SUPER CHEAP AUTO GROUP LIMITED
ANNUAL REPORT 2007
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
Tel (07) 3205 8511
Fax (07) 3205 8522
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
BANKERS
Australia and New Zealand Banking Group Limited
AUDITORS
PricewaterhouseCoopers
SOLICITORS
Redmond Van De Graaff
Mallesons Stephen Jaques
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 Kedron Wavell Services Club, Long Tan
Room, 375 Hamilton Road, Chermside South,
Queensland on Wednesday, 24 October 2007
at 11.00 am.
Formal notice of this meeting and proxy form are
enclosed with this report.
CONTENTS
03
Chairman’s Report
04 Managing Director’s Report
09
11
14
18
Board of Directors
Senior Management Team
Corporate Governance Statement
Financial Statements
19 Directors’ Report
31
32
33
34
Income Statements
Balance Sheets
Statement of Change in Equity
Cash Flow Statement
35 Notes to the Financial Statements
75 Directors’ Declaration
76
78
Independent Audit Report
Shareholder Information
Supercheap Auto and BCF stores at the
Noosa Civic Centre, Noosa, Queensland.
HIGHLIGHTS
JUL 06
First BCF store in Western Australia opens in Midland.
Relocation of the New Zealand Distribution Centre to larger and more efficient facilities.
OCT 06 Supercheap Auto Bathurst 1000 hugely successful with more than 6 million viewers
across Australia and New Zealand and an event record of 193,647 motorsport fans
attending the great race.
NOV 06 Opening of the Asia Sourcing Office at Hangzhou, to the west
of Shanghai, China
MAR 07 BCF opens its 30th store in Mandurah, Western Australia
JUN 07 Supercheap Auto celebrates success at the National Retail Association Awards.
Winner of the Supreme Award for Best Retailer, Winner of the Innovation in Retail Award
and received a Merit award for Specialty Retailer and was a national finalist in the Best
Designed Store category.
Supercheap Auto stores sell over 16,000 Monopoly games to help create over $1m in
net profit for children’s charities throughout Australia.
STORE NUMBERS
SALES $ MILLIONS
2
7
7
2
4
7
2
1
5
1
8
3
1
4
4
6
2
4
.
8
5
2
5
.
9
4
7
0
.
1
3
8
2
.
7
2
7
5
.
1
2003
2004
2005
2006
2007
2003
2004
2005
2006
2007
TEAM MEMBERS
EBIT
4
,
0
0
4
3
,
8
4
4
3
,
6
0
4
2
,
9
6
4
2
,
4
0
8
2
2
.
8
1
9
.
8
3
8
.
1
3
0
.
4
*
2
8
.
9
2003
2004
2005
2006
2007
2003
2004
2005
2006
2007
*excludes benefit of one-off inventory revaluation
2007 ANNUAL REPORT
CHAIRMAN’S
REPORT
Super Cheap Auto has successfully moved into its
fourth year as a listed company. The initial share offer
2004 was priced at $1.97 on the promise of earnings
per share of 13.4 cents. Sales were forecast at $378.9
million from 176 stores offering a single retail format
servicing the auto aftermarket.
The results achieved in the 2007 financial year capture
the changes made to the business since 2004. These
changes have delivered greater returns for investors
who have been willing to be part of a fast growing
company. Super Cheap Auto is now much much more
than what it was when investors took up shares in the
initial public offering.
The results achieved in the 2007 financial year
have seen sales lift 19% to $625 million from 246
Supercheap Auto and 31 BCF stores. The earnings
before interest tax depreciation and amortisation were
up 30% to $51 million, and earnings per share grew
35% to 21.0 cents. These significant improvements
in the financial outcomes have produced the earnings
required to support the further development of
the company and increase the dividends paid to
shareholders.
The parallel strategies of investment and profit growth
have combined to produce a number of significant
outcomes in FY 2007. The investment in new
locations, new retail formats, and store refurbishments
for Supercheap Auto, and the expansion of BCF to
31 stores spread across Queensland, NSW, NT and
WA are the most obvious examples of the initiatives
taken by the company during the past 12 months.
Remarkably, BCF has generated almost $100 million
in annual sales after only two years since the company
entered the camping, boating and fishing market with
the acquisition of a small group of stores which were
producing annual sales of $14 million.
These initiatives have been supported with the
ongoing development of the logistics capability of
the company, including the establishment of the
direct sourcing facility in China. Refinancing and team
member development activities add to the attention
given to the many moving parts of Super Cheap Auto’s
operations by Peter Birtles and his highly competent
and professional management team.
The many moving parts in a retail business offer
different opportunities for a variety of people to
contribute to the success of Super Cheap Auto.
Team members occupying merchandise, warehouse,
administrative, finance, property, IT, human resources
and many other corporate roles provide the invisible
support that sits behind those who service our
customers. The Directors value the commitment,
energy and creativity of the whole team.
The company’s results in FY 2007 have been delivered
through a clear focus on shareholder wealth. Building
on the gains made over the last three years will remain
an important part of the company’s business strategies.
We recognise that shareholders’ patience should also
be rewarded by more than an increased share price.
Consequently, the Board has decided to increase the
dividend payout ratio to between 45% and 55% of
net earnings and declare a final fully franked dividend
of 6.5 cents. The full year dividend of 10.5 cents
compares with 8.0 cents last financial year. The record
date for the final dividend will be 18 September 2007.
It will be paid on 10 October 2007.
We look forward to continuing the company’s growth
and delivering shareholder value.
3
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
2007 ANNUAL REPORT
MANAGING
DIRECTOR’S
REPORT
I am very pleased to report that all areas of the Group
performed strongly during the 2006/07 year and as a
result the Group has generated record sales and profit.
The highlights included:
Earnings Per Share increasing by 35% over the
prior year
Both Supercheap Auto and BCF delivering strong
growth in EBIT to contribute to an overall increase
of 32% in Group EBIT compared to the prior year
Group Sales increasing by 19% over the prior
year as a result of stronger than expected like
for like sales growth and a solid contribution from
new stores
Group Operating Cash Flow (before new store set
up costs) increasing by $15 million compared to the
prior year. As a result, the $45 million investment in
new and refurbished stores was largely funded out
of operating cash flows.
These results are a direct reflection of the passion and
commitment demonstrated by our team members in
successfully implementing initiatives under our 5 core
strategic themes:
expanding the Supercheap Auto network
driving like for like sales growth in Supercheap Auto
expanding the BCF network
developing our procurement and supply
chain capabilities
developing our people.
The improvement in Supercheap Auto’s performance
has gained momentum during the year with 2nd
half like for like sales growing at their highest rate
for four years. BCF has continued to deliver sales
and profit results ahead of launch targets whilst
controlling capital investment below expectations. Our
Group Logistics and Shared Services functions have
successfully supported the growth plans of the two
Business Units whilst significantly reducing the overall
cost of doing business.
SUPERCHEAP AUTO
Sales at $525.7 million were 9.1% higher than the prior
year with like for like sales growth of 4.1%. Like for
like sales growth during the 2nd half of the year was
5.0% with a strong contribution from the 38 stores in
New Zealand. The auto aftermarket remains relatively
subdued so the business’ sales performance was
primarily achieved from market share gains driven by
a range of store format, merchandising and marketing
initiatives implemented during the year.
EBIT at $37.9 million was 14.7% higher than the
prior year with the growth in sales supported by a
0.5% points reduction in operating costs as a % of
sales primarily as a result of savings in marketing and
support office costs. Gross margins were 0.2% points
lower than the prior year, with a reduction in retail
margins arising from higher relative sales of lower gross
margin categories being partly offset by a further saving
of 0.2% points in logistics costs. Operating margins
increased by 0.3% points to 7.2%.
14 new stores were opened during the year to take total
store numbers to 246 at the end of June. In addition,
four stores were relocated to stronger retail sites and
two smaller under-performing stores were closed.
Four of the new stores were developed in the new
‘400’ format, a 400m2 store with a reduced investment
in space and inventory. This enables the business to
open stores in smaller regional towns and higher rental
cost metro locations and still achieve its return on
capital target. One existing store was also converted
to a ‘400’ format. The performance of these stores has
continued to support confidence in plans to grow a
small network of ‘400’ format stores to supplement the
larger network of ‘700’ format stores.
In December, we opened a trial store under the sub
brand of Supercheap Auto – Pitstop, a 200m2 store
aimed at shopping centre locations. A second Pitstop
store has commenced trading since the end of the
financial year and a decision will be taken on the
potential of the Pitstop opportunity after the Christmas
trading period.
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
4
Towards the end of the year, products carrying the
new mid market own brand ‘SCA’ began to appear
in store. Customer reaction and sales response to
these new products has been very positive. We are
planning to introduce an extended range of products
carrying the ‘SCA’ brand in the new financial year
which should benefit both sales and gross margin.
Total stock investment ended the year at $499,000
per store which represented a small decrease of
$2,000 compared to the prior year. On a like for like
basis, stock levels were $14,000 per store lower
than the prior year as the business is now holding
$3 million of battery stock that was previously held
on consignment.
David Ajala and the whole team at Supercheap
Auto deserve enormous credit for the progress that
has been made in re-invigorating the business over
the past year. The team have worked tirelessly to
successfully implement initiatives across a broad
range of the company’s operations and it is very
pleasing to see all the hard work rewarded with
such a positive set of results. Many of the initiatives
are still work in progress and we are confident that
the business will continue to further enhance its
position as the leading retailer of auto parts and
accessories across Australia and New Zealand
in the coming years.
2007 ANNUAL REPORT
MANAGING DIRECTOR’S REPORT
At the start of the year, the Retail Operations team
commenced a program of refurbishing the higher
trading stores utilising many of the enhancements
successfully trialled at the Chermside concept store.
16 stores have now been refurbished whilst nine of
the new stores and the four relocated stores have
also been built using the updated store livery, layout
and fixtures. The refurbishment program has been a
key factor behind the improvement in the like for like
performance of the business.
Promotional events continue to be important
opportunities to drive sales in a subdued market
and the Merchandising and Marketing teams have
developed a sequence of successful themed
promotional activities during the year. These events
have been supported by the launch of a set of well
received new TV commercials highlighting the broad
range available in stores as well as the ‘fun and
friendly’ culture of the business. The Bathurst 1000
event was particularly successful as the business
leveraged its sponsorship of the event to drive sales
as well as a brand building opportunity.
Positive like for like growth was achieved in all
merchandise categories across the year. Lubricants,
batteries and car-care maintained the strong growth,
reported at the half year, throughout the balance of
the year, whilst the electrical and leisure and outdoor
categories rebounded in the 2nd half. The increased
investment in car audio, navigation and performance
products continued to deliver strong growth.
The higher sales growth of higher unit value and
lower gross margin categories which feature national
brands, such as lubricants and car audio and
navigation, had a slightly negative impact on overall
retail gross margins but this was partly offset by
further reductions in stock loss and product returns.
5
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
Gross margin was 40.6%, an increase of 4.9% points
over the prior year. This significant step up reflected
the benefit of a year’s experience, the larger scale
of the business, the development of partnerships
with key suppliers to deliver product exclusives
and improvements to trading terms and a focus on
enhancing inventory management processes.
Operating costs (pre set up costs) at 33.9% of sales
were 1.1% higher than the prior year partly as a result
of higher rental costs and partly as a result of the timing
of new store openings.
Total inventory investment per store at $1.2 million
is $0.1 million lower than the prior year reflecting
the improvements made in inventory management
processes and the three smaller stores.
The performance of BCF has continued to exceed the
targets that we set at the launch of the business in
October 2005. Steve Doyle and the team have done
an outstanding job in building such a sizeable business
in such a short time period. We continue to refine the
business through experience and we remain confident
in the opportunity to develop a national network of BCF
stores that will generate a significant contribution to
Group Earnings in the coming years.
BCF – BOATING CAMPING FISHING
Sales at $99.1 million were 124% higher than the prior
year with the growth driven by opening new stores and
through the delivery of 13.5% like for like sales growth
from existing stores.
EBIT at $1.8 million was $5.3 million higher than the
prior year whilst EBIT pre new store set up costs, at
$6.6 million, was $5.3 million higher than the prior year.
BCF opened 18 stores during the year to take
total store numbers to 31, including 19 throughout
Queensland, six in Western Australia, five in New South
Wales and one in Darwin.
During the year, we developed a second store format
model of around 1,200m2 to supplement the existing
2,000m2 model. The smaller model has been designed
to operate successfully in smaller regional towns and
achieve target return on capital. Following a successful
trial at Noosa, a further two new smaller format
stores were opened in Bundaberg and Gladstone. It
is anticipated that future stores will include a higher
representation of the smaller format stores.
BCF is a more seasonal business than Supercheap
Auto with the Christmas/New Year holiday period being
particularly important. The sales results were boosted
by the efforts of the team in opening 10 new stores in
the period from mid November to mid December with a
number of these stores ahead of schedule.
All three Categories have performed well during the
year with sales ahead of target. The offer continues
to be refined in line with sales experience and there
remain further opportunities to tailor the offer for local
market demand. There are also opportunities for the
business to extend its range offering into new products.
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
6
2007 ANNUAL REPORT
MANAGING DIRECTOR’S REPORT
GROUP LOGISTICS AND SHARED SERVICES
REVIEW OF FINANCIAL CONDITION
The Group has continued to fund its investment
through its debt facilities. Effective management of
working capital has enabled the Group to minimise the
drawdown of new debt and there remains significant
capacity in the Group’s debt facilities to fund further
growth initiatives over the coming years.
Net external debt for the Group has increased from
$80.5 million to $93.5 million. Under AIFRS a further
$1.6 million (2006 - $2.1 million) of net debt relating to
a team member share scheme special purpose vehicle
has been consolidated into the Group’s balance sheet.
Cash flow from operations was $34.0 million, an
increase of $7.2 million compared to the prior year.
Overall investment in working capital was $12.5 million
with $26.9 million invested in new stores opened during
the year.
Group Capital Expenditure was $30.6 million with $13.5
million in new store fit-out, $4.6 million in the store
refurbishment program, $8.1 million in supply chain and
IT projects and $4.4 million in general maintenance and
enhancement projects.
The Group Logistics and Shared Services functions
have not only supported the growth of the two retail
businesses but also implemented important strategic
initiatives at the same time as reducing the cost of
doing business. Group Logistics costs reduced as a
% of sales by 0.2% points for the 2nd successive year
whilst Shared Services costs reduced by 0.5% points.
These costs are recharged to the Business Units.
The establishment of larger Distribution Centre facilities
in Melbourne and Auckland has proved to be a major
contributor to the improvement in Group Logistics
operations through relieving pressure on the Brisbane
Distribution Centre and facilitating a more efficient
distribution network. The Group intends to convert
the outsourced operation in Melbourne to an in-house
managed operation during the 2007/08 year and
further increase the product volume processed through
this facility.
