SUPER CHEAP AUTO GROUP LIMITED
ANNUAL REPORT 2008
NAME OF ENTITY
Super Cheap Auto Group Limited
ABN OR EQUIVALENT COMPANY REFERENCE
ABN: 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
Westpac Banking Corporation
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
29 October 2008 at 11.00 am.
Formal notice of this meeting and proxy form are enclosed with
this report.
CONTENTS
3
Chairman’s Report
4 Managing Director’s Report
9
Board of Directors
10 Group Leadership Team
14 Corporate Governance Statement
18
Financial Statements
19 Directors’ Report
31
Income Statements
32 Balance Sheets
33 Statement of Change in Equity
34 Cash Flow Statement
35 Notes to the Financial Statements
86 Directors’ Declaration
87
Independent Audit Report
89 Shareholder Information
HIGHLIGHTS
SEP 07 Supercheap Auto Superstore opens at Caboolture.
OCT 07 Melbourne Distribution Centre commences set up of operations at Altona.
Supercheap Auto renews Bathurst 1000 sponsorship for a further three years.
NOV 07 BCF acquires Campbell’s ProTackle located in Perth, WA.
FEB 08 Perth Distribution Centre relocates to larger more efficient premises at Forestfield.
BCF acquires retail operations of JV Marine located in Melbourne.
MAY 08 Melbourne Distribution Centre becomes fully operational.
Super Cheap Auto Group announces launch of Bicycle Retailing Business
and acquisition of Goldcross Cycles Pty Ltd.
JUNE 08 Supercheap Auto opens its 250th store located at Timaru, New Zealand.
Supercheap Auto again celebrates success at the National Retail Association
Awards. Winner of the Best Designed Store Award (Caboolture Superstore) and
Winner of Young Retailer of the Year Award (Wade Johnson).
AUG 08 Supercheap Auto crowned the 2008 Australian Retailer of the Year at the
Australian Retailers Association Awards.
SALES ($m)
EBIT ($m)
45 745.745.7444
45.7
38.1
38.1
715.4
624.8
30.4
30.4
28.9
28.9
22.8
22.8
525.9
470.1
382.7
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
EPS
EPS (cents)
20.4
20.9
15.5
24.2
13.2
Post Tax ROC (%)
13.9
14.1
11.7
2005
2006
2007
2008
June 05
June 06
June 07
June 08
Store Numbers
Team Members
310
277
247
215
183
2964
4608
3844
4004
3604
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
2008 ANNUAL REPORT
CHAIRMAN’S
REPORT
Relatively low average transactions at the Supercheap
Auto stores add a degree of resilience when economic
conditions change. Nevertheless, the company is
mindful that price increases, more expensive petrol
and any sudden increase in unemployment could
overwhelm the benefits available from recent tax cuts
and cause consumers to reduce their spending.
The current outlook is reasonably positive for retailers
in the space occupied by Supercheap Auto, BCF
and Goldcross. The Board and longstanding holders
of Super Cheap Auto Group shares recognise that
the team under Peter Birtles’ leadership continues
to demonstrate the capacity to openly and honestly
confront and respond to shifts in consumer demand.
The Board has declared a fully franked final dividend
of 7.5 cents. This brings the dividend for the full year
to 13.0 cents which is an increase of 2.5 cents on the
2007 financial year. It recognises that the company
continues to invest in growth. This strategy is the best
way to ensure that dividends continue to grow in the
future. The dividend will be paid on 14 October 2008.
Finally, John Skippen has accepted an invitation to
join the Board in September. His appointment is both
welcome and timely. He was formerly the Finance
Director at Harvey Norman Holdings Limited. It is the
first non-executive director appointment to the Board
since the company listed on the ASX in 2004.
R D McIlwain
Chairman
Super Cheap Auto Group Limited
The relentless effort of the last three years to produce
good results and secure ongoing growth within Super
Cheap Auto Group has emerged again as the defining
feature of the 2008 financial year. This has seen the
company lift profits by 15.5% from a revenue increase
of 14.5%.
This remarkable effort was achieved whilst investing
in an additional five Supercheap Auto and 17 BCF
stores. The accounting treatment of these investments
reduced operating profit by $6.3 million.
Like for like growth within the Supercheap Auto
network of 4.8% was led by the New Zealand stores.
They achieved 5.5%. Meanwhile, BCF’s network has
grown from four Campmart stores in 2005 turning over
$14 million annually to 50 stores throughout Australia
producing annual sales of $180 million.
New retail formats have underpinned the Super Cheap
Auto Group business strategy since it became a public
company in 2004. This strategy recognises the risk of
relying on a single specialty retailing business within
Australia and New Zealand. Expanding the reach of
the company’s retailing activity has involved careful
consideration of management’s capacity to take some
advantage from the capabilities available within the
existing businesses, and the benefits available from
the consolidation and aggregation of fragmented retail
markets.
The decision to take a position in bicycle retailing
through the acquisition of 11 Goldcross Cycle stores
follows the well trodden path that Super Cheap Auto
Group navigated when it moved into the leisure sector
through BCF. Recent shifts in motor vehicle usage,
rapidly developing cycling infrastructure by local
governments and the opportunity cycling provides for
fitness all support the view that there is more room in
this retail segment for large scale retailing.
Super Cheap Auto Group is not all about growth
through new formats. There is a heightened awareness
in the current economic conditions of the need
to carefully manage both costs and inventories.
Excessive inventory at a time of relatively high interest
rates is a concern at a time when higher petrol prices
are having an impact on the cost of manufacture and
distribution, and the capacity of customers to spend.
3 SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
3
2008 ANNUAL REPORT
MANAGING
DIRECTOR’S
REPORT
I am pleased to be able to report another year of
significant progress for the Super Cheap Auto Group.
We have delivered record sales and profits at the
same time as investing in growth opportunities and in
building capability and infrastructure across the Group.
The highlights for the year included:
(cid:115)(cid:172) (cid:37)(cid:65)(cid:82)(cid:78)(cid:73)(cid:78)(cid:71)(cid:83)(cid:172)(cid:80)(cid:69)(cid:82)(cid:172)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:172)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:73)(cid:78)(cid:71)(cid:172)(cid:66)(cid:89)(cid:172)(cid:17)(cid:21)(cid:14)(cid:21)(cid:5)(cid:172)(cid:79)(cid:86)(cid:69)(cid:82)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:172) (cid:172)
prior comparative period
(cid:115)(cid:172) (cid:51)(cid:85)(cid:80)(cid:69)(cid:82)(cid:67)(cid:72)(cid:69)(cid:65)(cid:80)(cid:172)(cid:33)(cid:85)(cid:84)(cid:79)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:34)(cid:35)(cid:38)(cid:172)(cid:71)(cid:82)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:172)(cid:80)(cid:82)(cid:79)(cid:108)(cid:84)(cid:83)(cid:172)(cid:65)(cid:84)(cid:172)(cid:65)(cid:172)(cid:172)
(cid:172)
faster rate than sales through improvement in retail
margins and control of support costs
(cid:115)(cid:172) (cid:172)(cid:51)(cid:84)(cid:82)(cid:79)(cid:78)(cid:71)(cid:172)(cid:76)(cid:73)(cid:75)(cid:69)(cid:172)(cid:70)(cid:79)(cid:82)(cid:172)(cid:76)(cid:73)(cid:75)(cid:69)(cid:172)(cid:83)(cid:65)(cid:76)(cid:69)(cid:83)(cid:172)(cid:71)(cid:82)(cid:79)(cid:87)(cid:84)(cid:72)(cid:172)(cid:65)(cid:67)(cid:82)(cid:79)(cid:83)(cid:83)(cid:172)(cid:66)(cid:79)(cid:84)(cid:72)(cid:172)
businesses
(cid:115)(cid:172) (cid:4)(cid:20)(cid:20)(cid:14)(cid:17)(cid:172)(cid:77)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:172)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:69)(cid:68)(cid:172)(cid:73)(cid:78)(cid:172)(cid:78)(cid:69)(cid:87)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:82)(cid:69)(cid:70)(cid:85)(cid:82)(cid:66)(cid:73)(cid:83)(cid:72)(cid:69)(cid:68)(cid:172)(cid:83)(cid:84)(cid:79)(cid:82)(cid:69)(cid:83)
(cid:115)(cid:172) (cid:172)(cid:52)(cid:72)(cid:69)(cid:172)(cid:82)(cid:69)(cid:76)(cid:79)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:83)(cid:69)(cid:84)(cid:172)(cid:85)(cid:80)(cid:172)(cid:79)(cid:70)(cid:172)(cid:84)(cid:72)(cid:82)(cid:69)(cid:69)(cid:172)(cid:68)(cid:73)(cid:83)(cid:84)(cid:82)(cid:73)(cid:66)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:172)
centres across Australia
(cid:115)(cid:172) (cid:52)(cid:72)(cid:69)(cid:172)(cid:65)(cid:67)(cid:81)(cid:85)(cid:73)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:172)(cid:79)(cid:70)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:39)(cid:79)(cid:76)(cid:68)(cid:67)(cid:82)(cid:79)(cid:83)(cid:83)(cid:172)(cid:35)(cid:89)(cid:67)(cid:76)(cid:69)(cid:83)(cid:172)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)
In early 2006, we established a strategic agenda for
the Group which incorporated a balance of initiatives
designed to both expand and increase the profitability
of our existing businesses, to build the systems and
infrastructure necessary to operate an expanded
group, to develop and retain our team members and to
develop new business opportunities.
Some two and a half years later, we are very pleased
with our progress. The Supercheap Auto and BCF
businesses are not only performing well but are set for
further growth through new stores, merchandising and
marketing initiatives and procurement opportunities.
The acquisition of Goldcross provides the opportunity
to develop the largest chain of bicycle retail stores
across Australia and New Zealand.
SUPERCHEAP AUTO
Sales increased by 6.3% to $558.8 million with like for
like sales growth in our existing stores of 4.8%. This
was the highest level of like for like growth recorded
for some five years and was particularly pleasing,
given the robust like for like growth of 4.1% in the prior
comparative period.
EBIT at $41.5 million was 9.8% higher than the prior
comparative period. EBIT margins increased from
7.2% of sales to 7.4% through continued reduction
in the cost of doing business. Operating costs as a
% of sales have fallen by 0.7% points over the last
two years. Gross margins held steady at 39.3% with
benefits derived from sourcing initiatives offsetting the
impact of the higher sales growth in lower gross margin
categories such as in-car navigation and lubricants.
Five new stores were opened during the year, one store
was closed and two stores were relocated. 30 stores
were refurbished during the year and the Caboolture
store was refurbished and reformatted as a Superstore.
At the end of June, there were 250 stores trading
across Australia and New Zealand. The refurbished
stores continue to trade well delivering a significant
uplift in sales compared to trend prior to refurbishment.
We intend to refurbish another 30 stores in the next
financial year.
The two Pitstop shopping centre concept stores are
not yet trading at a level that merits further rollout but
we will continue to refine store layout and the product
offering over the next few months. The Caboolture
Superstore is trading very strongly and we expect to
convert two existing stores to Superstores in the next
12 months.
We have continued to focus our product range
selection around national brand leaders such as
Castrol, Bosch, Amorall and Ferodo along with our
three tier own brand strategy under our Best Buy,
SCA and Calibre own brands. The strengthening
performance of Supercheap Auto has attracted leading
brands such as Ryco filters and Bendix brake pads
which will in turn cement our position as the leading
retailer of auto parts and accessories. New products
are a key part of our offer to our customers and over
the last 12 months over 25% of our products were
SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT 4
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
4
2008 ANNUAL REPORT
MANAGING DIRECTOR’S REPORT
renewed.
We have supplemented our product offering with
service offerings such as car insurance, a trade
customer offer and product fitment. At the end of
June we were fitting around 1,000 products per
week. We see service as a growth opportunity for
the business and will increase our marketing of our
service offer in the coming year.
Marketing and promotion continues to be a key driver
of sales performance. We renewed our sponsorship
of the Bathurst 1000 until 2010 and we have entered
into a new sponsorship agreement with Paul Morris
Motor Sport and Russell Ingall to support a two car
team in the V8 Super Car series.
During the year, we commenced work on a customer
service development program for our team as we
believe that there is an opportunity to more actively
engage with our customers in store. We have also
introduced the functionality to sell product online
through the Supercheap Auto website.
Finally, the Australian Retail Association awarded
Supercheap Auto Best Retailer of the Year award
for 2008. This award and the performance of the
business are worthy recognition of the direction
and leadership that David Ajala has provided for
Supercheap Auto over the last two and a half years.
David and his team have worked tirelessly to drive
the business forward in a low growth market. As
I said in last year’s report, many of the initiatives
underway are works in progress and this remains
the case again this year. There is much potential for
growth for Supercheap Auto over the coming years.
