ANNUAL REPORT 2009
CONTENTS
Chairman’s Report
Managing Director’s Report
Board of Directors
Group Leadership Team
Corporate Governance Statement
Financial Statements
Directors’ Report
Income Statements
Balance Sheets
Statements of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Shareholder Information
3
4
8
9
12
18
19
31
32
33
34
35
85
86
88
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 28
October 2009 at 11.00 am.
Formal notice of this meeting and proxy
form are enclosed with this report.
NAME OF ENTITY
SUPER CHEAP AUTO GROUP LIMITED
BANKERS
Australia and New Zealand Banking
Group Limited
AUDITORS
PricewaterhouseCoopers
SOLICITORS
Redmond Van De Graaff
Mallesons Stephen Jaques
STOCK EXCHANGE LISTING
Super Cheap Auto Group Limited shares
are quoted on the Australian Stock
Exchange.
ABN OR EQUIVALENT
COMPANY REFERENCE
ABN 81 108 676 204
REGISTERED OFFICE
751 Gympie Road
LAWNTON QLD 4501
Telephone (07) 3205 8511
Facsimile (07) 3205 8522
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street
SYDNEY NSW 2000
1 ANNUAL REPORT 2009
828.8
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June
06
June
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June
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June
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June
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June
06
June
07
June
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June
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June
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June
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June
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June
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June
06
June
07
June
08
June
09
ANNUAL REPORT 2009
2
CHAIRMAN’S REPORT
A 25% increase in annual profit to $32.1 million for the 2009 financial year is a remarkable result. It reflects well on a
highly disciplined management team which has been prepared to continually adjust to threats to the existing business from
rapidly changing circumstances and the need to position the company for longer term growth.
The strong like-for-like growth in sales from Supercheap Auto of 7.3% and BCF of 12.5% demonstrated that these
businesses reach out to a dependable and growing consumer base. These sales come from a rich mix of relatively small
ticket items. This presents significant merchandising and logistical challenges.
The company’s continual investment in its inventory and logistic management infrastructure is proving to be a
competitive advantage. This advantage is further underpinned by spending on refurbishments and new stores. It has seen
the company increase its share in highly competitive markets. This has been particularly evident from the growth achieved
by Supercheap Auto in New Zealand and in the profitability from BCF.
The results achieved by BCF in 2009 present us with a case study of a profitable investment in a new business. It began
with the acquisition of four Campmart stores delivering annual sales of $14 million in 2005. There are now 59 BCF stores
producing sales of over $200 million and profit of $16 million.
The commitment to growing beyond the gradually maturing Supercheap Auto and BCF businesses has continued with the
acquisition of Goldcross Cycles. There is no expectation that Goldcross will re-produce the rapid success of BCF. Times
and the business model are different. Obviously, the investment profile will also be different and will continue to rely on
the courage to commit and hold back expenditure to meet the market conditions that apply at particular times in the retail
cycle.
The company’s debt and balance sheet is manageable and can support the current business plan. Debt will be kept under
review as we move through 2010 and get a far better feel for the sustainability of current growth rates.
Shareholders continue to benefit from a good business which is well run. The management team led by Peter Birtles has
shown their willingness to adapt to changing circumstances and create a vision for the future. They, and all other team
members, can take great satisfaction from the results they have produced in FY2009.
The Board has declared a final dividend of 11.5 cents to bring the full year dividend to 18 cents (13 cents last year). The
increase in dividend payout ratio from 50% to 60% reflects the increased capacity of the Group to fund future expansion
from internally generated cash flow. The Board has activated the Company’s Dividend Reinvestment Plan. This Plan which
will not be underwritten provides shareholders with the opportunity to acquire fully paid ordinary shares in the company
without incurring brokerage. The dividend record date will be 25 September 2009 and it will be paid on 20 October 2009.
Dick McIlwain
Chairman
3 ANNUAL REPORT 2009
MANAGING DIRECTOR’S REPORT
The 2008/09 year has been a very successful one for our Company on many fronts. Not only have we delivered strong
growth in sales and profits, we have also continued to make significant progress in our major strategic initiatives. Our
business has stood up to the challenge of the Global Financial Crisis and delivered the highest rate of like for like sales
growth since the introduction of GST.
Other highlights for the year included:
•
•
•
•
•
•
Earnings per share increasing by 25% over the prior comparative period
Supercheap Auto and BCF continuing to increase EBIT margins
The safety, accuracy, service and operating cost improvements delivered by our Group Logistics team
The development of the Goldcross Cycles business
$43 million invested in new and refurbished stores across the Group
Significant improvement in team member retention
The plan that we put in place in 2006 continues to set the direction for our Group and although this is updated on an
annual basis the core focus remain the same: customer service, store development, improving our retail operations, new
product introduction, trade partnerships, improving our procurement and supply chain capabilities, developing our people
and new business development.
We have many initiatives underway across the Group and we are fortunate to have a strong team who are not only proud of
their achievements but are passionate for future growth. On behalf of all shareholders, I would like to thank all of our team
members for their commitment and contribution.
Supercheap Auto
Sales at $604.2 million were 8.1% higher than the prior comparative period. Like for like sales growth was 7.3% for the
year which is the highest rate of like for like growth achieved in this decade. All States and Territories of Australia delivered
strong like for like sales growth. In New Zealand, the business achieved like for like sales growth of 3.2%, a very strong
performance given the widely reported downturn in retail spending and the 6% like for like growth achieved in the prior
year.
The business performed particularly well in both the ‘Car Maintenance’ and ‘Tools and Outdoors’ product categories. There
has been an increase in the number of our customers servicing their own vehicles. Growth in sales of products in the “Car
Accessories” category was not as strong and reflected the slowdown in both new and used car sales.
EBIT at $46.4 million was 11.7% higher than the prior comparative period with EBIT margins increasing by 0.3% points to
7.7%. Gross margins increased by 1.1% points over the prior comparative period through improvements in trading terms
and efficiency gains in the supply chian. Investment in store manning, store refurbishments, learning and development
programs and a number of business improvement projects drove the increase in operating costs as a % of sales.
Six new stores were opened during the year, two stores were relocated and 30 stores were refurbished. The Albany store
in New Zealand was reconfigured to become the second Supercheap Auto Superstore following the successful trial of this
new format in Caboolture in South East Queensland. At the end of June, there were 256 stores trading across Australia and
New Zealand.
ANNUAL REPORT 2009
4
Over the last three years, we have refurbished and relocated 89 stores and opened the most recent 22 new stores with the
updated store design. This has been a very successful initiative with our customers enjoying the improved shopping
environment with these stores delivering like for like sales growth of close to 10% over the last 12 months.
We have developed a four tier refurbishment program which allows the business to tailor the refurbishment activity and
consequential capital spend for each store in line with our sales growth expectations. This allows us to manage the return
on capital for each refurbishment project. We intend to refurbish a further 40 stores in the next 12 months.
The effective management of a consistent introduction of new products into our range and deletion of slower moving and
outdated lines is a key differentiator for the Supercheap Auto business. Over 20% of the range was renewed in 2008/09.
Our range offer is built upon a dual approach of promoting the leading national brands and developing own brand products
under our Calibre, SCA and Best Buy brands. Each year more leading brands look to partner with Supercheap Auto and in
2009 we have finalised partnerships with Pioneer and Triden.
The product fitment offering has gone from strength to strength and at the end of June weekly fitments had grown to
2,000 per week, double the rate at the same time last year.
We have continued to develop our trade customer offer and although the trade business is relatively small at this time, it
represents an opportunity for growth.
I would like to acknowledge the leadership that David Ajala and Pam Pugsley have provided to Supercheap Auto over the
last three and a half years. They have established the business as one of the most highly regarded retailers in Australasia.
BCF Boating Camping Fishing
Sales grew by 31% over the prior comparative period to $205.5 million. Like for like sales growth was a very strong 12.5%
benefiting from increased localised ranging, localised marketing and new products. The outdoor recreational industry has
also benefited from an increase in the number of Australian families taking low cost recreational vacations rather than
travelling overseas or spending time in coastal apartments.
EBIT at $16.4 million was just over double the $7.9 million achieved in the prior comparative period. EBIT margins
increased from 5.1% to 8.0% with gross margins increasing by 0.8% points through improved trading terms, the increase
in sales of own brand products and localised ranging. Operating cost to sales reduced by 2.1% points through the benefits
of scale and a reduction in the cost of opening new stores.
10 new stores were opened during the year with the business opening its first two stores in South Australia. At the end of
June, the business had 59 stores trading with stores in all the mainland States and Territories of Australia. One of the new
stores opened during the year came through the acquisition of the Jurkiewicz Adventure Store in Fyshwick. This iconic store
has a strong winter ski business which BCF has begun to expand into other stores surrounding the ski fields.
Although the Campbells ProTackle store in Perth is trading very well, the business has decided that, at the present, it will
expand its range of higher end fishing and tackle products in its existing stores rather than establish a separate chain of
specialist stores.
The increased focus on local ranging enabled the business to conduct a complete review of inventory holdings at a local
store level and as a result, BCF’s average inventory per store at June 2009 was 6.0% lower than at June 2008. We expect
to achieve further inventory efficiencies in 2009/10. The increase in EBIT margins and the lower stock investment have
resulted in a significant improvement in BCF’s Return on Capital during the year.
2008/09 was only the third full year of trading for BCF. Steve Doyle and his team deserve enormous credit for the work
5 ANNUAL REPORT 2009
they have done in building a business from scratch that has progressed ahead of plan and is already delivering returns
above our cost of capital. We continue to identify opportunities for further growth and profit improvement over the coming
years.
Goldcross Cycles
On 23 June 2008, we acquired the Goldcross Cycles business which had 11 stores trading in Melbourne. During the year,
we opened five new stores in South East Queensland and acquired two separate independent bike stores in Brisbane in the
lead up to Christmas.
Sales for the year were $19.1 million with the business incurring an EBIT loss of $4.0 million after business and new store
development costs.
The long lead times associated with the bicycle supply chain resulted in the business experiencing some product supply
challenges in the first half of the year as a number of changes were made to our supply partners. In the second half of the
year, the 11 Melbourne stores traded broadly in line with our expectations. Sales in our Queensland stores have been below
expectations as it has taken longer to build customer numbers than we originally expected.
We have used our experience from the first 12 months trading to make a number of changes to the business model
including our range offer, our marketing and promotion activity, our store design and our team member training program. I
have also asked the Supercheap Auto management team to take an active role in the management of the Goldcross Cycles
business which will provide more resources to support the ongoing development of the Goldcross Cycles business.
We have put further expansion of the chain on hold until we are comfortable that we have developed a profitable business
model. We remain confident that we can develop Goldcross Cycles into a successful business with a network of up to
100 stores across Australia and New Zealand.
Group Costs
Group costs of $3.7 million include $1.2 million of distribution centre rents that have not been charged to business units, a
$0.4 million write-off of debts from a sub lease tenant and $2.1 million of ongoing public company costs.
Group Logistics
We are very pleased that we have been able to capitalise on the investments made in our supply chain over the last two
years. The network of five distribution centres we established in 2007/08 performed very effectively during the year and we
have delivered the expected efficiencies with logistics costs to sales reducing by 0.5% points compared to the prior period.
We now have a network that has the capacity to support the planned growth of our existing businesses and deliver further
cost efficiencies.