The Group established its Overseas Sourcing office in
Hangzhou to the west of Shanghai in October 2006.
The Sourcing team have a focus not only on sourcing
new and lower cost product but also on improving
quality, packaging and supply chain operations.
In June 2007, the Group completed a successful
upgrade of its core IT system – SAP. This was a
major project, led by the Information Services Team,
delivered on time and under budget and which provides
the Group with additional functionality to enhance
merchandise and supply chain management operations.
Group costs of $1.6 million represent the costs
associated with operating as a public company, the
cost of share options and costs incurred on corporate
development opportunities. Costs increased by $1.0
million over the prior year primarily as a result of $0.4
million of non recurring advisory costs incurred on a
corporate development opportunity, as well as the
one-off positive impact in the prior year relating to the
cancellation of share options.
7
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
TEAM MEMBERS
LOOKING AHEAD
Our September 2006 Annual Management Conference
was titled ‘Pride and Passion – It’s Our Business’ and
I strongly believe that it is that sense of pride and
passion shared by so many team members across our
business that has been at the heart of all the Group has
achieved over the last 12 months.
We now have over 4,000 team members working in the
business and I would like to thank and acknowledge
them all for their contribution during the year.
One of our major initiatives was the establishment
of the Group’s Business Leadership Academy. This
will provide a series of learning and development
opportunities for team members at all levels of the
business whether they are new inductees to the
business, high potential store managers or team
members who are aspiring to join the Group’s
Leadership Team. We believe that investing in providing
our team members with an opportunity for self
development will be critical in an ever more competitive
employment market.
The Group will maintain its focus on its five key
strategic initiatives during the upcoming year.
Supercheap Auto will be targeting 10 new stores
in the year and is planning to refurbish around 30
existing stores. The overall auto aftermarket is
expected to remain relatively subdued during the
year but we remain confident that Supercheap Auto
will continue to grow market share and improve
underlying profit margins.
BCF will be targeting 10 to 15 new stores with further
stores in its existing markets and the potential of stores
in the southern States of Australia. The increased
scale and another year’s experience will lead to further
improvements in profit margins.
The development of the Group Overseas sourcing
operation and the domestic Logistics operations will
lead to further underlying improvement in supply chain
costs. The Group will be investing circa $5 million in
establishing its Melbourne Distribution Centre, of which
around $1 million of one-off costs will be expensed in
the 2007/08 year.
The 2007/08 year is shaping up to be another enjoyable
and exciting year as the Group continues to grow and
develop its operations and I look forward to reporting
our progress to you during the year.
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
8
2007 ANNUAL REPORT
BOARD OF
DIRECTORS
Dick McIlwain, BA, FAICD
Independent Non-Executive Chairman
Dick McIlwain, aged 60, was appointed a Director
of the Company on 19 May 2004. Dick is also the
Managing Director and Chief Executive of Tattersall’s
Limited, Non-Executive Chairman of Wotif.com
Limited and a Fellow of the Australian Institute of
Company Directors.
Peter Birtles, BSc, ACA
Managing Director
Peter Birtles, aged 43, was appointed a Director of
the Company on 5 January 2006. Peter joined Super
Cheap Auto Pty Ltd in 2001 as Chief Financial Officer
and in 2006 was appointed Managing Director.
Peter is a chartered accountant with over 20 years’
experience. Prior to joining Super Cheap Auto, Peter
spent 12 years working with The Boots Company
in the United Kingdom and Australia in a variety of
senior finance, operational 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.
Reg Rowe
Non-Executive Director
Reg Rowe, aged 63, 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.
9
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
Darryl McDonough, BBus (Acty), LLB (Hons),
SJD, FCPA, FAICD
Independent Non-Executive Director
Darryl McDonough, aged 56, was appointed a Director
of the Company on 19 May 2004. Darryl is a practicing
solicitor with over 20 years of corporate experience.
He has served as a director of a number of public
companies in the past including Cellnet Group Limited
of which he was chairman and Bank of Queensland
Limited. Darryl is a Past-President of the Australian
Institute of Company Directors, Queensland Division.
Robert Wright, BCom, FCPA, MAICD
Independent Non-Executive Director
Robert Wright, aged 58, 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 both Babcock
& Brown Residential Land Partners Limited and
Babcock & Brown Residential Land Partners Services
Limited (jointly Babcock & Brown Residential Land
Partners Group).
Robert is the Chairman of the Audit and Risk Committee.
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 10
2007 ANNUAL REPORT
SENIOR
MANAGEMENT
TEAM
Peter Birtles
Managing Director
Peter joined Super Cheap Auto in
2001 as Chief Financial Officer and
was appointed Managing Director
in January 2006.
Steve Doyle
Chief Operating Officer - BCF
Steve joined Super Cheap Auto in
2002 as Marketing Manager. He
subsequently held the positions
of General Manager – Retail and
General Manager – Merchandising.
Peter is a chartered accountant with over 20 years
experience. Prior to joining Super Cheap Auto, Peter
spent 12 years working with The Boots Company
in the United Kingdom and Australia in a variety of
senior finance, operations 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.
In January 2005, following the acquisition of
CampMart, Steve was appointed General Manager –
CampMart. CampMart was relaunched as BCF in July
2005. Steve was appointed Chief Operating Officer
– BCF in January 2006. He is responsible for the
merchandising, marketing and retail operations of the
BCF business.
David Ajala
Chief Operating Officer –
Supercheap Auto
David joined the Super Cheap Auto
Group in July 2005 as the General
Manager of Merchandise before
taking on his current role as COO
in January 2006. David is responsible for Merchandise,
Marketing and Retail Operations of the Supercheap
Auto business.
David has an extensive background in store operations
and merchandise in the retail sector. Prior to joining
the Super Cheap Auto Group, David held a number of
senior management positions with Coles Myer across
several states in a career spanning over 20 years. Roles
included Regional Store Operations, National Category,
National Promotions and National Business Manager.
Gary Carroll
Chief Financial Officer
Gary joined Super Cheap Auto
Group in April 2006. He has over
15 years experience in accounting,
treasury and banking areas across
a number of industry sectors. He
holds an honours degree in Commerce and Law from
the University of Queensland, and is a CPA.
After commencing his career with Ernst & Young, Gary
held senior management positions with companies
such as Citibank, Duke Energy and Flight Centre.
Gary is responsible for the finance, information
services, risk management and compliance functions
for the Group.
11
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
Robert Dawkins
Group Property 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. He holds a degree qualification
in Accountancy from Queensland University of
Technology.
Robert’s key responsibilities include property
and facilities management, property leasing and
development, project and contract management and
asset acquisition and disposal.
Graham Chad
General Manager –
Group Logistics
Prior to joining Super Cheap Auto
in 2005, Graham spent 19 years
with the Masterfoods (Mars) Group
in Australia and New Zealand in
various senior management roles followed by five years
in retail general merchandise. He was Chief Logistics
Officer for The Warehouse Group, Auckland and spent
several years at Woolworths in the Supply Chain
Operations Group for grocery distribution.
Graham is responsible for the logistics functions
that support the Group’s business units incorporating
the management of distribution centres, freight
and imports.
Steve Tewkesbury
General Manager – Overseas
Sourcing
Steve joined the Super Cheap
Auto Group in 2004 as Supply
Chain Manager and in 2006 was
appointed as General Manager
– Overseas Sourcing. He has in excess of 24 years’
experience in sales, marketing and logistics. Prior to
joining Super Cheap Auto, Steve worked in Global
Supply Chain and E-Commerce Strategy for Reckitt
& Colman, then as a Supply Chain Consultant within
the Australian FMCG sector. He holds a degree
qualification in E-Commerce from Monash University.
Steve is responsible for our overseas sourcing
operations based in Hangzhou and Shanghai, China,
international shipping negotiations and co-ordinating
our China logistics partner services at origin.
Sonia La Penna
Group Human Resources
Manager
Sonia joined Super Cheap Auto
Group in December 2005 as
the Group Human Resources
Manager. Together with her
tertiary qualifications, Sonia has over 10 years of
Human Resources experience both in Australia and
internationally.
Prior to joining Super Cheap Auto Group, Sonia
commenced her HR career with Franklins Limited and
since then has held senior management positions for
companies including Brazin Limited, Royal Caribbean
Cruise Lines and Sunglass Hut Australasia.
Sonia is responsible for Human Resources
Management across the Group.
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 12
Wayne McMahon
Chief Information Officer
Wayne joined Super Cheap Auto
Group in 2006. A graduate of
Wollongong University, he has over
22 years experience in all areas of
Information Technology.
Wayne was previously based in Hong Kong as CIO
for Esquel Enterprises Limited and in Singapore as
Director Information Technology, Asia Pacific for
ModusLink. In total he has over 13 years experience
living and working across Asia, with 11 of those years
in the eCommerce enabled Supply Chain industry.
Wayne is responsible for process development and
information technology across the group.
2007 ANNUAL REPORT
SENIOR MANAGEMENT TEAM
David Kelley
Company Secretary
David joined Super Cheap Auto
Group in 2005. Prior to this, David
held various management and
Internal Audit positions at Adelaide
Casino, Woolworths Limited and
General Motors – Asia/Pacific. David has a Bachelors
Degree in Economics from the University of Adelaide
and an M.B.A. from the Australian Graduate School of
Management.
In addition to serving as Company Secretary, David
leads the Group’s loss prevention, internal audit,
stocktake, risk management and compliance functions.
Pam Pugsley
General Manager Retail
Operations
Pam joined Super Cheap Auto
in November 2004. Pam has
23 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 as well as the Store Improvements Department.
13
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
2007 ANNUAL REPORT
CORPORATE
GOVERNANCE
STATEMENT
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 unless otherwise stated were in place for the
reported period.
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 Chairman is responsible for leading the Board,
ensuring Directors are properly briefed in all matters
relevant to their role and responsibilities, facilitating
board discussions and managing the Board’s
relationship with the Company’s senior executives.
The Managing Director is responsible for implementing
Group strategies and policies. The Board Charter
specifies that these are separate roles to be undertaken
by separate people.
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 on pages 19 to 28.
Responsibilities
The responsibilities of the Board include:
approving the Company’s goals and strategic
direction;
monitoring financial performance, including
adopting annual budgets and approving the
Group’s financial statements;
ensuring that adequate systems of internal
control exist and are appropriately monitored
for compliance;
selecting the Managing Director and reviewing
the performance of senior management; and
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.
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 14
2007 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
The Board has adopted the independence definition
suggested by the ASX Corporate Governance Council
and as such three of the Company’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 undertakes 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.
This assessment was undertaken during April 2007.
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 each
financial year involves both the Managing Director
and the Chief Financial Officer making the following
certifications to the Board that:
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;
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
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.
Minutes of committee meetings are tabled at the
subsequent Board meeting. Additional requirements
for specific reporting by the committees to the
Board are addressed in the charter of the individual
committees.
BOARD NOMINATION AND REMUNERATION
COMMITTEE
The current composition of the Board Nomination
and Remuneration Committee is the full Board. The
Committee 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.
The Board has charged the Board Nomination and
Remuneration Committee with responsibility to:
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;
establish procedures for the selection and
recommendation of candidates suitable for
appointment to the Board;
15
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
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;
review the succession planning for the Board and
senior management and report to the Board on
such issues.
The Committee advises the Board on remuneration and
incentive policies and practices generally, and makes
specific recommendations on remuneration packages
and other terms of employment for executive directors,
other senior executives and non-executive directors.
Each member of the senior executive team signs
a formal employment contract at the time of their
appointment covering a range of matters including their
duties, rights, responsibilities and any entitlements on
termination. The standard contract refers to a specific
formal job description.
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.
Details of these Directors’ qualifications and
attendance at Audit and Risk Committee meetings are
set out in the Director’s Report on pages 19 to 28.
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:
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;
establishing a sound system of risk oversight and
management, and internal control;
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:
financial administration and reporting;
audit control and independence;
The Audit and Risk Committee consists of the following
Independent Non-Executive Directors:
legal compliance;
R J Wright (Chairman)
R D McIlwain
D D McDonough
accounting policies and standards;
internal controls; and
risk oversight and management.
EXTERNAL AUDITORS
All members of the Audit and Risk Committee are
financially literate and have the requisite financial
expertise. Some members have an in-depth
understanding of the industry in which the Company
operates.
The Company’s Audit and Risk Committee’s policy
is to appoint external auditors who demonstrate quality
and independence.
The Audit and Risk Committee:
The Audit and Risk Committee operates in accordance
with a charter which is available on the Company’s
website.
recommends to the Board the appointment of
External Auditors and their fee;
reviews the performance of the External Auditors;
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 16
2007 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
establishes processes to ensure the independence
and competence of the External Auditors’ Audit
Managers;
oversees and appraises the quality of audits
conducted by the External Auditors;
approves External Audit yearly audit plans for the
Company and its subsidiaries and oversees the
scope of audits to be conducted;
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 29 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 values
and a Code of Conduct (the Code) which has been
fully endorsed by the Board and applies to all Directors
and team members. The Code is reviewed and
updated as necessary to ensure it reflects the highest
standards of behaviour and professionalism and the
practices necessary to maintain confidence in the
Company’s integrity.
In summary, the Code requires that at all times all
company personnel 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.
The Company Secretary is the person responsible
for communications with the Australian Stock
Exchange (ASX).
17
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
FINANCIAL
STATEMENTS
SUPER CHEAP AUTO GROUP LIMITED
FOR THE PERIOD ENDED
30 JUNE 2007
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 18
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
Directors’ Report
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 30 June 2007.
Directors
The following persons were Directors of Super Cheap Auto Group Limited during the financial period and up to the date of this
report.
R D McIlwain
R A Rowe
D D McDonough
R J Wright
P A Birtles
Information on qualifications and experience of Directors is included on pages 20 to 21.
Principal activities
During the period, the principal continuing activities of the consolidated entity consisted of the retailing of:
(cid:120)
(cid:120)
auto parts and accessories, tools and equipment
boating, camping and fishing equipment
Dividends – Super Cheap Auto Group Limited
The Directors recommended a fully franked dividend of 6.5 cents per share be paid on 10 October 2007 (total dividend, fully
franked - $6,917,925). 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
$
2006 final fully franked dividend (5¢ per share)
2007 interim fully franked dividend (4¢ per share)
11 October 2006
4 April 2007
5,321,481
4,257,185
9,578,666
Review of operations
Revenue from trading operations for the year was $625,187,000 (2006: $526,236,000). During the period, the consolidated entity
opened 14 new Supercheap Auto stores of which 12 were in Australia and 2 in New Zealand. This resulted in Supercheap Auto
trading with 246 stores at the end of the period. 18 new BCF stores were opened during the period taking total trading stores to 31.