5 SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT
5
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
BCF - BOATING CAMPING FISHING
Sales at $156.4 million were 58% higher than the
prior comparative period. Like for like growth from
stores trading for more than 12 months was 5.7%, a
particularly strong result given that sales at a number
of existing stores were cannibalised by the opening
of new stores.
EBIT at $7.9 million was $6.1 million higher than the
prior comparative period with EBIT pre new store
set up costs at $11.9 million was $5.3 million higher.
Underlying EBIT margins pre new store set up costs
have increased from 6.7% to 7.6%.
At the end of June, BCF had 49 stores trading
across Queensland, New South Wales, Victoria,
Western Australia and the Northern Territory. 17 new
BCF stores were opened during the year including
two stores acquired from JV Marine in Melbourne.
Nine of these new stores are in the smaller 1,200m2
store format in regional towns around Australia.
A smaller specialist Fishing and Tackle store trading
as Campbell’s ProTackle in Perth was acquired
in December and continues to trade under the
Campbell’s name. This acquisition has provided the
opportunity for BCF to gain a deeper understanding
of the more specialist end of the Fishing and Tackle
market and the opportunity that exists to extend our
offer into more specialist products.
BCF is still a very young business and although the
business has performed very well we recognise that
there remains an opportunity to better tailor the offer
to local market demand. We are looking to build our
business in Victoria and to launch the business in
South Australia in the next 12 months.
We are working on an own brand program for
BCF across a range of categories and we see
opportunities to further develop our apparel offer.
We continue to work closely with our National Brand
supply partners on new product development and
exclusive product opportunities.
GROUP LOGISTICS AND SHARED SERVICES
2007/08 has been a year of significant investment in
building a logistics infrastructure to support the future
growth of the company. At the start of the year we had
a network of three distribution centres in Brisbane,
Perth and Auckland and we also utilised a number of
third party facilities in Brisbane, Perth and Melbourne.
During the year we have established new distribution
centres in Melbourne and Brisbane and relocated our
Perth distribution centre. As a result, we have been
able to exit all third party facilities.
The new network provides us with approximately
88,000 square metres of warehousing space of which
we are currently utilising 53,000. As a result we are
currently sub-letting 15,000 square metres of our new
Melbourne facility to a third party until we need it. The
new network will allow us to increase the efficiency of
both our domestic and international freight operations
leading to lower unit costs.
We invested around $5 million in establishing the new
network of which $2 million was expensed as part of
operating costs and $3 million of distribution centre
fit-out was capitalised. The disruption to the supply
chain through the relocation project has had a short
term impact of the efficiency of our Group Logistics
operations and led to a short term increase in working
capital. These impacts will reverse in 2008/09.
Our Shared Services teams continued to do an
excellent job in supporting the growth and operations
of our retail businesses and at the same time reduce
their operating costs from 3.3% of Group sales in the
prior comparative period to 3.1% of Group sales.
This has been a major driver of the improvement in
gross margins which increased from 40.6% in the prior
comparative period to 41.6%.
I would like to acknowledge and thank Steve Doyle and
his team for their ongoing passion and commitment
towards developing the BCF business. 2008/09 is
shaping up to be another year of significant growth
for BCF with both new stores and new product
development opportunities. In recognition of Steve’s
demonstrated ability to grow new businesses, his
responsibilities have been extended to incorporate
driving the growth of the Goldcross business.
GOLDCROSS
On 23 June 2008, we completed the acquisition of
Goldcross Cycles, an 11 store network of bicycle
stores all based in suburban Melbourne. At the same
time we acquired a 50 per cent interest in Oceania
Bicycles, an importer and distributor of bicycles and
bicycle parts and accessories, which provides us with
certainty of product supply.
We have been looking at opportunities in the bicycle
retail market for some time. The market has grown
significantly over the last few years and we believe
that a number of factors, including public policy,
environmental concerns and demographic changes will
continue to drive growth over the coming years.
The bicycle retail market is highly fragmented and
we see an opportunity to develop a market leading
category killer business. Over the next few years, we
plan to grow Goldcross to a chain of around 50 stores
across Australia.
We are currently working on updating the store design
and marketing activity and in extending the product
offer. We aim to relaunch the business prior to the
Christmas 08 sales period.
We incurred around $500,000 of due diligence and
market research costs associated with the acquisition
of Goldcross during the year.
SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT 6
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
6
2008 ANNUAL REPORT
MANAGING DIRECTOR’S REPORT
REVIEW OF FINANCIAL CONDITION
CORPORATE SOCIAL RESPONSIBILITY
We have continued to utilise debt facilities to fund the
investment in the growth of the Group. During the year
we renegotiated our debt facilities with our banker,
ANZ, who, despite the wider turmoil in the credit
markets, were willing to reinforce their support for our
business. We have increased our debt facilities to an
overall limit of $200 million with only a minor increase
in costs. $80 million of the facilities are in the form of a
working capital funding facility which is reviewed on an
annual basis. $120 million is in the form of a term debt
facility which matures in April 2010.
Net external debt for the Group has increased from
$93.5 million to $117.8 million. Under AIFRS a further
$1.1 million (2007 - $1.6 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 $49.6 million, an
increase of $15.6 million compared to the prior year.
Overall investment in working capital was $7 million of
which $19.2 million related to new stores, $10 million
related to extra stock carried by the business through
the supply chain reconfiguration, offset by a $30 million
benefit arising from the earlier period end balance date
of 28 June.
Group capital expenditure was $43.5 million with $15.2
million invested in acquisitions, $8.5 million in new
store fit-out, $7.9 million in the store refurbishment
program, $7.5 million in supply chain and IT projects
and $4.4 million in general maintenance projects.
We recognise our responsibilities as a member of the
wider community and have established a number of
initiatives under a social and environmental agenda.
On the social side, the Group is supporting a number
of children’s healthcare charities through the sale of
promotional product in store, change collection and
fund raising events. Over the last three years, in excess
of $2 million has been raised for these charities.
The Group is a founding partner of the Queensland
Leaders Group, an organisation established to assist in
the development and mentoring of smaller Queensland
based companies.
Supercheap Auto has begun promoting the importance
of safe driving. In partnership with Channel 7 and
Russell Ingall, the business has developed a series
of TV advertisements and the message will also be
featured in promotional catalogues. The business
has developed a safe driving program in partnership
with the Holden Performance Driving Centre which is
available through the store network at no profit. All of
the Group’s managers who have company vehicles
undertake this program.
On the environmental side, the Group has established
programs to reduce consumption of paper, packaging
and power. The Group is working in partnership with
PMP to more accurately target catalogue distribution
to reduce the number of catalogues issued. The Group
is also developing a program to enable customers to
return car batteries for recycling and is considering
similar programs for paint and oil. The Group will be
exploring opportunities to replace customer plastic
bags with biodegradable bags in the coming year.
7 SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT
7
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
TEAM MEMBERS
At the end of June, total Team Member numbers had
grown to just a tick over 4,600. We see that our ability
as an organisation to continue to motivate and retain
our team members will be critical to our growth plans.
Over the last two years, we have increased our
investment in the development of our people and
we are pleased that in a very competitive labour
market, we have been able to reduce the level of team
member turnover across our Group. Moving forward,
we will be doing more work on our team member
development programs but also enhancing our team
member engagement and remuneration and reward
arrangements.
We are also very pleased that our focus on a safe
working environment is delivering results. For the
second year in a row, despite the significant increase in
the number of team members working in our business,
we have been able to reduce both the number of lost
time injuries and the hours lost to injury.
Passion is the first of our team member values and I am
always extremely gratified by the number of our team
members who have a real passion for their jobs. It is
this passion that has enabled the business to grow and
develop. Our management teams and our wider group
of team members have worked very hard on both
our every day business and our strategic initiatives.
On behalf of my fellow shareholders I would like to
acknowledge and thank all of our team members for
their contribution.
LOOKING AHEAD
We anticipate that the trading environment will be
challenging for the next few months reflecting the
more general slowing in the growth of retail spending.
However, we believe that the medium term outlook
for retail spending remains strong. Consequently, we
will continue to invest in growth opportunities for the
Group.
Supercheap Auto is planning to open up to eight stores
in the next year depending on property opportunities
and will refurbish another 30 existing stores. It also
is planning to reconfigure two existing stores as
Superstores. Leveraging the reconfigured logistics
network provides the opportunity to further improve
profit margins.
BCF will be targeting around 10 new stores including
the first BCF stores in the ACT and South Australia.
The increased scale and sourcing opportunities plus a
reduced investment in store opening costs will further
improve profit margins.
The development of the Goldcross business will be
dependent on property opportunities but the business
has the capacity to open around eight stores in the
next year. The business will also be refurbishing most
of the existing 11 stores. The revenue investment in
developing the Goldcross business will result in a
negative EBIT contribution of around $2 million in the
2008/09 year.
We have a full agenda of interesting and challenging
initiatives to grow and develop our businesses in the
2008/09 year and I look forward to reporting on our
progress to you during the year.
progress to you during the
Peter Birtles
Managing Director
Super Cheap Auto Group Limited
SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT 8
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
8
2008 ANNUAL REPORT
BOARD OF
DIRECTORS
Dick McIlwain, BA, FAICD
Independent Non-Executive Chairman
Dick McIlwain, aged 61, was appointed a Director
of the Company on 19 May 2004. Dick is also the
Managing Director and Chief Executive of Tatts Group
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 44, was appointed a Director of
the Company on 5 January 2006. Peter joined Super
Cheap Auto Pty Ltd in April 2001 as Chief Financial
Officer and in January 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 64, 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 2008 ANNUAL REPORT
9
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
Darryl McDonough, BBus (Acty), LLB (Hons),
SJD, FCPA, FAICD
Independent Non-Executive Director
Darryl McDonough, aged 57, 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 59, 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, 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 also a director of
Australian Pipeline Limited.
Robert is the Chairman of the Audit and Risk
Management Committee.
SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT 10
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 10
2008 ANNUAL REPORT
GROUP
LEADERSHIP
TEAM
Peter Birtles
Managing Director
Peter joined Super Cheap Auto in
2001 as Chief Financial Officer and
was appointed Managing Director
in January 2006.
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.
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 in Coles Myer’s
supermarket division across several States in a career
spanning over 20 years. Roles included Regional Store
Operations, National Category, National Promotions
and National Business Manager.
11 SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT
11
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
Steve Doyle
Chief Operating Officer -
Leisure Retailing
Steve joined Super Cheap Auto in
2002 as Marketing Manager. He
subsequently held the positions
of General Manager – Retail and
General Manager – Merchandising.
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. Following the acquisition of
Goldcross in June 2008, Steve’s role has expanded
to Chief Operating Officer Leisure Retailing. He is
responsible for the merchandising, marketing and retail
operations of the BCF and Goldcross businesses.
Prior to joining the Super Cheap Auto Group, Steve
was a National Business Manager in Woolworths
Limited’s merchandise team. In 2004, Steve received
the Australian Institute of Management Young Manager
of the Year Award for Brisbane.
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.
Robert Dawkins
Group Property Manager
Robert has 15 years’ experience
in property management. Prior
to joining Super Cheap Auto 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 has been based in China since August 2006,
managing our overseas sourcing operations in
Hangzhou and Shanghai, coordinating our international
shipping negotiations and managing 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 2008 ANNUAL REPORT 12
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 12
2008 ANNUAL REPORT
SENIOR MANAGEMENT TEAM
David Kelley
Company Secretary
David joined Super Cheap Auto
Group in 2005, having held various
roles at General Motors – Asia/
Pacific, Woolworths Limited and
Adelaide Casino. David has a
Bachelors Degree in Economics from the University
of Adelaide, a Post Graduate Diploma in Applied
Corporate Governance and an M.B.A. from the
Australian Graduate School of Management.
In addition to serving as Company Secretary, David
leads the Group’s risk management, compliance, audit,
insurance, investigations and loss prevention functions.
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.
