ANNUAL REPORT 2010
CONTENTS
Chairman’s Report
Managing Director’s Report
Corporate Governance Statement
Financial Statements
Directors’ Report
Income Statements
Statement of Financial Position
Statements of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Shareholder Information
3
4
8
13
14
27
29
30
31
33
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
27 October 2010 at 11.30 am.
NAME OF ENTITY
SUPER CHEAP AUTO GROUP LIMITED
ABN OR EQUIVALENT COMPANY
REFERENCE
ABN 81 108 676 204
BANKERS
Australia and New Zealand Banking
Group Limited
HSBC
Commonwealth Bank of Australia
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.
REGISTERED OFFICE
751 Gympie Road
LAWNTON QLD 4501
Telephone (07) 3482 7500
Facsimile (07) 3205 8522
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street
SYDNEY NSW 2000
1 ANNUAL REPORT 2010
938.0
828.8
715.4
624.8
525.9
June
06
June
07
June
08
June
09
June
10
30.2
34.0
15.5
20.9
24.2
June
06
June
07
June
08
June
09
June
10
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June
06
June
07
June
08
June
09
June
10
*excludes goodwill impairment charge
13.9
14.1
15.6
16.8
11.7
June
06
June
07
June
08
June
09
June
10
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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
07
June
08
June
09
June
10
ANNUAL REPORT 2010
2
CHAIRMAN’S REPORT
The 2010 financial year has been another successful one for our Company. Net profit has increased by 18.4% from a revenue
increase of 13.2% whilst net debt has reduced by $35.9 million. At the same time, the Company has continued to invest in both
long term growth opportunities across the Group and in building its organisational capabilities to support this growth and to deliver
improved financial returns.
Supercheap Auto and BCF Boating Camping Fishing have both performed extremely well. Both businesses have been able to deliver
solid like for like sales growth which is extremely creditable given the benefit of the government stimulus in the comparative period.
Importantly, the sales growth has been augmented by significant improvement in gross margin which reflect a combination of
initiatives that the management team have implemented over the last few years.
Goldcross Cycles has not performed to our expectations and we have completed a full review of the business strategy and have
developed a revised business model to generate improved returns. The revised plan requires a number of store relocations which it
is envisaged will take a couple of years to complete. As a result, Goldcross Cycles is not expected to generate profits in the next two
financial years. We remain confident of the long term potential for this business.
The acquisition of Ray’s Outdoors broadens our participation in the Outdoor Leisure retail market and creates a market leading retail
business with two distinct brands, operating 108 stores with combined annualised sales of approximately $400 million. The Company
has the expertise and the systems to grow this business over the coming years towards a potential combined network of 160 stores
with approximately $600 million of sales.
The equity capital raising to finance the acquisition was strongly supported by existing shareholders and attracted a number of new
shareholders to the Company. The raising has also generated the capital to fund the planned rollout of Ray’s Outdoors stores over the
next five years. I would like to thank our shareholders for their support.
The Company has undergone significant change over the last five years. At the beginning of 2005, we had one retail business,
Supercheap Auto with 200 stores and sales of close to $500 million. Today, we have four retail brands with close to 400 stores,
whose combined sales are projected to be over $1.1 billion in the 2010/11 year. The Company’s role has evolved into operating as the
manager and provider of shared services to its retail businesses. In recognition of this change of role, the Directors are recommending
a proposal to change the name of the Company from Super Cheap Auto Group Limited to Super Retail Group Limited at the 2010
Annual General Meeting.
The Board has declared a fully franked final dividend of 13 cents per share. This brings the dividend for the full year to 21.5 cents
per share which is an increase of 3.5 cents on the prior year. The current dividend policy will enable the Group to fully fund planned
store development across each business and deliver a gradual pay-down of debt whilst generating ongoing growth in dividends for
shareholders.
There have been two recent changes to membership of the Board of Directors. Darryl McDonough has decided to retire from the Board
and steps down at the end of August 2010. Darryl has been a member of the Board since the Company was formed prior to listing
in April 2004 and has also served as a member of the Audit & Risk and the Nomination & Remuneration committees. I would like to
thank Darryl for his valuable contribution to the Company and its shareholders during that time. Sally Pitkin has joined the Board from
the beginning of July 2010. Sally has extensive board and corporate governance experience and her presence on the Board will add a
strong complementary skill set to the existing Directors. We look forward to her contribution to the future of the Company.
On behalf of the Board I would like to thank Peter, his management team and all team members for their contribution to our record
result.
Robert Wright
Chairman
3 ANNUAL REPORT 2010
MANAGING DIRECTOR’S REPORT
We can look back on our achievements during the 2009/10 year with pride. During a tough period for Australasian retail businesses,
Super Cheap Auto Group has delivered another record sales and profit result with net earnings growing by 18.4%. At the same time,
the Group has continued to make pleasing progress in our growth and business improvement strategic initiatives.
Highlights for the year included:
• Earnings per share increasing by 13.7%
• Continued growth in EBIT margins at Supercheap Auto and BCF Boating Camping Fishing
• Further improvements in working capital management across the Group
• Continued improvement in customer research brand tracking survey results
• Continued improvement in team member retention across the Group
• $32.9 million invested in new and refurbished Supercheap Auto and BCF Boating Camping Fishing stores
• Acquisition of Ray’s Outdoors on 31 May 2010
2009/10 was a 53 week trading period for the Group and the extra week’s trading generated an additional $800,000 in net earnings.
The results reflect the strong focus on delivering the right offer (centred on the right range at great value) for our target customers
across the Group. At the same time, we continue to improve our business operations and the progress that we have made in
category and supply chain management over the last few years has been the major driver of like for like sales growth, gross margin
improvement and a reduction in working capital per store.
The results are also testament to the passion, commitment and contribution of our team members. We are a people business - it is our
team that select, buy, move, display and sell our product. I am very proud of our team and on behalf of all shareholders; I would like to
thank the team for their achievements throughout the year.
Auto and Cycle Retailing
At the start of the 2009/10 period we established the Auto and Cycle Retailing division consisting of our Supercheap Auto and
Goldcross Cycles businesses.
Sales at $684.8 million grew by 9.9% whilst EBIT at $48.2 million was 13.5% higher than the prior comparative period.
The performance at Supercheap Auto was particularly pleasing with like for like sales growth of 5.0% building on the very strong
growth achieved in the prior comparative period. Like for like transaction numbers, average items per transaction and average item
values all improved on the prior comparative period.
New products introduction, the further development of the SCA and Calibre own brand product range, effective marketing and
promotion, in store execution and improved in stock presence have been major drivers of this result.
Growth was particularly strong in the Electrical, Interior, Tools & Storage, Carcare and Lubricants categories whilst a market wide
decline in demand and retail prices impacted the performance of the Car Audio/Visual, Navigation and Performance categories.
Gross margin grew by a further 80 basis points over the prior comparative period, driven by improvements to trading terms, overseas
sourcing benefits, own brand development, supply chain efficiencies and the higher Australian dollar through the second half of the
period.
The business continued to improve its inventory management capability and delivered a 2.5% reduction in inventory per store whilst
improving in stock presence in store.
11 new Supercheap Auto stores were opened during the period bringing total store numbers to 267 at the end of June 2010. The
business also refurbished 30 stores during the period including two as Superstores. The performance of more recently opened
regional stores in the 400 format cements confidence that we can extend the Supercheap Auto network to over 300 stores.
ANNUAL REPORT 2010
4
The product fitment offer continues to grow and the business has also delivered another period of strong growth in its trade customer
offer. This represents an opportunity for future growth.
Supercheap Auto also relaunched its Australian website during the period. The majority of the product range is now available online
supported by an increase in product information and instructional videos. Although small, the growth in online sales has been
significant and the website has been awarded the No 1 Hitwise site for the Retail Automotive Industry category.
Goldcross Cycles has experienced a challenging period with a market wide decline in sales of bicycles and parts and accessories.
Sales in its 11 Melbourne stores were 10% lower than the prior comparative period although the seven Queensland stores grew by
37% on a like for like basis.
Price discounting was a regular feature of the bicycle retail market in 2009/10 as retailers strove to drive sales and clear aged stock.
As a result, gross margins fell by nearly 11% of sales when compared to the prior comparative period.
As a result of the performance of the business, the Directors reviewed the carrying value of the $8.1 million of goodwill arising from
the acquisition of Goldcross Cycles and recorded a write-down of $2.0 million.
No new stores were opened during the period as the business completed a full review of its strategy. This review resulted in a revised
business model that will enable the business to achieve its targeted return on capital from a lower sales base. The model for future
stores will be between 400m2 and 600m2 with a reduced investment in space and stock compared to existing stores. The business
plans to relocate eight of its existing stores to smaller locations as opportunities arise and to open three to five new stores in the next
year.
Goldcross Cycles has developed a range of own brand bicycles under the brands Nitro and Flight. Some of these bicycles started
to arrive in store in the second half of the period with the balance arriving in the first half of the new financial period. This range of
own brand bicycles will supplement Goldcross’ range of international branded bicycles and allow the business to present bikes at a
compelling price point for the customer whilst enabling it to achieve target gross margin.
I would like to acknowledge David Ajala, Pam Pugsley, Chris Wilesmith and their teams for their contribution to the Group. The results
they have delivered with the Supercheap Auto business over the last four and a half periods have been outstanding and we look
forward to the development of the Goldcross Cycles business over the coming periods.
Leisure Retailing
The acquisition of Ray’s Outdoors on 31 May 2010 has led to the formation of the Leisure Retailing division consisting of our BCF
Boating Camping Fishing and Ray’s Outdoors businesses.
Sales at $253.2 million were 23.2% higher than the prior comparative period. EBIT at $21.3 million was 30.2% higher than the prior
comparative period.
BCF Boating Camping Fishing performed strongly through the period achieving like for like sales growth of 4.8% which built on the
12.5% delivered in the prior comparative period. Like for like transaction numbers and average item value were higher but average
items per transaction was lower than the prior comparative period.
Very strong sales growth was delivered in New South Wales, Victoria, South Australia and the Australian Capital Territory whereas sales
performance in Northern and Central Queensland reflected the broader slow down in retail spending in those markets. Solid growth
was delivered in all three of the business’s major categories.
Localised ranging, targeted marketing, new product introduction, range extension and own brand development were key drivers of this
result adding to the benefit of a maturing business.