Review of Financial Condition
Cash flow from operations was $62.7 million which represents an increase of $13.1 million compared to the prior
comparative period. The strong growth in earnings was augmented by working capital initiatives across the Group.
Group Capital Expenditure at $33.1 million was $10.4 million lower than the prior comparative period which included the
acquisition of Goldcross Cycles and JV Marine. The major areas of expenditure were $14.1 million in new stores,
$10.3 million in refurbished stores, $3.6 million in development projects and $5.1 million in maintenance.
Despite the continued investment in growth, Group Net Debt reduced by $3.1 million during the year to $115 million. The
global financial crisis has had an impact on the cost of our debt facilities and as a result, we decided to reduce our
facility limits from $200 million to $180 million. This provides sufficient head room to meet our forecast requirements and
we were operating comfortably within our debt facility covenants at June 2009.
ANNUAL REPORT 2009
6
The Group has recorded an unrealised mark to market loss of $2.2 million in finance costs relating to interest rate hedging
arrangements in accordance with International Financial Accounting Standards. The Group’s effective tax rate was 23.3%
benefiting from investment allowances.
Corporate Social Responsibility
The Group has continued to progress its social and environmental initiatives during the year. A full report on these activities
is included in our Annual Review which is available at supercheapautogroup.com.au.
Team Members
Team Member numbers had grown to 4,841 at the end of June which represented an increase of 8% during the year. Very
pleasingly, we have continued to see an improvement in our team member retention which improved by 3.6% points during
the year and has improved by 8.7% points over the last three years to stand at 68.3%.
We have established the provision of learning and development opportunities as an area of differentiation for our Group.
We have developed in-house a complete set of programs which provides training in product knowledge, customer service
skills, management, leadership and company policies and procedures appropriate to team members at all levels across the
Group. The effectiveness of these programs will be assisted by the planned rollout of dedicated intranet terminals into all of
our stores.
We are also very pleased that we have been able to further reduce time lost to injuries across the Group for the third year in
a row, with a reduction of 0.04% points to 0.15%.
I would like to acknowledge and thank Dick McIlwain for the important contribution that he has made to the development of
the Group over the last six years. I wish Dick all the very best for the future and I look forward to working with
Robert Wright as he steps into the role of Chairman.
Looking Forward
The outlook for retail trading remains uncertain but still positive. We are confident that our businesses will continue to grow
faster than the markets in which they operate but we expect that there may be some slowing of market growth as
unemployment and interest rates rise over the coming two years.
We have been successful in increasing the operating margins of our two major businesses over the last three years and we
expect further improvement over the next three years.
Supercheap Auto will open between five and eight stores in the coming 12 months and will refurbish 40 stores including at
least one more Superstore. BCF plans to open five stores in the next year.
There remain many opportunities to further improve the performance of our company. We will continue to progress the
existing initiatives underway across the Group plus we have added the development of multi-channel and customer
relationship marketing capabilities to our list of projects.
I look forward to reporting on our progress during the coming year.
Peter Birtles
Managing Director
7 ANNUAL REPORT 2009
BOARD OF DIRECTORS
Dick McIlwain, BA, FAICD
Independent Non-Executive Chairman
Dick McIlwain, aged 62, 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 and Chief Executive Officer
Peter Birtles, aged 45, 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 and Chief Executive
Officer.
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 65, was appointed a Director of the Company on 8 April 2004. Reg and Hazel Rowe founded an
automotive accessories mail order business in 1972 which they ran from their Queensland home. In 1974 they
commenced retail operations of the business which evolved into Super Cheap Auto. Reg served as Managing Director of
Super Cheap Auto Pty Ltd until 1996 and then Chairman from 1996 to 2004.
Prior to this, Reg had 13 years’ experience in various retail roles at Myer Department Stores.
Darryl McDonough, BBus (Acty), LLB (Hons), SJD, FCPA, FAICD
Independent Non-Executive Director
Darryl McDonough, aged 58, was appointed a Director of the Company on 19 May 2004. Darryl is a practicing solicitor
with over 20 years of corporate experience. Darryl is currently a Non-Executive Director of GWA International Limited.
Robert Wright, BCom, FCPA, MAICD
Independent Non-Executive Director
Robert Wright, aged 60, 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 Non-Executive Director of Australian Pipeline Limited.
Robert is the Chairman of the Audit and Risk Management Committee.
R John Skippen, ACA (appointed 16 September 2008)
Independent Non-Executive Director
John Skippen, aged 61, was appointed a Director of the Company on 16 September 2008. John is the former Finance
Director of Harvey Norman Holdings Ltd and has over 30 years’ experience as a chartered accountant. John has served as
a Director of Rebel Sport Ltd and Orion Telecoms Limited, Courts (Singapore) Limited, Pertama Holdings Limited (Singapore)
and Mint Wireless Limited. John is currently a Non-Executive Director of Briscoe Group Limited and Flexigroup Limited.
ANNUAL REPORT 2009
8
GROUP LEADERSHIP TEAM
Peter Birtles – Managing Director and Chief Executive Officer
Peter joined Super Cheap Auto in 2001 as Chief Financial Officer and was appointed Managing Director and Chief
Executive Officer 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 – Auto and Cycle Retailing
David joined the Super Cheap Auto Group in July 2005 as the General Manager of Merchandise before taking the role on
as COO of Supercheap Auto in January 2006. In June 2009, David assumed leadership of the Goldcross Cycles business.
David is responsible for Merchandise, Marketing and Retail Operations of the Supercheap Auto and Goldcross Cycles
businesses.
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.
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. He is
responsible for the merchandising, marketing and retail operations of the BCF business.
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.
9 ANNUAL REPORT 2009
Robert Dawkins – General Manager - Group Property Services
Robert has 15 years’ experience in property management. Prior to joining Super Cheap Auto Group in 2001, Robert was
the Property Manager for the Bank of Queensland Limited. He holds a degree qualification in Accountancy from
Queensland University of Technology.
Robert’s key responsibilities include property and facilities management, property leasing and development, project and
contract management and asset acquisition and disposal.
Graham Chad – General Manager – Group Logistics
Prior to joining Super Cheap Auto Group 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 – General Manager - Group Human Resources
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.
David Kelley – General Manager – Risk Management and 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.
ANNUAL REPORT 2009
10
Pam Pugsley – General Manager Retail Operations - Auto and Cycle Retailing
Pam joined Super Cheap Auto Group in November 2004. Pam has 23 years of retail experience in Coles Myer Limited.
Prior to joining Super Cheap Auto Group, 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 retail operations and store improvements across the Supercheap Auto and Goldcross Cycles businesses.
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.
Kevin McAulay - General Manager - Group Marketing & Communications
Kevin originally joined Super Cheap Auto Group in 2003 as Marketing Manager for the Supercheap Auto brand. In 2005,
Kevin left Super Cheap Auto Group to pursue other interests. In 2007, Kevin rejoined Super Cheap Auto Group as BCF
Marketing Manager. In July 2008, Kevin was appointed General Manager – Group Marketing and Communications.
Prior to joining Super Cheap Auto Group, Kevin held roles in advertising, sales and marketing in various companies
including Franklins, Sargents and IGA.
Chris Wilesmith – General Manager Merchandising – Auto and Cycle Retailing
Chris joined Super Cheap Auto Group in 2007. He is a graduate of AGSM with 22 years retail and wholesale experience
including sourcing within Australasia and the greater Asia Pacific regions.
Prior to joining Super Cheap Auto Group, Chris was General Manager, Toys ‘R’ Us and previously spent 13 years with Wool-
worths holding Senior Management roles in Merchandise as well as Retail operations within Dick Smith and Big W.
Chris is responsible for the merchandise management operations of the Supercheap Auto and Goldcross Cycles
businesses.
11 ANNUAL REPORT 2009
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. They comply with the August 2007 ASX Principles of Good Governance and
Best Practice Recommendations.
Principle 1: Lay solid foundations for management and oversight
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.
Principle 2: Structure the Board to add value
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 six directors, five 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.supercheapautogroup.com.au.
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.
ANNUAL REPORT 2009
12
Responsibilities
The responsibilities of the Board include:
•
•
•
•
•
approving the Company’s goals and strategic direction;
monitoring financial performance, including adopting annual budgets and approving the Group’s financial
statements;
ensuring that adequate systems of internal control exist and are appropriately monitored for compliance;
selecting the Managing Director and reviewing the performance of senior management; and
ensuring significant business risks are identified and appropriately managed.
Directors’ Independence
As stated there are six Directors, four of whom are Independent Non-Executive Directors (including the Chairman). The
predominance of Independent Non-Executive Directors clearly separates the Board from the Company’s executive
management and enshrines board independence. The structure also provides the Company with the benefit of a diverse
range of experience, qualifications and professional skills.
The Board has adopted the independence definition suggested by the ASX Corporate Governance Council and as such four
of the Company’s Directors (namely Mr Dick McIlwain, Dr Darryl McDonough, Mr Robert Wright, Mr R John Skippen) 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 2009.
Financial Reporting
The Board is provided with monthly reports from management on the financial performance of the Company. The monthly
reports include details of all key financial measures reported against budgets approved by the Board. The Company’s
financial report preparation and approval process for each financial year involves both the Managing Director and the Chief
Financial Officer making the following certifications to the Board that:
•
•
the Company’s financial reports and accompanying notes represent a true and fair view in all material respects
of the Company’s financial condition and operational results and are in accordance with relevant accounting
standards;
the above statement is founded on a sound system of risk management and internal compliance and control which
13 ANNUAL REPORT 2009
•
implements the policies adopted by the Board; and
the Company’s risk management and internal compliance and control system is operating efficiently and effectively
in all material respects.
Board Committees
The Board has established two Committees to assist it in carrying out its responsibilities, the Board Nomination and
Remuneration Committee and the Audit and Risk Committee.
Each Committee has its own written charter setting out its role and responsibilities, composition, structure, membership
requirements and the manner in which the Committee is to operate. All matters determined by Committees are submitted
to the full Board as recommendations for Board decision.
Minutes of committee meetings are tabled at the subsequent Board meeting. Additional requirements for specific reporting
by the committees to the Board are addressed in the charter of the individual committees.
Principle 3: Promote ethical and responsible decision making
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.
ANNUAL REPORT 2009
14
Ethical Sourcing Policy
The Company has developed an Ethical Sourcing Policy that applies to all its businesses and brands.
The policy incorporates both environmental and socioeconomic criteria for all imported products sourced directly or through
agents responsibly. The policy encourages trade partners and agents to improve their social and environmental practices,
and protect our corporate reputation and that of our individual businesses and brands.
Principle 4: Safeguard integrity in financial reporting
Audit and Risk Committee
The existence of the Audit and Risk Committee is considered by the Company to be a key element of its corporate
governance program and part of the Company’s commitment to best practice in the area of corporate governance.
The Audit and Risk Committee consists of the following Independent Non-Executive Directors:
R J Wright (Chairman)
R D McIlwain
D D McDonough
R J Skippen (appointed 16 September 2008)
All members of the Audit and Risk Committee are financially literate and have the requisite financial expertise. Some
members have an in-depth understanding of the industry in which the Company operates.
The Audit and Risk Committee operates in accordance with a charter which is available on the Company’s website.
Details of these Directors’ qualifications and attendance at Audit and Risk Committee meetings are set out in the Director’s
Report on pages 19 to 28.