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 2008 ANNUAL REPORT
13
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
2008 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:
(cid:115)(cid:172) (cid:172)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:78)(cid:71)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:172)(cid:71)(cid:79)(cid:65)(cid:76)(cid:83)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:73)(cid:67)(cid:172)
direction;
(cid:115)(cid:172) (cid:172)(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:172)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:172)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:12)(cid:172)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:172)(cid:65)(cid:68)(cid:79)(cid:80)(cid:84)(cid:73)(cid:78)(cid:71)(cid:172)
annual budgets and approving the Group’s financial
statements;
(cid:115)(cid:172) (cid:172)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:172)(cid:84)(cid:72)(cid:65)(cid:84)(cid:172)(cid:65)(cid:68)(cid:69)(cid:81)(cid:85)(cid:65)(cid:84)(cid:69)(cid:172)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:172)(cid:79)(cid:70)(cid:172)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:172)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:172)
exist and are appropriately monitored for compliance;
(cid:115)(cid:172) (cid:172)(cid:83)(cid:69)(cid:76)(cid:69)(cid:67)(cid:84)(cid:73)(cid:78)(cid:71)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:172)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)
performance of senior management; and
(cid:115)(cid:172) (cid:172)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:172)(cid:83)(cid:73)(cid:71)(cid:78)(cid:73)(cid:108)(cid:67)(cid:65)(cid:78)(cid:84)(cid:172)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:172)(cid:82)(cid:73)(cid:83)(cid:75)(cid:83)(cid:172)(cid:65)(cid:82)(cid:69)(cid:172)(cid:73)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:108)(cid:69)(cid:68)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)
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 2008 ANNUAL REPORT 14
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 14
2008 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 May 2008
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:
(cid:115)(cid:172) (cid:172)(cid:52)(cid:72)(cid:69)(cid:172)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:172)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:172)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:83)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:65)(cid:67)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:73)(cid:78)(cid:71)(cid:172)
notes represent a true and fair view in all material
respects of the Company’s financial condition and
operational results and are in accordance with
relevant accounting standards;
(cid:115)(cid:172) (cid:172)(cid:52)(cid:72)(cid:69)(cid:172)(cid:65)(cid:66)(cid:79)(cid:86)(cid:69)(cid:172)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:172)(cid:73)(cid:83)(cid:172)(cid:70)(cid:79)(cid:85)(cid:78)(cid:68)(cid:69)(cid:68)(cid:172)(cid:79)(cid:78)(cid:172)(cid:65)(cid:172)(cid:83)(cid:79)(cid:85)(cid:78)(cid:68)(cid:172)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:172)
of risk management and internal compliance and
control which implements the policies adopted by
the Board; and
(cid:115)(cid:172) (cid:172)(cid:52)(cid:72)(cid:69)(cid:172)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:172)(cid:82)(cid:73)(cid:83)(cid:75)(cid:172)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:172)
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:
(cid:115)(cid:172) (cid:172)(cid:33)(cid:83)(cid:83)(cid:73)(cid:83)(cid:84)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:172)(cid:73)(cid:78)(cid:172)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:172)(cid:84)(cid:72)(cid:65)(cid:84)(cid:172)(cid:73)(cid:84)(cid:172)(cid:73)(cid:83)(cid:172)(cid:67)(cid:79)(cid:77)(cid:80)(cid:82)(cid:73)(cid:83)(cid:69)(cid:68)(cid:172)
of Directors with the appropriate mix of skills,
experiences and competencies to discharge its
mandate effectively;
(cid:115)(cid:172) (cid:172)(cid:37)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:172)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:68)(cid:85)(cid:82)(cid:69)(cid:83)(cid:172)(cid:70)(cid:79)(cid:82)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:83)(cid:69)(cid:76)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)
recommendation of candidates suitable for
appointment to the Board;
15 SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
15
(cid:115)(cid:172) (cid:172)(cid:37)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:172)(cid:84)(cid:72)(cid:65)(cid:84)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:172)(cid:72)(cid:65)(cid:83)(cid:172)(cid:73)(cid:78)(cid:172)(cid:80)(cid:76)(cid:65)(cid:67)(cid:69)(cid:172)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:80)(cid:82)(cid:73)(cid:65)(cid:84)(cid:69)(cid:172)
remuneration policies designed to meet the needs
of the Company and to enhance corporate and
individual performance;
(cid:115)(cid:172) (cid:172)(cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:83)(cid:85)(cid:67)(cid:67)(cid:69)(cid:83)(cid:83)(cid:73)(cid:79)(cid:78)(cid:172)(cid:80)(cid:76)(cid:65)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:172)(cid:70)(cid:79)(cid:82)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)
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.
The Audit and Risk Committee supports the full Board
and essentially acts in a review and advisory capacity.
The Committee is considered to be a more efficient
forum than the full Board for focusing on particular
issues relevant to:
(cid:115)(cid:172) (cid:172)(cid:54)(cid:69)(cid:82)(cid:73)(cid:70)(cid:89)(cid:73)(cid:78)(cid:71)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:83)(cid:65)(cid:70)(cid:69)(cid:71)(cid:85)(cid:65)(cid:82)(cid:68)(cid:73)(cid:78)(cid:71)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:73)(cid:78)(cid:84)(cid:69)(cid:71)(cid:82)(cid:73)(cid:84)(cid:89)(cid:172)(cid:79)(cid:70)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)
Company’s financial reporting including the review,
assessment and approval of the half-year financial
report, the annual report and all other financial
information published by the Company or released to
the market;
(cid:115)(cid:172) (cid:172)(cid:37)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:73)(cid:78)(cid:71)(cid:172)(cid:65)(cid:172)(cid:83)(cid:79)(cid:85)(cid:78)(cid:68)(cid:172)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:172)(cid:79)(cid:70)(cid:172)(cid:82)(cid:73)(cid:83)(cid:75)(cid:172)(cid:79)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:71)(cid:72)(cid:84)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)
management, and internal control;
(cid:115)(cid:172) (cid:172)(cid:37)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:73)(cid:78)(cid:71)(cid:172)(cid:65)(cid:172)(cid:83)(cid:79)(cid:85)(cid:78)(cid:68)(cid:172)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:172)(cid:79)(cid:70)(cid:172)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:172)(cid:87)(cid:73)(cid:84)(cid:72)(cid:172)
laws and regulations, internal compliance guidelines,
policies, procedures and control systems and
prescribed internal standards of behaviour.
This committee provides ongoing assurance in the
areas of:
(cid:115)(cid:172) (cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:172)(cid:65)(cid:68)(cid:77)(cid:73)(cid:78)(cid:73)(cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:78)(cid:71)(cid:27)
(cid:115)(cid:172) (cid:33)(cid:85)(cid:68)(cid:73)(cid:84)(cid:172)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:67)(cid:69)(cid:27)
(cid:115)(cid:172) (cid:76)(cid:69)(cid:71)(cid:65)(cid:76)(cid:172)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:27)
The Audit and Risk Committee consists of the following
Independent Non-Executive Directors:
(cid:115)(cid:172) (cid:33)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:172)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:73)(cid:69)(cid:83)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:83)(cid:27)
R J Wright (Chairman)
R D McIlwain
D D McDonough
All members of the Audit and Risk Committee are
financially literate and have the requisite financial
expertise. Some members have an in-depth
understanding of the industry in which the Company
operates.
(cid:115)(cid:172) (cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:172)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:83)(cid:27)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)
(cid:115)(cid:172) (cid:50)(cid:73)(cid:83)(cid:75)(cid:172)(cid:79)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:71)(cid:72)(cid:84)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:14)
External Auditors
The Company’s Audit and Risk Committee’s policy is to
appoint external auditors who demonstrate quality and
independence.
The Audit and Risk Committee operates in accordance
with a charter which is available on the Company’s
website.
The Audit and Risk Committee:
(cid:115)(cid:172) (cid:172)(cid:50)(cid:69)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:68)(cid:83)(cid:172)(cid:84)(cid:79)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:172)(cid:79)(cid:70)(cid:172)
External Auditors and their fee;
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.
(cid:115)(cid:172) (cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:83)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:172)(cid:79)(cid:70)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:37)(cid:88)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:172)(cid:33)(cid:85)(cid:68)(cid:73)(cid:84)(cid:79)(cid:82)(cid:83)(cid:27)(cid:172)
SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT 16
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT 16
2008 ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
(cid:115)(cid:172) (cid:172)(cid:37)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:69)(cid:83)(cid:172)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:69)(cid:83)(cid:172)(cid:84)(cid:79)(cid:172)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:67)(cid:69)(cid:172)
and competence of the External Auditors’ Audit
Managers;
(cid:115)(cid:172) (cid:172)(cid:47)(cid:86)(cid:69)(cid:82)(cid:83)(cid:69)(cid:69)(cid:83)(cid:172)(cid:65)(cid:78)(cid:68)(cid:172)(cid:65)(cid:80)(cid:80)(cid:82)(cid:65)(cid:73)(cid:83)(cid:69)(cid:83)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)(cid:81)(cid:85)(cid:65)(cid:76)(cid:73)(cid:84)(cid:89)(cid:172)(cid:79)(cid:70)(cid:172)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:83)(cid:172)
conducted by the External Auditors;
(cid:115)(cid:172) (cid:172)(cid:33)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:83)(cid:172)(cid:37)(cid:88)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:172)(cid:33)(cid:85)(cid:68)(cid:73)(cid:84)(cid:172)(cid:89)(cid:69)(cid:65)(cid:82)(cid:76)(cid:89)(cid:172)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:172)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:172)(cid:70)(cid:79)(cid:82)(cid:172)(cid:84)(cid:72)(cid:69)(cid:172)
Company and its subsidiaries and oversees the
scope of audits to be conducted;
(cid:115)(cid:172) (cid:172)(cid:37)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:172)(cid:84)(cid:72)(cid:65)(cid:84)(cid:172)(cid:78)(cid:79)(cid:172)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:172)(cid:82)(cid:69)(cid:83)(cid:84)(cid:82)(cid:73)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:172)(cid:65)(cid:82)(cid:69)(cid:172)(cid:80)(cid:76)(cid:65)(cid:67)(cid:69)(cid:68)(cid:172)
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 2008 ANNUAL REPORT
17
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
FINANCIAL
STATEMENTS
SUPER CHEAP AUTO GROUP LIMITED
FOR THE PERIOD ENDED
28 JUNE 2008
SUPER CHEAP AUTO GROUP 2008 ANNUAL REPORT 18
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
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 28 June 2008.
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 7.5 cents per share be paid on 14 October 2008 (total dividend, fully
franked - $7,997,222). 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
$
2007 final fully franked dividend (6.5¢ per share)
2008 interim fully franked dividend (5.5¢ per share)
10 October 2007
2 April 2008
6,917,925
5,864,629
12,782,554
Review of operations
Revenue from trading operations for the year was $715,657,000 (2007: $625,187,000). During the period, the consolidated
entity opened five new Supercheap Auto stores of which four were in Australia and one in New Zealand. This resulted in
Supercheap Auto trading with 250 stores at the end of the period. 18 new BCF stores were opened or acquired during the
period taking total trading stores to 49. The Group acquired 11 Goldcross stores on 23 June 2008. At the end of the
financial year, the consolidated entity was trading from 310 stores.
The net profit of the consolidated entity for the period ended 28 June 2008, after providing for income tax, amounted to
$25,800,000 (2007: $22,332,000).
A review of the operations for the 52 weeks to 28 June 2008 is set out in pages 3 to 7 of this report.
Matters subsequent to the end of the financial period
Subsequent to the end of the period, BCF Australia Pty Ltd completed the acquisition of Jurkiewicz Adventure Store
(including the Canberra Ski and Board Centre) for $1.70 million, buying certain assets and assuming certain liabilities.
Page 19
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
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 28 June 2008.
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 61.
Experience and expertise
Independent non-executive Chairman for 4 years 3 months. Currently Managing Director and Chief Executive of Tatts
Group Limited. Fellow of the Australian Institute of Company Directors.
Other current directorships
Director of Tatts Group 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 44
Experience and expertise
Managing Director for 2 years 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 200,507 ordinary shares in Super Cheap Auto Group Limited.
500,000 options over ordinary shares in Super Cheap Auto Group Limited.
R A Rowe. Non-Executive Director. Age 64
Experience and expertise
Founder of the business in 1972. Non-executive director for 4 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.
Page 20
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
D D McDonough, BBus (Acty), LLB (Hons), SJD, FCPA, FAICD. Independent Non-Executive Director. Age 57
Experience and expertise.
Independent Non-Executive Director for 4 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
None
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 59
Experience and expertise
Independent Non-Executive Director for 4 years 3 months. Director of a number of major Retail companies over the last 20
years.
Other current directorships
Chairman and 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). Chairman and Non-executive director
of SAI Global Limited (director since 2003). Non–executive director of Australian Pipeline Limited (director since 2000).
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., Grad. Dip. AppCorpGov, MBA, MIIA, ACIS. 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 28
June 2008 is set out below:
Full meetings
directors
A
10
10
10
10
10
B
10
10
10
10
10
Meetings of Committees
Audit & Risk
B
A
3
n/a
n/a
3
3
3
n/a
n/a
3
3
Nomination &
Remuneration
A
1
1
1
1
1
B
1
1
1
1
1
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
Page 21
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
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 in this report has been audited as required by s.308(3c) of the Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
The broad remuneration policy is to ensure remuneration properly reflects the relevant person’s duties and responsibilities
and that the 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 1 July 2007. 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.
Page 22
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
Remuneration report (continued)
Principles used to determine the nature and amount of remuneration (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 28 June 2008, 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 28 June 2008 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
Page 23
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
Remuneration report (continued)
Details of remuneration
Key management personnel of the Group
The following directors are key management personnel of the Group and Super Cheap Auto Group Limited.