Gross margin grew by 130 basis points to 43.7% benefitting from improvements in trading terms, overseas sourcing, own brand
development, supply chain efficiencies and the stronger Australian dollar through the second half of the period.
BCF also focussed on improved inventory management and delivered a 5% reduction in inventory per store whilst maintaining in stock
presence in store at better than target.
Ten new stores were opened during the period bringing total store numbers to 69 at the end of June 2010. The business has the
potential for 85 to 90 stores across Australia.
5 ANNUAL REPORT 2010
Membership of the BCF Club continued to grow with over 450,000 active members at the end of June. BCF Boating Camping Fishing
also relaunched its website towards the end of the period with an increase in online sales functionality and informational and video
content. Early response from BCF customers has been very encouraging.
Ray’s Outdoors was part of the Group for just one month during the 2009/10 period and so made only a small contribution to the
Group’s results. The acquisition was completed on 31 May 2010 at a total net investment of $53.2 million. The business is expected
to contribute around $7.5 million to Group EBIT in 2010/11 and provide a platform for $2 million in annual synergies to be realised by
2011/12.
At the end of June 2010, Ray’s Outdoors had 38 stores trading across Australia. The business has a potential for around 75 stores
across Australia and New Zealand.
The integration of Ray’s Outdoors is progressing well and we expect the business to be trading on the Group’s POS and SAP ERP
platforms before the end of October 2010.
Steve Doyle, Nat Cooper and Terry Pelzer and their teams have had a very busy period and I would like to congratulate them on the
continuing strong performance of BCF Boating Camping Fishing and the initial success of the Ray’s Outdoors integration.
Group Costs
Group Costs consist of $1.8 million of Ray’s Outdoors acquisition costs and $1.9 million of ongoing public company and bad debt
costs.
Group Logistics
We have continued to benefit from the investment made by the Group in establishing our network of five distribution centres in the
2007/08 period. We have had sufficient capacity to absorb the growth of the Group including the acquisition of Ray’s Outdoors.
This has allowed the Group Logistics team to focus on operational improvements which have resulted in Group Logistics costs falling
by a further 0.1% of sales compared to the prior comparative period. At the same time, the team have also delivered significant
savings in international shipping costs.
This improvement in efficiency has been delivered in conjunction with improvements in service performance to the business in both
the timeliness and accuracy of deliveries contributing to the improved stock position on shelf in store. Importantly the team have also
reduced both the number of and time lost to injuries.
Review of Financial Condition
Cash flow from operations was $52.6 million which was $10.1 million below the prior period. However, the 2009/10 period included
an extra month’s payment of creditors, amounting to $35 million, which fell into the 53rd week. Underlying cash flow performance
continued to be very strong reflecting the ongoing improvements in net inventory to sales ratios in both Supercheap Auto and BCF
Boating Camping Fishing.
Group capital expenditure was $27.1 million which included $7.8 million in new store fit-out, $9.8 million in store refurbishment,
$4.5 million in IT projects and $5.0 million in general capital projects.
The net investment in the acquisition of Ray’s Outdoors was $53.2 million. This was fully funded by the issue of new equity through a
combination of an institutional placement and a share purchase plan which together raised a total of $87 million. The additional capital
raised is being held to fund the rollout of Ray’s Outdoor’s stores over the next five years.
At the end of the period, Group net debt was $78.8 million which was $35.9 million lower than the prior comparative period.
Towards the end of the period, the Group invited the CBA and HSBC to join the ANZ in providing a club debt facility to the Group. The
overall facility is $190 million, with $90 million in the form of a working capital facility, which is reviewed on an annual basis, and
$100 million in the form a term debt facility which matures in June 2012. The Group operated comfortably within our debt facility
covenants during the period.
The Group’s finance costs benefited from the reversal of an unrealised mark to market loss of $2.2 million relating to interest rate
hedging arrangements which was recorded in 2008/09 in accordance with International Financial Accounting Standards.
ANNUAL REPORT 2010
6
Corporate Social Responsibility
The Group has continued to progress its social and environmental initiatives during the year.
On the social side, Supercheap Auto is a supporter of safe driving campaigns, BCF Boating Camping Fishing raises funds for the State
Emergency Services, Goldcross Cycles supports the United Way Bikes for Kids program and across the Group funds are raised for Sids
and Kids, Canteen and BrAshA-T.
Plastic bag usage across the Group’s store network has been significantly reduced and eliminated from BCF Boating Camping
Fishing stores. Supercheap Auto has established car battery recycling arrangements for its customers. The Group is a signatory to
the Australian Packaging Covenant working towards reducing the volume of packaging used across the Group. The Group has also
established a power consumption reduction initiative.
Further details on these initiatives can be found in the Corporate Review section of the Group’s website.
Team Members
The acquisition of Ray’s Outdoors takes the total number of team members in the Group to close to 6,000, operating from 400
locations across Australia, New Zealand and China. We are very pleased that we have continued to increase retention of our team as
we believe that passionate and motivated team members are vital to our success.
Time lost to injuries, although below industry rates, increased during the year despite the reduction in time lost in the distribution
centres. Work is underway to review and improve our safety procedures across our Retail network.
We continue to invest in learning and development initiatives across the Group as one of our strategic differentiators. We completed
the rollout of terminals across the Group which provide the platform for the delivery of computer based training to all retail team
members.
Looking Forward
We expect that the general outlook for retail trading will remain uncertain in the lead up to Christmas but we expect that increasing
confidence will start to drive retail spending in the second half of the coming year. Over the last few years, our businesses have grown
at a faster rate than the markets in which they operate and we expect this to continue in the coming years. Each of our businesses has
a number of retail, product and marketing initiatives underway to drive sales and margin growth.
We continue to have a full store development agenda. We expect to open between 10 and 15 new stores in the Auto and Cycle
Retailing division and around 20 stores in the Leisure Retailing division in the coming 12 months. We also expect to refurbish another
30 Supercheap Auto stores, including three as Superstores, close two Supercheap Auto stores and relocate a number of Goldcross
Cycles stores.
We will also continue to progress our strategic initiatives in the areas of inventory and supply management, multi-channel marketing
and sales, customer relationship management, store systems and people development.
Thank you for your ongoing support of the Company, I look forward to reporting on our progress during the coming year.
Peter Birtles
Managing Director
7 ANNUAL REPORT 2010
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 14 to 24.
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, five 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.
ANNUAL REPORT 2010
8
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 Robert Wright, Dr Darryl McDonough, Ms Sally Pitkin and 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 2010.
Financial Reporting
The Board is provided with monthly reports from management on the financial performance of the Company. The monthly reports
include details of all key financial measures reported against budgets approved by the Board. The Company’s financial report
preparation and approval process for each financial year involves both the Managing Director and the Chief Financial Officer making
the following certifications to the Board that:
•
the Company’s financial reports and accompanying notes represent a true and fair view in all material respects of the Company’s
financial condition and operational results and are in accordance with relevant accounting standards;
the above statement is founded on a sound system of risk management and internal compliance and control which implements the
policies adopted by the Board; and
the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material
respects.
•
•
Board Committees
The Board has established two Committees to assist it in carrying out its responsibilities, the Board Nomination and Remuneration
Committee and the Audit and Risk Committee.
Each Committee has its own written charter setting out its role and responsibilities, composition, structure, membership requirements
and the manner in which the Committee is to operate. All matters determined by Committees are submitted to the full Board as
recommendations for Board decision.
Minutes of committee meetings are tabled at the subsequent Board meeting. Additional requirements for specific reporting by the
committees to the Board are addressed in the charter of the individual committees.
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. This is supported by the Company’s integrity policy and system of reporting
activity suspected of breaching the code to the Company Secretary.
A copy of the Code is available on the Company’s website.
9 ANNUAL REPORT 2010
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 must notify the Chairman before they buy or sell Company securities
and confirm once the transaction is complete.
In all instances, buying or selling Company 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.
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 Skippen (Chairman)
R J Wright
R D McIlwain (resigned 28 October 2009)
D D McDonough
S A Pitkin (appointed 1 July 2010)
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 14 to 24.
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;
ANNUAL REPORT 2010
10
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; and
• ensures 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 28 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:
•
•
• risk oversight and management.
legal compliance;
internal controls; and
Risk Management
The Managing Director 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 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.
11 ANNUAL REPORT 2010
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. Team Members 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; and
• 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.
ANNUAL REPORT 2010
12
FINANCIAL
STATEMENTS
FOR THE PERIOD ENDED
3 JULY 2010
ANNUAL REPORT 2010
13
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
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 3 July 2010.
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 (resigned 28 October 2009)
R A Rowe
D D McDonough
R J Wright
P A Birtles
R J Skippen
S A M Pitkin (appointed 1 July 2010)
Information on qualifications and experience of Directors is included on pages 15 to 17.
Principal activities
During the period, the principal continuing activities of the consolidated entity consisted of:
•
•
•
retailing of auto parts and accessories, tools and equipment
retailing of boating, camping, outdoor entertainment and fishing equipment and apparel
wholesale, retail and distribution of bicycles and bicycle accessories
Dividends – Super Cheap Auto Group Limited
The Directors declared a fully franked dividend of 13.0 cents per share be paid on 1 October 2010 (total dividend, fully
franked - $16,579,199). 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
$
2009 final fully franked dividend (11.5¢ per share)
2010 interim fully franked dividend (8.5¢ per share)
20 October 2009
31 March 2010
12,315,222
9,181,820
21,497,042
Review of operations
Revenue from trading operations for the year was $938,602,000 (2009: $829,306,000). During the period, the consolidated
entity opened 11 new Supercheap Auto stores of which nine were in Australia and two in New Zealand. This resulted in
Supercheap Auto trading with 267 stores at the end of the period. BCF opened or acquired 10 stores during the period
taking total trading stores to 69. The store network for Goldcross Cycles remained static at 18 stores. On 31 May 2010, the
Group acquired Ray’s Outdoors, a 38 store network focusing on camping and outdoor equipment and apparel. At the end of
the financial year, the consolidated entity was trading from 392 stores.
The net profit of the consolidated entity for the period ended 3 July 2010, after providing for income tax, amounted to
$38,053,000 (2009: $32,135,000).
A review of the operations for the 53 weeks to 3 July 2010 is set out in pages 3 to 7 of this report.
Significant changes in the state of affairs
Contributed equity increased by $86,500,000 as the result of a share placement and share purchase plan. Details of the
changes in contributed equity are disclosed in note 24 to the financial statements.