At the end of the financial year, the consolidated entity was trading from 277 stores.
The net profit of the consolidated entity for the period ended 30 June 2007, after providing for income tax, amounted to
$22,332,000 (2006: $16,510,000).
A review of the operations for the 52 weeks to 30 June 2007 is set out in pages 4 to 8 of this report.
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.
19
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
(continued)
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 30 June
2007.
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 60.
Experience and expertise
Independent non-executive Chairman for 3 years 3 months. Chief Executive Officer of UNiTAB for 10 years to 1999 and then
Managing Director and Chief Executive Officer of UNiTAB Limited for 7 years. Currently Managing Director and Chief Executive
Officer of Tattersall’s Limited. Fellow of the Australian Institute of Company Directors.
Other current directorships
Director of Tattersall’s Limited
Non-Executive Chairman of Wotif.com Limited since 2006
Former directorships in the last 3 years
None.
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.
P A Birtles. BSc, ACA Managing Director. Age 43.
Experience and expertise
Managing Director for 1 year and 8 months. Previously Chief Financial Officer for 4 years 8 months and Company Secretary for 1
year 5 months.
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
1,192,089 ordinary shares held on trust and 507 ordinary shares in Super Cheap Auto Group Limited.
700,000 options over ordinary shares in Super Cheap Auto Group Limited.
R A Rowe. Non-Executive Director. Age 63.
Experience and expertise
Founder of the business in 1972. Non-executive director for 3 years 4 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.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
20
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
D D McDonough, BBus (Acty), LLB (Hons), SJD, FCPA, FAICD. Independent Non-Executive Director. Age 56.
Experience and expertise.
Independent Non-Executive Director for 3 years 3 months. Partner of a major legal firm. Past President of the Australian Institute
of Company Directors (Queensland Division).
Other current directorships
None
Former directorships in the last 3 years
Chairman and non-executive director of Queensland Competition Authority (director 1998-2005).
Chairman and non-executive director of Cellnet Group Limited (director 2002-2005).
Special responsibilities
Member of the Audit and Risk Committee.
Member of the Nomination and Remuneration Committee.
Interests in shares and options
60,000 ordinary shares in Super Cheap Auto Group Limited
R J Wright, BCom, FCPA, MAICD. Independent Non-Executive Director. Age 58.
Experience and expertise
Independent Non-Executive Director for 3 years 3 months. Director of a number of major Retail companies over the last 20 years.
Other current directorships
Non-executive director of both Babcock & Brown Residential Land Partners Limited and Babcock & Brown Residential Land
Partners Services Limited (jointly Babcock & Brown Residential Land Partners Group) (director since 2006). Chairman and non-
executive director of Dexion Limited (director since 2005). Non-executive director of Australian Pipeline Limited (director since
2000) and SAI Global Limited (director since 2003).
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 D J Kelley, B.Ec., MBA, MIIA. Mr Kelley commenced with Super Cheap Auto Group Limited as the
Business Audit & Compliance Manager in February 2005 and was appointed Company Secretary in January 2006.
Meetings of directors
The number of meetings of the Company’s Board of Directors and each Board Committee held during the period ended 30 June
2007 is set out below:
Full meetings
directors
A
13
13
11
13
13
B
13
13
13
13
13
Meetings of Committees
Audit & Risk
B
A
3
n/a
n/a
3
3
3
n/a
n/a
3
3
Nomination &
Remuneration
A
2
2
1
2
2
B
2
2
2
2
2
R D McIlwain
P A Birtles
R A Rowe
D D McDonough
R J Wright
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
21
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
(continued)
Remuneration report
The remuneration report is set out under the following main headings:-
(cid:120) Principles used to determine the nature and amount of remuneration;
(cid:120) Details of remuneration;
(cid:120) Service agreements;
(cid:120) Share-based compensation; and
(cid:120) Additional information.
The information provided includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party
Disclosures. These disclosures have been transferred from the financial report and have been audited. The disclosures on pages
26 and 27 are additional disclosures required by the Corporations Act 2001 and the Corporations Regulation 2001 which have not
been audited.
Principles used to determine the nature and amount of remuneration (audited)
The broad remuneration policy is to ensure remuneration properly reflects the relevant person’s duties and responsibilities and that
the Group’s 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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
22
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
Remuneration report (continued)
Principles used to determine the nature and amount of remuneration (audited) (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 50% 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 30 June 2007, 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 targets are set to ensure that
reward is only available when value has been created for shareholders and when profit is consistent with the business plan.
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.
Key management personnel of the Group
Amounts of remuneration
Details of the remuneration of the directors and key management personnel (as defined in AASB 124 Related Party Disclosures) of
Super Cheap Auto Group Limited are set out in the following tables.
The key management personnel of the Group includes the directors and the following executive officers, (being those who have
responsibility for directing strategy for the Group):
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
P A Birtles, Managing Director
D F Ajala, Chief Operating Officer, Super Cheap Auto
S J Doyle, Chief Operating officer, BCF
G G Carroll, Chief Financial Officer
G L Chad, General Manager, Group Logistics
The highest paid executives for the period ended 30 June 2007 were as follows:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
P A Birtles
D F Ajala
S J Doyle
G G Carroll
G L Chad
23
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
(continued)
Remuneration report (continued)
Details of remuneration (audited)
Key management personnel of the Group
The following directors are key management personnel of the Group and Super Cheap Auto Group Limited.
2007
Short-term benefits
Post-employment
benefits
Share-based
payment
Name
Non-executive directors
R D McIlwain Chairman
R A Rowe
D D McDonough
R J Wright
Sub-total non-executive directors
Executive directors
P A Birtles
Other key management personnel
D F Ajala
S J Doyle
G G Carroll
G L Chad
Totals
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Retirement
benefits
$
Options
$
Total
$
0
55,046
0
36,697
91,743
100,000
4,954
60,000
23,303
188,257
597,502
306,875
2,414
12,686
235,564
251,534
249,676
250,891
1,676,910
157,500
144,375
100,397
126,000
835,147
42,064
22,254
0
17,656
84,388
37,224
12,686
12,686
43,017
306,556
0
0
0
0
0
0
0
0
0
0
0
100,000
60,000
60,000
60,000
280,000
119,533
1,039,010
36,137
36,137
29,732
7,809
229,348
508,489
466,986
392,491
445,373
3,132,349
2006
Name
Short-term benefits
Post-employment
benefits
Share-based
payment
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Retirement
benefits
$
Options
$
Total
$
Non-executive directors
R D McIlwain Chairman
R A Rowe
D D McDonough
R J Wright
Sub-total non-executive directors
Executive directors
P A Birtles (a)
R E Thorn (From 3 July 2005 –
27 January 2006) (b)
Other key management personnel
P A Birtles (a)
D F Ajala (appointed 18 July 2005)
S J Doyle
G G Carroll (appointed 17 April 2006)
G L Chad (appointed 5 September
2005)
Totals
25,000
55,046
20,000
55,046
155,092
216,698
617,073
171,939
217,454
234,075
47,572
0
0
0
0
0
0
0
0
0
0
0
0
0
75,000
4,954
40,000
4,954
124,908
5,121
17,583
13,200
0
0
110,000
0
0
16,590
14,380
0
7,019
13,869
12,139
3,034
179,979
1,839,882
0
110,000
22,138
70,691
32,615
211,905
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
100,000
60,000
60,000
60,000
280,000
43,626
265,445
(270,326)
377,530
0
15,346
15,346
6,110
178,958
263,259
385,940
56,716
0
(189,898)
234,732
2,042,580
(a) Mr P A Birtles was appointed a director on 5 January 2006. Before this appointment he was the company’s Chief
Financial Officer and Company Secretary. Amounts shown above include all remuneration during the reporting period,
whether as a director or as Chief Financial Officer and Company Secretary.
(b) Mr R E Thorn resigned as an executive officer of the Company on 27 January 2006. Upon resignation he was paid
unused leave entitlements of $259,140. This is included in the table above in cash salary and fees. All allocated options
lapsed upon resignation.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
24
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
Remuneration Report (continued)
Service Agreements (audited)
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Each of
these agreements provide for the provision of performance related cash bonuses, other benefits and when eligible, participation in
the Executive Option Plan.
All contracts with executives may be terminated early by either party with three months notice, subject to termination payments as
detailed below:-
P A Birtles, Managing Director
Term of Agreement - 5 years commencing 27 January 2006
Base salary, inclusive of superannuation, for the period ended 30 June 2007 of $613,750 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 12 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.
D F Ajala, Chief Operating Officer, Supercheap Auto
Term of Agreement - 5 years commencing 27 January 2006
Base salary, inclusive of superannuation, for the period ended 30 June 2007 of $315,000 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 6 months base salary if the
termination is effective more than 12 months before the expiry date or 3 months base salary if the termination is effective within 12
months before the expiry date.
S J Doyle, Chief Operating Officer, BCF
Term of Agreement - 5 years commencing 27 January 2006
Base salary, inclusive of superannuation, for the period ended 30 June 2007 of $288,750 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 6 months base salary if the
termination is effective more than 12 months before the expiry date or 3 months base salary if the termination is effective within 12
months before the expiry date.
G G Carroll, Chief Financial Officer
Term of Agreement - 5 1/4 years commencing 17 April 2006
Base salary, inclusive of superannuation, for the period ended 30 June 2007 of $262,500 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 6 months base salary if the
termination is effective more than 12 months before the expiry date or 3 months base salary if the termination is effective within 12
months before the expiry date.
25
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
(continued)
Remuneration Report (continued)
Share based compensation (audited)
Shares under option
Unissued ordinary shares of Super Cheap Auto Group Limited under option at the date of this report are as follows:
Grant date
Exercise date
Exercise Price
Value per option at
grant date
Number under
option
19 May 2004
27 January 2006
27 January 2006
27 January 2006
17 April 2006
17 April 2006
17 April 2006
1 July 2006
1 July 2006
1 July 2006
26 October 2006
26 October 2006
26 October 2006
1 July 2007
5 January 2009
5 January 2010
5 January 2011
17 April 2009
17 April 2010
17 April 2011
1 July 2009
1 July 2010
1 July 2011
1 February 2009
1 February 2010
1 February 2011
$1.97
$2.44
$2.44
$2.44
$2.25
$2.25
$2.25
$2.25
$2.25
$2.25
$2.44
$2.44
$2.44
$0.68
$0.29
$0.34
$0.38
$0.43
$0.47
$0.51
$0.19
$0.25
$0.30
$0.63
$0.72
$0.79
200,000
400,000
200,000
200,000
75,000
75,000
100,000
262,500
262,500
350,000
150,000
150,000
200,000
2,625,000
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. The options
do not have an expiry date.
No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.
Details of options over ordinary shares in the Company provided as remuneration to each Director of Super Cheap Auto Group
Limited and each of the key management personnel of the Group are set out below.
Name
Directors of Super Cheap
Auto Group
R D McIlwain
R A Rowe
D D McDonough
R J Wright
P A Birtles
Other Key Management
Personnel
D F Ajala
S J Doyle
G G Carroll
G L Chad
Number of options granted during
the period
2007
2006
Number of options vested during
the period
2007
2006
-
-
-
-
500,000
-
-
-
125,000
-
-
-
-
-
400,000
400,000
250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 Binomial 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.
Additional Information (unaudited)
The level of executive rewards takes into account the performance of the Group with greater emphasis given to the current and
future years. Since listing in July 2004 profits have increased by 69% and dividends to shareholders have grown by approximately
62%. Revenue and store numbers have increased by 63% and 51% respectively. On a total basis, executive management
remuneration has increased by 29% over the last 3 years, although notwithstanding certain managers have had their remuneration
packages increased in line with performance and additional responsibilities.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
26
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
Remuneration Report (continued)
Additional Information (unaudited) (continued)
Share-based compensation: Options
Further details relating to options are set out below.
Name
R D McIlwain
R A Rowe
D D McDonough
R J Wright
P A Birtles
D F Ajala
S J Doyle
G G Carroll
G L Chad
A
Remuneration
consisting of
options
B
C
D
E
Value at grant
date
$
Value at
exercise date
$
Value at lapse
date
$
Total of
columns B-D
$
0%
0%
0%
0%
11.5%
7.1%
7.8%
7.6%
1.8%
0
0
0
0
360,550
0
0
0
31,813
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
360,550
0
0
0
31,813
A = The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B.
B = The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year
as part of remuneration.
C = The value at exercise date of options that were granted as part of remuneration and were exercised during the year.
D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year.
Details of remuneration: Cash bonuses and options
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.
Cash Bonus
Name
Paid
%
Forfeited
%
Year
granted
Vested
%
Forfeited
%
Options
Financial years in
which options may
vest
P A Birtles
100
D F Ajala
100
S J Doyle
100
G G Carroll
100
G L Chad
100
0
0
0
0
0
2004
2007
2006
2006
2006
2007
-
-
-
-
-
-
-
-
-
-
-
-
2008
2009
2010
2011
2009
2010
2011
2009
2010
2011
2009
2010
2011
2010
2011
2012
Minimum
total value
of grant yet
to vest
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Maximum
total value
of grant yet
to vest ($)
135,400
94,950
108,000
157,600
58,200
34,100
38,100
58,200
34,100
38,100
32,175
35,475
50,800
7,275
9,488
15,050
Insurance of officers
During the financial year, Super Cheap Auto Group Limited paid a premium of $27,000 to insure the directors and secretaries of
the Company and its controlled entities, and the general managers of each of the divisions of the Group.
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 Group, 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.
27
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
Super Cheap Auto Group Limited
Directors' report
for the period ended 30 June 2007
(continued)
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 Group are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) 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:
(cid:120) 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
(cid:120) none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants, including 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.
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
PricewaterhouseCoopers Australian arm
Remuneration for audit services
Remuneration for other assurance services
Total remuneration for assurance services
Taxation Services
Consolidated Entity
2006
2007
$’000
$’000
290
0
290
211
85
296
Total remuneration for taxation services
93
125
Advisory Services
Total remuneration for advisory services
0
159
Auditors Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page
29.
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
23 August 2007
P A Birtles
Director
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
28
(cid:3)
Auditor’s Independence Declaration
Super Cheap Auto Group Limited
for the period ended 30 June 2007
PricewaterhouseCoopers
ABN 52 780 433 757
Riverside Centre
123 Eagle Street
BRISBANE QLD 4000
GPO Box 150
BRISBANE QLD 4001
DX 77 Brisbane
Australia
www.pwc.com/au
Telephone +61 7 3257 5000
Facsimile +61 7 3257 5999
As lead auditor for the audit of Super Cheap Auto Group Ltd for the period ended 30 June 2007 I declare that to the
best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Super Cheap Auto Group Limited and the entities it controlled during the period.