2008
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
$
86,871
0
0
41,000
127,871
0
0
0
0
0
0
0
0
0
0
13,129
72,000
72,000
41,000
198,129
634,456
65,000
2,415
13,129
283,204
280,936
266,871
264,910
1,858,248
34,500
31,500
28,000
33,000
192,000
24,917
20,935
0
22,014
70,281
31,879
13,129
13,129
43,076
312,471
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
100,000
72,000
72,000
82,000
326,000
112,025
827,025
36,137
36,137
29,732
7,807
221,838
410,637
382,637
337,732
370,807
2,654,838
2007
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
Other key management personnel
D F Ajala
S J Doyle
G G Carroll
G L Chad
Totals
0
55,046
0
36,697
91,743
0
0
0
0
0
0
0
0
0
0
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
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
Page 24
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
Remuneration Report (continued)
Service Agreements
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 28 June 2008 of $650,000 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 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 28 June 2008 of $340,000 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 28 June 2008 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.
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 28 June 2008 of $280,000 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.
G L Chad, General Manager Group Logistics
Term of Agreement - 5 years commencing 27 January 2006
Base salary, inclusive of superannuation, for the period ended 28 June 2008 of $330,000 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.
Page 25
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
Remuneration Report (continued)
Share based compensation
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
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
23 August 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
24 July 2010
$2.44
$2.44
$2.44
$2.25
$2.25
$2.25
$2.25
$2.25
$2.25
$2.44
$2.44
$2.44
$4.37
$0.29
$0.34
$0.38
$0.43
$0.47
$0.51
$0.19
$0.25
$0.30
$0.63
$0.72
$0.79
$0.93
400,000
200,000
200,000
75,000
75,000
100,000
262,500
262,500
350,000
150,000
150,000
200,000
180,000
2,605,000
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
Number of options granted during
the period
Number of options vested during
the period
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
2008
0
0
0
0
0
0
0
0
0
2008
0
0
0
0
200,000
0
0
0
0
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
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 196% and dividends to shareholders have grown by
approximately 185%. Revenue and store numbers have increased by 187% and 170% respectively. On a total basis, key
management personnel remuneration (excluding bonus) has increased by 6% over the last 3 years, although
notwithstanding certain managers have had their remuneration packages increased in line with performance and additional
responsibilities.
Page 26
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
Remuneration Report (continued)
Additional Information (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
Value at grant
date
$
Value at exercise
date
$
Value at lapse
date
$
0%
0%
0%
0%
13.5%
8.7%
9.3%
9.1%
2.1%
0
0
0
0
0
0
0
0
0
0
0
0
0
394,000
0
0
0
0
0
0
0
0
0
0
0
0
0
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
Minimum
total value
of grant
yet to vest
P A Birtles
14.3
85.7
D F Ajala
S J Doyle
20
20
G G Carroll
25
G L Chad
25
80
80
75
75
2004
2007
2006
2006
2006
2007
100
-
-
-
-
-
-
-
-
-
-
-
2008
2009
2010
2011
2009
2010
2011
2009
2010
2011
2009
2010
2011
2010
2011
2012
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.
Page 27
Super Cheap Auto Group Limited
Directors' report
for the period ended 28 June 2008
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 firm
Remuneration for audit services
Remuneration for other assurance services
Total remuneration for assurance services
Taxation Services
Consolidated Entity
2007
2008
$’000
$’000
281,365
0
281,365
289,700
0
289,700
Total remuneration for taxation services
75,532
92,864
Advisory Services
Total remuneration for advisory services
0
0
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
27August 2008
P A Birtles
Director
Page 28
Super Cheap Auto Group Limited
for the period ended 28 June 2008
(cid:3)
Auditor’s Independence Declaration
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 28 June 2008 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
27 August 2008
Liability limited by a scheme approved under Professional Standards Legislation
Page 29
Super Cheap Auto Group Limited ABN 81 108 676 204
Annual financial report - 28 June 2008
Contents
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
86
87
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 19 to 28, which is not part of this financial report.
The financial report was authorised for issue by the directors on 28 August 2008. 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.
Page 30
INCOME STATEMENTS
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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
Finance costs expense
Total expenses
Profit before income tax
Consolidated
Parent entity
Notes
2008
$'000
2007
$'000
5
6
715,657
625,187
320
715,977
129
625,316
2008
$'000
24,019
4
24,023
2007
$'000
17,013
2
17,015
(426,299)
(376,733)
0
0
(83,697)
(37,472)
(53,171)
(69,416)
(9,116)
(679,171)
36,806
(70,633)
(35,906)
(44,979)
(58,614)
(7,191)
(594,056)
31,260
(8,928)
0
0
0
(2,086)
(8,914)
(11,000)
13,023
2,989
0
0
0
(1,602)
(6,662)
(8,264)
8,751
2,633
Income tax (expense)/benefit
8
(11,006)
Profit attributable to Members of Super Cheap Auto
Group Limited
25,800
22,332
16,012
11,384
Earnings per share for profit attributable to the
ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
38
38
24.2
24.2
21.0
20.9
Cents
Cents
The above income statements should be read in conjunction with the accompanying notes.
Page 31
BALANCE SHEETS
Super Cheap Auto Group Limited
As at 28 June 2008
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
Consolidated
Parent entity
Notes
2008
$'000
2007
$'000
2008
$'000
2007
$'000
9
10
11
12
13
14
15
16
17
18
19
20
21
23
24
8,709
19,282
193,975
221,966
0
79,552
7,629
76,009
163,190
6,271
14,591
159,880
180,742
0
67,262
7,991
58,613
133,866
108
133,990
0
134,098
95,319
0
37
0
95,356
17
116,290
0
116,307
84,234
0
32
0
84,266
385,156
314,608
229,454
200,573
91,205
57,393
3,682
7,696
159,976
10,469
70,315
0
8,635
89,419
62,243
31,410
5,611
5,800
105,064
8,194
70,000
0
6,824
85,018
250
54,782
3,683
224
58,939
0
70,000
0
2,866
72,866
1,601
29,729
5,611
0
36,941
0
70,000
0
0
70,000
249,395
190,082
131,805
106,941
135,761
124,526
97,649
93,632
EQUITY
Contributed equity
Reserves
Retained profits
Capital and reserves attributable to equity holders of
Super Cheap Auto Group Limited
25
26
26
84,627
(3,344)
54,478
84,233
(1,168)
41,461
84,627
890
12,132
84,233
496
8,903
135,761
124,526
97,649
93,632
The above balance sheets should be read in conjunction with the accompanying notes.
Page 32
STATEMENTS OF CHANGES IN EQUITY
Super Cheap Auto Group Limited
for the period ended 28 June 2008
Consolidated
Parent entity
Notes
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Total equity at the beginning of the financial
year
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
Profit for the year
Total recognised income and expense for the
year
124,526
112,930
93,632
91,491
26
465
(1,613)
(2,959)
(2,494)
118
(1,495)
76
0
76
(2)
0
(2)
25,800
22,332
16,012
11,384
23,306
20,837
16,088
11,382
Transactions with equity holders in their capacity as
equity holders:
Dividends provided for or paid
Employee share options
26
(12,783)
318
(12,465)
(9,579)
338
(9,241)
(12,783)
318
(12,465)
(9,579)
338
(9,241)
Issue of shares
394
0
394
0
Total equity at the end of the financial year
135,761
124,526
97,649
93,632
Total recognised income and expense for the year
is attributable to:
Members of Super Cheap Auto Group Limited
23,306
20,837
16,088
11,382
The above statements of changes in equity should be read in conjunction with the accompanying notes.
Page 33
CASH FLOW STATEMENTS
Super Cheap Auto Group Limited
for the period ended 28 June 2008
Consolidated
Parent entity
Notes
2008
$'000
2007
$'000
2008
$'000
2007
$'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
Payments for purchase of subsidiary, net of cash
acquired
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
Proceeds from issue of shares
Repayment of loans re shares
Advances to related parties
Repayments of advances to related parties
Net cash inflow (outflow) from financing
activities
784,645
689,172
0
0
(671,250)
(602,820)
(2,238)
(5,888)
(42,589)
(7,626)
(13,527)
(36,597)
(8,417)
(7,346)
0
0
(12,769)
0
0
(6,892)
37
49,653
33,992
(15,007)
(12,780)
(28,277)
(30,605)
502
(15,744)
0
147
0
75
0
0
(8,221)
0
(43,519)
(30,383)
(8,221)
0
0
0
0
0
26
434,365
(415,451)
(10,011)
(12,783)
394
0
0
0
255,950
(243,750)
(6,284)
(9,579)
0
0
0
0
434,365
(414,998)
(10,141)
(12,783)
394
0
(430,503)
456,985
252,500
(239,750)
(6,626)
(9,579)
0
0
(254,710)
270,830
(3,486)
(3,663)
23,319
12,665
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
2,648
6,271
(210)
8,709
(54)
6,372
(47)
6,271
91
17
0
108
(115)
132
0
17
The above cash flow statements should be read in conjunction with the accompanying notes.
Page 34
NOTES TO THE
FINANCIAL STATEMENTS
SUPER CHEAP AUTO GROUP LIMITED
FOR THE PERIOD ENDED
28 JUNE 2008
Page 35
NOTES TO THE FINANCIAL STATEMENTS
Super Cheap Auto Group Limited
for the period ended 28 June 2008
Contents of the notes to the financial statements
Summary of significant accounting policies .............................................................................................................................. 37
1
Financial risk management ....................................................................................................................................................... 45
2
Critical accounting estimates and judgements.......................................................................................................................... 49
3
Segment information................................................................................................................................................................. 50
4
Revenue ................................................................................................................................................................................... 52
5
Other Income ............................................................................................................................................................................ 52
6
Expenses .................................................................................................................................................................................. 53
7
Income tax expense.................................................................................................................................................................. 54
8
9
Current assets - Cash and cash equivalents ............................................................................................................................ 55
10 Current assets - Trade and other receivables........................................................................................................................... 55
11 Current assets – Inventories ..................................................................................................................................................... 56
12 Non-current assets – Other financial assets ............................................................................................................................. 56
13 Non-current assets – Property, plant and equipment................................................................................................................ 56
14 Non-current assets - Deferred tax assets ................................................................................................................................. 58
15 Non-current assets – Intangible assets..................................................................................................................................... 59
16 Current liabilities - Trade and other payables ........................................................................................................................... 60
17 Current liabilities – Borrowings ................................................................................................................................................. 60
18 Current liabilities – Current tax liabilities ................................................................................................................................... 61
19 Current liabilities – Provisions................................................................................................................................................... 61
20 Non-current liabilities – Trade and Other Payables .................................................................................................................. 61
21 Non-current liabilities – Borrowings .......................................................................................................................................... 61
22 Derivative Financial instruments ............................................................................................................................................... 62
23 Non-current liabilities - Deferred tax liabilities ........................................................................................................................... 66
24 Non-current liabilities – Provisions............................................................................................................................................ 66
25 Contributed equity..................................................................................................................................................................... 67
26 Reserves and retained profits ................................................................................................................................................... 69
27 Dividends .................................................................................................................................................................................. 70
28 Key management personnel disclosures .................................................................................................................................. 71
29 Remuneration of auditors.......................................................................................................................................................... 74
30 Contingencies ........................................................................................................................................................................... 74
31 Commitments............................................................................................................................................................................ 75
32 Related party transactions ........................................................................................................................................................ 76
33
Investments in controlled entities.............................................................................................................................................. 77
34 Business Combinations ............................................................................................................................................................ 77
35 Net tangible asset backing........................................................................................................................................................ 80
36 Deed of cross guarantee .......................................................................................................................................................... 80
37 Reconciliation of profit from ordinary activities after income tax to net cash inflow from operating activities ............................ 83
38 Earnings per share ................................................................................................................................................................... 83
39 Share-based payments............................................................................................................................................................. 84
40 Events occurring after the balance sheet date.......................................................................................................................... 85
Page 36
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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 28 June 2008 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.
Page 37
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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 and will reverse with the rate of 30% (for deferred tax balances) 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)
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
(cid:120)
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
Page 38
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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 financial assets 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.
Page 39
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
Recognition and derecognition
(v)
Regular purchases and sales of financial assets are recognised on trade date – the date on which the Group commits to purchase
or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair
value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and
transaction costs are expensed in the income statement. 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.
When securities classified as available for sale are sold, the accumulated fair value adjustments recognised in equity are included in
the income statement as gains and losses from investment securities.
Subsequent measurement
(vi)
Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest method.
Available for sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are
presented in the income statement within other income or other expenses in the period in which they arise. Dividend income from
financial assets at fair value through profit and loss is recognised in the income statement as part of revenue from continuing
operations when the Group’s right to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available for sale are analysed
between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount
of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other
changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and non-monetary securities
classified as available for sale are recognised in equity.
(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.
Net investment hedges
(ii)
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is recognised immediately in the income statement within other income or other expenses.
Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or
sold.
Derivatives that do not qualify for hedge accounting
(iii)
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.
Page 40
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
(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
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.
Page 41
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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.
