto undertakes not to make distributions of more
than 60% of NPAT without ANZ Banking Group Limited’s prior consent.
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Total facilities
- Multi-Option Facility
(including commercial bill,
overdraft and cash advance)
- Indemnity/Guarantee Facility
63,120
1,300
90,000
1,338
Totals
Facilities used at balance date
- Multi-Option Facility
(including commercial bill,
overdraft and cash advance)
- Indemnity/Guarantee Facility
Totals
Unused balance of facilities at balance date
- Multi-Option Facility
(including commercial bill,
overdraft and cash advance)
- Indemnity/Guarantee Facility
Totals
91,338
64,420
81,250
1,287
50,600
1,287
82,537
51,887
8,750
51
12,520
13
8,801
12,533
90,000
1,388
91,338
59,650
0
59,650
30,350
1,338
31,688
0
0
0
0
0
0
0
0
0
In addition, the Company has access to a $35.3 million (2004: $20.3 million) transactional facility
for clean credit and foreign currency dealings. Super Cheap Auto has commercial bills of $21.6 million
(2004: $50.6 million) outstanding at year end which are drawn as part of the group facility.
The current interest rates on the financing arrangements are:
- Multi Option Facility
(including commercial bills, overdraft and cash advance)
5.99%-7.23% (2004:6.19%-7.43%)
21 NON-CURRENT LIABILITIES – DEFERRED TAX LIABILITIES
Deferred tax liabilities
341
355
174
355
SCA2005/64
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
22 NON-CURRENT LIABILITIES – PROVISIONS
Employee benefits (refer Note 29)
23 CONTRIBUTED EQUITY
Ordinary shares fully paid
Movement in ordinary share capital
Issue of shares on incorporation (8 April 2004)
Issue of shares on 23 April 2004
Share split on 19 May 2004
Closing balance 2 July 2005
Consolidated entity
Parent entity
2005
$’000
984
2004
$’000
797
2005
$’000
0
2004
$’000
0
84,233
84,233
84,233
84,233
Number of
Shares
1
49,697,150
56,732,471
106,429,622
Issue
Price
1.00
1.69
-
$’000
0
84,233
0
84,233
The ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of
the parent entity in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present, in person or by proxy, at a meeting of
shareholders of the parent entity is entitled to one vote and, upon a poll, each share is entitled to
one vote.
No options were issued, exercised nor lapsed during the period. Information relating to options
outstanding at the end of the financial year are set out in Note 31.
24 RESERVES AND RETAINED EARNINGS
Reserves
Foreign currency translation reserve
Movements
Balance at the beginning of the financial period
Net exchange difference on translation of
foreign controlled Entity
Reserves at the end of the financial period
Retained earnings
Balance at the beginning of the financial period
Net profit/(loss) for the financial period attributable
to shareholders of Super Cheap Auto Group Limited
Dividends provided for or paid
Retained profits/(losses) at the end of the
financial period
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
$'000
2004
$'000
0
2
(2)
0
2,767
2
0
2
2
0
0
0
0
0
0
20,563
(2,129)
2,767
0
7,871
(2,129)
21,201
2,767
5,742
0
0
0
0
0
0
0
0
Nature and purpose of reserves
Foreign currency translation reserve
Exchange differences which arise on translation of the foreign controlled entity are taken to the foreign
currency translation reserve (refer Note 1(c)(iii)).
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/65
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
25 DIVIDENDS
Ordinary shares
Dividends paid by Super Cheap Auto Group Limited during
the reporting period were as follows:
Interim dividend for the period ended 2 July 2005 of 2 cents
per share paid on 24 March 2005. Fully franked based on tax paid @ 30%
Total dividends provided and paid
Parent entity
2005
$'000
2004
$'000
2,129
2,129
0
0
During the period, Super Cheap Auto Pty Ltd paid a $5 million dividend which had been declared at
26 June 2004.
Dividends not recognised at year end
Subsequent to year end, the Directors have recommended the payment
of a final dividend of 4.5 cents per ordinary share, fully franked
based on tax paid at 30%. The aggregate amount of the dividend
expected to be paid on 12 October 2005, out of retained profits
at 2 July 2005, but not recognised as a liability at year end, is
4,789
0
Franking credits
The franked portions of dividends paid after 2 July 2005 will be franked out of existing franking
credits and out of franking credits arising from the payments of income tax in the years ending after
2 July 2005.
Franking credits remaining at balance date available for dividends
declared after the current balance date based on a tax rate of 30%
22,539
15,926
The above amounts represent the balance of the franking account as at the end of the financial
period, adjusted for:
- franking credits that will arise from the payment of the current tax liability; and,
- franking debits that will arise from the payment of the dividend as a liability at the
reporting date.
The amount recorded above as the franking credit amount is based on the amount of Australian
income tax paid or to be paid in respect of the liability for income tax at the balance date.
SCA2005/66
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
26 FINANCIAL INSTRUMENTS
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
$'000
2004
$'000
Derivative financial instruments
The parent entity and its controlled entity are parties to derivative financial instruments in the normal
course of business in order to hedge exposures to foreign exchange and interest rate changes.
Foreign exchange contracts
The economic entity retails products including some that have been imported from South East Asia. In
order to protect against exchange rate movements, the economic entity has entered into forward exchange
rate contracts to purchase United States Dollars. The contracts are timed to mature in line with
forecasted payments for imports and cover forecast purchases for the coming 3 months on a rolling basis.