B S Delaney
Partner
PricewaterhouseCoopers
Brisbane
23 August 2007
Liability limited by a scheme approved under Professional Standards Legislation
29
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
Super Cheap Auto Group Limited
Auditors’ Independence Declaration
for the period ended 30 June 2007
Financial report
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the financial statements
Directors' declaration
Independent audit report to the members
Page
31
32
33
34
36
75
76
This financial report covers both Super Cheap Auto Group Limited as an individual entity and the consolidated entity consisting
of Super Cheap Auto Group Limited and its subsidiaries. The financial report is presented in the Australian currency.
Super Cheap Auto Group Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is:
751 Gympie Road, Lawnton, Queensland, 4501
A description of the nature of the consolidated entity's operations and its principal activities is included in the directors’ report on
pages 4 to 8, which is not part of this financial report.
The financial report was authorised for issue by the directors on 23 August 2007. The company has the power to amend and
reissue the financial report.
Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at
minimum cost to the company. All press releases, financial reports and other information are available at our Shareholders’
Centre on our website: www.supercheapauto.com.au.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
30
INCOME STATEMENTS
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Revenue from continuing operations
Other income
Total revenues and other income
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Borrowing costs expense
Total expenses
Profit before income tax
Consolidated
Parent entity
Notes
5
6
2007
$'000
2006
$'000
625,187
526,236
129
625,316
268
526,504
2006
$'000
17,013
2
17,015
(376,733)
(316,860)
0
(70,633)
(35,906)
(44,979)
(58,614)
(7,191)
(594,056)
31,260
(58,959)
(32,586)
(36,881)
(52,017)
(5,836)
(503,139)
23,365
(6,855)
0
0
0
(1,602)
(6,662)
(8,264)
8,751
2,633
2006
$'000
13,008
0
13,008
0
0
0
0
(618)
(4,245)
(4,863)
8,145
1,456
Income tax (expense)/benefit
8
(8,928)
Profit attributable to Members of Super Cheap Auto
Group Limited
22,332
16,510
11,384
9,601
Earnings per share for profit attributable to the
ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
Cents
Cents
37
37
21.0
20.9
15.5
15.5
The above income statements should be read in conjunction with the accompanying notes.
31
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
BALANCE SHEETS
Super Cheap Auto Group Limited
as at 30 June 2007
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
Consolidated
Parent entity
Notes
2007
$'000
2006
$'000
2006
$'000
2006
$'000
9
10
11
12
13
14
15
16
17
18
19
20
21
23
24
6,271
14,591
159,880
180,742
0
67,262
7,991
58,613
133,866
6,372
14,137
135,021
155,530
0
49,797
5,355
58,794
113,946
17
116,290
0
116,307
84,234
0
32
0
84,266
132
96,064
0
96,196
84,234
0
0
0
84,234
314,608
269,476
200,573
180,430
62,243
31,410
5,611
5,800
105,064
8,194
70,000
0
6,824
85,018
49,443
19,020
1,725
4,941
75,129
5,482
70,000
45
5,890
81,417
1,601
29,729
5,611
0
36,941
0
70,000
0
0
70,000
213
16,956
1,725
0
18,894
0
70,000
45
0
70,045
190,082
156,546
106,941
88,939
124,526
112,930
93,632
91,491
25
26
26
84,233
(1,168)
41,461
84,233
(11)
28,708
84,233
496
8,903
84,233
160
7,098
124,526
112,930
93,632
91,491
The above balance sheets should be read in conjunction with the accompanying notes.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
32
STATEMENTS OF CHANGES IN EQUITY
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Consolidated
Parent entity
Notes
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Total equity at the beginning of the financial
year
112,930
104,597
91,491
89,896
Changes in the fair value of cash flow hedges, net
of tax
Exchange differences on translation of foreign
operations
Net income recognised directly in equity
26
(1,613)
118
(1,495)
28
(129)
(101)
(2)
0
(2)
Profit for the year
Total recognised income and expense for the
year
22,332
16,510
11,384
20,837
16,409
11,382
70
0
70
9,601
9,671
Transactions with equity holders in their capacity as
equity holders:
Dividends provided for or paid
Employee share options
26
(9,579)
338
(9,241)
(7,982)
(94)
(8,076)
(9,579)
338
(9,241)
(7,982)
(94)
(8,076)
Total equity at the end of the financial year
124,526
112,930
93,632
91,491
Total recognised income and expense for the year
is attributable to:
Members of Super Cheap Auto Group Limited
20,837
16,409
11,382
9,671
The above statements of changes in equity should be read in conjunction with the accompanying notes.
33
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
CASH FLOW STATEMENTS
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Consolidated
Parent entity
Notes
2007
$'000
2006
$'000
2007
$'000
2006
$'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
- related parties
Income taxes paid
Net cash (outflow) inflow from operating
activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and
equipment
Proceeds from sale of service centres
Net cash (outflow) inflow from investing
activities
Cash flows from financing activities
Proceeds from borrowings
Payments for borrowings
Interest paid
Dividends paid to company’s shareholders
Repayment of loans re shares
Advances to related parties
Repayments of advances to related parties
Net cash inflow (outflow) from financing
activities
689,172
581,016
0
0
(602,820)
(510,000)
(5,888)
(1,273)
(36,597)
(8,417)
(7,346)
(29,253)
(8,103)
(6,889)
0
0
(6,892)
0
0
(6,549)
36
33,992
26,771
(12,780)
(7,822)
(30,605)
(20,994)
147
75
158
50
(30,383)
(20,786)
0
0
0
0
0
0
0
0
26
255,950
(243,750)
(6,284)
(9,579)
0
0
0
264,266
(259,000)
(3,927)
(7,982)
0
0
55
252,500
(239,750)
(6,626)
(9,579)
0
(254,710)
270,830
259,638
(231,950)
(3,604)
(7,982)
0
(197,402)
189,209
(3,663)
(6,588)
12,665
7,909
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of the
financial year
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at end of year
9
(54)
6,372
(47)
6,271
(603)
(115)
6,902
73
6,372
132
0
17
87
45
0
132
The above cash flow statements should be read in conjunction with the accompanying notes.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
34
NOTES TO THE
FINANCIAL STATEMENTS
SUPER CHEAP AUTO GROUP LIMITED
FOR THE PERIOD ENDED
30 JUNE 2007
35
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Contents of the notes to the financial statements
1
Summary of significant accounting policies
2
Financial risk management
3
Critical accounting estimates and judgements
4
Segment information
Revenue
5
6 Other income
Expenses
7
Income tax expense
8
9
Current assets - Cash and cash equivalents
10 Current assets - Trade and other receivables
11 Current assets - Inventories
12 Non-current assets - Other financial assets
13 Non-current assets - Property, plant and equipment
14 Non-current assets - Deferred tax assets
15 Non-current assets - Intangible assets
16 Current liabilities - Trade and other payables
17 Current liabilities - Borrowings
18 Current liabilities – Current tax liabilities
19 Current liabilities - Provisions
20 Non-current liabilities – Trade and other payables
21 Non-current liabilities - Borrowings
22 Derivative Financial instruments
23 Non-current liabilities - Deferred tax liabilities
24 Non-current liabilities - Provisions
25 Contributed equity
26 Reserves and retained profits
27 Dividends
28 Key management personnel disclosures
29 Remuneration of auditors
30 Contingencies
31 Commitments
32 Related party transactions
33
34 Net tangible asset backing
35 Deed of cross guarantee
36 Reconciliation of profit after income tax to net cash inflow from operating activities
37 Earnings per share
38 Share-based payments
Investments in controlled entity
Page
37
44
45
46
48
48
49
50
51
51
51
52
52
53
54
55
55
56
56
56
56
57
61
61
62
62
63
64
67
67
68
68
69
70
70
72
72
73
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
36
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
1
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements
for Super Cheap Auto Group Limited as an individual entity and the consolidated entity consisting of Super Cheap Auto Group
Limited and its subsidiaries.
(a)
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial
Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues
Group Interpretations and the Corporations Act 2001.
Compliance with IFRS
Australian Accounting Standards include AIFRSs. Compliance with AIFRSs ensures that the consolidated financial statements and
notes of Super Cheap Auto Group Limited comply with International Financial Reporting Standards (IFRS). The parent entity
financial statements and notes also comply with IFRS except that it has elected to apply the relief provided to parent entities in
respect of certain disclosure requirements contained in AASB 132 Financial Instruments: Presentation and Disclosure.
Historical cost convention
These financial statements have been prepared under the historical cost convention.
(b)
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 30 June 2007 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.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial
and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect
of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls
another entity.
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.
(c)
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and
returns that are different to those of other business segments. A geographical segment is engaged in providing products or
services within a particular economic environment and is subject to risks and returns that are different from those of segments
operating in other economic environments.
(d)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The
relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred
tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a
liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arise in a transaction, other
than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
37
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
The New Zealand tax rate changes to 30% with effect from 1 July 2008. All current deferred tax balances have been assessed for
expected realisation timeframes for either the current rate of 33% or future rate of 30% to be applied.
Tax Consolidation Legislation
Super Cheap Auto Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation as of 1 July 2003.
The head entity, Super Cheap Auto Group Limited and the controlled entities in the tax consolidated group continue to account for
their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group
continues to be a stand alone taxpayer in its own right.
(e)
Foreign currency translation
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in
Australian dollars, which is Super Cheap Auto Group Limited’s functional and presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non-monetary items such as equities held at fair value through profit or loss, are reported as part of the
fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial
assets, are included in the fair value reserve in equity.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:
(cid:120)
(cid:120)
(cid:120)
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
(f)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
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 and rewards have
passed to the carrier or customer. Revenue from rendering a service is recognised upon the delivery of the service to the customer.
(g)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful
debts. Trade receivables are due for settlement 30 days from the end of the month after sale. Collectibility of trade receivables is
reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due.
(h)
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
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
38
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated
cost of completion and the estimated costs necessary to make the sale.
(i)
Provisions
Provisions for legal claims and service warranties are recognised when: the Group has a present legal or constructive obligation as
a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been
reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of
the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised
as interest expense.
(j)
Financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines the classification of its investments at initial recognition and re-
evaluates this designation at each reporting date.
Financial assets at fair value through profit or loss
(i)
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss on
initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if
so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets
in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of
the balance sheet date.
Loans and receivables
(ii)
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the
receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet
date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.
Held-to-maturity investments
(iii)
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity.
Available-for-sale financial assets
(iv)
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of
the balance sheet date.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value.
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised
and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’
category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes
in the fair value of non monetary securities classified as available-for-sale are recognised in equity in the available for sale
investments revaluation reserve. When securities classified as available for sale are sold or impaired, the accumulated fair value
adjustments are included in the income statement as gains and losses from investment securities.
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is
impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a
security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-
sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less
any impairment loss on that financial asset previously recognised in profit and loss – is removed from equity and recognised in the
income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the
income statement.
39
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
(k)
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to
their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either; (1) hedges of the fair
value of recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of highly probable forecast
transactions (cash flow hedges).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items as well as
its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment,
both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and
will continue to be highly effective in offsetting changes in cash flows of hedged items.
Cash flow hedge
(i)
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.
Amounts accumulated in equity are recycled in the income statement in the income periods when the hedged item will affect profit
or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged
results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously
deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or
liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at the time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or
loss that was reported in equity is immediately transferred to the income statement.
Derivatives that do not qualify for hedge accounting
(ii)
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does
not qualify for hedge accounting are recognised immediately in the income statement.
(l)
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The fair value of interest rate swaps is calculated as the present value of the estimated
future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance
sheet date.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at
the current market interest rate that is available to the Group for similar financial instruments.
(m) Property, plant & equipment
Each class of property, plant and equipment is carried at historical cost, less any accumulated depreciation or amortisation.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are
incurred.
(n)
Business combinations
The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of
whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or
liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments
are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare
circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and
that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of
equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the
fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of the acquisition is less
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
40
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but
only after a reassessment of the identification or measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
(o)
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash generating units).
(p)
Depreciation and amortisation of property, plant and equipment
Depreciation and amortisation are calculated on a straight line or diminishing value basis to allocate the cost of an item of property,
plant and equipment net of residual values over the expected useful life of each asset to the consolidated entity. Estimates of
remaining useful lives and residual values are reviewed and adjusted, if appropriate, at each balance sheet date. The depreciation
rates used for each class of assets are:
Plant and equipment
Capitalised leased plant and equipment
Motor vehicles
Computer systems
Depreciation rate
10% - 37.5%
10% – 37.5%
15%
25% – 37.5%
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income
statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those
assets to retained earnings.
(q)
Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other
long term payables. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on
the finance balance outstanding. The interest element of the finance cost is charged to the income statement over the lease period
so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant
and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income
statement on a straight-line basis over the period of the lease term.
(r)
Intangible assets
Goodwill
(i)
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of
the acquired subsidiary or business at the date of the acquisition. Goodwill on acquisitions of subsidiaries is included in intangible
assets. Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually, or more
frequently if events or changes in circumstances indicated that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units
represents the Group’s investment in each country of operation by each primary reporting segment.
Other items of expenditure
(ii)
Significant items of expenditure, such as costs incurred in store set-ups, are expensed in the financial period in which these costs
are incurred.
41
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
(s)
Trade and other payables
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 sixty days of recognition.
(t)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the
income statement over the period of the borrowings using the effective interest method.
(u)
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are
included in the cost of the acquisition as part of the purchase consideration.
(v)
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the
entity, on or before the end of the financial period but not distributed at balance date.
(w)
Employee benefits
Wages and salaries, annual leave and sick leave
(i)
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the
reporting date are recognised and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
Long service leave
(ii)
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using market yields at the reporting date on national government bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
Contributions are made by the economic entity to an employee superannuation fund and are charged as expenses when incurred.
(iv) Share-based payments
Share-based compensation benefits are provided to certain employees via the Super Cheap Auto Executive Option Plan.
Shares options granted before 7 November 2002 and/or vested before 1 January 2005
No options were granted before 7 November 2002 nor were any vested before 1 January 2005.
Shares options granted after 7 November 2002 and vested after 1 January 2005
The fair value of options granted under the Super Cheap Auto Group Limited Executive Option Plan is recognised as an employee
benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period
during which the employees become unconditionally entitled to the options.
The fair value at grant date is determined using a Binomial 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.
The fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales
growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to
become exercisable. At each balance sheet date, the entity revises its estimate of the number of options that are expected to
become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate.