The Audit and Risk Committee supports the full Board and essentially acts in a review and advisory capacity. The
Committee is considered to be a more efficient forum than the full Board for focusing on particular issues relevant to:
•
•
•
verifying and safeguarding the integrity of the Company’s financial reporting including the review, assessment and
approval of the half-year financial report, the annual report and all other financial information published by the
Company or released to the market;
establishing a sound system of risk oversight and management, and internal control;
establishing a sound system of compliance with laws and regulations, internal compliance guidelines, policies,
procedures and control systems and prescribed internal standards of behaviour.
This committee provides ongoing assurance in the areas of:
•
•
•
financial administration and reporting;
audit control and independence; and
accounting policies and standards;
15 ANNUAL REPORT 2009
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:
•
•
•
•
•
•
recommends to the Board the appointment of External Auditors and their fee;
reviews the performance of the External Auditors;
establishes processes to ensure the independence and competence of the External Auditors’ Audit Managers;
oversees and appraises the quality of audits conducted by the External Auditors;
approves External Audit yearly audit plans for the Company and its subsidiaries and oversees the scope of audits to
be conducted;
ensuring that no management restrictions are placed upon access to relevant information or personnel by External
Auditors.
The performance of the External Auditor is reviewed annually.
An analysis of fees paid to the External Auditors, including a break-down of fees for non-audit services is provided in Note
29 to the financial statements. It is the policy of the External Auditors to provide an annual declaration of their
independence to the Audit and Risk Committee.
The External Auditor is requested to attend the annual general meeting and be available to answer shareholder questions
about the conduct of the audit and the preparation and content of the audit report.
Principle 5 and 6: Make timely and balanced disclosures and respects the rights of shareholders
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).
Principle 7: Recognise and manage risk
The Audit and Risk Committee provides oversight and direction to the Company’s risk management, compliance and
internal control systems, including:
•
•
•
legal compliance;
internal controls; and
risk oversight and management.
Risk Management
The Chief Executive Officer and senior management team are instructed and empowered by the Board to implement risk
management strategies co-operatively with the Audit and Risk Committee, report to the Board and the Audit and Risk
ANNUAL REPORT 2009
16
Committee on developments related to risk, and suggest to the Board new and revised strategies for mitigating risk.
The General Manager – Risk Management is a senior role with responsibility for providing counsel and direction in risk
management across the Group. This includes counsel on the refinement, implementation and monitoring of a
comprehensive and integrated risk management framework based on unit manager ownership of risk with independent
monitoring. The General Manager – Risk Management reports directly to the Group’s Chief Financial Officer with an
indirect reporting line to the Chairman of the Audit and Risk Committee.
Internal Audit
The role of Internal Audit as part of the Group’s risk management framework is to understand the key risks of the
organisation and to examine and evaluate the adequacy and effectiveness of the system of risk management and internal
controls used by management. Internal Audit carries out regular systematic monitoring of control activities and reports to
both relevant business unit management and the Audit and Risk Committee.
Typically, the audit methodology includes performing risk assessments of the area under review, undertaking audit tests,
including selecting and testing audit samples, reviewing progress made on previously reported audit findings and
discussing internal control or compliance issues with line management, and reaching agreement on the actions to be taken.
Health and Safety
Super Cheap Auto Group aims to provide and maintain a safe and healthy work environment. The company acts to meet
this commitment by implementing work practices and procedures throughout the Group that comply with the relevant
regulations governing the workplace. Employees are expected to take all practical measures to ensure a safe and healthy
working environment in keeping with their defined responsibilities and applicable law.
Principle 8: Remunerate fairly and responsibly
Board Nomination and Remuneration Committee
The current composition of the Board Nomination and Remuneration Committee is the full Board. The Committee Chairman
is the Chairman of the Board. The Managing Director does not have voting rights.
The Committee operates in accordance with its charter which is available on the Company’s website.
The Board has charged the Board Nomination and Remuneration Committee with responsibility to:
•
•
•
•
assist the Board in ensuring that it is comprised of Directors with the appropriate mix of skills, experiences and
competencies to discharge its mandate effectively;
establish procedures for the selection and recommendation of candidates suitable for appointment to the Board;
ensure that the Company has in place appropriate remuneration policies designed to meet the needs of the
Company and to enhance corporate and individual performance;
review the succession planning for the Board and senior management and report to the Board on such issues.
The Committee advises the Board on remuneration and incentive policies and practices generally, and makes specific
recommendations on remuneration packages and other terms of employment for executive directors, other senior
executives and non executive directors.
Each member of the senior executive team signs a formal employment contract at the time of their appointment covering a
range of matters including their duties, rights, responsibilities and any entitlements on termination. The standard contract
refers to a specific formal job description.
17 ANNUAL REPORT 2009
FINANCIAL
STATEMENTS
FOR THE PERIOD ENDED
27 JUNE 2009
ANNUAL REPORT 2009
18
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
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 27 June 2009.
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
R J Skippen (appointed 16 September 2008)
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:
•
•
•
auto parts and accessories, tools and equipment
boating, camping and fishing equipment
wholesale, retail and distribution of bicycles and bicycle accessories
Dividends – Super Cheap Auto Group Limited
The Directors recommended a fully franked dividend of 11.5 cents per share be paid on 20 October 2009 (total dividend,
fully franked - $12,262,407). 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
$
2008 final fully franked dividend (7.5¢ per share)
2009 interim fully franked dividend (6.5¢ per share)
14 October 2008
21 March 2009
7,997,225
6,930,929
14,928,154
Review of operations
Revenue from trading operations for the year was $829,306,000 (2008: $715,657,000). During the period, the consolidated
entity opened six new Supercheap Auto stores of which four were in Australia and two in New Zealand. This resulted in
Supercheap Auto trading with 256 stores at the end of the period. 10 new BCF stores were opened or acquired during the
period taking total trading stores to 59. Goldcross Cycles opened five and acquired two stores during the year, taking the
store network to 18 stores at the end of the period. At the end of the financial year, the consolidated entity was trading from
333 stores.
The net profit of the consolidated entity for the period ended 27 June 2009, after providing for income tax, amounted to
$32,135,000 (2008: $25,800,000).
A review of the operations for the 52 weeks to 27 June 2009 is set out in pages 3 to 7 of this report.
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 27 June 2009.
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.
Page 19
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
R D McIlwain, BA, FAICD. Independent Chairman – non-executive. Age 62.
Experience and expertise
Independent non-executive Chairman for 5 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 and Chief Executive Officer. Age 45
Experience and expertise
Managing Director and Chief Executive Officer for 3 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 and Chief Executive Officer.
Member of the Nomination and Remuneration Committee.
Interests in shares and options
1,392,596 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 65
Experience and expertise
Founder of the business in 1972. Non-executive director for 5 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.
D D McDonough, BBus (Acty), LLB (Hons), SJD, FCPA, FAICD. Independent Non-Executive Director. Age 58
Experience and expertise.
Independent Non-Executive Director for 5 years 3 months. Partner of a major legal firm
Other current directorships
Non-executive director of GWA International Limited.
Former directorships in the last 3 years
None.
Page 20
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
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 60
Experience and expertise
Independent Non-Executive Director for 5 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.
R J Skippen, ACA (appointed 16 September 2008) Independent Non-Executive Director. Age 61
Experience and expertise
Independent Non-Executive Director for 9 months. John is the former Finance Director of Harvey Norman Holdings Ltd and
has over 30 years' experience as a chartered accountant.
Other current directorships
Non-Executive Director of Briscoe Group Limited (NZ) and Flexigroup Limited.
Former directorships in the last 3 years
Director of Harvey Norman Holdings Limited, Rebel Sport Ltd and Pertama Holdings Limited (Singapore). Non-Executive
Director of Orion Telecoms Limited, Courts (Singapore) Limited and Mint Wireless Limited.
Special responsibilities
Member of the Audit Committee
Member of the Nomination and Remuneration Committee
Interest in shares and options
Nil.
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.
Page 21
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
Meetings of directors
The number of meetings of the Company’s Board of Directors and each Board Committee held during the period ended 27
June 2009 is set out below:
Full meetings
directors
A
10
10
9
10
10
8
B
10
10
10
10
10
8
Meetings of Committees
Audit & Risk
B
A
3
n/a
n/a
3
3
2
3
n/a
n/a
3
3
2
Nomination &
Remuneration
A
3
3
3
3
3
1
B
3
3
3
3
3
1
R D McIlwain
P A Birtles
R A Rowe
D D McDonough
R J Wright
R J Skippen
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the Committee during the
year
Remuneration report
The remuneration report is set out under the following main headings:-
• Principles used to determine the nature and amount of remuneration;
• Details of remuneration;
• Service agreements;
• Share-based compensation; and
• 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 26 August 2008. The Directors’ fees are inclusive of Committee fees.
Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit approved by shareholders.
Executive pay
The executive pay and reward framework has four components:
•
•
•
•
base pay and benefits
short-term performance incentives
long-term incentives through participation in the Super Cheap Auto Executive Option Plan, and
other remuneration such as superannuation.
The combination of these comprises the executive’s total remuneration.
Page 22
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
Remuneration report (continued)
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.
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 70% of total base salary
dependent on the seniority of the executive.
Each year, the Nomination and Remuneration Committee considers the appropriate targets and key performance indicators
(KPIs) to link the STI plan and the level of payout if targets are met. This includes setting any maximum payout under the
STI plan, and minimum levels of performance to trigger payment of STI.
For the period ended 27 June 2009, 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):
•
•
•
•
•
P A Birtles, Managing Director
D F Ajala, Chief Operating Officer, Auto & Cycles
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 27 June 2009 were as follows:
•
•
•
•
•
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 27 June 2009
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.
2009
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
R J Skippen
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
86,871
0
0
42,250
19,792
148,913
0
0
0
0
0
0
0
0
0
0
0
0
13,129
74,500
72,000
42,250
39,583
241,462
732,318
341,250
4,553
13,129
353,826
321,517
285,957
299,707
2,142,238
138,750
129,500
78,000
96,600
784,100
1,921
16,723
0
5,062
28,259
20,029
13,129
13,129
40,000
340,878
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
100,000
74,500
72,000
84,500
59,375
390,375
94,730
1,185,980
26,600
26,600
27,560
7,807
183,297
541,126
507,469
404,646
449,176
3,478,772
2008
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
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
Page 24
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
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 27 June 2009 of $750,000 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 27 June 2009 of $375,000 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 27 June 2009 of $350,000 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 27 June 2009 of $300,000 to be reviewed annually by the
Nomination and Remuneration Committee.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to 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 27 June 2009 of $345,000 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 27 June 2009
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
1 August 2008
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
1 August 2011
$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
$2.49
$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
$0.65
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
220,000
2,825,000
The exercise of the options is subject to the satisfaction of a qualifying hurdle. For the options granted prior to 23 August
2007, 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. For the options granted in August 2007 and August 2008, the
relevant start dates for measurement of the 10% cumulative annual growth in Earnings Per Share are 30 June 2007 and 28
June 2008 respectively. Exercise of options is subject to being employed by the Group.
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
R J Skippen
P A Birtles
Other Key Management
Personnel
D F Ajala
S J Doyle
G G Carroll
G L Chad
2009
0
0
0
0
0
0
0
0
0
0
2009
0
0
0
0
0
150,000
200,000
200,000
75,000
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.