At balance date the following amounts were committed on foreign currency forward exchange contracts:
Buy United States dollars and sell
Australian dollars with maturity
- 0 to 6 months
- 7 to 12 months
Weighted average rate of contracts
4,000
0
8,000
0
75 cents 70 cents
0
0
0
0
0
0
These forward exchange contracts are hedging future purchases and unrealised gains and losses on the
contracts, together with the costs of the contracts, are deferred and will be recognised in the
measurement of the underlying transaction provided the underlying contract is still expected to occur
as originally designated.
Gains and losses arising from hedging contracts terminated prior to maturity are also carried forward
until the designated hedged transaction occurs.
The following gains, losses and costs have
been deferred as at the balance date:
- realised gains
- unrealised gains
- total gains (a)
- realised losses and costs
- unrealised losses and costs
- total losses and costs (b)
Net gains/(losses and costs)
(a) Included in other creditors under note 16
(b) Included in sundry debtors under note 7
0
0
0
0
(7)
(7)
(7)
0
16
16
0
0
0
16
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Interest rate swap contracts
Bank loans of the economic entity currently bear an average variable interest rate of 7.09% (2004: 7.26%).
It is policy to protect part of the loans from exposure to increasing interest rates. Accordingly, the
economic entity has entered into interest rate swap contracts, under which it is obliged to receive
interest at variable rates and to pay interest at fixed rates. The contracts are settled on a net basis
and the net amount receivable or payable at the reporting date is included in other debtors or other
creditors.
The contracts require settlement of net interest receivable or payable each 90 days. The settlement
dates coincide with the dates on which interest is payable on the underlying debt. Swaps currently in
place cover approximately 45% (2004: 49%) of the loan principal outstanding. The fixed interest rate
is 6.24% (2004: 6.19%).
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/67
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
26 FINANCIAL INSTRUMENTS CONTINUED
Interest rate risk exposures
The economic entity’s exposure to interest rate risk and the effective weighted average interest rate
by maturity periods is set out in the following table:
Fixed interest maturing in
Floating
interest
rate
$’000
Notes
1 year
or
less
$’000
Over
1 to 5
years
$’000
More
Non-
than interest
bearing
$’000
5 years
$’000
Total
$’000
2005
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of interest
Financial liabilities
Trade and other creditors
Related parties
Hire purchase creditors
Commercial bill
Employee entitlements
Total financial liabilities
Weighted average rate of interest
Net financial assets/(liabilities)
2004
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of interest
Financial liabilities
Trade and other creditors
Related parties
Hire purchase creditors
Commercial bill
Employee entitlements
0
0
0
0
0
0
0
0
0
0
0
0
0
6
7, 10
5,379
0
5,379
5.11%
0
0
0
16
17
17, 20
19, 22
0
0
0
59,650
0
0
0
0
21,600
0
59,650
21,600
7.09%
6.24%
(54,271) (21,600)
6
7, 10
16
17
17, 20
19, 22
11,947
0
11,947
3.69%
0
0
0
26,000
0
0
0
0
0
0
0
3,000
0
0
0
0
21,600
0
0
0
0
0
0
0
0
0
0
1,047
11,332
6,426
11,332
12,379
17,758
46,417
1
0
0
5,016
46,417
1
0
81,250
5,016
51,434 132,684
0
(39,055) (114,926)
0
0
0
0
0
0
0
0
0
1,693
6,600
13,640
6,600
8,293
20,240
46,857
7,184
0
0
4,440
46,857
7,184
0
50,600
4,440
58,481
109,081
Total financial liabilities
26,000
3,000
21,600
Weighted average rate of interest
Net financial assets/(liabilities)
7.26%
(14,053)
6.19%
(3,000) (21,600)
6.19%
0
(50,188) (88,841)
Net fair value of financial assets and liabilities
On-balance sheet items
The net fair values of cash and cash equivalents and non-interest bearing monetary financial assets and
financial liabilities of the consolidated entity approximate the carrying amounts.
The net fair values of other monetary financial assets and financial liabilities of the consolidated
entity are based upon market prices where a market exists or by discounting the expected future cash
flows by the current interest rates for assets and liabilities with similar risk profiles.
SCA2005/68
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
26 FINANCIAL INSTRUMENTS CONTINUED
Derivative financial instruments
The net fair values of forward exchange contracts is taken as the unrealised gain or loss at balance
date calculated by reference to the current forward rates for contracts with similar maturity profiles.
Carrying amounts and net fair values of financial assets
and financial liabilities at balance sheet date:
On-balance sheet financial instruments
Financial assets
Cash and deposits
Receivables
Non-traded financial assets
Financial liabilities
Trade and other creditors
Bank overdrafts
Hire purchase creditors
Commercial bill
Carrying amount
2004
2005
$'000
$'000
Net fair value
2004
2005
$'000
$'000
6,426
11,332
13,640
6,600
6,426
11,332
13,640
6,600
17,758
20,240
17,758
20,240
(46,418) (54,041)
0
0
(81,250) (50,600)
0
0
(46,418) (54,041)
0
0
(81,250) (50,600)
0
0
Non-traded financial liabilities
(127,688) (104,641)
(127,668) (104,641)
Off-balance sheet financial instruments
Financial assets
Forward exchange contracts *
Financial liabilities
Forward exchange contracts *
0
16
(7)
0
* These amounts are unrealised gains and losses which have been included in the net carrying amount and net fair value of
the on-balance sheet financial assets and liabilities.
None of the financial assets and liabilities are readily traded on organised markets in the standardised form.
Where assets are carried at amounts above the net fair value these amounts have not been written down as it is intended to
hold these assets to maturity.