Upon exercise of the options, the balance of the share-based payments reserve relating to those options is transferred to share
capital.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
42
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Profit-sharing and bonus plans
(v)
The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the
profit attributable to the company’s shareholders after certain adjustments. The Group recognises a provision where contractually
obliged or where there is a past practice that has created a constructive obligation.
(x)
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 an effective yield 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; and
- finance lease charges;
(y)
Cash and cash equivalents
For the purposes of the cash flow statement, cash includes cash on hand, cash at bank and at call deposits with banks or financial
institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
(z)
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
consolidated balance sheet are shown inclusive of goods and services tax.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to, the taxation authority, are presented as operating cash flow.
(aa) Make good requirements in relation to leased premises.
Make good costs arising from contractual obligations in lease agreements are recognised as provisions at the inception of the
agreement. A corresponding asset is taken up in property, plant and equipment at that time. Expected future payments are
discounted using appropriate market yields at reporting date.
(ab) Earnings per share
Basic earnings per share
(i)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share
(ii)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(ac) 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.
(ad) New accounting standard and UIG interpretations
Certain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2007 reporting
periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
UIG 9 Reassessment of Embedded Derivatives
UIG 9 is effective for annual reporting periods beginning on or after 1 June 2006. It requires an entity to assess whether an
embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first
becomes a party to the contract. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that
significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required.
This is currently not relevant to the Group, but may transpire with future transactions.
43
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
AASB-I 10 Interim Financial Reporting and Impairment
AASB-I 10 applies to annual reporting periods beginning on or after 1 November 2006. It prohibits impairment losses recognised in
an interim period on goodwill, investments in equity instruments and investments in financial assets carried at cost to be reversed at
a subsequent balance sheet date. The Group will apply AASB-I 10 from 1 July 2007 but it is not expected to have any impact on
the Group's financial statements.
AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards [AASB
132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038]
AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. AASB 7 introduces
new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative
information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk,
liquidity risk and market risk, including sensitivity analysis to market risk. It replaces AASB 130 Disclosures in the Financial
Statements of Banks and Similar Financial Institutions and the disclosure requirements in IAS 32 Financial Instruments: Disclosure
and Presentation. It is applicable to all reporting entities. The amendment to AASB 101 introduces disclosures about the level of an
entity's capital and how it manages capital. The Group assessed the impact of AASB 7 and the amendment to AASB 101 and
concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by
the amendment of AASB 101. The Group will apply the standards from annual reporting periods beginning 1 July 2007.
Revised AASB 101 Presentation of Financial Statements
A revised AASB 101 was issued in October 2006 and is applicable to annual reporting periods beginning on or after 1 January
2007. The Group has not adopted the standard early. Application of the revised standard will not have any impact on the Group's
financial statements.
AASB-I 11 AASB 2 - Group and Treasury Share Transactions and AASB 2007-1 Amendments to Australian Accounting
Standards arising from AASB Interpretation 11
AASB-I 11 and AASB 2007-1 are effective for annual reporting periods commencing on or after 1 March 2007. AASB-I 11
addresses whether certain types of share-based payment transactions should be accounted for as equity-settled or as cash settled
transactions and specifies the accounting in a subsidiary’s financial statements for share-based payment arrangements involving
equity instruments of the parent. The Group will apply AASB-I 11 from 1 July 2007, but it is not expected to have any impact on the
Group's financial statements.
AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8
AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in
a significant change in the approach to segment reporting, as it requires adoption of a "management approach" to reporting on the
financial performance. The information being reported will be based on what the key decision-makers use internally for evaluating
segment performance and deciding how to allocate resources to operating segments. The Group has not yet decided when to
adopt AASB 8. Application of AASB 8 may result in different segments, segment results and different type of information being
reported in the segment note of the financial report. However, it will not affect any of the amounts recognised in the financial
statements.
AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments and AASB
2007-7 Amendments to Australian Accounting Standards [AASB 1, AASB 2, AASB 4, AASB 5, AASB 107 & AASB 128]
AASB 2007-4 and AASB 2007-7 are applicable to annual reporting periods beginning on or after 1 July 2007. The amendments
introduce a number of options that existed under IFRS but had not been included in the original Australian equivalents to IFRS and
remove many of the additional Australian disclosure requirements.
Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising from
AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]
The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the option
to expense all borrowing costs and - when adopted - will require the capitalisation of all borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset.
2
Financial risk management
The Group's activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk and
price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Group. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge
certain risk exposures.
Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of
Directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating
units. The Board provides written principles for overall risk management, as well as written policies covering specific areas,
such as mitigating foreign exchange, interest rate and credit risks, use of derivative financial instruments and investing excess
liquidity.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
44
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
(a) Market risk
Foreign exchange risk
(i)
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a
currency that is not the entity’s functional currency.
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to the United
States dollar and New Zealand dollar.
Forward contracts and currency options are used to manage foreign exchange risk.
The Group’s risk management policy is to hedge up to 75% of anticipated transactions (purchases) in US dollars for at least the
subsequent 4 months.
Fair value interest rate risk
(ii)
Refer to (d) below.
(b)
Credit risk
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and
services are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited
to high credit quality financial institutions.
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close-out market positions. Due to the dynamic
nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines
available.
(d)
Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are not materially
exposed to changes in market interest rates.
The Group's interest-rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash
flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk.
The Group manages its cash flow interest-rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have
the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long-term
borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed
rates directly. Under the interest-rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly
quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed
notional principal amounts.
3
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the
circumstances.
(a)
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Estimated impairment of goodwill
(i)
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note
1(o). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions. Refer to note 15 for details of these assumptions and the potential impact of
changes to the assumptions.
45
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
4
Segment information
The consolidated entity is organised on a global basis into the following business segments:
Supercheap 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.
Primary reporting segment – business segment
2007
Supercheap
Auto
$’000
BCF
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
Sales to external customers
525,745
99,070
624,815
Inter segment sales
0
0
0
Total sales revenue
525,745
99,070
624,815
Other revenue/income
119
8
127
525,864
99,078
624,942
37,851
1,827
39,678
Total revenue and other
income
Segment result (pre-
borrowing costs)
Borrowing costs
Profit before income tax
Income tax expense
Profit for the period
0
0
0
374
374
(1,227)
(7,191)
624,815
0
624,815
501
625,316
38,451
(7,191)
31,260
(8,928)
22,332
Segment assets
250,283
63,779
314,062
(1,054)
313,008
Unallocated assets
Total assets
1,600
1,600
314,608
Segment liabilities
(136,939)
(62,021)
(198,960)
110,147
(88,813)
(101,269)
(101,269)
(190,082)
Unallocated liabilities
Total liabilities
Acquisitions of property,
plant and equipment and
other non-current segment
assets
Depreciation and
amortisation expense
19,633
10,701
30,334
11,870
1,390
13,260
0
0
30,334
13,260
299
Other non-cash expenses
0
0
0
299
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
46
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
4
Segment information (continued)
2006
Supercheap
Auto
$’000
BCF
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
Sales to external customers
481,781
44,168
525,949
Inter segment sales
0
0
0
Total sales revenue
481,781
44,168
525,949
Other revenue/income
268
0
268
482,049
44,168
526,217
33,012
(3,472)
29,540
Total revenue and other
income
Segment result (pre-
borrowing costs)
Borrowing costs
Profit before income tax
Income tax expense
Profit for the period
Segment assets
235,322
32,292
267,614
Unallocated assets
Total assets
0
0
0
287
287
(339)
(5,836)
(288)
2,150
525,949
0
525,949
555
526,504
29,201
(5,836)
23,365
(6,855)
16,510
267,326
2,150
269,476
Segment liabilities
(126,936)
(35,031)
(161,967)
94,331
(67,636)
Unallocated liabilities
Total liabilities
Acquisitions of property,
plant and equipment and
other non-current segment
assets
13,806
6,341
20,147
Depreciation and
amortisation expense
10,096
Other non-cash expenses
0
609
0
Geographical segments
(88,910)
(88,910)
(156,546)
0
0
10,705
0
(134)
20,147
10,705
(134)
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 Supercheap Auto operates in New Zealand.
47
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Secondary Segment – Geographical Segments
Segment Revenues
from sales to
external customers
Segment
Assets
2007
$’000
2006
$’000
2007
$’000
2006
$’000
Australia
New Zealand
565,632
59,183
472,851
53,098
288,292
26,316
245,545
23,931
624,815
525,949
314,608
269,476
Acquisitions of
property, plant and
equipment,
intangibles and other
non-current segment
assets
2007
$’000
29,225
1,109
30,334
2006
$’000
18,482
1,665
20,147
5
Revenue
From continuing operations
Sales revenue
Sale of goods
Other revenue
Interest
Dividends – related party
6
Other Income
Net gain on disposal of property, plant and equipment
Other income
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
624,815
525,949
624,815
525,949
372
0
372
287
0
287
625,187
526,236
0
0
13
17,000
17,013
17,013
0
0
8
13,000
13,008
13,008
Consolidated
Parent entity
2007
$'000
0
129
129
2006
$'000
84
184
268
2007
$'000
2006
$'000
0
2
2
0
0
0
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
48
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
7
Expenses
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Profit before income tax includes the following specific
gains and expenses:
Expenses
Net loss on disposal of property, plant and equipment
260
0
Depreciation
Computer systems
Plant and equipment
Motor vehicles
Total depreciation
Amortisation
Computer software
Finance costs
Interest and finance charges
Amount capitalised
Finance costs expensed
Employee benefits expense
Superannuation expense
Salaries and wages
Rental expense relating to operating leases
Lease expenses
Equipment hire
Total rental expense relating to operating leases
4,014
6,283
311
10,608
3,434
4,814
317
8,565
2,652
2,140
7,191
0
7,191
6,094
98,417
104,511
43,405
1,274
44,679
5,933
(97)
5,836
5,416
85,419
90,835
35,590
991
36,581
Foreign exchange gains and losses
Net foreign exchange (gains)/losses
509
745
0
0
0
0
0
0
6,662
0
6,662
6
283
289
0
0
0
0
0
0
0
0
0
0
4,320
(75)
4,245
12
280
292
0
0
0
9
49
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
8
Income tax expense
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
(a)
Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior period
Deferred income tax (revenue) expense included in income
tax expense comprises:
Decrease (increase) in deferred tax assets (note 14)
(Decrease) increase in deferred tax liabilities (note 23)
(b)
Numerical reconciliation of income tax expense
to prima facie tax payable
11,037
(1,922)
(187)
8,928
(2,217)
295
(1,922)
7,538
(666)
(17)
6,855
(624)
(42)
(666)
Profit from continuing operations before income tax expense
31,260
23,365
9,378
7,010
0
(342)
50
9,086
(6)
6
(173)
15
8,928
0
(177)
22
6,855
17
(17)
0
0
6,855
Tax at the Australian tax rate of 30% (2006 - 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Non-taxable dividends
Tax consolidation adjustments re NZ branch
Sundry items
Difference in overseas tax rates
Adjustments for current tax of prior periods
Research and development tax credits
Restatement of New Zealand deferred tax balances to 30%
Income tax expense
Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting
period and not recognised in net profit or loss but directly
debited or credited to equity
Net deferred tax – debited/(credited) directly to equity
(notes 14 and 23)
(c)
Tax consolidation legislation
(2,468)
(37)
(128)
(2,633)
(37)
0
(37)
8,751
2,625
(5,100)
0
2
(2,473)
0
13
(173)
0
(2,633)
(1,469)
13
0
(1,456)
13
0
13
8,145
2,444
(3,900)
0
0
(1,456)
0
0
0
0
(1,456)
(731)
(731)
28
28
(40)
(40)
10
10
Super Cheap Auto Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation as of 1 July 2003. The accounting policy in relation to this legislation is set out in note 1(d).
On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement
which, in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the
head entity, Super Cheap Auto Group Limited.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Super Cheap
Auto Group Limited for any current tax payable assumed and are compensated by Super Cheap Auto Group Limited for any current
tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Super Cheap Auto
Group Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts
recognised in the wholly-owned entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity,
which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim
funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany
receivables or payables (see note 32).
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
50
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
9
Current assets - Cash and cash equivalents
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Cash at bank and in hand
6,271
6,372
17
132
10
Current assets - Trade and other receivables
Trade receivables
Provision for impairment of receivables (a)
Loans to related parties (b)
Other receivables
Tax receivable
Prepayments
Consolidated
Parent entity
2007
$'000
5,639
(74)
5,565
0
2,753
1,176
5,097
14,591
2006
$'000
6,653
(26)
6,627
0
2,188
564
4,758
14,137
2007
$'000
2006
$'000
0
0
0
116,194
96
0
0
116,290
0
0
0
95,554
102
0
408
96,064
Further information relating to loans to key management personnel is set out in note 28.
(a)
Impaired trade receivables
The Group has recognised a loss of $52,000 (2006: $27,000) in respect of bad and doubtful trade receivables during the period
ended 30 June 2007. The loss has been included in ‘other expenses’ in the income statement.
(b)
Loan’s to related parties
Super Cheap Auto Group Limited provides funding to its wholly owned subsidiaries in the form of cash loans. These are repaid
by the subsidiaries as the funds become available.