The net cash received from these issues was used principally to undertake the acquisition of Ray’s Outdoors.
Page 14
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
Matters subsequent to the end of the financial year
Since 3 July 2010 Super Cheap Auto Group Limited does not have any matters subsequent to the end of the financial year
to be disclosed.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of operations have not been
included in this annual financial report because the directors believe it would be likely to result in unreasonable prejudice to
the Group.
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 3 July 2010.
Directors and Directors’ interests
The Directors of Super Cheap Auto Group Limited in office at the date of this report are listed below together with details of
their relevant interest in the securities of the Company at that date.
R J Wright, BCom, FCPA, MAICD. Independent Chairman Non-Executive. Age 61
Experience and expertise
Appointed Chairman on 28 October 2009 and has been an Independent Non-Executive Director for 6 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 RCL Group (formerly 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 Board
Member of the Audit and Risk Committee
Chairman of the Nomination and Remuneration Committee
Interest in shares and options
44,274 ordinary shares in Super Cheap Auto Group Limited
P A Birtles. BSc, ACA Managing Director and Chief Executive Officer. Age 46
Experience and expertise
Managing Director and Chief Executive Officer for 4 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
1,542,596 ordinary shares in Super Cheap Auto Group Limited
350,000 options over ordinary shares in Super Cheap Auto Group Limited
100,000 performance rights over ordinary shares in Super Cheap Auto Group Limited
Page 15
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
R A Rowe. Non-Executive Director. Age 66
Experience and expertise
Founder of the business in 1972. Non-executive director for 6 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
53,028,254 ordinary shares in Super Cheap Auto Group Limited.
D D McDonough, BBus (Acty), LLB (Hons), SJD, FCPA, FAICD. Independent Non-Executive Director. Age 59
Experience and expertise.
Independent Non-Executive Director for 6 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.
Special responsibilities
Member of the Audit and Risk Committee.
Member of the Nomination and Remuneration Committee.
Interests in shares and options
62,083 ordinary shares in Super Cheap Auto Group Limited
R J Skippen, ACA Independent Non-Executive Director. Age 62
Experience and expertise
Independent Non-Executive Director for 1 year 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), Flexigroup Limited and Slater & Gordon.
Former directorships in the last 3 years
Non-Executive Director of Courts (Singapore) Limited and Mint Wireless Limited.
Special responsibilities
Chairman of the Audit Committee
Member of the Nomination and Remuneration Committee
Interest in shares and options
Nil.
Page 16
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
S A Pitkin, LLM, LLB Independent Non-Executive Director. Age 51 (Appointed 1 July 2010)
Experience and expertise
Started as Independent Non-Executive Director on 1 July 2010. Sally is a former lawyer and partner of Clayton Utz.
Other current directorships
Non-Executive Director of Aristocrat Leisure Limited, UniQuest Pty Ltd, Export Finance and Insurance Corporation, ASC Pty
Ltd and CEDA.
Former directorships in the last 3 years
Chandler Macleod 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.
Meetings of directors
The number of meetings of the Company’s Board of Directors and each Board Committee held during the period ended 3
July 2010 is set out below:
Full meetings
directors
A
12
4
12
12
11
10
0
B
12
4
12
12
12
12
0
Meetings of Committees
Audit & Risk
B
A
3
1
n/a
n/a
3
2
0
3
1
n/a
n/a
3
3
0
Nomination &
Remuneration
A
2
1
2
2
2
2
0
B
2
1
2
2
2
2
0
R J Wright
R D McIlwain
P A Birtles
R A Rowe
D D McDonough
R J Skippen
S A Pitkin
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.
Page 17
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
Remuneration report (continued)
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 21 July 2009. 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 Perforrmance Rights Plan and the Super Cheap
Auto Executive Option Plan, and
other remuneration such as superannuation.
•
The combination of these comprises the executive’s total remuneration.
Base pay
Structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-
financial benefits at the executives’ discretion.
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. External
remuneration consultants provide analysis and advice to ensure base pay is set to reflect the market for a comparable role.
Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An
executive’s pay is also reviewed on promotion.
There are no guaranteed base pay increases included in any senior executives’ contracts.
Benefits
Executives are entitled to package benefits including car allowances and voluntary superannuation contributions.
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
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 55% 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 3 July 2010, 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 financial,
operational, strategic and human resource areas. 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.
Page 18
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
Remuneration report (continued)
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
are involved with the Group’s strategy):
•
•
•
•
•
P A Birtles, Managing Director
D F Ajala, Chief Operating Officer, Auto & Cycle Retailing
S J Doyle, Chief Operating Officer, Leisure Retailing
G G Carroll, Chief Financial Officer
G L Chad, General Manager, Group Logistics
The highest paid executives for the period ended 3 July 2010 were as follows:
•
•
•
•
•
P A Birtles
D F Ajala
S J Doyle
G G Carroll
G L Chad
Key management personnel of the Group
The following directors are key management personnel of the Group and Super Cheap Auto Group Limited.
2010
Name
Short-term benefits
Post-employment
benefits
Share-based payment
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Retirement
benefits
$
Options
$
Performance
Rights
$
Total
$
108,333
33,333
75,000
72,000
77,917
0
366,583
0
0
0
0
0
0
0
0
0
0
0
0
0
0
56,356
143,771
1,401,377
12,187
12,187
17,220
5,383
103,333
55,833
50,948
36,190
40,860
327,602
668,020
610,635
487,411
536,242
4,070,268
Non-executive directors
R J Wright Chairman
R D McIlwain Chairman
(resigned)
R A Rowe
D D McDonough
R J Skippen
S A Pitkin
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
89,871
30,051
25,000
40,479
32,083
0
217,484
0
0
0
0
0
0
0
0
0
0
0
0
0
0
18,462
3,282
50,000
31,521
45,834
0
149,099
727,262
426,250
2,508
45,230
342,935
334,416
295,539
280,426
200,000 30,104
182,500 16,123
0
124,000
140,000 25,189
2,198,062 1,072,750 73,924
26,961
14,461
14,461
44,384
294,597
0
0
0
0
0
0
0
0
0
0
0
0
0
Page 19
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
Remuneration report (continued)
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
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 3 July 2010 of $775,000 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, Auto & Cycle Retailing
Term of Agreement - 5 years commencing 27 January 2006
Base salary, inclusive of superannuation, for the period ended 3 July 2010 of $400,000 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, Leisure Retailing
Term of Agreement - 5 years commencing 27 January 2006
Base salary, inclusive of superannuation, for the period ended 3 July 2010 of $365,000 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 20
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
Remuneration Report (continued)
G G Carroll, Chief Financial Officer
Term of Agreement - 5 years commencing 17 April 2006
Base salary, inclusive of superannuation, for the period ended 3 July 2010 of $310,000 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
Base salary, inclusive of superannuation, for the period ended 3 July 2010 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.
Share based compensation
Performance Rights
During the year the Group introduced a performance rights plan.
Unissued ordinary shares of Super Cheap Auto Group Limited under the performance rights plan at the date of this report
are as follows:
Grant date
Share Price
Number of Performance Rights
1 September 2009
$5.15
375,165
The above performance rights vest progressively from 3 to 5 years after the date of grant. The exercise of performance
rights is subject to the achievement of qualifying hurdles. The first qualifying hurdle is a 10% cumulative growth in Earnings
per Share (pre amortisation) over the 3 year period ending 30 June 2012. The second qualifying hurdle is a Return of
Capital of greater than 15% over the 3 year period ending 30 June 2012.
The performance rights do not give the right to participate in any other share issue of the Company or any other entity.
The table below lists the performance rights provided as remuneration to each Director of Super Cheap Auto Group Limited
and each of the key management personnel of the Group.
Name
Directors of Super Cheap
Auto Group
R J Wright
R D McIlwain
R A Rowe
D D McDonough
R J Skippen
P A Birtles
Other Key Management
Personnel
D F Ajala
S J Doyle
G G Carroll
G L Chad
Number of performance rights
granted during the period
Number of performance rights
vested during the period
2010
2010
0
0
0
0
0
100,000
38,835
35,437
25,172
28,420
0
0
0
0
0
0
0
0
0
0
The above performance rights are valued using the share price at time of granting. The performance rights granted in the
current reporting period were valued using a share price of $5.15. The performance rights are expensed over a 5-year
period in-line with the vesting conditions of the rights.
Page 21
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
Remuneration Report (continued)
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
100,000
135,000
200,000
0
75,000
100,000
55,000
225,000
300,000
0
150,000
200,000
180,000
220,000
1,940,000
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
2010
0
0
0
0
0
0
0
0
0
0
2010
0
0
0
0
0
150,000
100,000
100,000
75,000
37,500
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.
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 288% and dividends to shareholders have grown by
approximately 372%. Revenue and store numbers (including recently acquired Ray’s Outdoors) have increased by 245%
and 217% respectively. Total key management personnel remuneration has increased by 45% since listing, although
notwithstanding certain managers have had their remuneration packages increased in line with performance and additional
responsibilities.
Page 22
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
Remuneration Report (continued)
Share-based compensation: Performance Rights and Options
Further details relating to options are set out below.
Name
A
Remuneration
consisting of
options and rights
B
C
D
Value at grant
date
$
Value at exercise
date
$
Value at lapse
date
$
R J Wright
R D McIlwain (Resigned 28 October 2009)
R A Rowe
D D McDonough
R J Skippen
S A Pitkin
P A Birtles
D F Ajala
S J Doyle
G G Carroll
G L Chad
0%
0%
0%
0%
0%
0%
14%
10%
10%
11%
9%
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
397,500
614,800
232,000
180,750
59,625
0
0
0
0
0
0
0
0
0
0
0
A = The percentage of the value of remuneration consisting of options and performance rights, 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 and performance rights
granted during the year as part of remuneration.
C = The value at exercise date of options and performance rights that were granted as part of remuneration and were
exercised during the year.
D = The value at lapse date of options and performance rights that were granted as part of remuneration and that lapsed
during the year.
Details of remuneration: Cash bonuses and options
Cash bonuses are dependent on the satisfaction of performance conditions as set out in the section headed “short term
incentives” above. For each cash bonus included in the above tables, the percentage of the available bonus that was paid
and the percentage that was forfeited because the person did not meet the performance criteria are set out below. No part
of the bonuses are payable in future years.