Page 26
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
Remuneration Report (continued)
Additional Information (continued)
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 243% and dividends to shareholders have grown by
approximately 277%. Revenue and store numbers have increased by 217% and 182% respectively. Total key management
personnel remuneration has increased by 24% since listing, although notwithstanding certain managers have had their
remuneration packages increased in line with performance and additional responsibilities.
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
R J Skippen
P A Birtles
D F Ajala
S J Doyle
G G Carroll
G L Chad
A
Remuneration
consisting of
options
0%
0%
0%
0%
0%
8.00%
4.92%
5.24%
6.81%
1.74%
B
C
D
Value at grant
date
$
Value at exercise
date
$
Value at lapse
date
$
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
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.
Name
Cash Bonus
Forfeited
%
Paid
%
Year
granted
Vested
%
Forfeited
%
Options
Financial years in
which options may
vest
P A Birtles
65
35
2004
2007
100
30
D F Ajala
S J Doyle
74
74
26
2006
50
26
2006
50
G G Carroll
65
35
2006
30
G L Chad
70
30
2007
-
-
-
-
-
-
-
-
2009
2010
2011
2009
2010
2011
2009
2010
2011
2009
2010
2011
2010
2011
2012
Minimum
total value
of grant yet
to vest
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Maximum
total value
of grant yet
to vest ($)
135,400
94,950
108,000
157,600
58,200
34,100
38,100
58,200
34,100
38,100
32,175
35,475
50,800
7,275
9,488
15,050
Page 27
Super Cheap Auto Group Limited
Directors' report
for the period ended 27 June 2009
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.
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:
• all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality
and objectivity of the auditor
• none of the services undermine the general principles relating to auditor independence as set out in 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
2008
2009
$’000
$’000
423,084
0
423,084
281,365
0
281,365
Total remuneration for taxation services
126,808
75,532
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
26 August 2009
P A Birtles
Director
Page 28
Super Cheap Auto Group Limited ABN 81 108 676 204
Annual financial report - 27 June 2009
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
35
85
86
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 27 August 2009. 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 27 June 2009
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
Consolidated
Parent entity
Notes
2009
$'000
5
6
829,306
477
829,783
2008
$'000
715,657
320
715,977
2009
$'000
28,260
11
28,271
2008
$'000
24,019
4
24,023
(481,468)
(426,299)
0
0
(97,441)
(40,965)
(65,141)
(89,133)
(13,749)
(787,897)
(83,697)
(37,472)
(53,171)
(69,416)
(9,116)
(679,171)
0
0
0
(2,655)
(13,645)
(16,300)
11,971
6,162
0
0
0
(2,086)
(8,914)
(11,000)
13,023
2,989
Profit before income tax
41,886
36,806
Income tax (expense)/benefit
8
(9,751)
(11,006)
Profit attributable to Members of Super Cheap Auto
Group Limited
32,135
25,800
18,133
16,012
Earnings per share for profit attributable to the
ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
38
38
30.2
30.0
24.2
24.2
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 27 June 2009
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
2009
$'000
2008
$'000
2009
$'000
2008
$'000
9
10
11
12
13
14
15
16
17
18
19
20
21
23
24
16,810
25,113
222,821
264,744
0
87,948
9,672
75,407
173,027
8,709
19,282
193,975
221,966
0
79,552
7,629
76,009
163,190
1,663
145,230
0
146,893
93,206
0
706
0
93,912
108
133,990
0
134,098
95,319
0
37
0
95,356
437,771
385,156
240,805
229,454
116,623
39,496
4,593
10,152
170,864
12,320
92,000
0
6,233
110,553
91,205
56,692
3,682
7,696
159,275
10,469
71,016
0
8,635
90,120
2,947
38,689
4,765
1,008
47,409
0
92,000
0
177
92,177
250
54,782
3,683
224
58,939
0
70,000
0
2,866
72,866
281,417
249,395
139,586
131,805
156,354
135,761
101,219
97,649
EQUITY
Contributed equity
Reserves
Retained profits
Capital and reserves attributable to equity holders of
Super Cheap Auto Group Limited
25
26
26
84,627
42
71,685
84,627
(3,344)
54,478
84,627
1,255
15,337
84,627
890
12,132
156,354
135,761
101,219
97,649
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 27 June 2009
Consolidated
Parent entity
Notes
2009
$'000
2008
$'000
2009
$'000
2008
$'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
135,761
124,526
97,649
93,632
26
3,027
465
37
3,064
(2,959)
(2,494)
43
0
43
76
0
76
32,135
25,800
18,133
16,012
35,199
23,306
18,176
16,088
Transactions with equity holders in their capacity as
equity holders:
Dividends provided for or paid
Employee share options
27
(14,928)
322
(14,606)
(12,783)
318
(12,465)
(14,928)
322
(14,606)
(12,783)
318
(12,465)
Issue of shares
0
394
0
394
Total equity at the end of the financial year
156,354
135,761
101,219
97,649
Total recognised income and expense for the year
is attributable to:
Members of Super Cheap Auto Group Limited
35,199
23,306
18,176
16,088
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 27 June 2009
Consolidated
Parent entity
Notes
2009
$'000
2008
$'000
2009
$'000
2008
$'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
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
907,255
784,645
0
0
(766,759)
(671,250)
(1,292)
(2,238)
(57,144)
(8,351)
(12,332)
(42,589)
(7,626)
(13,527)
0
0
(12,332)
0
0
(12,769)
37
62,669
49,653
(13,624)
(15,007)
(31,762)
(28,277)
3,237
502
(4,621)
(15,744)
(33,146)
(43,519)
0
0
0
0
27
410,909
(405,517)
(11,891)
(14,928)
0
0
0
0
434,365
(415,451)
(10,011)
(12,783)
394
0
0
0
410,317
(404,106)
(11,921)
(14,928)
0
0
(415,498)
451,315
0
0
(8,221)
(8,221)
434,365
(414,998)
(10,141)
(12,783)
394
0
(430,503)
456,985
(21,427)
(3,486)
15,179
23,319
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
8,096
8,709
5
16,810
2,648
6,271
(210)
8,709
1,555
108
0
1,663
91
17
0
108
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
27 JUNE 2009
Page 35
NOTES TO THE FINANCIAL STATEMENTS
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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
Current assets - Cash and cash equivalents ............................................................................................................................ 55
9
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 ................................................................................................................................. 57
15 Non-current assets – Intangible assets..................................................................................................................................... 58
16 Current liabilities - Trade and other payables ........................................................................................................................... 59
17 Current liabilities – Borrowings ................................................................................................................................................. 60
18 Current liabilities – Current tax liabilities ................................................................................................................................... 60
19 Current liabilities – Provisions................................................................................................................................................... 60
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.......................................................................................................................................................... 73
30 Contingencies ........................................................................................................................................................................... 73
31 Commitments............................................................................................................................................................................ 74
32 Related party transactions ........................................................................................................................................................ 75
Investments in controlled entities.............................................................................................................................................. 76
33
34 Business Combinations ............................................................................................................................................................ 76
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 ............................ 82
38 Earnings per share ................................................................................................................................................................... 82
39 Share-based payments............................................................................................................................................................. 83
40 Events occurring after the balance sheet date.......................................................................................................................... 84
Page 36
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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 27 June 2009 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 27 June 2009
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 changed 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:
•
•
•
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
(f)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Amounts disclosed as revenue are net of returns, trade allowances, duties and taxes paid. Revenue from the sale of goods is
recognised upon the delivery of goods to customers pursuant to sales orders and when the associated risks and rewards have
passed to the carrier or customer. Revenue from rendering a service is recognised upon the delivery of the service to the customer.
(g)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful
debts. Trade receivables are due for settlement 30 days from the end of the month after sale. Collectibility of trade receivables is
reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due.
(h)
Inventories
Inventories are measured at the lower of cost and net realisable value. Costs comprise direct purchase costs and an appropriate
proportion of supply chain variable and fixed overhead expenditure. Costs are assigned to individual items of stock on the basis of
Page 38
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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 27 June 2009
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 27 June 2009
(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%
25%
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 27 June 2009
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 27 June 2009
(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 27 June 2009
(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 27 June 2009 reporting
periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
(ae) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009 reporting
periods. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.
(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 (effective
from 1 January 2009)
AASB 8 requires adoption of a 'management approach' to reporting on 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 will adopt AASB 8 from 1 July 2009. The segments will be reported in a manner that is more
consistent with the internal reporting provided to the chief operating decision-makers. As goodwill is allocated by management to
groups of cash-generating units on a segment level, the change in reportable segment may also require a reallocation of goodwill.
However, this is not expected to result in any additional impairment of goodwill.
(ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123
(effective from 1 January 2009)
The revised AASB 123 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. There will be no impact
on the financial report of the Group, as the Group already capitalises borrowing costs relating to qualifying assets.
(iii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian Accounting Standards
arising from AASB 101 (effective from 1 January 2009)
The September 2007 revised AASB 101 requires the presentation of a statement of comprehensive income and makes changes to
the statement of changes in equity, but will not affect any of the amounts recognised in the financial statements. If an entity has
made a prior period adjustment or has reclassified items in the financial statements, it will need to disclose a third balance sheet
(statement of financial position), this one being as at the beginning of the comparative period. The Group will apply the revised
standard from 1 July 2009.
(iv) AASB 2008-1 Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions and Cancellations
(effective from 1 January 2009)
AASB 2008-1 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 1 July 2009, but it is not expected to
affect the accounting for the Group's share-based payments.
(v) 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 (effective 1 July 2009)
The revised AASB 3 continues to apply the acquisition method to business combinations, but with some significant changes. For
example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments
Page 44
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
classified as debt subsequently remeasured through the income statement. There is a choice on an acquisition-by-acquisition basis
to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net assets. All acquisition-related costs must be expensed. This is different to the Group's current policy which is set
out in note 1(b) above.
The revised AASB 127 requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no
change in control and these transactions will no longer result in goodwill or gains and losses, see note 1(b). The standard also
specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value, and a gain or loss is
recognised in profit or loss. This is consistent with the Group's current accounting policy if significant influence is not retained.
The Group will apply the revised standards prospectively to all business combinations and transactions with non-controlling
interests from 1 July 2009.
(vi) AASB 2008-6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (effective
1 July 2009)
The amendments to AASB 5 Discontinued Operations and AASB 1 First-Time Adoption of Australian-Equivalents to International
Financial Reporting Standards are part of the IASB’s annual improvements project published in May 2008. They clarify that all of a
subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant
disclosures should be made for this subsidiary if the definition of a discontinued operation is met. The Group will apply the
amendments prospectively to all partial disposals of subsidiaries from 1 July 2009.
(vii) AASB 2008-7 Amendments to Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly Controlled
Entity or Associate (effective 1 July 2009)
In July 2008, the AASB approved amendments to AASB 1 First-time Adoption of International Financial Reporting Standards and
AABS 127 Consolidated and Separate Financial Statements. The Group will apply the revised rules prospectively from 1 July 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 impairment as a result of
the dividend payment. Under the entity’s current policy, these dividends are deducted from the cost of the investment. 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.
(viii) AASB Interpretation 16 Hedges of a Net Investment in a Foreign Operation (effective 1 October 2008)
AASB-I 16 clarifies which foreign currency risks qualify as hedged risk in the hedge of a net investment in a foreign operation and
that hedging instruments may be held by any entity or entities within the group. It also provides guidance on how an entity should
determine the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item. The
Group will apply the interpretation prospectively from 1 July 2009.