Net fair value is exclusive of costs that would be incurred on realisation of an asset and inclusive of costs that would be
incurred on settlement of a liability.
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance
date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts of
those assets, as disclosed in the statement of financial position, and notes to the financial statements.
Credit risk for derivative financial instruments arises from the potential failure by counterparties
to the contract to meet their obligations. The credit risk exposure to forward exchange contracts and
interest rate swaps is the net fair value of these contracts.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/69
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
27 REMUNERATION OF AUDITORS
During the period the auditor of the parent
entity and its related practices earned the
following remunerations:
Grant Thornton – Australian firm
Audit or review of financial reports of the entity
and any entity in the consolidated entity
Other audit related work
Other assurance services
Total audit and assurance services
Advisory services
Taxation services
Total remuneration
Related entities of Grant Thornton – Australian firm
Audit or review of financial reports of the entity
and any entity in the consolidated entity
Other audit related work
Other assurance services
Total audit and assurance services
Advisory services
Taxation services
Total remuneration
28 CONTINGENT LIABILITIES
Guarantees
Guarantees issued by the bankers of
Super Cheap Auto Pty Ltd in support of various
rental arrangements for certain retail outlets.
The maximum future rental payments guaranteed amount to:
29 COMMITMENTS FOR EXPENDITURE
Capital commitments
Commitments for the acquisition of plant and equipment
contracted for at the reporting date but not recognised
as liabilities payable:
Within one year
Later than one year but not later than five years
Later than five years
Total capital commitments
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
$'000
2004
$'000
175
0
0
175
0
4
179
0
0
0
0
0
0
0
84
28
0
112
37
1
150
0
0
0
0
0
0
0
143
0
0
143
0
0
143
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,287
1,287
0
0
1,694
0
0
1,694
786
0
0
786
0
0
0
0
0
0
0
0
SCA2005/70
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
29 COMMITMENTS FOR EXPENDITURE CONTINUED
Consolidated entity
Parent entity
2005
$'000
2004
$'000
2005
2004
$'000 $'000
Lease commitments
Commitments in relation to operating lease payments under
non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Total lease commitments
Future minimum lease payments expected to be
received in relation to non-cancellable sub-leases
of operating leases
29,249
87,119
46,171
25,280
80,181
53,141
162,539 158,602
3,874
4,668
30 EMPLOYEE BENEFITS
Employee benefits and related on-costs liabilities
Included in other creditors
– current (refer Note 16)
Provision for employee benefits
– current (refer Note 19)
Provision for employee benefits
– non-current (refer Note 22)
850
761
4,032
3,643
984
797
Total employee benefit and related on-costs liabilities
5,866
5,201
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Employee numbers
Number of employees at reporting date
Long service leave
Amounts provided for long service leave, as stated in
note 1(n), that are expected to be settled more than
twelve months after the reporting date, are measured at
the present value of the expected settlement amount.
The following assumptions have been adopted in measuring
the present values:
Weighted average rates of increase in annual employee
benefits until the settlement of the liabilities
Weighted average discount rates
Consolidated entity
2005
Number
2004
Number
Parent entity
2004
2005
Number Number
3,604
2,964
0
0
2.0%
5.6%
2.0%
5.6%
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/71
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
31 DIRECTOR AND EXECUTIVE DISCLOSURES
Principles used to determine the nature and amount of remuneration
The broad remuneration policy is to ensure remuneration properly reflects the relevant person’s
duties and responsibilities and that the remuneration is competitive in attracting, retaining and
motivating people of the highest quality.
The Board believes that the best way to achieve this objective is to provide Senior Executives with
a remuneration package consisting of fixed components (salary and superannuation) which reflect the
individual’s responsibilities, duties and personal performance and a blend of short and long term
incentives which reward both individual and company performance each year. The framework provides
a mix of fixed and variable pay. As executives gain seniority within the group, the balance of this
mix shifts to a higher proportion of “at risk” rewards.
Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands which are made on, and the
responsibilities of, the Directors. Non-Executive Directors’ fees and payments are reviewed annually
by the Board. The Chairman’s fees are determined independently to the fees of Non-Executive Directors
based on comparative roles in the external market. The Chairman is not present at any discussions
relating to determination of his own remuneration. Non-Executive Directors do not receive share
options. Non-Executive Directors may opt each year to receive a percentage of their remuneration in
Super Cheap Auto Group Limited shares, which would be acquired on-market.
Directors’ fees
The current base remuneration was established on 19 May 2004. The Directors’ fees are inclusive of
Committee fees.
Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit approved
by shareholders.
Executive pay
The executive pay and reward framework has four components:
• base pay and benefits
• short-term performance incentives
• long-term incentives through participation in the Super Cheap Auto Executive Option Plan, and
• other remuneration such as superannuation.
The combination of these comprises the executive’s total remuneration.
Base pay
Structured as a total employment cost package which may be delivered as a combination of cash and
prescribed non-financial benefits at the executives’ discretion.
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards.
External remuneration consultants provide analysis and advice to ensure base pay is set to reflect
the market for a comparable role. Base pay for senior executives is reviewed annually to ensure the
executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion.
There are no guaranteed base pay increases included in any senior executives’ contracts.
Benefits
Executives receive benefits including car allowances and salary continuance insurance.
Short-term incentives
Should the Company achieve a pre-determined profit target set by the Nomination and Remuneration
Committee then a short-term incentive (STI) pool is available for allocation to executives during the
annual review. Cash incentives (bonuses) are payable in September each year. Using a profit target
ensures variable reward is only available when value has been created for shareholders and when
profit is consistent with the business plan. The incentive pool is leveraged for performance above
the threshold to provide an incentive for executive out-performance.