Cash Bonus
Name
Paid
%
Forfeited
%
Year
granted
Vested
%
Forfeited
%
Options
Financial years in
which options
may vest
P A Birtles
D F Ajala
S J Doyle
G G Carroll
G L Chad
100
100
100
100
100
0
0
0
0
0
2007
2006
2006
2006
2007
60
75
75
60
60
-
-
-
2010
2011
2010
2011
-
2010
2011
2010
2011
2010
2011
Minimum
total value
of grant yet
to vest
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Maximum
total value
of grant yet
to vest ($)
108,000
157,600
11,935
38,100
29,100
34,100
38,100
35,475
50,800
9,488
15,050
Insurance of officers
During the financial year, Super Cheap Auto Group Limited paid a premium of $58,500 to insure the directors and
secretaries of the Company and its controlled entities, and the general managers of each of the divisions of the Group.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a
wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for
themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between
amounts relating to the insurance against legal costs and those relating to other liabilities.
Page 23
Super Cheap Auto Group Limited
Directors' report
for the period ended 3 July 2010
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
2009
2010
$
$
405,321
0
405,321
423,084
0
423,084
Total remuneration for taxation services
292,272
126,808
Advisory Services
Total remuneration for advisory services
573,308
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 25.
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 Wright
Chairman
Brisbane
24 August 2010
P A Birtles
Director
Page 24
Super Cheap Auto Group Limited
for the period ended 3 July 2010
PricewaterhouseCoopers
ABN 52 780 433 757
Riverside Centre
123 Eagle Street
BRISBANE QLD 4000
GPO Box 150
BRISBANE QLD 4001
DX 77 Brisbane
Australia
Telephone +61 7 3257 5000
Facsimile +61 7 3257 5999
Auditor’s Independence Declaration
As lead auditor for the audit of Super Cheap Auto Group Limited for the year ended 03 July 2010,
I declare that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Super Cheap Auto Group Limited and the entities it controlled
during the period.
Brett Delaney
Partner
PricewaterhouseCoopers
Brisbane
24 August 2010
Liability limited by a scheme approved under Professional Standards Legislation
Page 25
Super Cheap Auto Group Limited ABN 81 108 676 204
Annual financial report - 3 July 2010
Contents
Financial report
Income Statements
Statement of Comprehensive Income
Statement of Financial Position
Statements of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Directors' declaration
Independent audit report to the members
Page
27
28
29
30
31
33
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 14 to 24, which is not part of this financial report.
The financial report was authorised for issue by the directors on 24 August 2010. 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 26
INCOME STATEMENTS
Super Cheap Auto Group Limited
For the period ended 3 July 2010
Revenue from continuing operations
Other income
Total revenues and other income
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Finance costs expense
Total expenses
Profit before income tax
Income tax (expense)/benefit
Profit attributable to Members of Super Cheap Auto Group Limited
Earnings per share for profit attributable to the ordinary equity
holders of the company:
Basic earnings per share
Diluted earnings per share
Consolidated
Notes
5
6
2010
$'000
938,602
163
938,765
2009
$'000
829,306
477
829,783
(535,825)
(481,468)
(112,502)
(43,462)
(74,716)
(107,903)
(10,477)
(884,885)
53,880
(15,827)
38,053
(97,441)
(40,965)
(65,141)
(89,133)
(13,749)
(787,897)
41,886
(9,751)
32,135
Cents
Cents
34.0
33.0
29.9
29.7
8
37
37
The above income statements should be read in conjunction with the accompanying notes.
Page 27
STATEMENT OF COMPREHENSIVE INCOME
Super Cheap Auto Group Limited
For the period ended 3 July 2010
Notes
2010
$'000
2009
$'000
Consolidated
Profit for the year
38,053
32,135
Other comprehensive income
Cash flow hedges
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
25
25
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Members of Super Cheap Auto Group Limited
(1,274)
526
0
(748)
37,305
3,027
37
0
3,064
35,199
37,305
35,199
The above statement of comprehensive income must be read in conjunction with the accompanying notes.
Page 28
STATEMENT OF FINANCIAL POSITION
Super Cheap Auto Group Limited
As at 3 July 2010
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current 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
Capital and reserves attributable to equity holders of Super Cheap Auto
Group Limited
Consolidated
Notes
2010
$'000
2009
$'000
9
10
11
12
13
14
15
16
17
18
19
20
22
23
24
25
25
30,200
22,195
253,101
305,496
105,309
7,611
103,830
216,750
16,810
25,113
222,821
264,744
87,948
9,672
75,407
173,027
522,246
437,771
99,563
9,008
7,694
11,781
128,046
13,217
100,000
0
10,426
123,643
116,623
39,496
4,593
10,152
170,864
12,320
92,000
0
6,233
110,553
251,689
281,417
270,557
156,354
182,158
158
88,241
270,557
84,627
42
71,685
156,354
The above statement of financial position should be read in conjunction with the accompanying notes.
Page 29
STATEMENTS OF CHANGES IN EQUITY
Super Cheap Auto Group Limited
For the period ended 3 July 2010
Contributed
Equity
Reserves
Notes
$’000
$’000
Retained
Earnings
$’000
Total
$’000
Balance at 28 June 2008
84,627
(3,344)
54,478
135,761
Total comprehensive income for the year as
reported in the 2009 financial statements
Transactions with owners in their capacity as
owners
Dividends provided for or paid
Employee share options
Balance at 27 June 2009
Total comprehensive income for the year
Transactions with owners in their capacity as
owners
Contributions of equity, net of transaction costs
Dividends provided for or paid
Employee share options and performance rights
Balance at 3 July 2010
26
25
24
26
25
0
0
0
0
84,627
3,064
32,135
35,199
0
322
322
42
(14,928)
0
(14,928)
(14,928)
322
(14,606)
71,685
156,354
0
(748)
38,053
37,305
97,531
0
0
97,531
182,158
0
0
864
864
158
0
(21,497)
0
(21,497)
97,531
(21,497)
864
76,898
88,241
270,557
The above statements of changes in equity should be read in conjunction with the accompanying notes.
Page 30
CASH FLOW STATEMENTS
Super Cheap Auto Group Limited
For the period ended 3 July 2010
Consolidated
Notes
2010
$'000
2009
$'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)
1,040,615
907,255
(891,068)
(766,759)
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
Net cash inflow (outflow) from financing activities
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
(72,736)
(10,346)
(13,905)
52,560
(27,136)
86
(52,943)
(79,993)
313,920
(336,358)
(10,714)
(14,395)
88,390
40,843
13,410
16,810
(20)
30,200
36
26
9
(57,144)
(8,351)
(12,332)
62,669
(31,762)
3,237
(4,621)
(33,146)
410,909
(405,517)
(11,891)
(14,928)
0
(21,427)
8,096
8,709
5
16,810
The above cash flow statements should be read in conjunction with the accompanying notes.
Page 31
[THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
Page 32
NOTES TO THE
FINANCIAL STATEMENTS
SUPER CHEAP AUTO GROUP LIMITED
FOR THE PERIOD ENDED
3 JULY 2010
Page 33
NOTES TO THE FINANCIAL STATEMENTS
Super Cheap Auto Group Limited
For the period ended 3 July 2010
Contents of the notes to the financial statements
Summary of significant accounting policies .............................................................................................................................. 35
1
Financial risk management ....................................................................................................................................................... 44
2
Critical accounting estimates and judgements.......................................................................................................................... 48
3
Segment information................................................................................................................................................................. 49
4
Revenue ................................................................................................................................................................................... 51
5
Other Income ............................................................................................................................................................................ 51
6
Expenses .................................................................................................................................................................................. 52
7
Income tax expense.................................................................................................................................................................. 53
8
Current assets - Cash and cash equivalents ............................................................................................................................ 54
9
10 Current assets - Trade and other receivables........................................................................................................................... 54
11 Current assets – Inventories ..................................................................................................................................................... 55
12 Non-current assets – Property, plant and equipment................................................................................................................ 55
13 Non-current assets - Deferred tax assets ................................................................................................................................. 56
14 Non-current assets – Intangible assets..................................................................................................................................... 57
15 Current liabilities - Trade and other payables ........................................................................................................................... 59
16 Current liabilities – Borrowings ................................................................................................................................................. 59
17 Current liabilities – Current tax liabilities ................................................................................................................................... 59
18 Current liabilities – Provisions................................................................................................................................................... 60
19 Non-current liabilities – Trade and Other Payables .................................................................................................................. 60
20 Non-current liabilities – Borrowings .......................................................................................................................................... 60
21 Derivative Financial instruments ............................................................................................................................................... 61
22 Non-current liabilities - Deferred tax liabilities ........................................................................................................................... 65
23 Non-current liabilities – Provisions............................................................................................................................................ 65
24 Contributed equity..................................................................................................................................................................... 66
25 Reserves and retained profits ................................................................................................................................................... 68
26 Dividends .................................................................................................................................................................................. 69
27 Key management personnel disclosures .................................................................................................................................. 70
28 Remuneration of auditors.......................................................................................................................................................... 73
29 Contingencies ........................................................................................................................................................................... 73
30 Commitments............................................................................................................................................................................ 74
31 Related party transactions ........................................................................................................................................................ 75
32
Investments in controlled entities.............................................................................................................................................. 75
33 Business Combinations ............................................................................................................................................................ 76
34 Net tangible asset backing........................................................................................................................................................ 78
35 Deed of cross guarantee........................................................................................................................................................... 78
36 Reconciliation of profit from ordinary activities after income tax to net cash inflow from operating activities ............................ 81
37 Earnings per share ................................................................................................................................................................... 81
38 Share-based payments............................................................................................................................................................. 82
39 Events occurring after balance date ......................................................................................................................................... 84
40 Parent entity financial information............................................................................................................................................. 84
Page 34
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
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 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).
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Financial statement presentation
The Group has applied the revised AASB 101 Presentation of Financial Statements which became effective on 1 January 2009.
The revised standard requires the separate presentation of a statement comprehensive income and a statement of changes in
equity. All non-owner changes in equity must now be presented in the statement of comprehensive income. As a consequence,
the Group had to change the presentation of its financial statements. Comparative information has been re-presented so that it is
also in conformity with the revised standards.
(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 3 July 2010 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
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Officers, who
are responsible for allocating resources and assessing performance of the operating segments. In the current financial year the
operating segments were amended in line with changes in the Group’s internal management structure. As a result, the previous
three operating segments have been combined into two operating segments. These operating segments are Auto & Cycle
Retailing, which encompass Super Cheap Auto and Goldcross Cycles, and Leisure Retailing, which encompass BCF and Ray’s
Outdoors.