Identifiable intangibles
(ii)
Separately identifiable assets such as brand names and supplier agreements that are acquired as part of a business combination
are recognised separately from goodwill. These assets are carried at their fair value at the date of acquisition less accumulated
amortisation and impairment losses. Brand names are valued using the relief from royalty method. Supplier agreements have
been valued using the multi-period excess earnings method. Amortisation is calculated based on the timing of projected cash flows
of the assets over their estimated useful lives.
(iii) Other items of expenditure
Significant items of expenditure, such as costs incurred in store set-ups, are expensed in the financial period in which these costs
are incurred.
(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.
Page 42
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
(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.
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.
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)
Finance 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.
Page 43
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
(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 2008 reporting
periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
Revised AASB 101 Presentation of Financial Statements
A revised AASB 101 was issued in September 2006 and is applicable to annual reporting periods beginning on or after 1 January
2009. 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 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.
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. The Group will apply the revised AASB123 from 29 June 2009 but
there will be no impact on the financial report of the Group, as the Group already capitalises borrowing costs relating to qualifying
assets.
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 29 June 2008, but it is not expected to have any impact on
the Group’s financial statements.
AASB 2008-1 Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions and
Cancellations
AASB 2008-1 was issued in February 2008 and will become applicable for annual reporting periods beginning on or after 1 January
2009. The revised standard clarifies that vesting conditions are service conditions and performance conditions only and that other
features of a share-based payment are not vesting conditions. It also specifies that all cancellations, whether by the entity or by
other parties, should receive the same accounting treatment. The Group will apply the revised standard from 29 June 2009, but it is
not expected to affect the accounting for the Group’s share-based payments.
Page 44
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
Revised AASB 3 Business Combinations, AASB 127 Consolidated and Separate Financial Statements and AASB 2008-3
Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127
Revised accounting standards for business combinations and consolidated financial statements were issued in March 2008 and are
operative for annual reporting periods beginning on or after 1 July 2009, but may be applied earlier. The Group has not yet decided
when it will apply the revised standards. However, the new rules generally apply only prospectively to transactions that occur after
the application date of the standard. Their impact will therefore depend on whether the Group will enter into any business
combinations or other transactions that affect the level of ownership held in the controlled entities in the year of initial application.
For example, under the new rules:
(cid:131)
(cid:131)
(cid:131)
all payments (including contingent consideration) to purchase a business are to be recorded at fair value at the acquisition
date, with contingent payments subsequently remeasured at fair value through income;
all transaction cost will be expensed;
the Group will need to decide whether to continue calculating goodwill based only on the parent’s share of net assets or
whether to recognised goodwill also in relation to the non-controlling (minority) interest; and
(cid:131) when control is lost, any continuing ownership interest in the entity will be measured to fair value and a gain or loss
recognised in profit or loss.
Amendments to IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
In May 2008, the IASB made amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS27
Consolidated and Separate Financial Statements. The new rules will apply to financial reporting periods commencing on or after 1
January 2009. Amendments to the corresponding Australian Accounting Standards are expected to be issued shortly. The Group
will apply the revised rules prospectively from 30 June 2009. After that date, all dividends received from investments in
subsidiaries, jointly controlled entities or associates will be recognised as revenue, even if they are paid out of pre-acquisition
profits, but the investments may need to be tested for impairments as a result of the dividend payment. Furthermore, when a new
intermediate parent entity is created in internal reorganisations it will measure its investment in subsidiaries at the carrying amounts
of the net assets of the subsidiary rather than the subsidiary’s fair value.
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 has approved written policies covering specific areas, such as mitigating foreign exchange, interest rate and
credit risks, use of derivative financial instruments and investing excess liquidity.
(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 (e) below.
28 June 2008
NZD
$’000
30 June 2007
NZD
$’000
28 June 2008
USD
$'000
30 June 2007
USD
$'000
Trade receivables
Trade payables
Forward exchange contracts
- buy foreign currency (cash flow hedges)
0
0
0
0
396
3,479
307
1,326
6,000
9,000
30,600
33,500
Page 45
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
The carrying amounts of the parent entity’s financial assets and liabilities are denominated in Australian dollars except as set out
below:
2008
USD
$’000
2008
NZD
$’000
2007
USD
$'000
2007
NZD
$'000
Forward exchange contracts
- buy foreign currency (cash flow hedges)
Nil
Nil
Nil
Nil
Group sensitivity
Based on the financial instruments held at 28 June 2008, had the Australian dollar weakened/strengthened by 10% against other
currencies with all other variables held constant, the impact on the Group’s post-tax profit would have been nil, on the basis that the
financial instruments would have been designated as cash flow hedges and the impact upon the foreign exchange movements of
other financial assets and liabilities is negligible.
Equity would have been $986,000 lower/$807,000 higher (2007: $1,168,000 lower/$956,000 higher) had the Australian dollar
weakened/strengthened by 10% against other currencies, arising mainly from forward foreign exchange contracts designated as
cash flow hedges. The impact on other Group assets and liabilities as a result of movements in exchange rates are not material.
A sensitivity of 10% was selected following review of historic trends.
(iii)
Cash flow and fair value interest rate risk
Group sensitivity
The Group’s main 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. During 2008 and
2007, the Group’s borrowings were at variable rates and were denominated in Australian dollars.
As at the reporting date, the Group had the following variable rate borrowings:
28 June 2008
Balance
$'000
30 June 2007
Balance
$'000
Bank overdrafts and bank loans
126,650
101,600
An analysis by maturities is provided in (c) below.
The Group utilises interest rate swaps to hedge its interest rate exposure on borrowings.
At 28 June 2008, if interest rates had changed by +/- 100 basis points from the year-end rates with all other variables held constant,
post-tax profit and equity for the year would have been $466,000 lower/higher (2007: $606,000 lower/higher), mainly as a result of
higher/lower interest expense on bank loans.
Parent entity sensitivity
As at the reporting date, the Parent had the following variable rate borrowings:
28 June 2008
Balance
$'000
30 June 2007
Balance
$'000
Bank overdrafts and bank loans
125,500
100,000
The parent entity’s main interest rate risk arises from cash equivalents and loans with variable interest rates. At 28 June 2008, if
interest rates had changed by +/- 100 basis points from the year-end rates with all other variables held constant, post-tax profit and
equity would have been $459,000 lower/higher (2007: $595,000 lower/higher) as a result of lower/higher interest income from cash
and cash equivalents and higher/lower interest expense on bank loans.
Page 46
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
(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.
Financing arrangements
The Group and the parent entity had access to the following undrawn borrowing facilities at the reporting date:
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Floating rate
- Commercial Bills and cash advances
77,759
27,120
74,500
25,000
The overdraft facilities may be drawn at any time and may be terminated by the bank without notice.
Maturities of financial liabilities
The tables below analyse the Group’s and the parent entity’s financial liabilities and gross settled derivative financial instruments
into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows. For interest rate swaps the cash flows have been calculated
using spot rates applicable at the reporting date.
0
605
605
0
0
0
0
Group – at 28 June
2008
Less than 6
months
$’000
6-12 months Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5
years
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
91,205
59,531
150,736
0
2,878
2,878
0
74,833
74,833
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
Group – at 30 June
2007
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
21
21
(24,109)
26,236
2,148
(12,487)
12,487
21
0
0
0
0
Less than 6
months
$’000
6-12 months Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5
years
62,243
33,837
96,080
0
2,237
2,237
0
74,473
74,473
0
3,728
3,728
54
27
(29,928)
31,062
1,188
(17,647)
17,762
142
0
0
0
0
0
0
0
0
Page 47
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
91,205
137,847
229,052
91,205
127,907
219,112
42
(36,596)
38,723
2,169
(205)
0
0
(205)
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
62,243
114,274
176,517
62,243
101,681
163,924
81
(47,575)
48,824
1,330
(97)
0
0
(97)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
Parent – at 28 June
2008
Less than 6
months
$’000
6-12 months Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5
years
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
250
58,185
58,435
0
2,685
2,685
0
74,473
74,473
21
0
0
21
21
0
0
21
0
0
0
0
0
0
0
0
0
0
0
Parent – at 30 June
2007
Less than 6
months
$’000
6-12 months Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5
years
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
1,601
32,237
33,838
0
2,237
2,237
0
74,473
74,473
0
3,728
3,728
54
0
0
54
27
0
0
27
0
0
0
0
0
0
0
0
(d)
Fair value estimation
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
250
135,343
135,593
250
125,500
125,750
42
0
0
42
(205)
0
0
(205)
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
1,601
112,674
114,275
1,601
100,000
101,601
81
0
0
81
(97)
0
0
(97)
0
0
0
0
0
0
0
0
0
0
0
0
0
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to
their short-term nature. 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.
(e)
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.
Page 48
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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.
Estimated value of intangible assets relating to acquisitions
(ii)
The Group has allocated portions of the cost of acquisition to various intangible assets, such as brand names and supply
agreements. Brand names have been valued using the relief from royalty method. Supplier agreements have been valued
using the multi-period excess earnings method. The calculations require the use of assumptions. In addition, the value of
liability of put options granted as part of acquisitions has been estimated.
Page 49
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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.
Goldcross: Wholesale, retail and distribution of bicycles and bicycle accessories.
Primary reporting segment – business segment
2008
Supercheap
Auto
$’000
BCF
$’000
Goldcross
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
Sales to external customers
558,802
156,420
217
715,439
Inter segment sales
0
0
0
0
Total sales revenue
558,802
156,420
217
715,439
0
0
0
715,439
0
715,439
Other revenue/income
311
5
0
316
222
538
Total revenue and other
income
Segment result (pre-borrowing
costs)
Borrowing costs
Profit before income tax
Income tax expense
Profit for the period
559,113
156,425
217
715,755
222
715,977
41,550
7,893
13
49,456
(3,534)
(9,116)
45,922
(9,116)
36,806
(11,006)
25,800
Segment assets
279,537
98,442
6,520
384,499
(493)
384,006
Unallocated assets
Total assets
1,150
1,150
385,156
Segment liabilities
(169,897)
(85,781)
(6,535)
(262,213)
138,738
(123,475)
Unallocated liabilities
Total liabilities
Acquisitions of property, plant
and equipment and other non-
current segment assets
Depreciation and amortisation
expense
Other non-cash expenses
(125,920)
(125,920)
(249,395)
20,047
12,924
1,890
34,861
13,073
47,934
(12,990)
(2,934)
0
(15,924)
0
318
(15,924)
318
Page 50
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
4
Segment information (continued)
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
Segment assets
250,283
63,779
314,062
Unallocated assets
Total assets
0
0
0
374
374
(1,227)
(7,191)
(1,054)
1,600
624,815
0
624,815
501
625,316
38,451
(7,191)
31,260
(8,928)
22,332
313,008
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
Geographical segments
The consolidated entity’s divisions are operated in two main geographical areas.
Australia
The home country of the parent entity. The three areas of operation are (i) automotive, (ii) boating, camping and fishing, and (iii)
bicycles and bicycle accessories.
New Zealand
Only Supercheap Auto operates in New Zealand.
Page 51
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
Secondary Segment – Geographical Segments
Segment Revenues
from sales to
external customers
Segment
Assets
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Australia
New Zealand
654,161
61,278
565,632
59,183
358,848
26,308
288,292
26,316
715,439
624,815
385,156
314,608
Acquisitions of
property, plant and
equipment,
intangibles and other
non-current segment
assets
2008
$’000
46,532
1,402
47,934
2007
$’000
29,225
1,109
30,334
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
2008
$'000
2007
$'000
2008
$'000
2007
$'000
715,439
624,815
715,439
624,815
218
0
218
372
0
372
715,657
625,187
0
0
19
24,000
24,019
24,019
0
0
13
17,000
17,013
17,013
Consolidated
Parent entity
2008
$'000
0
320
320
2007
$'000
0
129
129
2008
$'000
2007
$'000
0
4
4
0
2
2
Page 52
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
7
Expenses
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Profit before income tax includes the following specific
gains and expenses:
Expenses
Net loss on disposal of property, plant and equipment
368
260
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
4,929
7,862
383
13,174
4,014
6,283
311
10,608
2,750
2,652
9,116
0
9,116
7,314
112,655
119,969
51,801
2,030
53,831
7,191
0
7,191
6,094
98,417
104,511
43,405
1,274
44,679
Foreign exchange gains and losses
Net foreign exchange (gains)/losses
2,626
509
0
0
0
0
0
0
8,914
0
8,914
33
1,409
1,442
0
0
0
0
0
0
0
0
0
0
6,662
0
6,662
6
283
289
0
0
0
0
Page 53
(2,468)
(37)
(128)
(2,633)
(37)
0
(37)
8,751
2,625
(5,100)
0
2
(2,473)
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
8
Income tax expense
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'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
11,469
(498)
35
11,006
11,037
(1,922)
(187)
8,928
(432)
(66)
(498)
(2,217)
295
(1,922)
(3,001)
(37)
49
(2,989)
(37)
0
(37)
Profit from continuing operations before income tax expense
36,806
31,260
13,023
Tax at the Australian tax rate of 30% (2007 - 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
Previously unrecognised tax losses now recouped to reduce
current tax expense
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
11,042
9,378
3,907
0
(127)
32
10,947
14
0
48
0
(3)
11,006
0
(342)
50
9,086
(6)
0
6
(173)
15
8,928
(7,200)
0
254
(3,039)
0
0
0
50
0
0
(2,989)
0
13
(173)
0
(2,633)
200
200
(731)
(731)
(32)
(32)
(40)
(40)
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).