SCA2005/72
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
31 DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED
Each executive has a target STI opportunity depending on the accountabilities of the role and impact
on organisation of business unit performance. The maximum target bonus opportunity is between 40% and
70% of total base salary dependent on the seniority of the executive.
Each year, the Nomination and Remuneration Committee considers the appropriate targets and key
performance indicators (KPIs) to link the STI plan and the level of payout if targets are met. This
includes setting any maximum payout under the STI plan, and minimum levels of performance to trigger
payment of STI.
For the period ended 2 July 2005, the KPIs linked to short term incentive plans were based on group,
individual business and personal objectives. Depending on the responsibilities of the executive, these
KPIs required performance in sales growth, gross profit improvement, reduction of operating costs and
improvement in operating procedures.
The Nomination and Remuneration Committee is responsible for assessing whether the KPIs are met.
To help make this assessment, the Committee receives reports on performance from management.
The STI target annual payment is reviewed annually.
Details of Remuneration
Details of the nature and amount of each element of the emoluments of each director of Super Cheap
Auto Group Limited for the period ended 2 July 2005 are set out in the following table.
Directors of Super Cheap Auto Group Limited
Primary
Cash
bonus
$
-
275,000
-
-
-
Cash salary
and fees
$
100,000
548,076
188,745
54,600
54,600
946,021
275,000
Post-
employment
Equity
Non-
monetary
benefits
$
-
9,342
-
-
-
9,342
Super-
annuation
$
-
31,520
5,400
5,400
5,400
Options
$
-
270,326
-
-
-
Total
$
100,000
1,134,264
194,145
60,000
60,000
47,720
270,326
1,584,409
Name
R D McIlwain
R E Thorn
R A Rowe
D D McDonough
R J Wright
Total
(1) Mr R A Rowe resigned as an Executive Officer of the Company on 5 July 2004. Upon resignation he was paid unused leave
entitlements of $134,145. This is included in the table above in cash salary and fees.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/73
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
31 DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED
Other executives of the Company and of the consolidated entity
The nature and amount of each element of the five officers of the consolidated entity with the
greatest authority for strategic direction and management of the consolidated entity for the period
ended 2 July 2005 are set out in the following table:
Primary
Post-
employment
Equity
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Options
$
Total
$
291,150
135,000
3,396
11,585
63,502
504,633
225,038
75,000
20,221
11,585
91,450
21,200
5,593
6,758
150,288
44,000
232,000
-
-
-
11,585
-
-
-
-
-
331,844
125,001
205,873
232,000
Name
P A Birtles
Chief Financial Officer
and Company Secretary
S J Doyle
General Manager – BCF1
P M Pugsley
General Manager –
Retail Operations2
N J Binns
Business Systems Manager
S R Tewkesbury
Supply Chain Manager
Total
989,926
275,200
29,210
41,513
63,502
1,399,351
(1) Mr S J Doyle served as General Manager - Retail Operations from 27 June 2004 to 3 October 2004, General Manager –
Merchandising from 4 October 2004 to 15 May 2005 and was appointed General Manager, BCF on 16 May 2005.
(2) Ms P Pugsley was appointed as General Manager – Retail Operations on 29 November 2004.
Cash bonuses
Cash bonuses are dependent on the satisfaction of performance conditions as set out in the section
headed “short term incentives” above. For each cash bonus included in the above tables, the percentage
of the available bonus that was paid and the percentage that was forfeited because the person did not
meet the performance criteria are set out below. No part of the bonuses are payable in future years.
Name
R E Thorn
P A Birtles
S J Doyle
N J Binns
P M Pugsley
CASH BONUS
Paid
%
Forfeited
%
71
75
60
69
57
29
25
40
31
43
Service agreements
Remuneration and other terms of employment for the Managing Director and Chief Financial Officer are
formalised in a service agreement. The agreement provides for the provision of performance-related cash
bonuses, other benefits including car allowances and participation, when eligible, in the Super Cheap
Auto Executive Option Plan.
SCA2005/74
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
31 DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED
R E Thorn, Managing Director
• Term of agreement – 5 years commencing 1 July 2004
• Base salary, inclusive of superannuation, for the year ended 30 June 2005 of $550,000 to be reviewed
annually by the Nomination and Remuneration Committee.
• Payment of a termination benefit on early termination by the Company, other than for cause, equal to
33 months base salary if the termination is effective more than 12 months before the expiry date or
9 months base salary if the termination is effective within 12 months before the expiry date.
P A Birtles, Chief Financial Officer and Company Secretary
• Term of agreement – 3 years commencing 1 July 2004
• Base salary, inclusive of superannuation for the year ended 30 June 2005 of $300,000 to be reviewed
annually by the Nomination and Remuneration Committee.
• Payment of a termination benefit on early termination by the Company, other than for cause, equal to
the lesser of 6 months base salary or the base salary in respect of the remainder of the contract.
Super Cheap Auto Executive Option Plan
The Company has established the Super Cheap Auto Executive Share Option Plan (“Option Plan”) to assist
in the retention and motivation of executives of Super Cheap Auto (“Participants”). It is intended that
the Option Plan will enable the Company to retain and attract skilled and experienced executives and
provide them with the motivation to enhance the success of the Company.
Under the Option Plan, options may be offered to Participants selected by the Board. Unless otherwise
determined by the Board, no payment is required for the grant of options under the Option Plan.