The Group has adopted AASB 8 Operating Segments from 28 June 2009. AASB 8 replaces AASB 114 Segment Reporting. The
new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for
internal reporting purposes. As outlined above, this is consistent with the Group’s existing policy in relation to presentation of
segment information.
(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
Page 35
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
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.
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.
A deferred tax liability is recognised in relation to a proportion of the Group’s indefinite life intangibles. The tax base assumed in
determining the magnitude of the deferred tax liability is the capital cost base of the assets. As the assets are indefinite life in
nature it was determined the assets would not be recovered through use but rather through sale.
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.
Investment allowances
Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets (investment
allowances). The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable
and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax
assets.
(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 statement of financial position presented are translated at the closing rate at the date of that
statement of financial position;
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.
Page 36
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
(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
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, service warranties and make good obligations 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 statement of financial position 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 statement of financial position 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 statement of
financial position date which are classified as non-current assets. Loans and receivables are included in receivables in the
statement of financial position.
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 statement of financial position date.
Page 37
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
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.
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.
Page 38
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
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.
(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
statement of financial position 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 acquisition method of accounting is used to account for all business combinations, including business combinations involving
entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The
consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred
and the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent
consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are
expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values as the acquisition date. On an acquisition-by-acquisition basis, the
group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the
measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
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.
Change in accounting policy
A revised AASB 3 Business Combinations became operative on 28 June 2009. While the revised standard continues to apply to
the acquisition method to business combinations, there have been some significant changes.
All purchase consideration is now recorded at fair value at the acquisition date. Contingent payments classified as debt are
subsequently remeasured through profit or loss. Under the Group’s previous policy, contingent payments were only recognised
Page 39
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
when the payments were probable and could be measured reliably and were accounted for as an adjustment to the cost of
acquisition.
Acquisition-related costs are expensed as incurred. Previously, they were recognised as part of the cost of acquisition and
therefore included in goodwill.
Non-controlling interests in an acquiree are now recognised either at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis. Under the previous
policy, the non-controlling interest was always recognised at its share of the acquiree’s net identifiable assets.
If the Group recognises previous acquired deferred tax assets after the initial acquisition accounting is completed there will no
longer be any adjustment to goodwill. As a consequence, the recognition of the deferred tax asset will increase the Group’s net
profit after tax.
(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 statement of financial position 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.
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 and intangibles acquired in business combinations are not amortised. Instead, they are 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.
Page 40
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill
arose, identified according to operating segments.
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.
(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 and Super
Cheap Auto Performance Rights Plan.
The fair value of options and performance rights granted under these plans are 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.
For share 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.
Page 41
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
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 statement of financial position 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.
Performance rights are valued using the 3 month weighted average share price as at the grant date.
Upon exercise of the options and performance rights, the balance of the share-based payments reserve relating to those options
remains in the share based reserve.
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 statement of financial position are shown inclusive of goods and services tax.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to, the taxation authority, are presented as operating cash flow.
(aa) Make good requirements in relation to leased premises.
Make good costs arising from contractual obligations in lease agreements are recognised as provisions at the inception of the
agreement. A corresponding asset is taken up in property, plant and equipment at that time. Expected future payments are
discounted using appropriate market yields at reporting date.
(ab) Earnings per share
Basic earnings per share
(i)
Basic earnings per share is calculated by dividing:-
•
•
the profit attributable to equity holders of the company, by the weighted average number of ordinary shares outstanding
during the period;
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year and excluding treasury shares (note 37).
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.
Page 42
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
(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) Financial year
As allowed under Section 323D(2) of the Corporations Act 2001, the Directors have determined the financial year to be a fixed
period of 52 calendar or 53 calendar weeks. For the period to 3 July 2010, the Group is reporting on the 53 week period that began
28 June 2009 and ended 3 July 2010. For the period to 27 June 2009, the Group is reporting on the period commencing 29 June
2008 and ended 27 June 2009.
(ae) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the 3 July 2010 reporting
period. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.
AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-Settled Share-based Payment Transactions
[AASB 2] (effective from 1 January 2010)
The amendments made by the AASB to AASB 2 confirm that an entity receiving goods or services in a Group share-based payment
arrangement must recognise an expense for those goods or services regardless of which entity in the Group settles the transaction
or whether the transaction is settled in shares or cash. They also clarify how the Group share-based payment arrangement should
be measured, that is, whether it is measured as an equity or a cash-settled transaction. The Group will apply these amendments
retrospectively for the financial reporting period commencing on 4 July 2010.
AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues [AASB 132] (effective
from 1 February 2010)
In October 2009 the AASB issued an amendment to AASB 132 Financial Instruments: Presentation which addresses the
accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Provided certain
conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is
denominated. Previously, these issues had to be accounted for as derivative liabilities. The amendment must be applied
retrospectively in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The Group will
apply the amended standard from 4 July 2010. As the Group has not made any rights issues in a currency other than the functional
currency, the amendment will not have any effect on the Group’s financial statements.
AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9
(effective from 1 January 2013)
AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is likely to affect the Group’s
accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. The
Group is yet to assess its full impact.
Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards
(effective from 1 January 2011)
In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning
on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a related
party and removes the requirement for government-related entities to disclose details of all transactions with the government and
other government-related entities. The Group will apply the amended standard from 4 July 2011. When the amendments are
applied, the Group will need to disclose any transactions between its subsidiaries and its associates. However, there will be no
impact on any of the amounts recognised in the financial statements.
AASB Interpretation 19 Extinguishing financial liabilities with equity instruments and AASB 2009-13 Amendments to
Australian Accounting Standards arising from Interpretation 19 (effective from 1 July 2010)
AASB Interpretation 19 clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is
extinguished by the debtor issuing its own equity instruments to the creditor (debt for equity swap). It requires a gain or loss to be
recognised in profit or loss which is measured as the difference between the carrying amount of the financial liability and the fair
value of the equity instruments issued. The Group will apply the interpretation from 4 July 2010. It is not expected to have any
impact on the Group financial statements since it is only retrospectively applied from the beginning of the earliest period presented
(28 June 2009) and the Group has not entered into any debt for equity swaps since that date.
AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB
2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (effective
from 4 July 2010)
In June 2010, the AASB made a number of amendments to Australian Accounting Standards as a result of the IASB’s annual
improvements project. The Group will apply the amendments from 4 July 2010. The Group does not expect that any adjustments
will be necessary as the result of applying the revised rules.
Page 43
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian
Accounting Standards arising fro Reduced Disclosure Requirements (effective from 1 July 2013)
On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under the framework, a two-
tier differential reporting regime applies to all entities that prepare general purpose financial statements. The Group has public
accountability as defined in AASB 1053 and is listed on the ASX and therefore not eligible to adopt the new Australian Accounting
Standards – Reduced Disclosure Requirements. As a consequence, the two standards will have no impact on the financial
statements of the entity.
(af) Parent entity financial information
The financial information for the parent entity, Super Cheap Auto Group Limited, disclosed in note 40 has been prepared on the
same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
(i)
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of Super
Cheap Auto Group Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than
being deducted from the carrying amount of these investments.
(ii) Tax consolidation legislation
Super Cheap Auto Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation.
The head entity, Super Cheap Auto Group Limited, and the controlled entities in the tax consolidated group 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.
In addition to its own current and deferred tax amounts, Super Cheap Auto Group Limited also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in
the tax consolidated group.
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.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised
as a contribution to (or distribution from) wholly-owned tax consolidated entities.
(iii) Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the
fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
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 44
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
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.
Trade receivables
Trade payables
Forward exchange contracts
- buy foreign currency (cash flow hedges)
Group sensitivity
3 July 2010
USD
$'000
27 June 2009
USD
$'000
508
5,541
8,000
517
3,135
17,300
Based on the financial instruments held at 3 July 2010, 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 $676,000 lower/$826,000 higher (2009: $391,000 lower/$320,000 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.
(ii) 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 2010 and
2009, the Group’s borrowings were at variable rates and were denominated in Australian dollars.
As at the reporting date, the Group had the following variable rate borrowings:
3 July 2010
Balance
$'000
27 June 2009
Balance
$'000
Bank overdrafts and bank loans
110,000
131,700
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 3 July 2010, 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 $211,000 lower/higher (2009: $362,000 lower/higher), mainly as a result of
higher/lower interest expense on bank loans.
Page 45
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
2
Financial risk management cont.
(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 entity had access to the following undrawn borrowing facilities at the reporting date:
Floating rate
- Cash advances
Maturities of financial liabilities
2010
$'000
80,000
Consolidated
2009
$'000
51,797
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.
Group – at 3 July
2010
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 27 June
2009
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
99,563
3,315
102,878
0
3,302
3,302
0
110,995
110,995
(623)
(9,470)
8,867
(1,226)
(623)
0
0
(623)
313
0
0
313
0
85
85
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
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
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
99,563
117,697
217,260
99,563
110,096
209,659
(933)
(9,470)
8,867
(1,536)
(282)
(622)
0
(904)
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)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Page 46
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
2
Financial risk management cont.
(d) Fair value measurements
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 statement of financial
position 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.
As of 28 June 2009, the Group has adopted the amendments to AASB 7 Financial Instruments: Disclosures which requires
disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(i)
(ii)
(iii)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices) (level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following tables present the Group’s entity’s assets and liabilities measured and recognised at fair value at 3 July 2010.
Comparative information has not been provided as permitted by the transitional provisions of the new rules.
Group – at 3 July 2010
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
0
0
0
0
904
904
0
0
0
0
0
0
Total
$'000
904
904
0
0
The fair value of financial instruments traded in active markets such as publicly traded derivatives and trading and available-for-sale
securities is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets
held by the Group is the current bid price. These instruments are included in level 1.
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 Group uses a variety of methods and makes assumptions that are based on market
conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used to
estimate fair value for long term debt for disclosure purposes. Other techniques, such as estimated discounted cash flows are used
to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as present value of
the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates
at the end of the reporting period. These instruments are included in level 2 and comprise debt investments and derivative financial
instruments. In the circumstances where a valuation technique for these instruments is based on significant unobservance inputs,
such instruments are included in level 3.
The carrying amounts 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. The fair value of the current
borrowings approximates the carrying amount, as the impact of discount is not significant.