Page 54
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
9
Current assets - Cash and cash equivalents
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Cash at bank and in hand
8,709
6,271
108
17
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
(a)
Impaired trade receivables
Consolidated
Parent entity
2008
$'000
14,107
(165)
13,942
0
3,221
1,745
374
19,282
2007
$'000
5,639
(74)
5,565
0
2,753
1,176
5,097
14,591
2008
$'000
142
0
142
133,228
620
0
0
133,990
2007
$'000
0
0
0
116,194
96
0
0
116,290
As at 28 June 2008 current trade receivables of the Group with a nominal value of $165,000 (2007: $74,000) were impaired.
The amount of the provision was $165,000 (2007: $74,000). The individually impaired receivables mainly relate to wholesalers,
which are in unexpectedly difficult economic situations. It was assessed that a portion of the receivables is expected to be
recovered. There were no impaired trade receivables for the parent in 2008 or 2007.
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year as uncollectible
Unused amount reversed
Consolidated
2008
$'000
(74)
(100)
9
0
(165)
2007
$'000
(26)
(100)
52
0
(74)
The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the income statement.
Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
(b)
Past due but not impaired
As of 28 June 2008, trade receivables of $5,176,000 (2007: $2,480,000) were past due but not impaired. These relate to a number
of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as
follows:
0 to 3 months
3 to 6 months
Over 6 months
Consolidated
Parent entity
2008
$'000
2,917
708
1,551
5,176
2007
$'000
334
495
1,651
2,480
2008
$'000
2007
$'000
0
0
0
0
0
0
0
0
Page 55
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
10
(c)
Current assets – Trade and other receivables (continued)
Loans 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
Finished goods
- at lower of cost or net realisable value
(a)
Inventory expense
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
193,975
159,880
0
0
Inventories recognised as expense during the year ended 28 June 2008 amounted to $409,473,000 (2007: $360,970,000).
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2008 amounted to
$2,128,000 (2007: $1,106,000). The expense has been included in ‘costs of sales of goods’ in the income statement.
12
Non-current assets – Other financial assets
Shares in subsidiaries at cost
Name of entity
Super Cheap Auto Pty Ltd
BCF Australia Pty Ltd
Super Retail Group Services Pty Ltd
Goldcross Cycles Pty Ltd
Oceania Bicycles Pty Ltd
Total non-current assets – shares in controlled entities
(refer Note 33)
These financial assets are carried at cost.
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
0
0
0
0
0
0
0
0
0
0
0
0
84,233
1
0
9,636
1,449
84,233
1
0
0
0
95,319
84,234
13
Non-current assets – Property, plant and equipment
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'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
94,472
(29,253)
65,219
750
(554)
196
33,495
(19,358)
14,137
77,346
(22,258)
55,088
1,423
(792)
631
26,104
(14,561)
11,543
Total net property, plant and equipment
79,552
67,262
Assets pledged as security are detailed in Note 21
Page 56
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
13
Non-current assets – Property, plant and equipment (continued)
Reconciliations - consolidated entity
Carrying amounts at 1 July 2007
Additions
Disposals
Business acquisitions
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 28 June 2008
Reconciliations - consolidated entity
Carrying amounts at 2 July 2006
Additions
Disposals
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 30 June 2007
Plant and
equipment
$’000
Motor
vehicles
$’000
Computer
systems
$’000
55,088
17,041
(491)
2,102
(7,862)
(659)
65,219
631
661
(717)
15
(383)
(11)
196
11,543
7,742
(59)
0
(4,929)
(160)
14,137
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
Total
$’000
67,262
25,444
(1,267)
2,117
(13,174)
(830)
79,552
Total
$’000
49,797
27,864
(407)
(10,608)
616
67,262
Page 57
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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 23)
Net deferred tax assets
Movements:
Opening balance
Credited/(charged) to the income statement
Credited/(charged) to equity
Foreign exchange on translation of NZ subsidiary
Acquired in acquisition
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
2008
$'000
2007
$'000
2008
$'000
2007
$'000
32
2,341
589
1,040
0
602
3,140
94
516
0
8,354
480
8,834
(1,205)
7,629
8,570
432
(200)
(62)
94
8,834
1,334
7,500
8,834
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
0
8,570
1,368
7,202
8,570
0
95
3
0
0
0
0
0
0
0
98
(61)
37
0
37
32
37
(32)
0
0
37
0
37
37
0
2
59
0
0
0
0
0
0
0
61
(29)
32
0
32
24
37
(29)
0
0
32
0
32
32
Page 58
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
15
Non-current assets – Intangible assets
Consolidated
Parent entity
Goodwill at cost
Less impairment charge
Net goodwill
Trademarks, at cost
Less accumulated depreciation
Net trademarks
Computer software
Less accumulated amortisation
Net computer software
Brand names at cost
Less impairment
Net brand names
Supplier agreement
Less impairment
Net supplier agreement
Total net intangibles
2008
$’000
66,581
0
66,581
14
0
14
17,977
(11,463)
6,514
2,500
0
2,500
400
0
400
2007
$’000
52,112
0
52,112
14
0
14
15,203
(8,716)
6,487
0
0
0
0
0
0
76,009
58,613
2008
$’000
2007
$’000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
Brand
Name
$’000
Supplier
Agreement
$’000
Totals
$’000
Reconciliations – consolidated
entity - 2008
Carrying amounts at 1 July 2007
Acquisitions
Additions
Disposals
Impairment/amortisation charge
Foreign currency exchange
differences
Carrying amounts at 28 June 2008
52,112
14,469
0
0
0
0
66,581
14
0
0
0
0
0
14
6,487
0
3,004
(226)
(2,750)
(1)
6,514
0
2,500
0
0
0
0
2,500
0
400
0
0
0
0
400
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
Brand
Name
$’000
Supplier
Agreement
$’000
Reconciliations – consolidated
entity - 2007
Carrying amounts at 2 July 2006
Additions
Impairment/amortisation charge
Foreign currency exchange
differences
Carrying amounts at 30 June 2007
52,112
0
0
0
52,112
(a)
Impairment tests for goodwill
14
0
0
0
14
6,668
2,470
(2,652)
1
6,487
0
0
0
0
0
0
0
0
0
0
58,613
17,369
3,004
(226)
(2,750)
(1)
76,009
Totals
$’000
58,794
2,470
(2,652)
1
58,613
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.
Page 59
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
15
(b)
Non-current assets – Intangible assets (continued)
Key assumptions used for value-in-use calculations
No impairment loss was recognised in the 2008 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
2008
%
3
5
2007
%
3
5
2008
%
15
15
2007
%
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
Loans from related parties
17
Current liabilities – Borrowings
Secured
Finance leases
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
2008
$'000
75,327
15,853
25
91,205
2007
$'000
43,138
19,105
0
62,243
2008
$'000
0
250
0
250
2007
$'000
25
1,576
0
1,601
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
1,091
56,501
(581)
0
31,540
(271)
0
55,351
(569)
0
29,940
(211)
57,011
31,269
54,782
29,729
1
381
382
2
139
141
0
0
0
0
0
0
Total current liabilities – interest bearing liabilities
57,393
31,410
54,782
29,729
(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.
Page 60
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
17
Current liabilities – Borrowings (continued)
(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.
Overdraft and equipment financing facilities are secured by a fixed and floating charge over the assets and undertakings of
Goldcross Cycles Pty Ltd.
18
Current liabilities – Current tax liabilities
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Income tax payable
3,682
5,611
3,683
5,611
19
Current liabilities – Provisions
Put option provision
Make good provision
Employee benefits
Consolidated
Parent entity
2008
$'000
531
165
7,000
7,696
2007
$'000
0
284
5,516
5,800
2008
$'000
0
0
224
224
2007
$'000
0
0
0
0
The put option relates to the acquisition of Oceania Bicycles Pty Ltd. As part of this acquisition, Super Cheap Auto Group Limited
has granted the vendor an option to sell the remaining 50% to the Group at an agreed EBITA multiple. This option can be
exercised at any time up to 10 years from acquisition.
20
Non-current liabilities – Trade and Other Payables
Straight line lease adjustment
21
Non-current liabilities – Borrowings
Secured
Cash advance
Consolidated
Parent entity
2008
$'000
10,469
2007
$'000
8,194
2008
$'000
0
2007
$'000
0
Consolidated
Parent entity
2008
$'000
70,315
70,315
2007
$'000
70,000
70,000
2008
$'000
70,000
70,000
2007
$'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,
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.
Page 61
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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
2008
$’000
2007
$’000
2008
$’000
2007
$’000
205,397
3,206
208,603
128,720
1,342
130,062
200,000
2,788
202,788
125,000
1,342
126,342
127,638
2,671
130,309
101,600
1,251
102,851
125,500
1,450
126,950
100,000
0
100,000
77,759
535
78,294
27,120
91
27,211
74,500
1,338
75,838
25,000
1,342
26,342
In addition, the Company has access to a $116 million (2007: $112 million) transactional facility for clean credit and foreign
currency dealings.
Included in the facility above is an amount of $1.15 million for SCA Equity Plan Pty Ltd. This amount was drawn to
$1.15 million (2007: $1.6 million) at 28 June 2008.
The current interest rates on the financing arrangements
are:
- Multi Option Facility (including commercial bills,
overdraft and cash advance)
7.58%-8.43% (2007: 7.50%-7.59%)
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.
Page 62
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
22
Derivative Financial instruments (continued)
At balance date the following amounts were committed on foreign currency forward exchange contracts:
Consolidated entity
Parent entity
2008
$000
2007
$000
2008
$000
2007
$000
Buy United States dollars and sell Australian dollars with
maturity
- 0 to 6 months
- 7 to 12 months
18,600
12,000
18,500
15,000
0
0
0
0
Weighted average rate of contracts
91 cents
82 cents
0 cents
0 cents
Buy Australian dollars and sell New Zealand dollars with
maturity
- 0 to 6 months
6,000
9,000
0
0
Weighted average rate of contracts
118 cents
115 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. In the year ended 28 June 2008, no hedges were
designated as ineffective (2007: nil).
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 (b)
- realised losses and costs
- unrealised losses and costs
- total losses and costs (a)
Net gains/(losses and costs)
(a)
(b)
Included in other payables under note 16
Included in other receivables under note 10
0
205
205
(1,803)
(1,803)
(1,598)
0
97
97
(2,362)
(2,362)
(2,265)
0
205
205
0
0
205
0
97
97
0
0
97
Interest rate swap contracts
Bank loans of the economic entity currently bear an average variable interest rate of 8.2% (2007: 7.5%). 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 $60,000,000 (2007: $15,000,000) which expires on 29 May 2009.
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 47% (2007: 15%) of the loan
principal outstanding. The average fixed interest rate is 7.60% (2007: 5.66%).
Page 63
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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
2008
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)
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)
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
7,937
0
7,937
6.46%
0
0
0
67,326
0
67,326
0
0
0
0
0
381
60,000
0
60,381
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
772
19,282
20,054
8,709
19,282
27,991
94,887
1
0
0
7,907
102,795
94,887
1
381
127,326
7,907
230,502
(82,741)
(202,511)
8.0%
7.6%
(59,389)
(60,381)
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
0
5,237
6.2%
0
0
0
0
0
0
86,269
0
86,269
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
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)
Page 64
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
22
Derivative Financial instruments (continued)
Carrying amounts and net fair values of financial assets and
financial liabilities at balance sheet date:
Financial assets
Cash and deposits
Receivables
Forward exchange contracts *
Non-traded financial assets
Financial liabilities
Trade and other payables
Commercial bill and other financing
Forward exchange contracts *
Non-traded financial liabilities
Consolidated entity
Carrying amount
Net fair value
2008
$’000
2007
$’000
2008
$’000
2007
$’000
8,709
19,282
(205)
27,786
(94,887)
(127,708)
(1,803)
(224,398)
6,271
14,591
97
20,959
8,709
19,282
0
27,991
6,271
14,591
0
20,862
(67,854)
(101,410)
(2,362)
(171,626)
(94,887)
(127,708)
0
(222,595)
(67,854)
(101,410)
0
(169,264)
Parent entity
Carrying amount
Net fair value
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Carrying amounts and net fair values of financial assets and
financial liabilities at balance sheet date:
Financial assets
Cash and deposits
Receivables
Forward exchange contracts *
Non-traded financial assets
Financial liabilities
Trade and other payables
Commercial bill and other financing
Forward exchange contracts *
Non-traded financial liabilities
108
133,990
250
134,348
(3,933)
(124,782)
0
(128,715)
17
116,291
97
116,405
108
133,990
0
134,098
17
116,291
0
116,308
(7,212)
(99,729)
0
(106,941)
(3,933)
(124,782)
0
(128,715)
(7,212)
(99,729)
0
(106,941)
*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.