Subject to any adjustment in the event of a bonus issue, each option is an option to subscribe for one
Share. Upon the exercise of an option by a Participant, each Share issued will rank equally with other
Shares of the Company.
Options issued under the Option Plan may not be transferred unless the Board determines otherwise. The
Company has no obligation to apply for quotation of the options on ASX. However, the Company must apply
to ASX for official quotation of Shares issued on the exercise of the options.
At any one time, the total number of options on issue under the Option Plan that have neither been
exercised nor lapsed will not exceed 5.0% of the total number of shares in the capital of the Company
on issue.
The Company has granted to R E Thorn and P A Birtles options under the plan as set out in the following
table. These options were granted on 19 May 2004 and are exercisable subject to satisfaction of a
qualifying hurdle. The qualifying hurdle requires cumulative annual growth of 10% in earnings per share
(pre-amortisation) from a base of 17.2 cents for the year ending 30 June 2005 through to each of the
years prior to the options being exercised.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/75
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
31 DIRECTOR AND EXECUTIVE DISCLOSURES CONTINUED
Option holdings
The number of options over ordinary shares in the Company held during the period by the directors of
Super Cheap Auto Group Limited and the five specified executives of the consolidated entity, including
their personally-related entities are set out below:
Name
Directors of Super Cheap
Auto Group Limited
R E Thorn
Specified executives of
the consolidated entity
P A Birtles
Date options granted
19 May 2004
19 May 2004
19 May 2004
Balance at
and fees
the year
Granted
during the
year as
remuneration
Exercised
during
the year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
1,000,000
200,000
-
-
-
-
Exercise
date
1 July 2007
1 July 2008
1 July 2009
1,000,000
200,000
Issue
price of
shares
$1.97
$1.97
$1.97
-
-
Number
under
option
700,000
250,000
250,000
1,200,000
Shareholdings
The number of ordinary shares in the Company held during the financial year by each director of Super
Cheap Auto Group Limited and each of the five specified executives of the consolidated entity, including
their personally related entities are set out below:
Name
Balance at
the start of
the year
Received
during the
year on the
exercise
of options
Directors of Super Cheap Auto Group Limited
R D McIlwain
R E Thorn
R A Rowe
D D McDonough
R J Wright
-
4,835,120
93,909,727
-
-
Specified executives of the consolidated entity
P A Birtles
S J Doyle
N J Binns
P M Pugsley
S R Tewkesbury
1,192,089
536,441
238,418
-
-
-
-
-
-
-
-
-
-
-
-
Other
changes
during
the year
158,882
63,958
(41,507,568)
50,000
40,609
507
507
-
-
-
Balance at
the end of
the year
158,882
4,899,078
52,402,159
50,000
40,609
1,192,596
536,948
238,418
-
-
SCA2005/76
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
32 RELATED PARTIES
Transactions with related parties are at arm’s length unless otherwise stated.
Directors
The names of the persons who were Directors of Super Cheap Auto Group Limited during the financial
period are R D McIlwain, R E Thorn, R A Rowe, R J Wright and D D McDonough.
Amounts due from Directors and director-related entities
Amounts due from Directors of the consolidated entity and their director-related entities which are
included under related parties in Note 8 are as follows:
Consolidated entity
Parent entity
2005
'000
2004
$'000
2005
$'000
2004
$'000
Amount due from:
Director – R E Thorn
– expenses to be reimbursed
Director related entities of R A Rowe
– costs of IPO to be reimbursed
– Store lease costs to be reimbursed
by landlord (see below)
The amounts due above have been repaid
subsequent to the end of the period
Other transactions with Directors and director-related entities
Aggregate amounts included in the determination
of profit from ordinary activities before income
tax that resulted from transactions with Directors
and director-related entities:
- store lease payments – R A Rowe related
property entities
33 RECONCILIATION OF PROFIT FROM ORDINARY ACTIVITIES
AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES
18
0
26
44
8
798
154
960
0
0
0
0
6,960
1,157
0
Profit from ordinary activities after
related income tax
Cash flows excluded from profit on ordinary
activities attributed to operating activities
Depreciation and amortisation
Net (gain)/loss on sale of non-current assets
(Gain)/loss on disposal of service entity
Cash flow attributed to investing and financing activities
Interest paid - net
IPO costs to be reimbursed
GST credit claims for fixed asset purchases
Change in operating assets and liabilities,
net of effects from the purchase of controlled
entities and the sale of the service entity
- (increase) in receivables
- (increase) in inventories
- increase/(decrease) in payables
- (decrease)/increase in provisions
- (decrease) in deferred tax
Net cash inflow from operating activities
20,563
2,767
7,871
11,023
147
0
1,554
20
(96)
3,751
0
1,615
616
798
162
(4,732)
(28,669)
(48)
531
(133)
(673)
(103)
2,484
(650)
(285)
4,048
6,594
8
0
0
2,021
0
0
(15,467)
0
589
0
4,484
(234)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/77
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
34 EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator
in calculating basic earnings per share
Weighted average potential ordinary shares used as the
denominator in calculating diluted earnings per share
Reconciliations of earnings used in calculating earnings per share
Basic earnings per share
- earnings used in calculating basic earnings per share
net profit after tax
Diluted earnings per share
- earnings used in calculating diluted earnings per share
net profit after tax
Consolidated
Entity
2005
Cents
19.3
19.3
Parent
entity
2004
Cents
4.1
4.1
Consolidated entity
2005
Number
2004
Number
106,429,622
67,550,020
106,429,622
67,550,020
Consolidated entity
2005
$'000
2004
$'000
20,563
2,767
20,563
2,767
Information on the classification of securities
The options over 1,200,000 ordinary shares remaining unconverted at year end is not included in basic or
dilutive EPS as the issue of shares is contingent upon future events. As at reporting date, conditions
which would result in the issue of shares had not been obtained.