Page 47
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
2
Financial risk management cont.
(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 14 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 48
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
4
Segment information
(a)
Description of segments
Consistent with changes in the internal management structure, the operating segments have been updated in the current year.
Management has determined the operating segments based on the reports reviewed by the Chief Operating Officers that are used
to make strategic decisions.
The Chief Operating Officers consider the business from the following business segments:
Auto & Cycle Retailing: Retail and distribution of motor vehicle spare parts and bicycle accessories, tools and equipment.
Leisure Retailing: Retail and distribution of boating, camping, fishing, outdoor equipment and apparel.
(b)
Segment information provided to the Chief Operating Officers
The segment information provided to the Chief Operating Officers for the reportable segments for the year ended 3 July 2010 is as
follows:
Auto & Cycle
Retailing
$’000
Leisure
Retailing
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
2010
Segment Revenue
Sales to external customers
687,856
254,005
941,861
0
941,861
Inter segment sales
Total sales revenue
Other revenue/income
(3,061)
284
(792)
130
(3,853)
414
343
(3,853)
938,008
757
938,765
48,180
21,290
69,470
(3,113)
66,357
(2,000)
(10,477)
(10,477)
(2,000)
53,880
(15,827)
38,053
Total revenue and other
income
Segment result (pre-borrowing
costs and impairment)
Borrowing costs
Impairment of goodwill
Profit before income tax
Income tax expense
Profit for the period
Segment Assets & Liabilities
Segment assets
319,796
154,766
474,562
47,684
522,246
Unallocated assets
Total assets
0
0
522,246
Segment liabilities
(161,422)
(96,563)
(257,985)
115,208
(142,777)
Unallocated liabilities
Total liabilities
Acquisitions of property, plant
and equipment and other non-
current segment assets
Depreciation and amortisation
expense
(108,912)
(108,912)
(251,689)
16,605
47,241
63,846
5,420
69,266
(15,609)
(4,976)
(20,585)
(145)
(20,730)
Goodwill impairment
Other non-cash expenses
(2,000)
(2,000)
784
Page 49
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
4 Segment information (continued)
The segment information provided to the Chief Operating Officers for the reportable segments for the year ended 27 June
2009 is as follows:
Auto & Cycle
Retailing
$’000
Leisure
Retailing
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
2009
Segment Revenue
Sales to external customers
623,320
205,492
828,812
Inter segment sales
0
0
0
Total sales revenue
623,320
205,492
828,812
0
0
0
Other revenue/income
382
95
477
494
828,812
0
828,812
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
623,702
205,587
829,289
494
829,783
42,450
16,362
58,812
(3,177)
55,635
(13,749)
(13,749)
41,886
(9,751)
32,135
Segment assets
307,989
103,690
411,679
26,092
437,771
Unallocated assets
Total assets
0
0
437,771
Segment liabilities
(141,869)
(79,278)
(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
(c) Other information
(160,848)
(160,848)
(281,417)
16,632
7,455
24,087
7,632
31,719
(14,312)
(3,854)
(18,166)
(117)
(18,283)
322
The consolidated entity’s divisions are operated in two main geographical areas.
Australia
The home country of the parent entity. The two areas of operation are (i) automotive, bicycles and accessories (ii) boating,
camping, outdoor entertainment and fishing.
Page 50
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
4 Segment information (continued)
New Zealand
Only Supercheap Auto operates in New Zealand.
Geographical information
Revenues from sales to
external customers
Assets
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Australia
New Zealand
871,176
66,832
766,738
62,074
490,421
31,825
408,076
29,695
938,008
828,812
522,246
437,771
Acquisitions of
property, plant and
equipment, intangibles
and other non-current
assets
2010
$’000
67,722
1,544
69,266
2009
$’000
29,918
1,801
31,719
Revenues are allocated based on the country in which the customer is located. Assets and capital expenditure are allocated
based on where the assets are located. The amounts provided to the Chief Operating Officer with respect to revenue, total
assets and liabilities are measured in a manner consistent with the income statement and statement of financial position.
5
Revenue
From continuing operations
Sales revenue
Sale of goods
Other revenue
Interest
6
Other Income
Other income
2010
$'000
938,008
938,008
594
594
Consolidated
2009
$'000
828,812
828,812
494
494
938,602
829,306
Consolidated
2010
$'000
163
163
2009
$'000
477
477
Page 51
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
7
Expenses
Profit before income tax includes the following specific gains and
expenses:
Expenses
Net loss on disposal of property, plant and equipment
Depreciation
Computer systems
Plant and equipment
Motor vehicles
Total depreciation
Amortisation and Impairment
Computer software
Brand name
Goodwill
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
Foreign exchange gains and losses
Net foreign exchange (gains)/losses
(a) Other finance costs
Consolidated
2010
$'000
2009
$'000
516
5,402
12,275
35
17,712
2,873
125
2,000
20
5,018
12,564
(2,201)
114
10,477
10,749
158,895
169,644
71,832
4,174
76,006
2,323
144
5,347
10,253
88
15,688
2,450
125
0
20
2,595
11,434
2,201
114
13,749
9,931
139,349
149,280
62,177
2,105
64,282
(1,452)
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 loss has
been reversed in the 2010 year due to the expiry of the swap, reducing finance cost expense by $2,201,000 in 2010.
Page 52
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
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 13)
(Decrease) increase in deferred tax liabilities (note 22)
Numerical reconciliation of income tax expense to prima facie tax
(b)
payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2009 - 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Tax consolidation adjustments re NZ branch
Investment allowance
Goodwill impairment
Sundry items
Adjustments for current tax of prior periods
R & D credits
Income tax expense
Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not
recognised in net profit or loss but directly debited or credited to equity
Net deferred tax – debited/(credited) directly to equity (notes 13 and 22)
Tax expense (income) relating to items of other comprehensive income
Cash flow hedges
(c) Tax consolidation legislation
Consolidated
2010
$'000
17,867
(1,652)
(388)
15,827
(1,614)
(38)
(1,652)
53,880
16,164
(39)
(199)
600
123
16,649
(388)
(434)
15,827
(1,137)
(1,137)
(548)
(548)
2009
$'000
15,202
(3,342)
(2,109)
9,751
(2,852)
(490)
(3,342)
41,886
12,566
(253)
(538)
0
85
11,860
(2,109)
0
9,751
1,296
1,296
1,296
1,296
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.
Page 53
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
9
Current assets - Cash and cash equivalents
Cash at bank and in hand
30,200
16,810
10
Current assets - Trade and other receivables
Consolidated
2010
$'000
2009
$'000
Trade receivables
Provision for impairment of receivables (a)
Other receivables
Tax receivable
Prepayments
(a)
Impaired trade receivables
Consolidated
2010
$'000
10,969
(210)
10,759
2,030
548
8,858
22,195
2009
$'000
18,257
(347)
17,910
4,597
1,091
1,515
25,113
As at 3 July 2010 current trade receivables of the Group with a nominal value of $210,000 (2009: $347,000) were impaired.
The amount of the provision was $210,000 (2009: $347,000). 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.
Movements in the provision for impairment of receivables are as follows:
At 28 June 2009
Provision for impairment recognised during the year
Receivables written off during the year as uncollectible
Unused amount reversed
Consolidated
2010
$'000
(347)
(947)
1,084
0
(210)
2009
$'000
(165)
(546)
364
0
(347)
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 3 July 2010, trade receivables of $3,009,000 (2009: $3,905,000) 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
2010
$'000
1,588
333
1,088
3,009
2009
$'000
2,233
616
1,056
3,905
Page 54
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
11
Current assets – Inventories
Finished goods
- at lower of cost or net realisable value
(a)
Inventory expense
Consolidated
2010
$'000
2009
$'000
253,101
222,821
Inventories recognised as expense during the year ended 3 July 2010 amounted to $518,626,000 (2009: $449,064,000).
Write-downs of inventories to net realisable value recognised as an expense/(credit) during the year ended 3 July 2010
amounted to ($1,323,000) (2009: $1,989,000). The expense has been included in ‘costs of sales of goods’ in the income
statement.
12
Non-current assets – Property, plant and equipment
Consolidated
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
Total net property, plant and equipment
Assets pledged as security are detailed in Note 20
Reconciliations - consolidated entity
Carrying amounts at 28 June 2009
Additions
Disposals
Business acquisitions
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 3 July 2010
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
2010
$'000
141,546
(51,581)
89,965
912
(251)
661
42,377
(27,694)
14,683
105,309
Plant and
equipment
$’000
Motor
vehicles
$’000
Computer
systems
$’000
70
0
(32)
658
(35)
0
661
196
0
(39)
0
(88)
1
70
14,678
4,467
(118)
1,079
(5,402)
(21)
14,683
14,137
6,591
(714)
0
(5,347)
11
14,678
73,200
18,643
(439)
10,965
(12,275)
(129)
89,965
65,219
20,238
(2,139)
110
(10,253)
25
73,200
Page 55
2009
$'000
113,116
(39,916)
73,200
326
(256)
70
38,184
(23,506)
14,678
87,948
Total
$’000
87,948
23,110
(589)
12,702
(17,712)
(150)
105,309
79,552
26,829
(2,892)
110
(15,688)
37
87,948
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
13
Non-current assets - Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Doubtful debts
Employee benefits
Accruals
Inventories
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
Share placement costs
Set off with deferred tax liabilities (note 22)
Net deferred tax assets
Movements:
Opening balance
Credited/(charged) to the income statement
Credited/(charged) to equity
Foreign exchange on translation of NZ subsidiary
Acquired in acquisition
Closing balance
Deferred tax assets to be recovered after more than 12 months
Deferred tax assets to be recovered within 12 months
Consolidated
2010
$'000
2009
$'000
63
4,569
103
2,100
0
1,175
3,965
107
1,875
13
13,970
589
14,559
(6,948)
7,611
11,206
1,614
589
0
1,150
14,559
12,013
2,546
14,559
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 56
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
14
Non-current assets – Intangible assets
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
Consolidated
2009
$’000
67,280
0
67,280
14
0
14
19,347
(13,989)
5,358
2,500
(125)
2,375
400
(20)
380
2010
$’000
76,701
(2,000)
74,701
14
0
14
23,356
(16,851)
6,505
22,500
(250)
22,250
400
(40)
360
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
Brand
Name
$’000
Supplier
Agreement
$’000
Totals
$’000
103,830
75,407
Reconciliations – consolidated
entity - 2010
Carrying amounts at 28 June 2009
Acquisitions
Additions
Disposals/Revision in provisional
accounting
Amortisation/Impairment charge
Foreign currency exchange
differences
Carrying amounts at 3 July 2010
67,280
9,421
0
0
(2,000)
0
74,701
14
0
0
0
0
0
14
5,358
0
4,033
(24)
(2,873)
11
6,505
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
Reconciliations – consolidated
entity - 2009
Carrying amounts at 29 June 2008
Acquisitions
Additions
Disposals/Revision in provisional
accounting
Amortisation/Impairment charge
Foreign currency exchange
differences
Carrying amounts at 27 June 2009
66,581
2,746
727
(2,774)
0
0
67,280
(a)
Impairment tests for goodwill
14
0
0
0
0
0
14
6,514
0
1,307
(13)
(2,450)
0
5,358
2,375
20,000
0
0
(125)
0
22,250
Brand
Name
$’000
2,500
0
0
0
(125)
0
2,375
380
0
0
0
(20)
0
360
Supplier
Agreement
$’000
400
0
0
0
(20)
0
380
75,407
29,421
4,033
(24)
(5,018)
11
103,830
Totals
$’000
76,009
2,746
2,034
(2,787)
(2,595)
0
75,407
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the group of assets based on
acquisition.