11
Current assets – Inventories
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Finished goods
- at lower of cost or net realisable value
159,880
135,021
0
0
51
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
12
Non-current assets – Other financial assets
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Shares in subsidiaries at cost
Name of entity
Super Cheap Auto Pty Ltd
BCF Australia Pty Ltd
Super Retail Group Services Pty Ltd
Total non-current assets – shares in controlled entities
(refer Note 33)
0
0
0
0
0
0
0
0
84,233
1
0
84,233
1
0
84,234
84,234
13
Non-current assets – Property, plant and equipment
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Plant and equipment, at cost
Less accumulated depreciation
Net plant and equipment
Motor vehicles, at cost
Less accumulated depreciation
Net motor vehicles
Computer systems, at cost
Less accumulated depreciation
Net computer equipment
77,346
(22,258)
55,088
1,423
(792)
631
26,104
(14,561)
11,543
55,498
(16,363)
39,135
1,342
(645)
697
20,468
(10,503)
9,965
Total net property, plant and equipment
67,262
49,797
Assets pledged as security are detailed in Note 21
0
0
0
0
0
0
0
0
0
0
Reconciliations - consolidated entity
Carrying amounts at 2 July 2006
Additions
Disposals
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 30 June 2007
Reconciliations - consolidated entity
Carrying amounts at 3 July 2005
Additions
Disposals
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 1 July 2006
Plant and
equipment
$’000
Motor
vehicles
$’000
Computer
systems
$’000
39,135
22,039
(346)
(6,283)
543
55,088
697
298
(61)
(311)
8
631
9,965
5,527
0
(4,014)
65
11,543
Plant and
equipment
$’000
Motor
vehicles
$’000
Computer
systems
$’000
31,500
13,024
(17)
(4,814)
(558)
39,135
652
412
(40)
(317)
(10)
697
9,359
4,127
(15)
(3,434)
(72)
9,965
0
0
0
0
0
0
0
0
0
0
Total
$’000
49,797
27,864
(407)
(10,608)
616
67,262
Total
$’000
41,511
17,563
(72)
(8,565)
(640)
49,797
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
52
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
14
Non-current assets - Deferred tax assets
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Doubtful debts
Employee benefits
Accruals
Inventories
Deferred borrowing/consulting costs
Deferred make good provision
Straight line lease adjustment
Deferred income
Depreciation
Provision for warranties and legal costs
Amounts recognised directly in equity
Cash flow hedges
Set off with deferred tax liabilities (note 22)
Net deferred tax assets
Movements:
Opening balance
Credited/(charged) to the income statement
Credited/(charged) to equity
Foreign exchange on translation of NZ subsidiary
Closing balance
Deferred tax assets to be recovered after more than 12
months
Deferred tax assets to be recovered within 12 months
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
129
2,191
774
1,146
0
686
2,458
90
386
30
7,890
680
8,570
(579)
7,991
5,633
2,217
662
58
8,570
1,368
7,202
8,570
214
1,785
419
889
2
550
1,658
78
0
20
5,615
18
5,633
(278)
5,355
5,086
624
18
(95)
5,633
2,560
3,073
5,633
0
2
59
0
0
0
0
0
0
0
61
(29)
32
0
32
24
37
(29)
0
32
0
32
32
0
0
24
0
0
0
0
0
0
0
24
0
24
(24)
0
37
(13)
0
0
24
0
24
24
53
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
15
Non-current assets – Intangible assets
Consolidated
Parent entity
2007
$’000
2006
$’000
Goodwill at cost
Less impairment charge
Net goodwill
Trademarks, at cost
Less accumulated depreciation
Net trademarks
Computer software
Less accumulated amortisation
2007
$’000
52,112
0
52,112
14
0
14
15,203
(8,716)
6,487
2006
$’000
52,112
0
52,112
14
0
14
12,732
(6,064)
6,668
Total net intangibles
58,613
58,794
0
0
0
0
0
0
0
0
0
0
Reconciliations – consolidated entity - 2007
Carrying amounts at 2 July 2006
Additions
Impairment/amortisation charge
Foreign currency exchange differences
Carrying amounts at 30 June 2007
Reconciliations – consolidated entity - 2006
Carrying amounts at 3 July 2005
Additions
Impairment/amortisation charge
Carrying amounts at 1 July 2006
(a)
Impairment tests for goodwill
Goodwill
$’000
Trademarks
$’000
52,112
0
0
0
52,112
14
0
0
0
14
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
6,668
2,470
(2,652)
1
6,487
Computer
Software
$’000
52,112
0
0
52,112
14
0
0
14
6,224
2,584
(2,140)
6,668
0
0
0
0
0
0
0
0
0
0
Totals
$’000
58,794
2,470
(2,652)
1
58,613
Totals
$’000
58,350
2,584
(2,140)
58,794
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to business segment and country of
operation.
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow
projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year
period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average
growth rate for the business in which the CGU operates.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
54
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
15
(b)
Non-current assets – Intangible assets (continued)
Key assumptions used for value-in-use calculations
No impairment loss was recognised in the 2007 financial year.
The following assumptions have been used for the analysis of each CGU within the business segment. Management
determined budgeted gross margin based on past performance and its expectations for the future. The weighted average
growth rates used are consistent with forecasts included in industry reports. The discount rates used are pre-tax. The factors
used by each business segment is shown below.
Supercheap Auto
BCF
Growth rate
Discount rate
2007
%
3
5
2006
%
3
5
2007
%
15
15
2006
%
15
15
In the initial two year’s of a store operating growth rate is assumed to be 10%.
16
Current liabilities - Trade and other payables
Trade payables
Other payables
17
Current liabilities – Borrowings
Secured
Commercial bill
Less borrowing costs capitalised, net
Total current liabilities – secured interest bearing
liabilities
Unsecured
Related parties
Unsecured bank financing
Total current liabilities – unsecured interest bearing
liabilities
Consolidated
Parent entity
2007
$'000
43,138
19,105
62,243
2006
$'000
36,412
13,031
49,443
2007
$'000
25
1,576
1,601
2006
$'000
8
205
213
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
31,540
(271)
19,379
(469)
29,940
(211)
17,229
(273)
31,269
18,910
29,729
16,956
2
139
141
1
109
110
0
0
0
0
0
0
Total current liabilities – interest bearing liabilities
31,410
19,020
29,729
16,956
(a) Bills payable
Bills have been drawn as a source of short-term financing on a needs basis.
(b) Interest rate risk exposures
Details of the Group’s exposure to interest rate changes on borrowings are set out in note 22.
(c) Fair value disclosures
Details of the fair value of borrowings for the Group are set out in note 22.
(d) Security
Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank loans
are set out in note 21.
55
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
18
Current liabilities – Current tax liabilities
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Income tax payable
5,611
1,725
5,611
1,725
19
Current liabilities – Provisions
Make good provision
Employee benefits
Consolidated
Parent entity
2007
$'000
284
5,516
5,800
2006
$'000
260
4,681
4,941
2007
$'000
0
0
0
2006
$'000
0
0
0
20
Non-current liabilities – Trade and Other Payables
Straight line lease adjustment
21
Non-current liabilities – Borrowings
Secured
Cash advance
Consolidated
Parent entity
2007
$'000
8,194
2006
$'000
5,482
2007
$'000
0
2006
$'000
0
Consolidated
Parent entity
2007
$'000
70,000
70,000
2006
$'000
2007
$'000
70,000
70,000
70,000
70,000
2006
$'000
70,000
70,000
The facilities are secured by first registered floating company charges over all the assets and undertakings of Super Cheap Auto
Group Limited, Super Cheap Auto Pty Ltd, Super Cheap Auto (New Zealand) Pty Ltd, Super Retail Group Services 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, Super Retail Group Services Pty Ltd and BCF Australia Pty Ltd in favour of ANZ Banking Group Limited. Financial
covenants are provided by Super Cheap Auto Group Limited with respect to leverage, gearing and fixed charges coverage.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
56
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
21
Non-current liabilities – Borrowings (continued)
The carrying amount of assets pledged as security are equal to those shown in the consolidated balance sheet.
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
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
Consolidated
Parent entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
128,720
1,342
130,062
128,720
1,338
130,058
125,000
1,342
126,342
125,000
1,338
126,338
101,600
1,251
102,851
27,120
91
27,211
89,400
1,287
90,687
39,320
51
39,371
100,000
0
100,000
25,000
1,342
26,342
87,250
0
87,250
37,750
1,338
39,088
In addition, the Company has access to a $112 million (2006: $37.5 million) transactional facility for clean credit and foreign
currency dealings.
Super Cheap Auto Pty Ltd has commercial bills of $Nil (2006: $17.25 million) outstanding at year end which are drawn as
part of the group facility. The bank facilities may be drawn at any time.
Included in the facility above is an amount of $3.72 million for SCA Equity Plan Pty Ltd. This amount was drawn to $1.6
million (2006: $2.15 million) at 30 June 2007.
The current interest rates on the financing arrangements
are:
- Multi Option Facility (including commercial bills,
overdraft and cash advance)
7.50%-7.59% (2006: 6.93%-7.13%)
22 Derivative Financial instruments
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 four months on a rolling basis.
57
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
22
Derivative Financial instruments (continued)
At balance date the following amounts were committed on foreign currency forward exchange contracts:
Consolidated entity
Parent entity
2007
$000
2006
$000
2007
$000
2006
$000
Buy United States dollars and sell Australian dollars with
maturity
- 0 to 6 months
- 7 to 12 months
18,500
15,000
3,000
0
0
0
0
0
Weighted average rate of contracts
82 cents
70 cents
0 cents
0 cents
Buy Australian dollars and sell New Zealand dollars with
maturity
- 0 to 6 months
9,000
0
0
0
Weighted average rate of contracts
115 cents
0 cents
0 cents
0 cents
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised
directly in equity. When the cash flows occur, the Group adjusts the initial measurement of the component recognised in
the balance sheet by the related amount deferred in equity.
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)
(b)
Included in other payables under note 16
Included in other receivables under note 10
0
2,362
2,362
(97)
(97)
2,265
0
60
60
0
(101)
(101)
(41)
0
0
0
(97)
(97)
(97)
0
0
0
0
(101)
(101)
(101)
Interest rate swap contracts
Bank loans of the economic entity currently bear an average variable interest rate of 7.5% (2006: 6.97%). 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 Group has entered an interest rate swap for nominal value of $15,000,000 which expires on 18 January 2008.
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 15% (2006: 17%) of the loan
principal outstanding. The average fixed interest rate is 5.66% (2006: 5.66%).
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
58
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
22
Derivative 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:
Notes
9
10
16, 18
17
17
17, 21
19, 24
Notes
9
10
16, 18
17
17
17, 21
19, 24
2007
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Related parties
Unsecured financing
Commercial bill/cash advance
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial assets/ (liabilities)
2006
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Related parties
Unsecured financing
Commercial bill/cash advance
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial assets/ (liabilities)
Fixed interest maturing in
1 year or
less
$’000
Over 1 to
5 years
$’000
More than
5 years
$000
Non-
interest
bearing
$’000
Total
$’000
Floating
interest
rate
$’000
5,237
5,237
6.2%
0
0
0
86,269
0
86,269
0
0
0
0
139
15,000
0
15,139
7.5%
6.56%
(81,032)
(15,139)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,034
14,591
15,625
6,271
14,591
20,862
67,854
2
0
0
6,782
74,638
67,854
2
139
101,269
6,782
176,046
(59,013)
(155,184)
Fixed interest maturing in
1 year or
less
$’000
Over 1 to
5 years
$’000
More than
5 years
$000
Non-
interest
bearing
$’000
Total
$’000
Floating
interest
rate
$’000
5,438
0
5,438
5.00%
0
0
0
73,910
0
73,910
6.97%
0
0
0
0
0
109
0
0
109
0
0
0
0
0
0
15,000
0
15,000
6.56%
(68,472)
(109)
(15,000)
0
0
0
0
0
0
0
0
0
0
934
14,137
15,071
6,372
14,137
20,509
51,168
1
0
0
5,902
57,071
51,168
1
109
88,910
5,902
146,090
(42,000)
(125,581)
59
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
22
Derivative Financial instruments (continued)
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.
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 payables
Commercial bill and other financing
Non-traded financial liabilities
Off-balance sheet financial instruments
Financial assets
Forward exchange contracts *
Financial liabilities
Forward exchange contracts *
Consolidated entity
Carrying amount
Net fair value
2007
$’000
2006
$’000
2007
$’000
2006
$’000
6,271
14,591
20,862
6,372
14,137
20,509
6,271
14,591
20,862
6,372
14,137
20,509
(67,854)
(101,410)
(169,264)
(51,168)
(89,020)
(140,188)
(67,854)
(101,410)
(169,264)
(51,168)
(89,020)
(140,188)
2,362
(97)
60
(101)
0
0
0
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 2007 ANNUAL REPORT
60
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
23
Non-current liabilities - Deferred tax liabilities
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Prepayments
Unrealised foreign exchange on inter company balances
Depreciation
Amounts recognised directly in equity
Share based payments
Cash flow hedges
10
224
345
579
0
0
579
6
0
248
254
39
30
323
Set-off of deferred tax liabilities of parent entity pursuant to
set-off provisions
Net deferred tax liabilities
(579)
0
(278)
45
Movements:
Opening balance
Charged/(credited) to the income statement
Charged/(credited) to equity
Foreign exchange on translation of NZ subsidiary
Closing balance
Deferred tax liabilities to be settled after more than 12
months
Deferred tax liabilities to be settled within 12 months
24
Non-current liabilities – Provisions
323
295
(69)
30
579
569
10
579
420
(42)
(10)
(45)
323
317
6
323
0
0
0
0
0
0
0
0
0
69
0
(69)
0
0
0
0
0
0
0
0
0
39
30
69
(24)
45
79
0
(10)
0
69
69
0
69
Make good provision
Employee benefits
Consolidated
Parent entity
2007
$'000
5,558
1,266
6,824
2006
$'000
4,669
1,221
5,890
2007
$'000
2006
$'000
0
0
0
0
0
0
(a)
Provision is made for costs arising from contractual obligations in lease agreements at the inception of the agreement.
Make good provision
A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold
improvements. These costs have been capitalised as part of the cost of the leasehold improvements and are amortised over the
shorter of the term of the lease or the useful life of the assets.
(b)
Movements in provisions (consolidated entity) (notes 19 & 24)
Opening balance as at 2 July 2006
Additional provisions recognised
Indexing of provisions
Provision released
Closing balance as at 30 June 2007
61
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
Make good
$'000
4,929
923
376
(387)
5,841
25
Contributed equity
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Consolidated
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Ordinary shares fully paid
84,233
84,233
84,233
84,233
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 30 June 2007
Number of
Shares
1
49,697,150
56,732,471
106,429,622
Issue Price
$’000
1.00
1.69
-
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.
Options over 1,375,000 ordinary shares were issued during the period, with no options being exercised during the period.
Information relating to options outstanding at the end of the financial period are set out in Note 38.
26
Reserves and retained profits
Reserves
Foreign currency translation reserve
Share based payments reserve
Hedging reserve
Movements
Foreign currency translation reserve
Balance at the beginning of the financial period
Net exchange difference on translation of foreign
controlled Entity
Balance at the end of the financial period
Share based payments reserve
Balance at beginning of the financial period
Options lapsed
Option expense
Balance at the end of the financial period
Hedging reserve
Balance of beginning of the financial period
Revaluation – gross
Deferred tax
Balance 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
Parent entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
(11)
428
(1,585)
(1,168)
(129)
118
(11)
90
0
338
428
28
(2,304)
691
(1,585)
28,708
22,332
(9,579)
(129)
90
28
(11)
0
(129)
(129)
184
(270)
176
90
0
40
(12)
28
0
428
68
496
0
0
0
90
0
338
428
70
(3)
1
68
20,180
16,510
(7,982)
7,098
11,384
(9,579)
41,461
28,708
8,903
0
90
70
160
0
0
0
184
(270)
176
90
0
100
(30)
70
5,479
9,601
(7,982)
7,098
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
62
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
26
(c)
Reserves and retained profits (continued)
Nature and purpose of reserves
(i) Hedging reserve - cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly
in equity, as described in note 1(k). Amounts are recognised in profit and loss when the associated hedged transaction affects
profit and loss.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
(iii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve,
as described in note 1(e). The reserve is recognised in profit and loss when the net investment is disposed of.