35 INVESTMENTS IN CONTROLLED ENTITIES
Name of Entity
Super Cheap Auto Pty Ltd (a)
Super Cheap Auto (New Zealand) Pty Ltd (b)
Super Cheap Auto Purchasing Pty Ltd (b)
BCF Australia Pty Ltd (a)
SCA Equity Plan Pty Ltd (b)
Country of
Incorporation
Class of
Shares
Australia
New Zealand
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity
Holding
2005
%
100
100
100
100
100
(a) These controlled entities have been granted relief from the necessity to prepare financial reports in accordance with
Class Order 98/1418 issued by the Australian Securities and Investments Commission.
(b) Investment is held directly by Super Cheap Auto Pty Ltd.
SCA2005/78
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
35 INVESTMENTS IN CONTROLLED ENTITIES CONTINUED
Acquisition by controlled entity
On 17 January 2005, BCF Australia Pty Ltd acquired certain assets and assumed certain liabilities of the
CampMart business from an entity external to the group.
Details of the acquisition are as follows:
Fair value of identifiable net assets acquired
Inventory
Plant and equipment
Trade creditors
Employee entitlements
Goodwill
Consideration
36 NET TANGIBLE ASSET BANKING
Net tangible asset per ordinary share
$’000
2,000
203
(914)
(46)
1,243
6,776
8,019
Consolidated entity
2005
Cents
53¢
2004
Number
39¢
37 DEED OF CROSS GUARANTEE
Super Cheap Auto Group Limited, Super Cheap Auto Pty Ltd and BCF Australia Pty Ltd are parties to a
Deed of Cross Guarantee under which each company guarantees the debts of the others. By entering into
the Deed, the wholly owned entities have been relieved from the requirement to prepare a financial
report and directors’ report under Class Order 98/1418 (as amended by Class Orders 98/2017, 00/0321,
01/1087, 02/0248 and 02/1017) issued by the Australian Securities and Investments Commission.
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are
no other parties to the Deed of Cross Guarantee that are controlled by Super Cheap Auto Group Limited,
they also represent the ‘Extended Closed Group’.
As the consolidated financial statements cover all parties to the Deed of Cross Guarantee and the
members of the Extended Closed Group are the same as the Closed Group, no separate disclosure of
consolidated information for the Closed Group has been shown.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/79
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
IMPACTS OF ADOPTING AUSTRALIAN EQUIVALENTS
TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
38
The Australian Accounting Standards Board (AASB) is adopting International Financial Reporting
Standards (IFRS) for application to reporting periods beginning on or after 1 January 2005. The AASB
has issued Australian equivalents to IFRS, and the Urgent Issues Group has issued interpretations
corresponding to International Accounting Standards Board (IASB) interpretations. These Australian
equivalents to IFRS are referred to hereafter as AIFRS. The adoption of AIFRS will be first reflected
in the consolidated entity’s financial statements for the half-year ending 31 December 2005 and the year
ending 1 July 2006.
Entities complying with AIFRS for the first time will be required to restate their comparative financial
statements to amounts reflecting the application of AIFRS to that comparative period. Most adjustments
required on transition to AIFRS will be made, retrospectively, against opening retained earnings at
26 June 2004.
The consolidated entity has established a project team to manage the transition to AIFRS. The project
team is chaired by the Chief Financial Officer and reports to the Audit and Risk Committee.
The project team has analysed all of the AIFRS and has identified the accounting policy changes that
will be required. In some cases, choices of accounting policies are available, including elective
exemptions under Accounting Standard AASB 1 First time Adoption of Australian Equivalents to
International Financial Reporting Standards. These choices have been analysed to determine the most
appropriate accounting policy for the consolidated entity.
The known or reliably estimable impacts on the financial report for the period ended 2 July 2005 had it
been prepared using AIFRS are set out below. No material impacts are expected in relation to the
Statements of Cash Flows.
Although the adjustments discussed below are based on management’s best knowledge of expected standards
and interpretations, and current facts and circumstances, these may change. For example, amended or
additional standards or interpretations may be issued by the AASB and the IASB. Therefore, until the
consolidated entity prepares its first full AIFRS financial statements, the possibility cannot be
excluded that the accompanying disclosures may have to be adjusted.
Notes explaining the impacts on the Statements of Financial Performance and Statements of
Financial Position:
(a) Intangible assets – goodwill/impairment
Under AASB 3 Business Combinations, amortisation of goodwill will be prohibited and will be replaced
by annual impairment testing focusing on the cash flows of the related cash generating unit.
If the policy required by AASB 3 had been applied during the period ended 2 July 2005, consolidated
goodwill at 2 July 2005 would have been $2.8 million higher and consolidated amortisation expense
for the period would have been $2.8 million lower. There would have been no impact on the parent
entity’s financial statements.
(b) Share based payments
Under AASB 2 Share Based Payment, from 1 July 2004, the group is required to recognise an expense
for those options that were issued to employees under the Share Option Plan but that had not vested
by 1 January 2005.
If the policy required by AASB 2 had been applied during the period ended 2 July 2005, consolidated
and parent entity share based payment reserve at 2 July 2005 would have been $0.3 million higher,
with a corresponding decrease in the opening retained earnings of $0.1 million and a decrease in
2005 earnings of $0.2 million.