(ix) AASB 2008-8 Amendment to IAS 39 Financial Instruments: Recognition and Measurement (effective 1 July 2009)
AASB 2008-8 amends AASB 139 Financial Instruments: Recognition and Measurement and must be applied retrospectively in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The amendment makes two
significant changes. It prohibits designating inflation as a hedgeable component of a fixed rate debt. It also prohibits including time
value in the one-sided hedged risk when designating options as hedges. The Group will apply the amended standard from 1 July
2009.
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.
Page 45
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
2
Financial risk management cont.
(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.
27 June 2009
NZD
$’000
28 June 2008
NZD
$’000
27 June 2009
USD
$'000
28 June 2008
USD
$'000
Trade receivables
Trade payables
Forward exchange contracts
- buy foreign currency (cash flow hedges)
0
0
0
0
0
6,000
517
3,135
17,300
396
3,479
30,600
The carrying amounts of the parent entity’s financial assets and liabilities are denominated in Australian dollars except as set out
below:
2009
USD
$’000
2009
NZD
$’000
2008
USD
$'000
2008
NZD
$'000
Forward exchange contracts
- buy foreign currency (cash flow hedges)
Nil
Nil
Nil
Nil
Group sensitivity
Based on the financial instruments held at 27 June 2009, 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 $391,000 lower/$320,000 higher (2008: $986,000 lower/$807,000 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 2009 and
2008, the Group’s borrowings were at variable rates and were denominated in Australian dollars.
Page 46
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
2
Financial risk management cont.
As at the reporting date, the Group had the following variable rate borrowings:
27 June 2009
Balance
$'000
28 June 2008
Balance
$'000
Bank overdrafts and bank loans
131,700
126,650
An analysis by maturities is provided in (c) below.
The Group utilises interest rate swaps and swaptions to hedge its interest rate exposure on borrowings.
At 27 June 2009, 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 $362,000 lower/higher (2008: $466,000 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:
27 June 2009
Balance
$'000
28 June 2008
Balance
$'000
Bank overdrafts and bank loans
131,700
125,500
The parent entity’s main interest rate risk arises from cash equivalents and loans with variable interest rates. At 27 June 2009, 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 $362,000 lower/higher (2008: $459,000 lower/higher) as a result of lower/higher interest income from cash
and cash equivalents and higher/lower interest expense on bank loans.
(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
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Floating rate
- Commercial Bills and cash advances
51,797
77,759
48,300
74,500
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.
Page 47
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
2
Financial risk management cont.
Group – at 27 June
2009
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
Group – at 28 June
2008
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
116,623
41,721
158,344
0
1,999
1,999
0
95,348
95,348
(1,212)
(1,212)
(21,558)
24,101
1,331
0
0
(1,212)
0
0
0
0
0
364
364
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
91,205
59,531
150,736
0
2,878
2,878
0
74,833
74,833
21
21
(24,109)
26,236
2,148
(12,487)
12,487
21
0
0
0
0
0
605
605
0
0
0
0
Parent – at 27 June
2009
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
2,947
41,528
44,475
0
1,828
1,828
0
95,046
95,046
(1,212)
(1,212)
0
0
(1,212)
0
0
(1,212)
0
0
0
0
0
0
0
0
0
0
0
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
Page 48
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
116,623
139,432
256,055
116,623
132,550
249,173
(2,424)
1,934
(21,558)
24,101
119
(2,457)
0
(523)
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
91,205
137,847
229,052
91,205
127,907
219,112
42
(205)
(36,596)
38,723
2,169
1,803
0
1,598
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
2,947
138,402
141,349
2,947
131,700
134,647
(2,424)
0
0
(2,424)
1,934
0
0
1,934
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)
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
2
Financial risk management cont.
(d)
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 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.
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.
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 27 June 2009
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 Cycles: Wholesale, retail and distribution of bicycles and bicycle accessories.
Primary reporting segment – business segment
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
2009
Segment Revenue
Sales to external customers
604,217
205,492
19,103
828,812
Inter segment sales
0
0
0
0
Total sales revenue
604,217
205,492
19,103
828,812
0
0
0
828,812
0
828,812
Other revenue/income
367
95
15
477
494
971
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 & Liabilities
604,584
205,587
19,118
829,289
494
829,783
46,422
16,362
(3,972)
58,812
(3,177)
55,635
(13,749)
(13,749)
41,886
(9,751)
32,135
Segment assets
284,322
103,690
23,667
411,679
26,092
437,771
Unallocated assets
Total assets
0
0
437,771
Segment liabilities
(114,355)
(79,278)
(27,514)
(221,147)
100,578
(120,569)
Unallocated liabilities
Total liabilities
Acquisitions of property, plant
and equipment and other non-
current segment assets
Depreciation and amortisation
expense
Other non-cash expenses
(160,848)
(160,848)
(281,417)
13,535
7,455
3,097
24,087
7,632
31,719
(13,710)
(3,854)
(602)
(18,166)
(117)
(18,283)
322
Page 50
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
4
Segment information (continued)
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
2008
Segment Revenue
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
Segment Assets & Liabilities
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
Geographical segments
(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
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.
Page 51
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
4
Segment information (continued)
New Zealand
Only Supercheap Auto operates in New Zealand.
Secondary Segment – Geographical Segments
Segment Revenues
from sales to
external customers
Segment
Assets
2009
$’000
2008
$’000
2009
$’000
2008
$’000
Australia
New Zealand
766,738
62,074
654,161
61,278
408,076
29,695
358,848
26,308
828,812
715,439
437,771
385,156
Acquisitions of
property, plant and
equipment,
intangibles and other
non-current segment
assets
2009
$’000
29,918
1,801
31,719
2008
$’000
46,532
1,402
47,934
Segment revenues are allocated based on the country in which the customer is located. Segment assets and capital expenditure
are allocated based on where the assets are located.
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
2009
$'000
2008
$'000
2009
$'000
2008
$'000
828,812
715,439
828,812
715,439
494
0
494
218
0
218
829,306
715,657
0
0
160
28,100
28,260
28,260
0
0
19
24,000
24,019
24,019
Consolidated
Parent entity
2009
$'000
0
477
477
2008
$'000
0
320
320
2009
$'000
0
11
11
2008
$'000
0
4
4
Page 52
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
7
Expenses
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Profit before income tax includes the following specific
gains and expenses:
Expenses
Net loss on disposal of property, plant and equipment
144
368
Depreciation
Computer systems
Plant and equipment
Motor vehicles
Total depreciation
Amortisation
Computer software
Brand name
Supplier agreement
Finance costs
Interest and finance charges
Other finance costs (a)
Accretion of put option
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
5,347
10,253
88
15,688
2,450
125
20
2,595
11,548
2,201
114
13,863
9,931
139,349
149,280
62,177
2,105
64,282
4,929
7,862
383
13,174
2,750
0
0
2,750
9,116
0
0
9,116
7,314
112,655
119,969
51,801
2,030
53,831
Foreign exchange gains and losses
Net foreign exchange (gains)/losses
(1,452)
2,626
0
0
0
0
0
0
0
0
0
11,444
2,201
114
13,759
30
1,772
1,802
0
0
0
0
0
0
0
0
0
0
0
0
0
8,914
0
0
8,914
33
1,409
1,442
0
0
0
0
(a)
Other finance costs
The market-to-market loss on the $60,000,000 swap was $2,201,000 as at 27 June 2009. This amount has been included as a
finance cost expense in the 2009 year as the swap was deemed to be ineffective as a cash flow hedge for the period.
Page 53
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
8
Income tax expense
Income tax expense
(a)
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)
Numerical reconciliation of income tax expense
(b)
to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2008 - 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Non-taxable dividends
Tax consolidation adjustments re NZ branch
Investment allowance
Sundry items
Consolidated
Parent entity
2009
$'000
2008
$'000
15,202
(3,342)
(2,109)
9,751
(2,852)
(490)
(3,342)
11,469
(498)
35
11,006
(432)
(66)
(498)
2009
$'000
(4,092)
(688)
(1,382)
(6,162)
(688)
0
(688)
2008
$'000
(3,001)
(37)
49
(2,989)
(37)
0
(37)
41,886
36,806
11,971
13,023
12,566
11,042
3,591
3,907
0
(253)
(538)
85
11,860
0
(127)
0
32
10,947
(8,430)
0
0
59
(4,780)
(7,200)
0
0
254
(3,039)
Difference in overseas tax rates
Previously unrecognised tax losses now recouped to reduce
current tax expense
Adjustments for current tax of prior periods
Restatement of New Zealand deferred tax balances to 30%
Income tax expense
0
14
0
0
0
(2,109)
0
9,751
0
48
(3)
11,006
0
(1,382)
0
(6,162)
0
50
0
(2,989)
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
1,296
1,296
200
200
(18)
(18)
(32)
(32)
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 27 June 2009
9
Current assets - Cash and cash equivalents
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Cash at bank and in hand
16,810
8,709
1,663
108
10
Current assets - Trade and other receivables
Trade receivables
Provision for impairment of receivables (a)
Loans to related parties (c)
Other receivables
Tax receivable
Prepayments
(a)
Impaired trade receivables
Consolidated
Parent entity
2009
$'000
18,257
(347)
17,910
0
4,597
1,091
1,515
25,113
2008
$'000
14,107
(165)
13,942
0
3,221
1,745
374
19,282
2009
$'000
5,237
0
5,237
139,329
349
0
315
145,230
2008
$'000
142
0
142
133,228
620
0
0
133,990
As at 27 June 2009 current trade receivables of the Group with a nominal value of $347,000 (2008: $165,000) were impaired.
The amount of the provision was $347,000 (2008: $165,000). The individually impaired receivables mainly relate to sub-tenants
and 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 2009 or 2008.
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
2009
$'000
(165)
(546)
364
0
(347)
2008
$'000
(74)
(100)
9
0
(165)
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 27 June 2009, trade receivables of $3,905,000 (2008: $5,176,000) 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
2009
$'000
2,233
616
1,056
3,905
2008
$'000
2,917
708
1,551
5,176
2009
$'000
2008
$'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 27 June 2009
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
2009
$'000
2008
$'000
2009
$'000
2008
$'000
222,821
193,975
0
0
Inventories recognised as expense during the year ended 27 June 2009 amounted to $449,064,000 (2008: $409,473,000).