Page 57
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
14 Non-current assets – Intangible assets (continued)
A CGU level summary of the goodwill allocation is presented below:-
2010
Goodwill
2009
Goodwill
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Ray’s
Outdoors
$’000
Total
$’000
45,336
12,950
7,954
8,461
74,701
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Ray’s
Outdoors
$’000
Total
$’000
45,336
11,990
9,954*
0
67,280
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.
As the Ray’s Outdoors acquisition occurred on 31 May 2010 we believe the intangibles acquired in this transaction reflect
recoverable amounts as they reflect fair value.
(b) Key assumptions used for value-in-use calculations
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
2010
%
3.0
5.0
7.5
2009
%
3
5
10
2010
%
15
15
15
2009
%
15
15
15
The initial two year’s of a store operating growth rate is assumed to be 10% for Supercheap Auto and BCF. For Goldcross
Cycles, store operating growth is assumed to be essentially flat for the first two years.
(c)
Impairment charge
An impairment charge of $2,000,000 arose in the Goldcross CGU following a review of sales and gross margin performance
against business plan expectations in December 2009. No class of asset other than goodwill was impaired. This has been
included in the Auto & Cycle Retailing segment in note 4.
(d) Useful life for brands
The Goldcross brand has been determined to have a 20 year life and is amortised over this period.
No amortisation is provided against the carrying value of the purchased Ray’s Outdoors brand on the basis that it is considered
to have an indefinite useful life.
Key factors taken into account in assessing the useful life of brands were:
•
•
the strong recognition of the Ray’s Outdoors brand; and
there are currently no legal, technical or commercial factors indicating that the life should be considered limited.
Page 58
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
15
Current liabilities - Trade and other payables
Trade payables
Other payables
Loans from related parties
16
Current liabilities – Borrowings
Secured
Finance leases
Cash advance
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
2010
$'000
70,459
29,084
20
99,563
2009
$'000
90,572
26,026
25
116,623
Consolidated
2010
$'000
96
10,000
(1,088)
9,008
0
0
0
2009
$'000
850
39,700
(1,054)
39,496
0
0
0
Total current liabilities – interest bearing liabilities
9,008
39,496
(a) Cash Advances
Cash advances 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 21.
(c) Fair value disclosures
Details of the fair value of borrowings for the Group are set out in note 21.
(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 20.
17
Current liabilities – Current tax liabilities
Income tax payable
Consolidated
2010
$'000
7,694
2009
$'000
4,593
Page 59
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
18
Current liabilities – Provisions
Put option provision
Provision for warranties
Make good provision
Employee benefits
(a) Put Option Provision
Consolidated
2010
$'000
758
44
346
10,633
11,781
2009
$'000
644
44
117
9,347
10,152
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.
19
Non-current liabilities – Trade and Other Payables
Straight line lease adjustment
20 Non-current liabilities – Borrowings
Secured
Finance lease
Cash advance
Consolidated
2010
$'000
13,217
2009
$'000
12,320
Consolidated
2010
$'000
0
100,000
100,000
2009
$'000
0
92,000
92,000
The facilities are secured by first registered floating company charges over all the assets and undertakings of Super Cheap Auto
Group Limited and all its wholly-owned subsidiaries in favour of ANZ Banking Group Limited, HSBC and Commonwealth Bank of
Australia and by cross guarantees and indemnities between Super Cheap Auto Group Limited and all its wholly-owned subsidiaries
in favour of ANZ Banking Group Limited, HSBC and Commonwealth Bank of Australia. Financial covenants are provided by Super
Cheap Auto Group Limited with respect to leverage, gearing, fixed charges coverage and tangible net worth.
Page 60
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
20 Non-current liabilities – Borrowings (continued)
The carrying amount of assets pledged as security are equal to those shown in the consolidated statement of financial position.
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Total facilities
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Totals
Facilities used at balance date
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Totals
Unused balance of facilities at balance date
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Totals
Consolidated
2010
$’000
2009
$’000
190,000
7,000
197,000
110,096
2,689
112,785
79,904
4,311
84,215
184,347
3,694
188,041
132,550
3,322
135,872
51,797
372
52,169
In addition, the Company has access to a $122 million (2009: $122 million) transactional facility for clean credit and foreign
currency dealings.
The current interest rates on the financing arrangements
are:
- Bank debt funding facility
3.97%- 7.09% (2009: 3.90%-7.69%)
21 Derivative Financial instruments
Derivative financial instruments
The Group is party 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 61
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
21
Derivative Financial instruments (continued)
At balance date the following amounts were committed on foreign currency forward exchange contracts:
Buy United States dollars and sell Australian dollars with maturity
- 0 to 6 months
- 7 to 12 months
Consolidated entity
2010
$000
8,000
0
2009
$000
17,300
0
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 statement
of financial position by the related amount deferred in equity. In the year ended 3 July 2010, no hedges were designated as
ineffective (2009: 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
- unrealised gains on interest rate swaps
- 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 15
Included in other receivables under note 10
622
282
904
0
0
904
2,457
0
2,457
(1,934)
(1,934)
523
Interest rate swap contracts
Bank loans of the economic entity currently bear an average variable interest rate of 7.28% (2009: 3.9%). 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
market-to-market loss on the $60,000,000 swap has not been taken to account in the 2010 year as it is considered immaterial.
The Group has entered two interest rate swaps for a total nominal value of $80,000,000 (2009: $80,000,000) with $60,000,000
expiring on 30 May 2011 and $20,000,000 expiring on 16 January 2012.
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 73% (2009: 61%) of the loan
principal outstanding. The average fixed interest rate is 6.31% (2009: 6.91%).
Page 62
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
21
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
15, 17
16, 20
18, 23
Notes
9
10
15, 17
16, 20
18, 23
2010
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Commercial bill/cash advance
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial assets/ (liabilities)
2009
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Commercial bill/cash advance
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial assets/ (liabilities)
Floating
interest
rate
$’000
21,360
0
21,360
2.7%
0
29,008
0
29,008
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
0
0
0
0
0
0
0
60,000
0
60,000
0
20,000
0
20,000
7.3%
7.09%
3.97%
(7,648)
(60,000)
(20,000)
0
0
0
0
0
0
0
0
8,840
22,195
31,035
30,200
22,195
52,395
107,257
0
12,840
120,097
107,257
109,008
12,840
229,105
(89,062)
(176,710)
Floating
interest
rate
$’000
16,087
0
16,087
2.2%
0
51,496
0
51,496
3.9%
(35,409)
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
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
723
25,113
25,836
16,810
25,113
41,923
121,216
0
10,277
131,493
121,216
131,496
10,277
262,989
(105,657)
(221,066)
Page 63
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
21 Derivative Financial instruments (continued)
Consolidated entity
Carrying amount
Net fair value
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Carrying amounts and net fair values of financial assets and
financial liabilities at statement of financial position 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
Interest rate swaps *
Non-traded financial liabilities
30,200
22,195
622
282
53,299
16,810
25,113
2,457
267
44,647
30,200
22,195
622
282
53,299
16,810
25,113
2,457
267
44,647
(107,257)
(109,008)
0
(216,265)
(121,216)
(131,496)
(2,201)
(254,913)
(107,257)
(109,008)
0
(216,265)
(121,216)
(131,496)
(2,201)
(254,913)
*These amounts are unrealised gains and losses which have been included in the net carrying amount and net fair value
of the on-statement of financial position 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 64
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
22
Non-current liabilities - Deferred tax liabilities
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
Consolidated
2010
$'000
2009
$'000
2
0
0
6,675
6,677
0
271
6,948
2
0
0
713
715
0
819
1,534
Set-off of deferred tax liabilities of parent entity pursuant to set-off provisions
Net deferred tax liabilities
(6,948)
0
(1,534)
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
23
Non-current liabilities – Provisions
Make good provision (a)
Employee benefits
Provision for Oceania future dividend (b)
1,534
(38)
(548)
0
6,000
6,948
6,946
2
6,948
1,205
(490)
819
0
0
1,534
1,532
2
1,534
Consolidated
2010
$'000
8,087
2,207
132
10,426
2009
$'000
5,171
930
132
6,233
(a) Make good provision
Provision is made for costs arising from contractual obligations in lease agreements at the inception of the agreement.
A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold
improvements. These costs have been capitalised as part of the cost of the leasehold improvements and are amortised over the
shorter of the term of the lease or the useful life of the assets.
(b) Provision for Oceania future dividend
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.