SCA2005/80
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
IMPACTS OF ADOPTING AUSTRALIAN EQUIVALENTS
TO INTERNATIONAL FINANCIAL REPORTING STANDARDS CONTINUED
38
(c) Financial instruments
The group will be taking advantage of the exemption available under AASB 1 to apply AASB 1 to
AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments:
Recognition and Measurement only from 1 July 2005. This allows the group to apply previous Australian
generally accepted accounting principles (Australian GAAP) to the comparative information of financial
instruments within the scope of AASB 132 and AASB 139 for the 30 June 2006 financial report.
(d) Provision for ‘make good’ requirements in relation to leased premises
Under AASB 137 Provisions, Contingent Liabilities and Contingent Assets, estimates of the costs
of make-good provisions that are contractually required as part of lease agreements should be
appropriately estimated and provided for, with a corresponding asset created for the deferred
expenditure being amortised over the term of the lease. If the policy required by AASB 137 had been
applied during the period ended 2 July 2005 the net impact would be to increase property, plant and
equipment by $2.6 million and increase provision liabilities by $3.8 million with a corresponding
decrease in opening retained earnings of $0.8 million and 2005 earnings of $0.4 million. There would
have been no impact on the parent entity’s financial statements.
(e) Deferred revenue
Under AASB 118 Revenue, revenue from the sale of goods shall be recognised if an entity retains
only an insignificant risk of ownership, when a refund is offered to a customer if they are not
satisfied, then revenue is recognised at the time of sale provided the seller can reliably estimate
future returns and recognises a liability for returns based on previous experience and other
relevant factors. If the policy required by AASB 118 had been applied during the period ended
2 July 2005, returns liability would have been $0.2 million higher, with a corresponding decrease
in opening returned earnings of $0.2 million. There would have been no impact on the parent
entity’s financial statements.
(f) Impairment of assets
Under AASB 136 Impairment of Assets, discounted cash flows are used to calculate the recoverable
amount of assets. The assessment is required on a Cash Generating Unit basis. Assessments to date
have not resulted in changes to the carrying value of applicable assets.
(g) Leases
Under AASB 117 Leases, there is a requirement to account for fixed rate increases in operating
leases on a straight line basis.
This will result in a change to current accounting policy under which lease payments are charged
to the statement of Financial Performance in the period in which they are incurred. If the policy
required by AASB 117 had been applied during the period ended 2 July 2005, lease liability would
have been $3.3 million higher with a corresponding decrease in opening retained earnings of $1.2
million and a decrease in 2005 earnings of $2.1 million. There would have been no impact on the
parent entity’s financial statements.
These numbers do not take into account discounting of future costs to present value. The project
team, in conjunction with its advisors, is considering discounting to present value to ensure
consistency with other AIFRS.
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/81
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Notes to and forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
IMPACTS OF ADOPTING AUSTRALIAN EQUIVALENTS
TO INTERNATIONAL FINANCIAL REPORTING STANDARDS CONTINUED
38
(h) Income Tax
Under AASB 112 Income Taxes, deferred tax balances are determined using the balance sheet method
which calculates temporary differences based on the carrying amounts of an entity’s assets and
liabilities in the statement of financial position and their associated tax basis. In addition,
current and deferred taxes attributable to amounts recognised directly in equity are also
recognised directly in equity.
This will result in a change to the current accounting policy under which deferred tax balances are
determined using the income statement method, items are only tax-effected if they are included in
the determination of pre-tax accounting profit or loss and/or taxable income or loss and current
and deferred taxes cannot be recognised directly in equity.
If the policy required by AASB 112 had been applied during the period ended 2 July 2005, deferred
tas assets would have decreased by $0.7 million, and deferred tax liabilities would have not
changed materially.
(i) Summary of impacts
Adjustments required on first time adoption of AIFRS are generally recognised directly in retained
earnings (with the exception of share based payments) of the date of transition. The effect of
these adjustments for the consolidated entity will be a decrease in retained earnings (pre-tax)
of $2.3 million and an increase in pre-tax 2005 earnings of $0.1 million (increase of $0.8 million
in earnings after tax).
SCA2005/82
DIRECTORS' DECLARATION
Forming part of the Consolidated Financial Statements
For the period from 27 June 2004 to 2 July 2005
The Directors declare that the financial
statements and notes of the consolidated entity
(a) comply with Accounting Standards, the
Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
(b) give a true and fair view of the Company’s
and consolidated entity’s financial position as
at 2 July 2005 and of their performance, as
represented by the results of their operations
and their cash flows, for the financial year ended
on that date.
In the Directors’ opinion:
(a) the financial statements and notes are in
accordance with the Corporations Act 2001; and
(b) 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
(c) at the date of this declaration, there are
reasonable grounds to believe that the members of
the Extended Closed Group identified in Note 37
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 37.
The Directors have been given the declarations by
the Chief Executive Officer and Chief Financial
Offer required by section 295A of the Corporations
Act 2001.
This declaration is made in accordance with a
resolution of the Directors.
R D McILWAIN
Chairman
R E THORN
Director
Brisbane
25 August 2005
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/83
AUDITOR'S REPORT
Chartered Accountants
Business Advisers and Consultants
INDEPENDENT AUDIT REPORT
TO MEMBERS OF SUPER CHEAP AUTO GROUP LIMITED
Scope
The financial report and directors’ responsibility
The financial report comprises the statement of financial position, statement of financial
performance, statement of cash flows, accompanying notes to the financial statements, and the
directors’ declaration for both Super Cheap Auto Group Limited (the company) and the
consolidated entity for the period ended 2 July 2005. The consolidated entity comprises both the
company and the entities it controlled during that period.