Write-downs of inventories to net realisable value recognised as an expense during the year ended 27 June 2009 amounted to
$1,989,000 (2008: $2,128,000). 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
2009
$'000
2008
$'000
2009
$'000
2008
$'000
0
0
0
0
0
0
0
0
0
0
0
0
84,233
1
0
7,523
1,449
84,233
1
0
9,636
1,449
93,206
95,319
13
Non-current assets – Property, plant and equipment
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'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
113,116
(39,916)
73,200
326
(256)
70
38,184
(23,506)
14,678
94,472
(29,253)
65,219
750
(554)
196
33,495
(19,358)
14,137
Total net property, plant and equipment
87,948
79,552
Assets pledged as security are detailed in Note 21
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Page 56
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
13
Non-current assets – Property, plant and equipment (continued)
Reconciliations - consolidated entity
Carrying amounts at 29 June 2008
Additions
Disposals
Business acquisitions
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 27 June 2009
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
14
Non-current assets - Deferred tax assets
Plant and
equipment
$’000
Motor
vehicles
$’000
Computer
systems
$’000
65,219
20,238
(2,139)
110
(10,253)
25
73,200
55,088
17,041
(491)
2,102
(7,862)
(659)
65,219
196
0
(39)
0
(88)
1
70
631
661
(717)
15
(383)
(11)
196
14,137
6,591
(714)
0
(5,347)
11
14,678
11,543
7,742
(59)
0
(4,929)
(160)
14,137
Total
$’000
79,552
26,829
(2,892)
110
(15,688)
37
87,948
67,262
25,444
(1,267)
2,117
(13,174)
(830)
79,552
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'000
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Doubtful debts
Employee benefits
Accruals
Inventories
Cash flow hedges
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
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
104
3,245
781
1,146
660
546
3,696
104
923
1
11,206
0
11,206
(1,534)
9,672
8,834
2,852
(480)
0
0
11,206
9,175
2,031
11,206
Page 57
0
123
2
0
660
0
0
0
0
1
786
0
786
(80)
706
37
688
61
0
0
786
783
3
786
0
95
3
0
0
0
0
0
0
0
98
(61)
37
0
37
32
37
(32)
0
0
37
0
37
37
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
15
Non-current assets – Intangible assets
Consolidated
Parent entity
2009
$’000
2008
$’000
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 amortisation
Net brand names
Supplier agreement
Less amortisation
Net supplier agreement
Total net intangibles
2009
$’000
67,280
0
67,280
14
0
14
19,347
(13,989)
5,358
2,500
(125)
2,375
400
(20)
380
2008
$’000
66,581
0
66,581
14
0
14
17,977
(11,463)
6,514
2,500
0
2,500
400
0
400
75,407
76,009
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
Reconciliations – consolidated
entity - 2009
Carrying amounts at 29 June 2008
Acquisitions
Additions
Disposals/Revision in provisional
accounting
Amortisation charge
Foreign currency exchange
differences
Carrying amounts at 27 June 2009
66,581
2,746
727
(2,774)
0
0
67,280
14
0
0
0
0
0
14
6,514
0
1,307
(13)
(2,450)
0
5,358
2,500
0
0
0
(125)
0
2,375
400
0
0
0
(20)
0
380
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
Brand
Name
$’000
Supplier
Agreement
$’000
Reconciliations – consolidated
entity - 2008
Carrying amounts at 1 July 2007
Acquisitions
Additions
Disposals
Amortisation charge
Foreign currency exchange
differences
Carrying amounts at 28 June 2008
52,112
14,469
0
0
0
0
66,581
(a)
Impairment tests for goodwill
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
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Totals
$’000
76,009
2,746
2,034
(2,787)
(2,595)
0
75,407
Totals
$’000
58,613
17,369
3,004
(226)
(2,750)
(1)
76,009
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the group of assets based on
acquisition.
Page 58
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
15
Non-current assets – Intangible assets (continued)
A CGU level summary of the goodwill allocation is presented below:-
2009
Goodwill
2008
Goodwill
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Total
$’000
45,336
11,990
9,954*
67,280
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Total
$’000
45,336
11,072
10,173
66,581
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 the Board of Directors 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.
* Goodwill allocation presented for Goldcross Cycles includes goodwill for Victor Cycles and Riders Cycles.
(b)
Key assumptions used for value-in-use calculations
No impairment loss was recognised in the 2009 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
Goldcross Cycles
Growth rate
Discount rate
2009
%
3.0
5.0
10.0
2008
%
3.0
5.0
-
2009
%
15
15
15
2008
%
15
15
-
In the initial two year’s of a store operating growth rate is assumed to be 10% for Supercheap Auto, BCF and Goldcross Cycles.
16
Current liabilities - Trade and other payables
Trade payables
Other payables
Loans from related parties
Consolidated
Parent entity
2009
$'000
90,572
26,026
25
116,623
2008
$'000
75,327
15,853
25
91,205
2009
$'000
3
2,944
0
2,947
2008
$'000
0
250
0
250
Page 59
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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
2009
$'000
2008
$'000
2009
$'000
2008
$'000
850
39,700
(1,054)
390
56,501
(581)
0
39,700
(1,011)
0
55,351
(569)
39,496
56,310
38,689
54,782
0
0
0
1
381
382
0
0
0
0
0
0
Total current liabilities – interest bearing liabilities
39,496
56,692
38,689
54,782
(a) Bills payable
Bills have been drawn as a source of short-term financing on a needs basis.
(b) Interest rate risk exposures
Details of the Group’s exposure to interest rate changes on borrowings are set out in note 22.
(c) Fair value disclosures
Details of the fair value of borrowings for the Group are set out in note 22.
(d)
Security
Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank loans
are set out in note 21.
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
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Income tax payable
4,593
3,682
4,765
3,683
19
Current liabilities – Provisions
Put option provision
Provision for warranties
Make good provision
Employee benefits
Consolidated
Parent entity
2009
$'000
644
44
117
9,347
10,152
2008
$'000
531
0
165
7,000
7,696
2009
$'000
644
0
0
364
1,008
2008
$'000
0
0
0
224
224
Page 60
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
19
Current liabilities – Provisions (continued)
(a)
Put Option Provision
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.
(b)
Provision for Warranties
Provision is made for the estimated warranty claims in respect of products sold which are still under warranty at balance date.
These claims are expected to be settled in the next financial year. Management estimates the provision based on historical
warranty claim information and any recent trends.
20
Non-current liabilities – Trade and Other Payables
Straight line lease adjustment
21
Non-current liabilities – Borrowings
Secured
Finance lease
Cash advance
Consolidated
Parent entity
2009
$'000
2008
$'000
12,320
10,469
2009
$'000
0
2008
$'000
0
Consolidated
Parent entity
2009
$'000
0
92,000
92,000
2008
$'000
701
70,315
71,016
2009
$'000
0
92,000
92,000
2008
$'000
0
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, Goldcross Cycles 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, Goldcross Cycles 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 27 June 2009
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
2009
$’000
2008
$’000
2009
$’000
2008
$’000
184,347
3,694
188,041
205,397
3,206
208,603
180,000
2,498
182,498
200,000
2,788
202,788
132,550
3,322
135,872
127,638
2,671
130,309
131,700
2,131
133,831
125,500
1,450
126,950
51,797
372
52,169
77,759
535
78,294
48,300
367
48,667
74,500
1,338
75,838
In addition, the Company has access to a $122 million (2008: $116 million) transactional facility for clean credit and foreign
currency dealings.
The current interest rates on the financing arrangements
are:
- Multi Option Facility (including commercial bills,
overdraft and cash advance)
3.90%-7.685% (2008: 7.58%-8.43%)
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 27 June 2009
22
Derivative Financial instruments (continued)
At balance date the following amounts were committed on foreign currency forward exchange contracts:
Consolidated entity
Parent entity
2009
$000
2008
$000
2009
$000
2008
$000
Buy United States dollars and sell Australian dollars with
maturity
- 0 to 6 months
- 7 to 12 months
17,300
0
18,600
12,000
0
0
0
0
Weighted average rate of contracts
72 cents
91 cents
0 cents
0 cents
Buy Australian dollars and sell New Zealand dollars with
maturity
- 0 to 6 months
0
6,000
0
0
Weighted average rate of contracts
0 cents
118 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 27 June 2009, no hedges were
designated as ineffective (2008: 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:
- unrealised gains on foreign exchange contracts
- total gains (b)
- realised losses and costs
- unrealised losses and costs on interest rate swaps
- 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
2,457
2,457
(1,934)
(1,934)
523
205
205
(1,803)
(1,803)
(1,598)
0
0
(1,934)
(1,934)
(1,934)
205
205
0
0
205
Interest rate swap contracts
Bank loans of the economic entity currently bear an average variable interest rate of 3.9% (2008: 8.2%). 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 two interest rate swaps for a total nominal value of $80,000,000 (2008: $60,000,000) with $60,000,000
expiring on 30 May 2010 and $20,000,000 expiring on 16 January 2012. It has also entered into a swaption which gives the bank
the right to require the Group to enter into a fixed interest rate swap from 31 May 2010 to 30 May 2011. It is considered highly likely
that this option will be exercised by the bank. The market-to-market loss on the swaption has not been taken to account in the 2009
year as it is considered to be immaterial. The market-to-market loss on the $60,000,000 swap was $2,201,000 as at 27 June 2009.
This amount has been included as a finance cost expense in the 2009 year as the swap was deemed to be ineffective as a cash
flow hedge for the period.
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 61% (2008: 47%) of the loan
principal outstanding. The average fixed interest rate is 6.91% (2008: 7.60%).
Page 63
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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
2009
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)
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)
Floating
interest
rate
$’000
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
16,087
0
16,087
2.2%
0
0
0
51,496
0
51,496
3.9%
(35,409)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
80,000
0
80,000
6.9%
(80,000)
0
0
0
0
0
0
0
0
0
0
723
25,113
25,836
16,810
25,113
41,923
121,216
0
0
0
10,277
131,493
121,216
0
0
131,496
10,277
262,989
(105,657)
(221,066)
Floating
interest
rate
$’000
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
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
8.0%
7.6%
(59,389)
(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)
Page 64
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
22
Derivative Financial instruments (continued)
Consolidated entity
Carrying amount
Net fair value
2009
$’000
2008
$’000
2009
$’000
2008
$’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 *
Interest rate swaps *
Non-traded financial assets
Financial liabilities
Trade and other payables
Commercial bill and other financing
Forward exchange contracts *
Interest rate swaps *
Non-traded financial liabilities
16,810
25,113
2,457
267
44,647
(121,216)
(131,496)
0
(2,201)
(254,913)
8,709
19,282
0
205
28,196
16,810
25,113
2,457
267
44,647
8,709
19,282
0
205
28,196
(94,887)
(127,708)
(1,803)
0
(224,398)
(121,216)
(131,496)
0
(2,201)
(254,913)
(94,887)
(127,708)
(1,803)
0
(224,398)
Parent entity
Carrying amount
Net fair value
2009
$’000
2008
$’000
2009
$’000
2008
$’000
Carrying amounts and net fair values of financial assets and
financial liabilities at balance sheet date:
Financial assets
Cash and deposits
Receivables
Interest rate swaps *
Non-traded financial assets
Financial liabilities
Trade and other payables
Commercial bill and other financing
Interest rate swaps *
Non-traded financial liabilities
1,663
145,230
267
147,160
(7,712)
(130,689)
(2,201)
(140,602)
108
133,990
250
134,348
1,663
145,230
267
147,160
108
133,990
250
134,348
(3,933)
(124,782)
0
(128,715)
(7,712)
(130,689)
(2,201)
(140,602)
(3,933)
(124,782)
0
(128,715)
*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.
With the exception of the forward exchange contracts and interest rate swaps, 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 27 June 2009
23
Non-current liabilities - Deferred tax liabilities
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'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
2
0
0
713
715
0
819
1,534
25
0
430
750
1,205
0
0
1,205
0
0
0
0
0
0
80
80
Set-off of deferred tax liabilities of parent entity pursuant to
set-off provisions
Net deferred tax liabilities
(1,534)
0
(1,205)
0
(80)
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
Make good provision (a)
Employee benefits
Provision for Goldcross Cycles performance incentive (b)
Provision for Oceania future dividend (c)
1,205
(490)
819
0
0
1,534
1,532
2
1,534
579
(66)
0
(58)
750
1,205
1,165
40
1,205
0
0
80
0
0
80
80
0
80
Consolidated
Parent entity
2009
$'000
5,171
930
0
132
6,233
2008
$'000
4,954
907
2,774
0
8,635
2009
$'000
0
45
0
132
177
2008
$'000
0
92
2,774
0
2,866
(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.