Page 65
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
23
Non-current liabilities - Deferred tax liabilities
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Prepayments
Unrealised foreign exchange on inter company balances
Depreciation
Brand values
Amounts recognised directly in equity
Foreign exchange revaluation reserve
Cash flow hedges
25
0
430
750
1,205
0
0
1,205
10
224
345
0
579
0
0
579
Set-off of deferred tax liabilities of parent entity pursuant to
set-off provisions
Net deferred tax liabilities
(1,205)
0
(579)
0
Movements:
Opening balance
Charged/(credited) to the income statement
Charged/(credited) to equity
Foreign exchange on translation of NZ subsidiary
Acquired in acquisition
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
579
(66)
0
(58)
750
1,205
1,165
40
1,205
323
295
(69)
30
0
579
569
10
579
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
69
0
(69)
0
0
0
0
0
0
Make good provision
Employee benefits
Provision for Goldcross performance incentive
Consolidated
Parent entity
2008
$'000
4,954
907
2,774
8,635
2007
$'000
5,558
1,266
0
6,824
2008
$'000
0
92
2,774
2,866
2007
$'000
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.
Page 66
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
24
(b)
Non-current liabilities – Provisions (continued)
Movements in provisions (consolidated entity) (notes 19 & 24)
Opening balance as at 1 July 2007
Additional provisions recognised
Indexing of provisions
Provision released
Acquisitions
Closing balance as at 28 June 2008
Make good
$'000
5,842
917
54
(1,846)
152
5,119
(c)
Provision for Goldcross performance incentive
In the event the stores comprising Goldcross at settlement date achieve a certain EBIT result additional consideration of $3,000,000
may be payable in cash. As this payment is considered probable it has been recorded, at present value, in the total purchase
consideration of Goldcross Cycles Pty Ltd.
25
Contributed equity
(a)
Share Capital
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Ordinary shares fully paid
84,627
84,233
84,627
84,233
Movement in ordinary share capital
(b)
Issue of shares on incorporation (8 April 2004)
Issue of shares on 23 April 2004
Share split on 19 May 2004
Issue of shares on 8 March 2008
Closing balance 28 June 2008
Number of
Shares
1
49,697,150
56,732,471
200,000
106,629,622
Issue Price
$’000
1.00
1.69
-
1.97
0
84,233
0
394
84,627
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 180,000 (2007: 1,375,000) ordinary shares were issued during the period, with 200,000 options being exercised
during the period. Information relating to options outstanding at the end of the financial period are set out in Note 39.
(c)
Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
The Group and the parent entity monitor overall capital on the basis of the gearing ratio. The ratio is calculated as net debt
divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated
as ‘equity’ as shown in the balance sheet (including minority interest) plus net debt.
During 2008 the Group’s strategy, which was unchanged from 2007, was to maintain a gearing ratio within 40% to 50%. This
target ratio range excludes the short-term impact of acquisitions. The gearing ratios at 28 June 2008 and 30 June 2007 were
as follows:
Page 67
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
25
Contributed equity (continued)
Total borrowings
Less: Cash & cash equivalents
Net Debt
Total Equity
Total Capital
Gearing Ratio
Consolidated
2008
$'000
127,708
(8,709)
118,999
135,761
254,760
46.8%
2007
$'000
101,410
(6,271)
95,139
124,526
219,665
43.3%
The increase in the gearing ratio in 2008 was primarily due to the acquisition of the Goldcross bicycle business, continued
expansion of the store network and the establishment of a new distribution centre in Melbourne.
The Group and the parent entity monitor ongoing capital on the basis of the fixed charge cover ratio. The ratio is calculated as
earnings before finance costs, tax, depreciation, amortisation and store rental expense divided by fixed charge obligations (being
finance costs and rental expenses). Rental expenses are calculated net of straight line lease adjustments.
During 2008 the Group’s strategy, which was unchanged from 2007, was to maintain a fixed charge cover ratio of around 2.0 times.
The fixed charge cover ratios at 28 June 2008 and 30 June 2007 were as follows:
Earnings
Add:
Taxation expense
Finance costs
Depreciation and amortisation
Rental expense
EBITDAR
Finance costs
Rental expense
Fixed charges
Fixed charge cover ratio
Consolidated Entity
2008
25,800
11,006
9,116
15,924
49,532
111,378
9,116
49,532
58,648
1.90
2007
22,332
8,928
7,191
13,260
40,693
92,404
7,191
40,693
47,884
1.93
The slight reduction in the fixed charge cover ratio in 2008 is due to costs associated with the establishment of a new distribution
centre in Melbourne and continued expansion of the store network, with store sales building over time.
Page 68
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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
(c)
Nature and purpose of reserves
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
(2,970)
746
(1,120)
(3,344)
(11)
(2,959)
(2,970)
428
0
318
746
(1,585)
665
(200)
(1,120)
(11)
428
(1,585)
(1,168)
(129)
118
(11)
90
0
338
428
28
(2,304)
691
(1,585)
0
746
144
890
0
0
0
428
0
318
746
68
107
(31)
144
0
428
68
496
0
0
0
90
0
338
428
70
(3)
1
68
41,461
28,708
8,903
7,098
25,800
(12,783)
22,332
(9,579)
16,012
(12,783)
11,384
(9,579)
54,478
41,461
12,132
8,903
(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.
Page 69
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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 28 June 2008 of 5.5 cents (2007: 4 cents per
share) paid on 2 April 2008. Fully franked based on tax paid @ 30%
Final dividend for the period ended 30 June 2007 of 6.5 cents per share (2007: 5
cents per share) paid on 10 October 2007. 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 7.5 cents per ordinary share (2007: 6.5 cents per ordinary share), fully
franked based on tax paid at 30%.
Parent Entity
2008
$’000
2007
$’000
5,865
6,918
12,783
4,257
5,322
9,579
The aggregate amount of the dividend expected to be paid on 14 October 2008, out
of retained profits at 28 June 2008, but not recognised as a liability at year end, is
8,530
6,918
Franking credits
The franked portions of dividends paid after 28 June 2008 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 28 June 2008.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
33,619
25,781
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 $3,427,381 (2007: $2,964,825).
Page 70
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
28
Key management personnel disclosures
(a)
Key management personnel compensation
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
Short-term employee benefits
Post-employment benefits
Share-based payments
2,120,529
312,471
221,838
2,654,838
2,596,445
306,556
229,348
3,132,349
127,871
198,129
221,838
547,838
91,743
188,257
215,519
495,519
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.
(b)
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.
2008
Balance at
the start of
the year
Granted
during the
year as
compensation
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
-
-
-
-
700,000
400,000
400,000
250,000
125,000
0
0
0
0
0
0
0
0
0
Exercised
during the
year
0
0
0
0
200,000
0
0
0
0
Other
changes
during the
year
Balance at
the end of the
year
Vested and
exercisable at
the end of the
year
Vested and
unexercisable
at the end of
the year
0
0
0
0
0
0
0
0
0
0
0
0
0
500,000
400,000
400,000
250,000
125,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
No options are vested and unexercisable at the end of the year.
Page 71
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
28
Key management personnel disclosures (continued)
2007
Balance at
the start of
the year
Granted
during the
year as
compensation
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
0
0
0
0
500,000
0
0
0
125,000
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
Vested and
unexercisable
at the end of
the year
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
0
0
0
0
0
0
0
0
0
No options are vested and unexercisable at the end of the year.
Page 72
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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.
2008
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
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
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
60,000
40,609
1,192,596
281
143,411
0
0
0
0
0
0
200,000
0
0
0
0
0
158,882
52,402,159
60,000
40,609
1,392,596
0
0
0
0
0
0
0
50,000
281
143,411
0
50,000
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
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
2008
$000
2007
$000
6,482
4,877
Page 73
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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
2008
$
2007
$
2008
$
2007
$
(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
281,365
281,365
289,700
289,700
Other assurance services
PricewaterhouseCoopers Australian firm
IFRS accounting services
Total remuneration for other assurance services
0
0
0
0
Total remuneration for assurance services
281,365
289,700
(b)
Taxation services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of company
income tax returns
Total remuneration for taxation services
75,532
75,532
92,864
92,864
(c)
Advisory services
PricewaterhouseCoopers Australian firm
Due diligence
Total remuneration for advisory services
0
0
0
0
0
0
0
0
0
0
0
0
0
171,700
171,700
0
0
171,700
0
0
0
0
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
2008
$000
2007
$000
2008
$000
2007
$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:
2,671
1,251
1,450
0
Page 74
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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
2008
$000
2007
$000
2008
$000
2007
$000
522
0
0
522
1,736
0
0
1,736
55,219
171,032
64,831
(11,174)
279,908
42,157
131,691
53,928
(8,194)
219,582
3,319
2,976
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,599
2,602
0
4,201
1,480
4,440
0
5,920
1,599
2,602
0
4,201
1,480
4,440
0
5,920
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.
Finance leases
The Group leases various plant and equipment with a carrying amount of $1,529,000 (2007: Nil) under finance leases expiring
within three to five years.
Commitments in relation to finance leases are payable as
follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Total lease liabilities
Representing lease liabilities:
Current (note 17)
Consolidated
Parent entity
2008
$000
2007
$000
2008
$000
2007
$000
390
964
1,354
(263)
1,091
1,091
1,091
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Page 75
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
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.
(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
Consolidated
Parent entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
0
0
0
0
0
0
0
0
7,625
7,393
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
24,000
17,000
14,075
13,420
116,194
468,862
(456,985)
128,071
95,555
291,469
(270,830)
116,194
Page 76
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
33
Investments in controlled entities
Name of Entity
Super Cheap Auto Pty Ltd(a)
Super Cheap Auto (New Zealand) Pty Ltd(b)
Super Retail Group Services Pty Ltd(a),
BCF Australia Pty Ltd(a)
SCA Equity Plan Pty Ltd(b)
Goldcross Cycles Pty Ltd
Oceania Bicycles Pty Ltd
Country of
Incorporation
Class of
Shares
2008
%
2007
%
Equity Holding
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
50
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.
34
Business Combinations
During the period, the parent entity acquired the Goldcross Cycles business as detailed below at (a). In addition, BCF Australia Pty
Ltd acquired certain assets and liabilities of two businesses during the period, Campbells Protackle (see (b) below) and JV Marine
(see (c) below).
These acquisitions resulted in the recognition of the following goodwill:
Goldcross Cycles
Campbells Protackle
JV Marine
(a)
(i)
Goldcross Cycles
Summary of acquisition
$'000
10,174
836
3,459
14,469
On 23 June 2008, the parent entity acquired 100% of the issued share capital of Goldcross Cycles Pty Ltd and 50% of the issued
share capital of Oceania Bicycles Pty Ltd.
Due to the timing of the acquisition, the contribution to revenues and net profit was not material. If the acquisition had occurred on 1
July 2007, consolidated revenue and consolidated profit for the period ended 28 June 2008 would have been $734,706,000 and
$23,786,000 respectively. These amounts have been calculated using the Group’s accounting policies and by adjusting the results
of the subsidiary to reflect the additional depreciation and amortisation that would have been charged assuming the fair value
adjustments to property, plant and equipment and intangible assets had applied from 1 July 2007, together with the consequential
tax effects.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Purchase consideration
Additional consideration accrued
Put option (current value)
Direct costs relating to acquisition
Total Purchase consideration (refer to (ii) below)
Less: Fair value of net identifiable assets
Goodwill recognised on acquisition
$'000
8,041
2,774
531
267
11,613
1,439
10,174
Page 77
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
34
Business Combinations (continued)
Super Cheap Auto Group Limited has not recognized a minority interest on acquisition of Oceania Bicycles Pty Ltd, on the basis
that Super Cheap Auto Group Limited has elected to deem that control has passed on acquisition due to a put agreement on the
remaining 50% of shares. Control is achieved via Supply Agreements as well as the ability of Super Cheap Auto Group Limited
to acquire the remaining shares of Oceania Bicycles Pty Ltd in the event of a dispute.
As part of the acquisition of a 50% shareholding in Oceania Bicycles Pty Ltd, Super Cheap Auto Group Limited has granted the
vendor an option to sell the remaining 50% to the group at an agreed EBITA multiple. This option can be exercised at any time
up to 10 years from acquisition.
In the event the stores comprising Goldcross at settlement date achieve a certain EBIT result additional consideration of
$3,000,000 may be payable in cash. As this payment is considered probable it has been recorded, at present value, in the total
purchase consideration of Goldcross Cycles Pty Ltd.