The directors of the company are responsible for the preparation and true and fair presentation
of the financial report in accordance with the Corporations Act 2001. This includes responsibility
for the maintenance of adequate accounting records and internal controls that are designed to
prevent and detect fraud and error, and for the accounting policies and accounting estimates
inherent in the financial report.
Audit approach
We conducted an independent audit in order to express an opinion to the members of the
company. Our audit was conducted in accordance with Australian Auditing and Assurance
Standards, in order to provide reasonable assurance as to whether the financial report is free of
material misstatement. The nature of an audit is influenced by factors such as the use of
professional judgment, selective testing, the inherent limitations of internal control, and the
availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee
that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report presents
fairly, in accordance with the Corporations Act 2001, Accounting Standards and other mandatory
financial reporting requirements in Australia, a view which is consistent with our understanding
of the company’s and the consolidated entity’s financial position, and of their performance as
represented by the results of their operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
(cid:131) examining, on a test basis, information to provide evidence supporting the amounts and
disclosures in the financial report; and
(cid:131) assessing the appropriateness of the accounting policies and disclosures used and the
reasonableness of significant accounting estimates made by the directors.
While we considered the effectiveness of management’s internal controls over financial reporting
when determining the nature and extent of our procedures, our audit was not designed to
provide assurance on internal controls.
A queensland Partnership – A Member of Grant Thornton Association Inc.-The Australian Member of Grant Thornton International.
Partners: DJ Carroll SG Hancox LR Jones RG Lunney MG McCann MJ O’Hare DS Skirving
Level 4, Grant Thornton House
King George Square
102 Adelaide Street
Brisbane Qld 4000 Australia
GPO Box 1008
Brisbane Qld 4001 Australia
Tel: 61 (0)7 3222 0200
Fax: 61 (0)7 3222 0444
www.grantthornton.com.au
SCA2005/84
AUDITOR'S REPORT
INDEPENDENT AUDIT REPORT
TO MEMBERS OF SUPER CHEAP AUTO GROUP LIMITED (cont)
Independence
In conducting our audit, we followed applicable independence requirements of Australian
professional ethical pronouncements and the Corporations Act 2001.
Audit opinion
In our opinion, the financial report of Super Cheap Auto Group Limited is in accordance with:
(a)
the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position
as at 2 July 2005 and of its performance for the period ended on that date; and
(ii) complying with Accounting Standards in Australia and the Corporations Regulations
2001; and
(b) other mandatory financial reporting requirements in Australian.
GRANT THORNTON
Chartered Accountants
L R JONES
Partner
Brisbane
25 August 2005
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/85
AUDITOR'S INDEPENDENCE DECLARATION
Chartered Accountants
Business Advisers and Consultants
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SUPER CHEAP AUTO GROUP LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Super Cheap Auto Group Limited for the period ended 2 July 2005, I
declare that, to the best of my knowledge and belief, there have been:
(a)
(b)
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON
Chartered Accountants
L R JONES
Partner
Brisbane
Dated this 25th day of August 2005
Level 4, Grant Thornton House
King George Square
102 Adelaide Street
Brisbane Qld 4000 Australia
GPO Box 1008
Brisbane Qld 4001 Australia
Tel: 61 (0)7 3222 0200
Fax: 61 (0)7 3222 0444
www.grantthornton.com.au
SCA2005/86
A Queensland Partnership – A Member of Grant Thornton Association Inc.-The Australian Member of Grant Thornton International.
Partners: DJ Carroll SG Hancox LR Jones RG Lunney MG McCann MJ O’Hare DS Skirving
SHAREHOLDER INFORMATION
DISTRIBUTION OF SHAREHOLDINGS AS AT 25 AUGUST 2005
Size of Holding
1-1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
Number of Shareholders with less than a marketable parcel
Ordinary Shareholders
646,229
4,455,555
3,484,568
6,602,825
91,240,445
106,429,622
22
Voting Rights
All ordinary shares issued by Super Cheap Auto Group Limited carry one vote per share.
TWENTY LARGEST SHAREHOLDERS AS AT 25 AUGUST 2005
Number of
Ordinary Shares
Shareholder
52,402,159
4,835,120
4,730,454
4,057,375
3,880,984
3,516,816
3,408,315
2,884,370
1,441,497
752,000
731,599
678,301
620,000
535,391
535,391
535,391
535,391
400,000
380,710
371,910
87,233,174
SCA FT Pty Ltd
Robert Edward Thorn
SCA Equity Plan Pty Ltd
Westpac Custodian Nominees Limited
Citicorp Nominees Pty Limited (CFS Future Leaders Fund A/C>
ANZ Nominees Limited
J P Morgan Nominees Australia Limited
Suncorp Custodian Services Pty Limited
Queensland Investment Corporation
GIO General Ltd
National Nominees Limited
Suncorp General Insurance Limited
Geomar Superannuation Pty Ltd
Bond Street Custodians Limited
Bond Street Custodians Limited
Bond Street Custodians Limited
Bond Street Custodians Limited
Seymour Group Pty Ltd
Geomar Superannuation Pty Ltd
Mr Rakesh Tulshyan & Mrs Seema Tulshyan
Total held by twenty largest shareholders as a percentage
81.96%
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT
SCA2005/87
SCA2005/88
SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT 2005
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