27
Dividends
Ordinary shares
Dividends paid by Super Cheap Auto Group Limited during the reporting period were
as follows:
Interim dividend for the period ended 30 June 2007 of 4 cents (2006: 3 cents per
share) paid on 4 April 2007. Fully franked based on tax paid @ 30%
Final dividend for the period ended 1 July 2006 of 5 cents per share (2005: 4.5 cents
per share) paid on 11 October 2006. Fully franked based on tax paid @ 30%
Total dividends provided and paid
Dividends not recognised at year end
Subsequent to year end, the Directors have recommended the payment of a final
dividend of 6.5 cents per ordinary share (2006: 5 cents per ordinary share), fully
franked based on tax paid at 30%.
Parent Entity
2007
$’000
2006
$’000
4,257
5,322
9,579
3,193
4,789
7,982
The aggregate amount of the dividend expected to be paid on 10 October 2007, out
of retained profits at 30 June 2007, but not recognised as a liability at year end, is
6,918
5,322
Franking credits
The franked portions of dividends paid after 30 June 2007 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 30 June 2007.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
25,781
22,805
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.
The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability
at year end, will be a reduction in the franking account of $2,964,825 (2006: $2,280,635).
63
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
28
Key management personnel disclosures
(a)
Directors
The following persons were directors of Super Cheap Auto Group Limited during the financial year:
(i) Chairman - non-executive
Richard Douglas McIlwain
(ii) Executive directors
Peter Alan Birtles, Managing Director
(iii) Non-executive directors
Reginald Rowe
Robert Wright
Darryl McDonough
(b)
Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, during the financial year:
Name
David Ajala
Steven Doyle
Gary Carroll
Graham Chad
Position
Chief Operating Officer – Super Cheap Auto
Chief Operating Officer – BCF
Chief Financial Officer
General Manager – Group Logistics
Employer
Super Cheap Auto Group Limited
Super Cheap Auto Group Limited
Super Cheap Auto Group Limited
Super Cheap Auto Group Limited
(c)
Key management personnel compensation
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
Short-term employee benefits
Post-employment benefits
Share-based payments
2,596,445
306,556
229,348
3,132,349
2,020,573
211,905
(189,898)
2,042,580
91,743
188,257
215,519
495,519
155,092
124,908
(189,898)
90,102
The key management personnel remuneration in some instances has been paid by a subsidiary.
The company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed
remuneration disclosures to the directors’ report. The relevant information can be found in the remuneration report on pages 22
to 27.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
64
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
28
Key management personnel disclosures (continued)
(d)
Equity instrument disclosures relating to key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and
conditions of the options, can be found in the remuneration report on pages 22 to 27.
(ii) Option holdings
The numbers of options over ordinary shares in the company held during the financial year by each director of Super Cheap
Auto Group Limited and other key management personnel of the Group, including their personally related parties, are set out
below.
2007
Balance at
the start of
the year
Name
Directors of Super Cheap Auto Group Limited
R D McIlwain
R A Rowe
D D McDonough
R J Wright
P A Birtles
Other key management personnel of the Group
D F Ajala
S J Doyle
G G Carroll
G L Chad
0
0
0
0
200,000
400,000
400,000
250,000
0
Granted during
the year as
compensation
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of the
year
Vested and
exercisable at
the end of the
year
0
0
0
0
500,000
0
0
0
125,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
700,000
400,000
400,000
250,000
125,000
0
0
0
0
0
0
0
0
0
No options are vested and unexercisable at the end of the year.
2006
Balance at
the start of
the year
Granted during
the year as
compensation
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of the
year
Vested and
exercisable at
the end of the
year
0
0
0
0
0
0
0
0
0
0
0
0
0
(1,000,000)
0
0
0
0
0
0
0
0
0
0
0
200,000
400,000
400,000
250,000
0
0
0
0
0
0
0
0
0
0
0
Name
Directors of Super Cheap Auto Group Limited
R D McIlwain
R A Rowe
D D McDonough
R E Thorn
R J Wright
P A Birtles
Other key management personnel of the Group
D F Ajala
S J Doyle
G G Carroll
G L Chad
0
0
0
1,000,000
0
200,000
0
0
0
0
0
0
0
0
0
0
400,000
400,000
250,000
0
No options are vested and unexercisable at the end of the year.
65
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
28 Key management personnel disclosures (continued)
(iii) Share holdings
The numbers of shares in the company held during the financial year by each director of Super Cheap Auto Group Limited
and other key management personnel of the Group, including their personally related parties, are set out below. There were
no shares granted during the reporting period as compensation.
2007
Name
Directors of Super Cheap Auto Group Limited
Ordinary shares
R D McIlwain
R A Rowe
D D McDonough
R J Wright
P A Birtles
Other key management personnel of the Group
Ordinary shares
D F Ajala
S J Doyle
G G Carroll
G L Chad
2006
Name
Directors of Super Cheap Auto Group Limited
Ordinary shares
R D McIlwain
R A Rowe
D D McDonough
R J Wright
R E Thorn (resigned 27 January 2006)
P A Birtles
Other key management personnel of the Group
Ordinary shares
D F Ajala
S J Doyle
G G Carroll
G L Chad
Balance at the
start of the year
Received during
the year on the
exercise of
options
Other changes
during the year
Balance at
the end of the
year
158,882
52,402,159
50,000
40,609
1,192,596
0
493,411
0
0
0
0
0
0
0
0
0
0
0
0
0
10,000
0
0
158,882
52,402,159
60,000
40,609
1,192,596
281
(350,000)
0
0
281
143,411
0
0
Balance at the
start of the year
Received during
the year on the
exercise of
options
Other changes
during the year
Balance at
the end of the
year
158,882
52,402,159
50,000
40,609
4,899,078
1,192,596
0
536,948
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(835,120)
0
158,882
52,402,159
50,000
40,609
4,063,958
1,192,596
0
(43,537)
0
0
0
493,411
0
0
Aggregate amounts of each of the above types of other transactions with key management personnel of Super Cheap Auto
Group Limited:
Amounts paid to key management personnel as shareholders
Dividends
2007
$000
2006
$000
4,877
4,382
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
66
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
29
Remuneration of auditors
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.
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
(a)
Assurance services
Audit services
PricewaterhouseCoopers Australian firm
Audit and review of financial reports and other audit work
under the Corporations Act 2001
Total remuneration for audit services
289,700
289,700
211,437
211,437
171,700
171,700
211,437
211,437
Other assurance services
PricewaterhouseCoopers Australian firm
IFRS accounting services
Total remuneration for other assurance services
0
0
85,230
85,230
0
0
85,230
85,230
Total remuneration for assurance services
289,700
296,667
171,700
296,667
(b)
Taxation services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of company
income tax returns
Total remuneration for taxation services
92,864
92,864
125,012
125,012
(c)
Advisory services
PricewaterhouseCoopers Australian firm
Due diligence
Total remuneration for advisory services
0
0
159,000
159,000
0
0
0
0
125,012
125,012
159,000
159,000
It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where
PricewaterhouseCoopers’ expertise and experience with the Group are important. These assignments are principally tax advice
and due diligence reporting on acquisitions, or where PricewaterhouseCoopers is awarded assignments on a competitive basis.
It is the Group’s policy to seek competitive tenders for all major consulting projects.
30
Contingencies
Consolidated
Parent entity
2007
$000
2006
$000
2007
$000
2006
$000
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:
1,251
1,287
0
0
67
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
31
Commitments
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
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
Less lease straight lining adjustment (note 20)
Total lease commitments
Future minimum lease payments expected to be received
in relation to non-cancellable sub-leases of operating
leases
Remuneration commitments
Commitments for the payment of salaries and other
remuneration under long-term employment contracts in
existence at the reporting date but not recognised as
liabilities, payable:
Within one year
Later than one year and not later than five years
Later than five years
Consolidated
Parent entity
2007
$000
2006
$000
2007
$000
2006
$000
1,736
0
0
1,736
895
0
0
895
42,157
131,691
53,928
(8,194)
219,582
35,222
108,548
44,136
(5,482)
182,424
2,976
3,641
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,480
4,440
0
5,920
1,375
5,500
0
6,875
1,480
4,440
0
5,920
1,375
5,500
0
6,875
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management
personnel referred to in the remuneration report on pages 22 to 27 that are not recognised as liabilities and are not included in the
key management personnel compensation.
32
Related party transactions
Transactions with related parties are at arm’s length unless otherwise stated.
(a)
The parent entity within the Group is Super Cheap Auto Group Limited, which is the ultimate Australian parent.
Parent entities
(b)
Interests in subsidiaries are set out in note 33.
Subsidiaries
(c)
Disclosures relating to key management personnel are set out in note 28.
Key Management Personnel
Directors
(d)
The names of the persons who were Directors of Super Cheap Auto Group Limited during the financial period are
R D McIlwain, R A Rowe, R J Wright, D D McDonough and P A Birtles.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
68
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
32
Related party transactions (continued)
(e)
Amounts due from Directors of the consolidated entity and their director-related entities are as follows:
Amounts due from related parties
Director related entities of R A Rowe
– store lease costs to be reimbursed by landlord
(see below)
Transactions with related parties
(f)
Aggregate amounts included in the determination of profit
from ordinary activities before income tax that resulted
from transactions with related parties:
Other Transactions
- store lease payments – R A Rowe related property
entities
- remuneration paid to directors of the ultimate Australian
parent entity
Dividend Revenue
- dividends from subsidiaries
Tax Consolidation Legislation
- current tax payable assumed from wholly owned tax
consolidated entities
Loans to/from Related Parties
(g)
Loans to Subsidiaries
- beginning of the period
- loans advanced
- loan repayments received
End of year
33
Investments in controlled entities
Consolidated
Parent entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
0
0
0
0
7,393
0
0
0
0
0
0
0
7,324
883
0
0
0
0
0
0
0
0
0
0
0
0
0
883
17,000
13,000
13,420
8,558
95,555
291,469
(270,830)
116,194
62,116
235,834
(202,395)
95,555
Name of Entity
Super Cheap Auto Pty Ltd(a)
Super Cheap Auto (New Zealand) Pty Ltd(b)
Super Retail Group Services Pty Ltd(a),(c)
BCF Australia Pty Ltd(a)
SCA Equity Plan Pty Ltd(b)
Country of
Incorporation
Class of
Shares
2007
%
2006
%
Equity Holding
Australia
New Zealand
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
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.
(c) During the period Super Cheap Auto Group Limited acquired the share capital from Super Cheap Auto Pty Ltd.
69
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Consolidated Entity
2007
Cents
60¢
2006
Cents
51¢
34
Net tangible asset backing
Net tangible asset per ordinary share
35
Deed of cross guarantee
Super Cheap Auto Group Limited, Super Cheap Auto Pty Ltd, BCF Australia Pty Ltd, Super Retail Group Services Pty Ltd and SCA
Equity Plan 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.
(a)
Consolidated Income Statement and a summary of movements in consolidated retained profits
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’.
Set out below is a consolidated income statement and a summary of movements in consolidated retained profits for the period
ended 30 June 2007 of the Closed Group consisting of Super Cheap Auto Group Limited, Super Cheap Auto Pty Ltd, BCF Australia
Pty Ltd, Super Retail Group Services Pty Ltd and SCA Equity Plan Pty Ltd.
Revenue from continuing operations
Other income
Total revenues and other income
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Borrowing costs expense
Total expenses
Profit before income tax
Income tax (expense)/benefit
Consolidated
2007
$'000
582,105
129
582,234
(351,484)
(63,886)
(34,618)
(39,733)
(54,773)
(7,253)
(551,747)
30,487
(8,810)
2006
$'000
490,689
268
490,957
(298,502)
(52,563)
(31,352)
(32,346)
(47,354)
(5,781)
(467,898)
23,059
(6,692)
Profit for the period
21,677
16,367
Summary of movements in consolidated retained profits
Retained profits at the beginning of the financial year
Profit for the period
Dividends provided for or paid
Retained profits at the end of the financial year
28,063
21,677
(9,579)
40,161
19,678
16,367
(7,982)
28,063
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
70
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
35
Deed of cross guarantee (continued)
(b)
Balance Sheet
Set out below is a consolidated balance sheet as at 30 June 2007 of the Closed Group consisting of Super Cheap Auto Group
Limited, Super Cheap Auto Pty Ltd, BCF Australia Pty Ltd, Super Retail Group Services Pty Ltd and SCA Equity Plan Pty Ltd.
Consolidated
2007
$'000
2006
$'000
5,780
33,758
142,677
182,215
1
60,777
7,837
58,605
127,220
309,435
58,367
31,410
6,786
4,617
101,180
8,194
70,000
0
6,824
85,018
186,198
123,237
84,233
(1,157)
40,161
5,888
32,153
119,639
157,680
1
44,015
5,018
58,790
107,824
265,504
46,739
19,020
2,289
3,625
71,673
5,482
70,000
45
5,890
81,417
153,090
112,414
84,233
118
28,063
123,237
112,414
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
71
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
Reconciliation of profit from ordinary activities after income tax to net cash inflow from
36
operating activities
Consolidated
Parent entity
Profit from ordinary activities after related income tax
Depreciation and amortisation
Net (gain)/loss on sale of non-current assets
Non-cash employee benefits expense/share based
payments
Net Interest Expense
Change in operating assets and liabilities, net of
effects from the purchase of controlled entities and the
sale of the service entity
- (increase)/decrease in receivables
- (increase) in inventories
- increase in payables
- increase/ in provisions
- (decrease)/increase in deferred tax
Net cash inflow from operating activities
37
Earnings per share
2007
$000
22,332
13,260
260
299
6,819
(441)
(24,859)
16,243
1,792
(1,713)
33,992
2006
$000
2007
$000
2006
$000
16,510
10,705
(84)
(134)
5,549
52
(11,838)
4,735
1,920
(644)
26,771
11,384
0
0
299
6,649
9,601
0
0
(134)
4,237
(36,350)
0
5,275
0
(37)
(12,780)
(22,800)
0
1,271
0
3
(7,822)
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
Adjustments for calculation of diluted earnings per share options
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
(a)
Information concerning the classification of securities
Consolidated Entity
2007
Cents
21.0
20.9
2006
Cents
15.5
15.5
Consolidated Entity
2007
Number
2006
Number
106,429,622
641,363
106,429,622
49,188
107,070,985
106,478,810
2007
$000
2006
$000
22,332
16,510
22,332
16,510
Options
(i)
Options granted are considered to be potential ordinary shares and have been included in the determination of diluted earnings per
share to the extent to which they are dilutive.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
72
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
38
Share-based payments
(a)
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.