(ii)
Purchase considerations
Outflow of cash to acquire subsidiary, net of cash
acquired
Total purchase consideration
Less: Consideration payable
Less: Balances acquired
Cash
Consolidated
Parent entity
2008
$’000
2008
$’000
11,613
(3,380)
12
12
11,613
(3,380)
12
12
Outflow of cash
8,221
8,221
In the event that certain pre-determined EBIT targets are achieved by the subsidiary in 2008/09, additional consideration of up to
$3 million may be payable in cash. If it becomes probable that additional consideration will be payable, it will be brought to account
as a component of the goodwill arising on the acquisition when the amount can be reliably measured.
Cash
Other Receivables
Inventory
Plant & Equipment
Brand name
Supplier agreement
Deferred make goods
Tax Assets
Bank Overdraft
Trade Payables
Provision for Employee Entitlements
Make-good provision
Other Payables
Deferred tax liability
Non-Current Borrowings
Net Identifiable Assets Acquired
Fair Value
$'000
12
516
5,739
1,768
2,500
400
123
633
(1,209)
(1,820)
(247)
(154)
(326)
(750)
(5,746)
1,439
The goodwill is attributable to Goldcross’ strong position and profitability in the bicycling market and the synergies expected to arise
from the acquisition.
Page 78
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
34
(b)
Business Combinations (continued)
Campbells Protackle
Acquisition by controlled entity
On 15 November 2007, BCF Australia Pty Ltd acquired certain assets and assumed
certain liabilities of the Campbells Pro Tackle business from an entity external to the
Group.
Net assets acquired and goodwill are as follows:
Purchase consideration
Cash Paid
Direct costs relating to the acquisition
Total purchase consideration
Provisional allocation of Fair value of net identifiable assets acquired (refer below)
Goodwill
The goodwill is attributable to Campbells Pro Tackle strong position and profitability
in the fishing market and synergies expected to arise after the company’s acquisition
Fair value of identifiable net assets acquired
Inventory
Plant and equipment
Employee entitlements
Other creditors
Net deferred tax assets
Net identifiable assets acquired
2008
$’000
1,500
49
1,549
713
836
700
16
(4)
(6)
7
713
The amounts recognised by the vendor immediately before acquisition for each class of asset and liability are not significantly
different from the fair values included in the table above.
The acquired business contributed revenues of $1.2 million to the Group for the period 15 November 2007 to 28 June 2008. If the
acquisition had occurred on 1 July 2007, the contribution to group revenue would have been $1.9 million. The contribution to group
net profit after tax is not significant.
Page 79
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
34
(c)
Business Combinations (continued)
JV Marine
Acquisition by controlled entity
On 1 February 2008, BCF Australia Pty Ltd acquired certain assets and assumed
certain liabilities of the JV Marine business from an entity external to the Group.
Net assets acquired and goodwill are as follows:
Purchase consideration
Cash Paid
Direct costs relating to the acquisition
Total purchase consideration
Fair value of net identifiable assets acquired (refer below)
Goodwill
The goodwill is attributable to JV Marine’s strong position and profitability in the
fishing and boating accessories market and synergies expected to arise after the
company’s acquisition.
Fair value of identifiable net assets acquired
Inventory
Other receivables
Plant and equipment
Employee entitlements
Other creditors
Net deferred tax assets
Net identifiable assets acquired
2008
$’000
5,908
69
5,977
2,518
3,459
2,140
214
210
(61)
(3)
18
2,518
The amounts recognised by the vendor immediately before acquisition for each class of asset and liability are not significantly
different from the fair values included in the table above.
The acquired business contributed revenues of $2.4 million to the Group for the period 1 February 2008 to 28 June 2008. If the
acquisition had occurred on 1 July 2007, the contribution to group revenue would have been $10.0 million. The contribution to
group net profit after tax is not significant.
35
Net tangible asset backing
Net tangible asset per ordinary share
36
Deed of cross guarantee
Consolidated Entity
2008
Cents
50¢
2007
Cents
56¢
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.
Page 80
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
36
(a)
Deed of cross guarantee (continued)
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 28 June 2008 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
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
Profit for the period
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
2008
$'000
655,905
2,131
658,036
(389,375)
(76,453)
(35,654)
(47,732)
(63,728)
(10,859)
(623,801)
34,235
(10,674)
23,561
40,161
23,561
(12,783)
50,939
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)
21,677
28,063
21,677
(9,579)
40,161
Page 81
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
36
(b)
Deed of cross guarantee (continued)
Balance Sheet
Set out below is a consolidated balance sheet as at 28 June 2008 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.
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
2008
$'000
2007
$'000
6,664
43,073
170,018
219,755
11,085
71,894
8,337
60,154
151,470
371,225
84,993
56,605
5,428
6,150
153,176
10,132
70,000
0
5,300
85,432
238,608
132,617
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
84,763
(3,085)
50,939
84,233
(1,157)
40,161
132,617
123,237
Page 82
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
37
Reconciliation of profit from ordinary activities after income tax to net cash inflow from
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) in receivables
- (increase) in inventories
- (decrease)/increase in payables
- increase in provisions
- (decrease) in deferred tax
Net cash inflow from operating activities
38
Earnings per share
2008
$000
25,800
15,924
368
318
8,898
(2,527)
(27,905)
26,925
2,233
(381)
49,653
2007
$000
22,332
13,260
260
299
6,819
2008
$000
2007
$000
16,012
0
0
318
8,894
11,384
0
0
299
6,649
(441)
(24,859)
16,243
1,792
(1,713)
33,992
(38,273)
0
(2,268)
315
(5)
(15,007)
(36,350)
0
5,275
0
(37)
(12,780)
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
2008
Cents
24.2
24.2
2007
Cents
21.0
20.9
Consolidated Entity
2008
Number
2007
Number
106,479,622
38,771
106,429,622
641,363
106,518,393
107,070,985
2008
$000
2007
$000
25,800
22,332
25,800
22,332
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.
Page 83
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
39
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
Unvested at
end of the
year
Number
Consolidated and parent entity – 2008
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
23 Aug 2007
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
24 Jul 2010
$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
$4.37
Total
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
0
2,625,000
0
0
0
0
0
0
0
0
0
0
0
0
0
180,000
180,000
(200,000)
0
0
0
0
0
0
0
0
0
0
0
0
0
(200,000)
0
400,000
200,000
200,000
75,000
75,000
100,000
262,500
262,500
350,000
150,000
150,000
200,000
180,000
0
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
200,000
0
0
180,000
0 2,605,000 2,605,000
Weighted average exercise price
$2.32
$2.49
$1.97
$2.49
$2.49
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
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
0
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
200,000
0
0 2,625,000 2,625,000
0
$2.32
$2.32
Page 84
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 28 June 2008
39
Share-based payments (continued)
Fair value of options granted
The assessed fair value at grant date of options granted during the period ended 28 June 2008 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 28 June 2008 included:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
options are granted for no consideration
exercise price: $4.37 (2007: $2.25, $2.44)
grant date: 23 August 2007 (2007: 1 July 2006 and 26 October 2006)
expiry date: 24 July 2010 (2007: 1 February 2009, 1 July 2009, 1 February 2010, 1 July 2010, 1 February 2011 and 1
July 2011)
share price at grant date: $4.40 (2007: $1.59, $2.65)
expected price volatility of the company’s shares: 33% (2007: 33%)
expected dividend yield: 3.5% (2007: 3.5%)
risk-free interest rate: 6.0% (2007: 6.0%).
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.
40
Events occurring after the balance sheet date
Subsequent to the end of the period, BCF Australia Pty Ltd completed the acquisition of Jurkiewicz Adventure Store (including
Canberra Ski and Board Centre) for $1.70 million, buying certain assets and assuming certain liabilities.
The financial effects of the above transaction have not been brought to account at 28 June 2008. The operating results and
assets and liabilities of the company will be brought to account from 31 July 2008.
Page 85
DIRECTORS’ DECLARATION
Super Cheap Auto Group Limited
For the period ended 28 June 2008
In the directors’ opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 30 to 85 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 28 June 2008
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
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed
Group identified in note 36 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 36.
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
27August 2008
Page 86
AUDIT REPORT
Super Cheap Auto Group Limited
for the period 28 June 2008
(continued)
(cid:3)
(cid:3)
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
Independent auditor’s report to the members of
Super Cheap Auto Group Limited
Report on the financial report
We have audited the accompanying financial report of Super Cheap Auto Group Limited (the company), which
comprises the balance sheet as at 28 June 2008, 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 Super Cheap
Auto Group Limited (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.
Directors’ responsibility for the financial 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 controls 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.
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.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial 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 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.
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.
Liability limited by a scheme approved under Professional Standards Legislation
Page 87
AUDIT REPORT
Super Cheap Auto Group Limited
for the period 28 June 2008
(continued)
Independent auditor’s report to the members of
Super Cheap Auto Group Limited (continued)
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
In our opinion:
(a)
the financial report of Super Cheap Auto Group Limited is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial position as at
28 June 2008 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.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 27 of the directors’ report for the period
ended 28 June 2008. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Super Cheap Auto Group Limited for the period ended 28 June
2008, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Brett Delaney
Partner
Brisbane
27 August 2008
Page 88
SHAREHOLDER INFORMATION
Super Cheap Auto Group Limited
for the period ended 28 June 2008
The shareholder information set out below was applicable as at 27 August 2008.
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
10,001-100,000
100,001 and over
Ordinary Shareholders
Option holders
1,007
1,053
210
150
40
21
There were 79 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
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Suncorp Custodian Services Pty Ltd
Cogent Nominees Pty Limited
Cogent Nominees Pty Limited
Geomar Superannuation Pty Ltd
SCA Equity Plan Pty Ltd
ANZ Nominees Limited
Citicorp Nominees Pty Limited
Mr Robert Edward Thorn
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
AMP Life Limited
Citicorp Nominees Pty Limited
Equitas Nominees Pty Limited
Equitas Nominees Pty Limited
Equitas Nominees Pty Limited
Ordinary shares
Number held
Percentage of
issued shares
52,402,159
11,258,117
6,350,214
4,248,371
2,270,904
2,265,656
2,026,033
1,809,843
1,570,000
1,479,941
1,389,879
1,374,009
1,026,285
959,610
711,366
621,538
557,380
535,391
535,391
535,391
49.14%
10.56%
5.96%
3.98%
2.13%
2.12%
1.90%
1.70%
1.47%
1.39%
1.30%
1.29%
0.96%
0.90%
0.67%
0.58%
0.52%
0.50%
0.50%
0.50%
93,927,478
88.09%
Page 89
18
SUPER CHEAP AUTO GROUP 2007 ANNUAL REPORT
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
TUGGERAH (02) 4355 4055
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
WESTERN AUSTRALIA
ALBANY (08) 9842 5400
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
WESTERN AUSTRALIA
ALBANY (08) 9841 2133
BALCATTA (08) 9240 1700
BUNBURY (08) 9791 5233
CAMPBELL’S PROTACKLE (08) 9444 3710
CANNINGTON (08) 9350 5888
GERALDTON (08) 9921 3144
JOONDALUP (08) 9301 4011
MANDURAH (08) 9581 6399
MIDLAND (08) 9250 2166
MYAREE (08) 9317 6011
ROCKINGHAM (08) 9527 9005
VICTORIA
BALLARAT (03) 5339 8011
BRAESIDE (03) 9701 8200
SHEPPARTON (03) 5822 4963
LAVERTON (03) 9360 9433
GOLDCROSS
VICTORIA
CAMBERWELL (03) 9882 0400
CHADSTONE (03) 9563 2322
CHIRNSIDE PARK (03) 9727 3110
CRANBOURNE (03) 5991 4550
EPPING (03) 9408 0011
FOUNTAIN GATE (03) 9705 3333
HOPPERS CROSSING (03) 9369 9556
KNOX CITY (03) 9887 0833
MOONEE PONDS (03) 9370 7033
RICHMOND (03) 9427 8844
WAURN PONDS (03) 5245 7222
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
MORNINGTON (03) 9976 4611
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
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
TIMARU 0011 64 3 686 9068
UPPER HUTT 0011 64 4 528 0278
WAIRAU PARK 0011 64 9 442 1905
WANGANUI 0011 64 6 348 9407
WHAKATANE 0011 64 7 308 9072
WHANGAREI 0011 64 9 459 6440
WOOLSTON 0011 64 3 389 1249
BCF
NEW SOUTH WALES
ALBURY (02) 6023 6877
AUBURN (02) 9648 4366
BATHURST (02) 6331 4188
BENNETTS GREEN (02) 4947 4066
CAMPBELLTOWN (02) 4620 4855
CASTLE HILL (02) 9680 7833
COFFS HARBOUR (02) 6651 6500
PORT MACQUARIE (02) 6583 2455
PENRITH (02) 4733 0110
TUGGERAH (02) 4351 7655
WAGGA WAGGA (02) 6921 2155
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
CALOUNDRA (07) 5438 9400
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
LOGANHOLME (07) 3801 3900
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
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