Provision for Goldcross Cycles performance incentive
(b)
A provision was recognised on acquisition of Goldcross Cycles for the present value of the estimated obligation to pay if specified
performance targets were met after acquisition. These targets were not achieved, therefore the provision was reallocated back to
goodwill and goodwill reduced for the year ended 27 June 2009.
Page 66
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 27 June 2009
24
Non-current liabilities – Provisions (continued)
Provision for Oceania future dividend
(c)
A provision has been recognised for the present value of the estimated cost of the future dividend required to be paid with respect
to Oceania.
(d)
Movements in provisions (consolidated entity) (notes 19 & 24)
Put option
$’000
Warranties
$’000
Make good
$'000
Goldcross
Cycles
performance
incentive
$’000
Oceania
future
dividend
$’000
Opening balance as at 29 June 2008
Additional provisions recognised
Indexing of provisions
Provision released
Acquisitions
Closing balance as at 27 June 2009
531
0
113
0
0
644
0
44
0
0
0
44
5,119
678
(443)
(66)
0
5,288
2,774
0
0
(2,774)
0
0
0
132
0
0
0
132
Total
$’000
8,424
854
(330)
(2,840)
0
6,108
25
Contributed equity
(a)
Share Capital
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Ordinary shares fully paid
84,627
84,627
84,627
84,627
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 27 June 2009
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 220,000 (2008: 180,000) ordinary shares were issued during the period, with nil 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 2009 the Group’s strategy, which was unchanged from 2008, 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 27 June 2009 and 28 June 2008 were
as follows:
Page 67
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
25
Contributed equity (continued)
Total borrowings
Less: Cash & cash equivalents
Net Debt
Total Equity
Total Capital
Gearing Ratio
Consolidated
2009
$'000
2008
$'000
131,496
(16,810)
114,686
156,354
271,040
42.3%
127,708
(8,709)
118,999
135,761
254,760
46.8%
The decrease in the gearing ratio in 2009 was primarily due to the Group’s profitability (and consequent increase in Retained
Earnings) as well as a slight reduction in net debt from 2008 levels.
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 and DC rental expense divided by fixed charge obligations
(being finance costs and store and DC rental expenses). Rental expenses are calculated net of straight line lease adjustments,
while finance costs exclude non-cash mark-to-market losses or gains on interest rate swaps.
During 2009 the Group’s strategy, which was unchanged from 2008, was to maintain a fixed charge cover ratio of around 2.0 times.
The fixed charge cover ratios at 27 June 2009 and 28 June 2008 were as follows:
Earnings
Add:
Taxation expense
Finance costs
Depreciation and amortisation
Rental expense
EBITDAR
Finance costs (excluding MTM adjustment)
Rental expense
Fixed charges
Fixed charge cover ratio
Consolidated Entity
2009
2008
32,135
9,751
13,749
18,283
60,289
134,207
11,548
60,289
71,837
1.87
25,800
11,006
9,116
15,924
49,532
111,378
9,116
49,532
58,648
1.90
The slight reduction in the fixed charge cover ratio in 2009 is due to costs associated with establishment of the Goldcross Cycles
business 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 27 June 2009
26
Reserves and retained profits
Consolidated
Parent entity
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
2009
$'000
2008
$'000
(2,933)
1,068
1,907
42
(2,970)
37
(2,933)
746
0
322
1,068
(1,120)
4,323
(1,296)
1,907
(2,970)
746
(1,120)
(3,344)
(11)
(2,959)
(2,970)
428
0
318
746
(1,585)
665
(200)
(1,120)
2009
$'000
0
1,068
187
1,255
0
0
0
746
0
322
1,068
144
61
(18)
187
2008
$'000
0
746
144
890
0
0
0
428
0
318
746
68
107
(31)
144
54,478
41,461
12,132
8,903
32,135
(14,928)
25,800
(12,783)
18,133
(14,928)
16,012
(12,783)
71,685
54,478
15,337
12,132
(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 27 June 2009
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 27 June 2009 of 6.5 cents (2008: 5.5 cents per
share) paid on 31 March 2009. Fully franked based on tax paid @ 30%
Final dividend for the period ended 28 June 2008 of 7.5 cents per share (2008: 6.5
cents per share) paid on 14 October 2008. 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 11.5 cents per ordinary share (2008: 7.5 cents per ordinary share), fully
franked based on tax paid at 30%.
Parent Entity
2009
$’000
2008
$’000
6,931
5,865
7,997
14,928
6,918
12,783
The aggregate amount of the dividend expected to be paid on 20 October 2009, out
of retained profits at 27 June 2009, but not recognised as a liability at year end, is
12,262
8,530
Franking credits
The franked portions of dividends paid after 27 June 2009 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 27 June 2009.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
34,769
33,619
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 $5,255,317 (2008: $3,427,381).
Page 70
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
28
Key management personnel disclosures
(a)
Key management personnel compensation
Consolidated
Parent entity
2009
$
2008
$
2009
$
2008
$
Short-term employee benefits
Post-employment benefits
Share-based payments
2,954,597
340,878
183,297
3,478,772
2,120,529
312,471
221,838
2,654,838
148,913
241,462
183,297
573,672
127,871
198,129
221,838
547,838
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.
2009
Balance at
the start of
the year
Granted
during the
year as
compensation
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of the
year
Vested and
exercisable at
the end of the
year
Vested and
unexercisable
at the end of
the year
Name
Directors of Super Cheap Auto Group Limited
R D McIlwain
R A Rowe
D D McDonough
R J Wright
R J Skippen
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
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
0
0
0
0
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
150,000
200,000
200,000
75,000
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 27 June 2009
28
Key management personnel disclosures (continued)
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.
(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.
2009
Name
Directors of Super Cheap Auto Group Limited
Ordinary shares
R D McIlwain
R A Rowe
D D McDonough
R J Wright
R J Skippen
P A Birtles
Other key management personnel of the Group
Ordinary shares
D F Ajala
S J Doyle
G G Carroll
G L Chad
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
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
0
1,392,596
281
143,411
0
50,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
158,882
52,402,159
60,000
40,609
0
1,392,596
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
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
Page 72
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
28
Key management personnel disclosures (continued)
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
29
Remuneration of auditors
2009
$000
2008
$000
7,593
6,482
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
2009
$
2008
$
2009
$
2008
$
(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
423,084
423,084
281,365
281,365
Other assurance services
PricewaterhouseCoopers Australian firm
IFRS accounting services
Total remuneration for other assurance services
0
0
0
0
Total remuneration for assurance services
423,084
281,365
(b)
Taxation services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of company
income tax returns
Total remuneration for taxation services
126,808
126,808
75,532
75,532
(c)
Advisory services
PricewaterhouseCoopers Australian firm
Customs Advice
Total remuneration for advisory services
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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
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:
Consolidated
Parent entity
2009
$000
2008
$000
2009
$000
2008
$000
3,322
2,671
2,131
1,450
Page 73
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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
2009
$000
2008
$000
2009
$000
2008
$000
9,230
0
0
9,230
522
0
0
522
61,487
179,970
56,960
(12,068)
286,349
55,219
171,032
64,831
(11,174)
279,908
2,151
3,319
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,120
1,374
0
3,494
1,599
2,602
0
4,201
2,120
1,374
0
3,494
1,599
2,602
0
4,201
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 $1,230,000 (2008: $1,529,000) 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)
Non-current
Consolidated
Parent entity
2009
$000
2008
$000
2009
$000
2008
$000
934
0
934
(84)
850
850
0
850
390
964
1,354
(263)
1,091
390
701
1,091
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Page 74
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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, R J Skippen and P A Birtles.
(e)
Amounts due from Directors of the consolidated entity and their director-related entities are nil (2008 : Nil):
Amounts due from related parties
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
2009
$
2008
$
2009
$
2008
$
8,350,895
7,625,922
0
0
1,576,355
1,153,025
1,576,355
1,153,025
0
0
0
(25,236)
0
(25,236)
0
0
0
0
0
0
28,100,000
24,000,000
18,363,655
14,074,793
128,071,732
947,019,846
(934,444,075)
140,647,503
116,193,615
468,863,172
(456,985,055)
128,071,732
Page 75
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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
2009
%
2008
%
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
100
50
(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, BCF Australia Pty Ltd acquired certain assets and liabilities of the business, Jurkiewicz Adventure Store as
detailed below at (a). In addition, Goldcross Cycles Pty Ltd acquired certain assets and liabilities of two businesses during the
period, Victor Cycles (see (b) below) and Riders Cycles (see (c) below).
These acquisitions resulted in the recognition of the following goodwill:
Jurkiewicz Adventure Store
Victor Cycles
Riders Cycles
$'000
919
77
1,750
2,746
(a)
Jurkiewicz Adventure Store (including Canberra Ski and Board Centre) (current
period)
Acquisition by controlled entity
On 30 July 2008, BCF Australia Pty Ltd acquired certain assets and assumed certain liabilities of the
Jurkiewicz Adventure Store business from an entity external to the Group.
Net assets acquired and goodwill are as follows:
Purchase consideration
Cash Paid
Total purchase consideration/outflow of cash
Less: Provisional allocation of Fair value of net identifiable assets acquired (refer below)
Goodwill
The goodwill is attributable to Jurkiewicz Adventure Store position and profitability in the leisure
market and synergies expected to arise after the company’s acquisition
Fair value of identifiable net assets acquired
Inventory
Employee entitlements
Other creditors
Net identifiable assets acquired
2009
$’000
1,700
1,700
(781)
919
811
(21)
(9)
781
Page 76
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
34
Business Combinations (continued)
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 $3.093 million to the Group for the period 30 July 2008 to 27 June
2009. If the acquisition had occurred on 29 June 2008, the contribution to group revenue would have been $3.374
million. The contribution to Group net profit after tax is $332,000.
(b)
Victor Cycles (current period)
Acquisition by controlled entity
On 17 November 2008, Goldcross Cycles Pty Ltd acquired certain assets and assumed certain
liabilities of the Victor Cycles business from an entity external to the Group.
Net assets acquired are as follows:
Purchase consideration
Cash Paid
Direct costs relating to the acquisition
Total purchase consideration/outflow of cash
Less: Provisional allocation of Fair value of net identifiable assets acquired (refer below)
Goodwill
The goodwill is attributable to Victor Cycles strong position and profitability in the cycling market
and synergies expected to arise after the company’s acquisition
Fair value of identifiable net assets acquired
Inventory
Plant and equipment
Other assets
Employee entitlements
Net identifiable assets acquired
2009
$’000
405
13
418
(341)
77
278
60
4
(1)
341
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 $0.479 million to the Group for the period 17 November 2008 to 27
June 2009. If the acquisition had occurred on 29 June 2008, the contribution to group revenue would have been
$0.767 million. The contribution to group net profit after tax is not significant.
Page 77
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
34.
Business combinations (continued)
(c)
Riders Cycles (current period)
Acquisition by controlled entity
On 11 December 2008, Goldcross Cycles Pty Ltd acquired certain assets and assumed certain
liabilities of the Riders Cycles business from an entity external to the Group.