Set out below are summaries of options granted under the plan:
Grant Date Exercise date Exercise price
Balance at start
of the year
Number
Granted
during the
year
Exercised
during the
year
Number Number Number
Expired
during the
year
Balance at
end of the
year
Number
Exercisable
at end of the
year
Number
Consolidated and parent entity - 2007
19 May 2004
27 Jan 2006
27 Jan 2006
27 Jan 2006
17 April 2006
17 April 2006
17 April 2006
1 July 2006
1 July 2006
1 July 2006
26 Oct 2006
26 Oct 2006
26 Oct 2006
1 July 2007
5 Jan 2009
5 Jan 2010
5 Jan 2011
17 April 2009
17 April 2010
17 April 2011
1 July 2009
1 July 2010
1 July 2011
1 Feb 2009
1 Feb 2010
1 Feb 2011
$1.97
$2.44
$2.44
$2.44
$2.25
$2.25
$2.25
$2.25
$2.25
$2.25
$2.44
$2.44
$2.44
Total
200,000
400,000
200,000
200,000
75,000
75,000
100,000
0
0
0
0
0
0
1,250,000
0
0
0
0
0
0
0
262,500
262,500
350,000
150,000
150,000
200,000
1,375,000
Weighted average exercise price
$2.25
$2.32
Consolidated and parent entity - 2006
19 May 2004
19 May 2004
19 May 2004
27 Jan 2006
27 Jan 2006
27 Jan 2006
17 April 2006
17 April 2006
17 April 2006
1 July 2007
1 July 2008
1 July 2009
5 Jan 2009
5 Jan 2010
5 Jan 2011
17 April 2009
17 April 2010
17 April 2011
$1.97
$1.97
$1.97
$2.44
$2.44
$2.44
$2.25
$2.25
$2.25
Total
700,000
250,000
250,000
0
0
0
0
0
0
1,200,000
0
0
0
400,000
200,000
200,000
75,000
75,000
100,000
1,050,000
Weighted average exercise price
$1.97
$2.39
There were no options exercised during the period.
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
200,000
400,000
200,000
200,000
75,000
75,000
100,000
262,500
262,500
350,000
150,000
150,000
200,000
200,000
0
400,000
0
200,000
0
200,000
0
75,000
0
75,000
0
100,000
0
262,500
0
262,500
0
350,000
0
150,000
0
150,000
0
0
200,000
0 2,625,000 2,625,000
0
$2.32
$2.32
500,000
250,000
250,000
0
0
0
0
0
0
200,000
200,000
0
0
0
0
400,000
400,000
200,000
200,000
200,000
200,000
75,000
75,000
75,000
75,000
100,000
100,000
1,000,000 1,250,000 1,250,000
$1.97
$2.25
$2.25
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.52 years.
73
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 30 June 2007
38
Share-based payments (continued)
Fair value of options granted
The assessed fair value at grant date of options granted during the period ended 30 June 2007 was 38 to 57 cents per option.
The fair value at grant date is independently determined using a Binomial option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The model inputs for options granted during the period ended 30 June 2007 included:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
options are granted for no consideration
exercise price: $2.25, $2.44 (2006: $2.25, $2.44)
grant date: 1 July 2006 and 26 October 2006 (2006: 27 January 2006 and 17 April 2006)
expiry date: 1 February 2009, 1 July 2009, 1 February 2010, 1 July 2010, 1 February 2011 and 1 July 2011 (2006: 5
January 2009, 17 April 2009, 5 January 2010, 17 April 2010, 5 January 2011, 17 April 2011)
share price at grant date: $1.59, $2.65 (2006: $2.41, $2.32)
expected price volatility of the company’s shares: 33% (2006: 20%)
expected dividend yield: 3.5% (2006: 3.5%)
risk-free interest rate: 6.0% (2006: 5.6%).
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any
expected changes to future volatility due to publicly available information.
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
74
DIRECTORS’ DECLARATION
Super Cheap Auto Group Limited
For the period ended 30 June 2007
`
In the directors’ opinion:
(a)
(b)
(c)
(d)
the financial statements and notes set out on pages 30 to 74 are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the company’s and consolidated entity's financial position as at 30 June 2007
and of its performance, as represented by the results of their operations, changes in equity and their cash
flows, for the financial period ended on that date; and
(ii)
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
the audited remuneration disclosures set out on pages 22 to 27 of the directors’ report comply with Accounting
Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed
Group identified in note 35 will be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in note 35.
The directors have been given the declarations by the managing director and chief financial officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
R D McIlwain
Director
P A Birtles
Director
Brisbane
23 August 2007
75
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
(cid:3)
(cid:3)
Independent auditor’s report
to the members of Super Cheap Auto Group Limited
Report on the financial report and the AASB 124 Remuneration
disclosures contained in the directors’ report
AUDIT REPORT
Super Cheap Auto Group Limited
for the period ended 30 June 2007
PricewaterhouseCoopers
ABN 52 780 433 757
Riverside Centre
123 Eagle Street
BRISBANE QLD 4000
GPO Box 150
BRISBANE QLD 4001
DX 77 Brisbane
Australia
www.pwc.com/au
Telephone +61 7 3257 5000
Facsimile +61 7 3257 5999
We have audited the accompanying financial report of Super Cheap Auto
Group Limited (the company), which comprises the balance sheet as at 30
June 2007, and the income statement, statement of changes in equity and
cash flow statement for the period ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration for both Super Cheap Auto
Group Limited and the Super Cheap Auto Group (the consolidated entity). The consolidated entity comprises the
company and the entities it controlled at the period’s end or from time to time during the financial period.
We have also audited the remuneration disclosures contained in the directors’ report. As permitted by the
Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and
executives (“remuneration disclosures”), required by Accounting Standard AASB 124 Related Party Disclosures,
under the heading “remuneration report” in pages 22 to 27 of the directors’ report and not in the financial report.
Directors’ responsibility for the financial report and the AASB 124 Remunerations disclosures contained in the
directors' report
The directors of the company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud
or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In Note 1 the directors also state, in accordance with Accounting Standard AASB
101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial
Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with
International Financial Reporting Standards.
The directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
whether the financial report is free from material misstatement. Our responsibility is to also express an opinion on the
remuneration disclosures contained in the directors’ report based on our audit.
Liability limited by a scheme approved under Professional Standards Legislation
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
76
AUDIT REPORT
Super Cheap Auto Group Limited
for the period 30 June 2007
(continued)
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report and the remuneration disclosures contained in the directors’ report. The procedures selected depend on the
auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the
remuneration disclosures contained in the directors’ report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial report and the remuneration disclosures contained in the directors’ report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.
Our procedures include reading the other information in the Annual Report to determine whether it contains any
material inconsistencies with the financial report.
For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion on the financial report
In our opinion:
(a)
the financial report of Super Cheap Auto Group Limited is in accordance with the Corporation Act 2001,
including:
(i)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June
2007 and of their performance for the period ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001; and
(b)
the consolidated financial statements and notes also complies with International Financial Reporting Standards
as disclosed in Note 1.
Auditor’s opinion on the AASB 124 Remuneration disclosures contained in the directors’ report
In our opinion, the remuneration disclosures that are contained in pages 22 to 27 of the directors’ report comply with
Accounting Standard AASB 124.
PricewaterhouseCoopers
B S Delaney
Partner
Brisbane
23 August 2007
77
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
SHAREHOLDER INFORMATION
Super Cheap Auto Group Limited
for the period ended 30 June 2007
The shareholder information set out below was applicable as at 23 August 2007.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1-1000
1,001-5,000
5,001-10,000
10,001-1000,000
100,001 and over
Ordinary Shareholders
Optionholders
955
1,128
231
210
40
11
There were 24 holders of less than a marketable parcel of ordinary shares.
B.
Equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
SCA FT Pty Ltd
J P Morgan Nominees Australia Limited
ANZ Nominees Limited
National Nominees Limited
Cogent Nominees Pty Limited
Cogent Nominees Pty Limited
UBS Wealth Management Australian Nominees Pty Ltd
SCA Equity Plan Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Geomar Superannuation Pty Ltd
Citicorp Nominees Pty Limited
AMP Life Limited
Citicorp Nominees Pty Limited
Equitas Nominees Pty Limited
Equitas Nominees Pty Limited
Equitas Nominees Pty Limited
Equitas Nominees Pty Limited
Suncorp General Insurance Limited
Ordinary shares
Number held
Percentage of
issued shares
52,402,159
9,196,214
3,768,979
3,056,133
2,986,695
2,972,501
2,817,222
2,522,000
1,964,774
1,829,408
1,481,491
1,470,000
1,374,009
828,283
740,553
535,391
535,391
535,391
535,391
516,401
49.24%
8.64%
3.54%
2.87%
2.81%
2.79%
2.65%
2.37%
1.85%
1.72%
1.39%
1.38%
1.29%
0.78%
0.70%
0.50%
0.50%
0.50%
0.50%
0.49%
92,068,386
86.51%
SUPER CHEAP AUTO GROUP LIMITED 2007 ANNUAL REPORT
78
SUPERCHEAP AUTO
AUSTRALIAN CAPITAL TERRITORY
Belconnen (02) 6253 5660
Fyshwick (02) 6239 2333
Tuggeranong (02) 6293 2233
NEW SOUTH WALES
Albury (02) 6041 1866
Armidale (02) 6771 1955
Auburn (02) 9648 5722
Ballina (02) 6681 4755
Bankstown (02) 9709 6500
Bathurst (02) 6331 7122
Bella Vista (02) 8814 6335
Bennetts Green (02) 4947 4088
Blacktown (02) 9676 1444
Bondi Junction (02) 9389 3968
Brookvale (02) 9905 5666
Campbelltown (02) 4625 9000
Coffs Harbour (02) 6651 8550
Dapto (02) 4260 9120
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
Hurstville (02) 9580 1722
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
Moree (02) 6752 4755
Mt Druitt (02) 9677 1400
Mudgee (02) 6372 7055
Narellan (02) 4647 4533
Newcastle (02) 4968 9833
North Parramatta (02) 9683 4188
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
NORTHERN TERRITORY
Alice Springs (08) 8952 7455
Berrimah (08) 8932 9866
Darwin (08) 8985 4898
QUEENSLAND
Acacia Ridge (07) 3274 6311
Airlie Beach (07) 4948 3644
Ashmore (07) 5539 2033
Ayr (07) 4783 7377
Beenleigh (07) 3287 2777
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
Oxenford (07) 5573 4422
Redcliffe (07) 3284 2055
Robina (07) 5578 8477
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
The Pines (07) 5534 5633
Thuringowa (07) 4773 9000
Toowoomba City (07) 4632 0799
Toowoomba South (07) 4635 7577
Townsville (Garbutt) (07) 4725 6866
Underwood (07) 3841 3400
Victoria Point (07) 3207 9262
Warwick (07) 4661 7633
Windsor (07) 3857 0677
Wynnum (07) 3348 2044
Yamanto (07) 3294 1033
SOUTH AUSTRALIA
Blair Athol (08) 8269 7122
Darlington (08) 8358 3566
Elizabeth (08) 8287 6533
Kilkenny (08) 8347 2214
Marion (08) 8296 2210
Munno Para (08) 8254 7999
Noarlunga (08) 8384 2833
Para HIlls (08) 8258 2760
Port Adelaide (08) 8447 6088
Salisbury (08) 8258 4811
Thebarton (08) 8354 0666
Whyalla (08) 8645 5159
TASMANIA
Burnie (03) 6432 4855
Devonport (03) 6424 3244
Glenorchy (03) 6272 9200
Launceston (03) 6333 0511
BCF
NEW SOUTH WALES
Auburn (02) 9648 4366
Bennetts Green (02) 4947 4088
Coffs Harbour (02) 6651 6500
Port Macquarie (02) 6583 2455
West Gosford (02) 4322 5833
NORTHERN TERRITORY
Darwin (08) 8948 0099
QUEENSLAND
Browns Plains (07) 3800 1733
Bundaberg (07) 4151 6566
Burleigh (07) 5593 8600
Cairns (07) 4051 8155
Capalaba (07) 3245 2220
Cannon Hill (07) 3890 2744
Gladstone (07) 4978 0611
Hervey Bay (07) 4194 1366
Ipswich (07) 3202 4455
Keperra (07) 3851 4625
Labrador (07) 5500 5700
Lawnton (07) 3889 2911
Mackay (07) 4942 3499
Maroochydore (07) 5479 2390
Noosa (07) 5440 5866
Rockhampton (07) 4926 5055
Springwood (07) 3808 2405
Toowoomba (07) 4638 7511
Townsville (07) 4775 6300
Virginia (07) 3216 5077
WESTERN AUSTRALIA
Balcatta (08) 9240 1700
Cannington (08) 9350 5888
Mandurah (08) 9581 6399
Midland (08) 9250 2166
Myaree (08) 9317 6011
Rockingham (08) 9527 9005
VICTORIA
Bairnsdale (03) 5153 2799
Ballarat (03) 5339 9455
Bendigo (03) 5442 7877
Brimbank (03) 8390 2611
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
Horsham (03) 5382 5000
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
Narre Warren (03) 9705 9199
North Geelong (03) 5272 3277
Preston (03) 9484 6006
Ringwood (03) 9847 0055
Rowville (03) 9764 1677
Roxburgh Park (03) 8339 0765
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
Albany (08) 9841 3700
Balcatta (08) 9240 1566
Belmont (08) 9477 5699
Bunbury (08) 9721 9977
Canning Vale (08) 9455 3411
Cannington Hometown (08) 9258 7294
Clarkson (08) 9407 9533
Geraldton (08) 9921 8244
Gosnells (08) 9398 4822
Joondalup (08) 9300 0744
Kalgoorlie (08) 9021 7145
Mandurah (08) 9581 8588
Midland (08) 9274 5422
Mirrabooka (08) 9344 3255
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
Whitford (08) 9403 0444
NEW ZEALAND
Albany 0011 64 9 448 2461
Alicetown 0011 64 4 569 1576
Blenheim 0011 64 3 579 3480
Botany 0011 64 9 273 8160
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
Invercargill 0011 64 3 214 4385
Kelston 0011 64 9 813 2091
Levin 0011 64 6 368 3195
Lyall Bay 0011 64 4 387 1092
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
Papanui 0011 64 3 354 8123
Paraparaumu 0011 64 4 298 1523
Porirua 0011 64 4 238 2641
Pukekohe 0011 64 9 239 2073
Riccarton 0011 64 3 341 5087
Rotorua 0011 64 7 348 5275
Stoke 0011 64 3 547 8394
Takanini 0011 64 9 299 8615
Taupo 0011 64 7 376 5023
Tauranga 0011 64 7 579 5436
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
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