Net assets acquired and goodwill are as follows:
Purchase consideration
Cash Paid
Less cash acquired
Total purchase consideration/outflow of cash
Less: Provisional allocation of Fair value of net identifiable assets acquired (refer below)
Goodwill
The goodwill is attributable to Riders Cycles strong position and profitability in the cycling market
and synergies expected to arise after the company’s acquisition
Fair value of identifiable net assets acquired
Inventory
Plant and equipment
Other assets
Employee entitlements
Net identifiable assets acquired
2009
$’000
2,503
(1)
2,502
(752)
1,750
695
50
17
(10)
752
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 $1.319 million to the Group for the period 11 December 2008 to 27
June 2009. If the acquisition had occurred on 29 June 2008, the contribution to group revenue would have been
$2.261 million. The contribution to group net profit after tax is not significant.
(d)
(i)
Goldcross Cycles
Summary of acquisition
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
Provision for future dividend
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
132
531
267
8,971
(844)
8,127
Page 78
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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.
(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
8,971
(738)
(12)
(12)
8,971
(738)
(12)
(12)
Outflow of cash
8,221
8,221
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
5,144
1,768
2,500
400
123
633
(1,209)
(1,820)
(247)
(154)
(326)
(750)
(5,746)
844
The Goldcross Cycles acquisition was disclosed provisionally in the financial report for the year ended 28 June 2008. As part of the
finalisation of the acquisition, the completion statement has been reviewed and the following adjustments were made:
(i)
a downward adjustment of $595,000 was made to inventory bringing the fair value of inventory at acquisition date to
$5,144,000; and
(ii)
recognition of the dividend liability with a fair value at acquisition date of $132,000.
These were the only adjustments to the provisional values disclosed in the year end financial report.
The deferred payment in relation to Goldcross Cycles was restated during the year ended 27 June 2009 to $nil as it was not
probable that the profit target established at the date of acquisition would be met. This resulted in a decrease of $2,774,000 to the
provision and a corresponding decrease to goodwill of $2,774,000.
The goodwill is attributable to Goldcross Cycles’ strong position and profitability in the bicycling market and the synergies expected
to arise from the acquisition.
Page 79
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
35
Net tangible asset backing
Net tangible asset per ordinary share
36
Deed of cross guarantee
Consolidated Entity
2009
Cents
69¢
2008
Cents
50¢
Super Cheap Auto Group Limited, Super Cheap Auto Pty Ltd, BCF Australia Pty Ltd, Super Retail Group Services Pty Ltd and
Goldcross Cycles Pty Ltd are parties to a Deed of Cross Guarantee under which each company guarantees the debts of the others.
By entering into the Deed, the wholly owned entities have been relieved from the requirement to prepare a financial report and
directors’ report under Class Order 98/1418 (as amended by Class Orders 98/2017, 00/0321, 01/1087, 02/0248 and 02/1017)
issued by the Australian Securities and Investments Commission.
(a)
Consolidated Income Statement and a summary of movements in consolidated retained profits
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to the
Deed of Cross Guarantee that are controlled by Super Cheap Auto Group Limited, they also represent the ‘Extended Closed
Group’.
Set out below is a consolidated income statement and a summary of movements in consolidated retained profits for the period
ended 27 June 2009 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 Goldcross Cycles Pty Ltd.
Revenue from continuing operations
Other income
Total revenues and other income
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Borrowing costs expense
Total expenses
Profit before income tax
Income tax (expense)/benefit
Profit for the period
Summary of movements in consolidated retained profits
Retained profits at the beginning of the financial year
Retained profits at the beginning of the financial year for
new entities in the closed Group
Profit for the period
Dividends provided for or paid
Retained profits at the end of the financial year
Consolidated
2009
$'000
760,646
336
760,982
2008
$'000
655,905
2,131
658,036
(438,514)
(389,375)
(88,485)
(38,784)
(59,475)
(83,303)
(11,976)
(720,537)
40,445
(9,357)
31,088
50,939
(15)
31,088
(14,928)
67,084
(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
Page 80
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
36
(b)
Deed of cross guarantee (continued)
Balance Sheet
Set out below is a consolidated balance sheet as at 27 June 2009 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 Goldcross Cycles Pty Ltd.
Consolidated
2009
$'000
2008
$'000
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
14,372
46,773
196,171
257,316
401
81,390
8,557
75,401
165,749
423,065
107,355
39,536
4,395
9,089
160,375
12,235
92,000
0
6,233
110,468
270,843
152,222
84,627
511
67,084
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
84,763
(3,085)
50,939
152,222
132,617
Page 81
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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
Other non cash items
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
2009
$000
32,135
18,283
144
322
13,749
(85)
(5,701)
(27,617)
32,132
2,649
(3,342)
62,669
2008
$000
25,800
15,924
368
318
8,898
0
2009
$000
2008
$000
18,133
0
0
322
13,645
0
16,012
0
0
318
8,894
0
(2,527)
(27,905)
26,925
2,233
(381)
49,653
(48,291)
0
2,524
731
(688)
(13,624)
(38,273)
0
(2,268)
315
(5)
(15,007)
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
2009
Cents
30.2
30.0
2008
Cents
24.2
24.2
Consolidated Entity
2009
Number
2008
Number
106,479,622
711,244
106,479,622
38,771
107,190,866
106,518,393
2009
$000
2008
$000
32,135
25,800
32,135
25,800
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 82
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
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
Expired
during the
year
Balance at
end of the
year
Number Number Number Number
Unvested at
end of the
year
Number
Consolidated and parent entity – 2009
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
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 August 2008 1 August 2011
Total
$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
$2.49
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
2,605,000
0
0
0
0
0
0
0
0
0
0
0
0
0
220,000
220,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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
220,000
0
0
200,000
0
200,000
0
0
0
75,000
0
100,000
0
262,500
0
262,500
0
350,000
0
0
0
150,000
0
200,000
0
180,000
0
0
220,000
0 2,825,000 2,200,000
Weighted average exercise price
$2.32
$2.49
$1.97
$2.49
$2.49
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
Total
$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
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
Page 83
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
for the period ended 27 June 2009
39
Share-based payments (continued)
Fair value of options granted
The assessed fair value at grant date of options granted during the period ended 27 June 2009 was 65 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 27 June 2009 included:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
options are granted for no consideration
exercise price: $2.49 (2008: $4.37)
grant date: 1 August 2008 (2008: 23 August 2007)
expiry date: 1 August 2011 (2008: 24 July 2010)
share price at grant date: $2.85 (2008: $4.40)
expected price volatility of the company’s shares: 33% (2008: 33%)
expected dividend yield: 5.0% (2008: 3.5%)
risk-free interest rate: 4.25% (2008: 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
No matter or circumstance has arisen since 27 June 2009 that has significantly affected, or may significantly affect:
(a)
(b)
(c)
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
Page 84
DIRECTORS’ DECLARATION
Super Cheap Auto Group Limited
For the period ended 27 June 2009
In the directors’ opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 30 to 84 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 27 June 2009
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
26 August 2009
Page 85
SHAREHOLDER INFORMATION
Super Cheap Auto Group Limited
for the period ended 27 June 2009
The shareholder information set out below was applicable as at 26 August 2009.
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
1,168
1,147
214
148
43
21
There were 41 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
COGENT NOMINEES PTY LIMITED
GEOMAR SUPERANNUATION PTY LTD
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
SUNCORP CUSTODIAN SERVICES PTYLIMITED & SUNCORP CUSTODIAN SERVICES PTY
LIMITED
COGENT NOMINEES PTY LIMITED
MR ROBERT EDWARD THORN
MR PETER ALAN BIRTLES
ANZ NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
EQUITAS 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
10,369,065
8,726,010
4,709,879
2,610,957
1,570,000
1,425,281
1,374,009
1,348,658
1,194,717
1,026,285
1,000,000
908,486
768,366
740,388
666,735
535,391
535,391
535,391
535,391
49.00%
9.70%
8.16%
4.40%
2.44%
1.47%
1.33%
1.28%
1.26%
1.12%
0.96%
0.94%
0.85%
0.72%
0.69%
0.62%
0.50%
0.50%
0.50%
0.50%
94,080,971
87.97%
Super Cheap Auto Group Limited wishes to confirm that, in accordance with ASX Listing Rule 4.10.4, the substantial holders in the
company as at 26 August 2009 were:-
Name
SCA FT PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
Ordinary shares
Number held
Percentage of
issued shares
52,402,159
10,369,065
8,726,010
49.00%
9.70%
8.16%
Page 88
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
MITTAGONG (02) 4872 3820
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
89 ANNUAL REPORT 2009
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
YEPPOON (07) 4930 2166
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
CAMBRIDGE (03) 6248 4655
DEVONPORT (03) 6424 3244
GLENORCHY (03) 6272 9200
LAUNCESTON (03) 6333 0511
VICTORIA
BAIRNSDALE (03) 5153 2799
BALLARAT (03) 5339 9455
BENDIGO (03) 5442 7877
BLACKBURN (03)
BRIMBANK (03) 8390 2611
BROADMEADOWS (03) 9309 2799
CARRUM DOWNS (03) 9782 8305
COLAC (03) 5231 4099
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) 5976 4611
NARRE WARREN (03) 9705 9199
NORTH GEELONG (03) 5272 3277
NUNAWADING (Blackburn) (03) 9894 7377
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
WODONGA (02) 6024 3733
YARRAVILLE (03) 9318 9928
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
NEW ZEALAND
ALBANY 0011 64 9 448 2461
ALICETOWN 0011 64 4 569 1576
ASHBURTON 0011 64 3 307 2960
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
HENDERSON 0011 64 9 984 9001
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
WESTGATE 0011 64 9 832 1830
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
PENRITH (02) 4733 0110
PORT MACQUARIE (02) 6583 2455
TUGGERAH (02) 4351 7655
WAGGA WAGGA (02) 6921 2155
WARRAWONG (02) 4274 1955
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
CANNON HILL (07) 3890 2744
CAPALABA (07) 3245 2220
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
MORAYFIELD (07) 5433 0499
NOOSA (07) 5440 5866
ROCKHAMPTON (07) 4926 5055
TOOWOOMBA (07) 4638 7511
TOWNSVILLE (07) 4775 6300
UNDERWOOD (07) 3808 2405
VIRGINIA (07) 3216 5077
SOUTH AUSTRALIA
GEPPS CROSS (08) 8260 3716
RICHMOND (08) 8352 3533
VICTORIA
BALLARAT (03) 5339 8011
BAYSWATER (03) 9729 2175
BENDIGO (03) 5447 3751
BRAESIDE (03) 9701 8200
EPPING (03) 9408 9323
LAVERTON (03) 9360 9433
MORNINGTON (03) 5976 8424
SHEPPARTON (03) 5822 4963
TRARALGON 03 5176 5211
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
GOLDCROSS
QUEENSLAND
BURLEIGH (07) 5576 3772
FORTITUDE VALLEY (07) 3852 5808
LABRADOR (07) 5529 1500
LAWNTON (07) 3205 1096
MAROOCHYDORE (07) 5479 4200
RIDERS MACGREGOR (07) 3849 5333
VICTOR CYCLES BRISBANE (07) 3211 0111
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
ANNUAL REPORT 2009
90
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