Page 65
Put option
$’000
644
0
114
0
0
758
Warranties
$’000
44
0
0
0
0
44
Make good
$'000
5,288
413
1,354
(21)
1,399
8,433
Oceania future
dividend
$’000
132
0
0
0
0
132
Total
$’000
6,108
413
1,468
(21)
1,399
9,367
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
23
Non-current liabilities – Provisions (continued)
(c) Movements in provisions (consolidated entity) (notes 18 & 23)
Opening balance as at 28 June 2009
Additional provisions recognised
Indexing of provisions
Provision released
Acquisitions
Closing balance as at 3 July 2010
24
Contributed equity
(a)
Share Capital
Ordinary shares fully paid
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
Dividend reinvestment plan issue on 14 October 2009
Dividend reinvestment plan issue on 17 March 2010
Issue of shares on 4 May 2010
Shares issue under share option
Share placement plan on 27 May 2010
Shares issue under share option
Shares issued on 31 May 2010 as consideration for Ray’s
Outdoors Pty Ltd
Less transaction costs on share issue
Deferred tax credit recognised directly in equity
Closing balance 3 July 2010
Consolidated
2010
$'000
2009
$'000
182,158
84,627
Issue Price
$’000
1.00
1.69
0
1.97
5.35
4.96
4.80
2.36
4.80
2.42
5.16
0
84,233
0
394
3,821
3,279
76,320
1,346
12,143
448
1,548
183,532
(1,963)
589
182,158
Number of
Shares
1
49,697,150
56,732,471
200,000
714,234
661,137
15,900,000
612,500
2,529,809
185,000
300,000
127,532,302
The purpose of the issue on 27 April 2010 was to finance the acquisition of Ray’s Outdoors and provide additional funds to
meet capital expenditure and working capital requirements associated with growing the Ray’s Outdoors store network.
Dividend reinvestment plan
The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or
part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid in cash. Shares
issued under the plan at a 2.5% discount to the market price.
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 nil (2009: 220,000) ordinary shares were issued during the period, with 797,500 options being exercised during
the period. Performance rights over 375,165 (2009: nil) ordinary shares were issued during the period. Nil performance
rights were exercised during the period. Information relating to options outstanding at the end of the financial period are set
out in Note 38.
Page 66
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
24
Contributed equity (continued)
(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 monitors 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 statement of financial position (including minority interest) plus net debt.
During 2010 the Group’s strategy, which was unchanged from 2009, was to ensure that the gearing ratio remained below
50%. This target ratio range excludes the short-term impact of acquisitions. The gearing ratios at 3 July 2010 and 27 June
2009 were as follows:
Total borrowings
Less: Cash & cash equivalents
Net Debt
Total Equity
Total Capital
Gearing Ratio
Consolidated
2010
$'000
109,008
(30,200)
78,808
270,557
349,365
22.6%
2009
$'000
131,496
(16,810)
114,686
156,354
271,040
42.3%
The decrease in the gearing ratio was due to the equity issuance that was undertaken to complete the acquisition of the Ray’s
Outdoors business. The Group now has significant capacity to fund its growth plans, including continued expansion of the store
network.
The Group monitors 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 2010 the Group’s strategy, which was unchanged from 2009, was to maintain a fixed charge cover ratio of around 2.0 times.
The fixed charge cover ratios at 3 July 2010 and 27 June 2009 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
2010
$’000
38,053
15,827
10,477
22,730
69,833
156,920
12,678
69,833
82,511
1.90
2009
$’000
32,135
9,751
13,749
18,283
60,289
134,207
11,548
60,289
71,837
1.87
The improvement in the fixed charge cover ratio was due to the increased profitability of the Group.
Page 67
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
25
Reserves and retained profits
Consolidated
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
Options and performance rights 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
2010
$'000
(2,407)
1,932
633
158
(2,933)
526
(2,407)
1,068
0
864
1,932
1,907
(1,822)
548
633
2009
$'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
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
71,685
54,478
38,053
(21,497)
88,241
32,135
(14,928)
71,685
(c)
Nature and purpose of reserves
(i) Hedging reserve - cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly
in equity, as described in note 1(k). Amounts are recognised in profit and loss when the associated hedged transaction affects
profit and loss.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options and performance rights 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 68
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
26 Dividends
Ordinary shares
Dividends paid by Super Cheap Auto Group Limited during the reporting period were
as follows:
Interim dividend for the period ended 3 July 2010 of 8.5 cents (2009: 6.5 cents per
share) paid on 31 March 2010. Fully franked based on tax paid @ 30%
Final dividend for the period ended 27 June 2009 of 11.5 cents per share (2009: 7.5
cents per share) paid on 20 October 2009. Fully franked based on tax paid @ 30%
Total dividends provided and paid
Dividends paid in cash or satisfied by the issue of shares under the dividend
reinvestment plan were as follows:
Paid in cash
Satisfied by issue of shares
Dividends not recognised at year end
Subsequent to year end, the Directors have declared the payment of a final dividend
of 13.0 cents per ordinary share (2009: 11.5 cents per ordinary share), fully franked
based on tax paid at 30%.
Parent Entity
2010
$’000
2009
$’000
9,182
6,931
12,315
21,497
7,997
14,928
14,395
7,102
21,497
14,928
0
14,928
The aggregate amount of the dividend expected to be paid on 1 October 2010, out of
retained profits at 3 July 2010, but not recognised as a liability at year end, is
16,579
12,315
Franking credits
The franked portions of dividends paid after 3 July 2010 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 3 July 2010.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
47,147
34,769
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 $7,105,371 (2009: $5,255,317).
Page 69
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
27
Key management personnel disclosures
(a)
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2010
$
2009
$
3,344,736
294,597
430,935
4,070,268
2,954,597
340,878
183,297
3,478,772
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 17
to 23.
(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 17 to 23.
(ii) Performance Rights
The performance rights plan commenced in the current reporting period. Details of performance rights provided as
remuneration and shares issued on the exercise of such performance rights, together with terms and conditions of the
performance rights, can be found in the remuneration report on pages 17 to 23.
The number of performance rights 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.
2010
Balance at
the start of
the year
Granted
during the
year as
compensation
0
0
0
0
Name
Directors of Super Cheap Auto Group Limited
R J Wright
R D McIlwain (resigned
28 October 2010)
0
R A Rowe
0
D D McDonough
0
R J Skippen
P A Birtles
100,000
Other key management personnel of the Group
38,835
D F Ajala
35,437
S J Doyle
25,172
G G Carroll
28,420
G L Chad
0
0
0
0
0
0
0
0
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of the
year
Vested and
exercisable at
the end of the
year
Vested and
unexercisable
at the end of
the year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
100,000
38,835
35,437
25,172
28,420
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Page 70
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
27 Key management personnel disclosures (continued)
(iii) 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.
2010
Balance at
the start of
the year
Granted
during the
year as
compensation
0
0
0
0
Name
Directors of Super Cheap Auto Group Limited
R J Wright
R D McIlwain (resigned
28 October 2009)
0
R A Rowe
0
D D McDonough
0
R J Skippen
P A Birtles
0
Other key management personnel of the Group
0
D F Ajala
0
S J Doyle
0
G G Carroll
0
G L Chad
0
0
0
500,000
400,000
400,000
250,000
125,000
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of the
year
Vested and
exercisable at
the end of the
year
Vested and
unexercisable
at the end of
the year
0
0
0
0
0
150,000
265,000
100,000
75,000
37,500
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
350,000
135,000
300,000
175,000
87,500
0
0
0
0
0
150,000
35,000
200,000
75,000
37,500
0
0
0
0
0
0
0
0
0
0
No options are vested and unexercisable at the end of the year.
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
0
Name
Directors of Super Cheap Auto Group Limited
R D McIlwain (resigned
28 October 2009)
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
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
0
500,000
400,000
400,000
250,000
125,000
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.
Share holdings
(iii)
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.
Page 71
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
27
Key management personnel disclosures (continued)
2010
Name
Directors of Super Cheap Auto Group Limited
Ordinary shares
R J Wright
R D McIlwain (resigned 28 October 2009)
R A Rowe
D D McDonough
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
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
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
40,609
158,882
52,402,159
60,000
0
1,392,596
0
0
0
0
0
150,000
3,665
(158,882)
626,095
2,083
0
0
44,274
0
53,028,254
62,083
0
1,542,596
281
143,411
0
50,000
265,000
100,000
75,000
37,500
(100,145)
(220,000)
(75,000)
(50,000)
165,136
23,411
0
37,500
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
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
2010
$000
2009
$000
10,891
7,593
Page 72
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
28
Remuneration of auditors
During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms.
(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
Total remuneration for assurance services
(b)
Taxation services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of company income tax returns
Customs Advice
Total remuneration for taxation services
(c)
Advisory services
PricewaterhouseCoopers Australian firm
Business Consulting
Total remuneration for advisory services
Consolidated
2010
$
2009
$
405,321
405,321
405,321
213,272
79,000
292,272
573,308
573,308
423,084
423,084
423,084
126,808
0
126,808
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.
29
Contingencies
Consolidated
Parent
2010
$000
2009
$000
2010
$000
2009
$000
Guarantees
Guarantees issued by the bankers of Super Cheap Auto
Pty Ltd in support of various rental arrangements for
certain retail outlets.
The maximum future rental payments guaranteed amount
to:
2,689
3,322
1,392
2,131
Page 73
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
30
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 19)
Total lease commitments
Future minimum lease payments expected to be received
in relation to non-cancellable sub-leases of operating
leases
The Group leases various offices, warehouses and retail
stores under non-cancellable operating leases. The
leases have varying terms, escalation clauses and
renewal rights. On renewal the terms of the leases are
renegotiated.
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
2010
$000
2009
$000
2010
$000
2009
$000
487
0
0
487
9,230
0
0
9,230
76,045
211,782
76,250
(13,217)
350,860
61,487
179,970
56,960
(12,068)
286,349
1,194
2,151
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
2,120
1,374
0
3,494
2,120
1,374
0
3,494
2,120
1,374
0
3,494
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management
personnel referred to in the remuneration report on pages 17 to 23 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 $605,000 (2009: $1,230,000) 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 16)
Non-current
Page 74
Consolidated
2010
$000
2009
$000
104
0
104
(8)
96
96
0
96
934
0
934
(84)
850
850
0
850
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
31
Related party transactions
Transactions with related parties are at arm’s length unless otherwise stated.
(a) Parent entities
The parent entity within the Group is Super Cheap Auto Group Limited, which is the ultimate Australian parent.
(b) Subsidiaries
Interests in subsidiaries are set out in note 32.
(c) Key Management Personnel
Disclosures relating to key management personnel are set out in note 27.
(d) Directors
The names of the persons who were Directors of Super Cheap Auto Group Limited during the financial period are R J Wright,
R D McIlwain (resigned 28 October 2009), R A Rowe, D D McDonough, R J Skippen, S A M Pitkin and P A Birtles.
(e) Amounts due from related parties
Amounts due from Directors of the consolidated entity and their director-related entities are nil (2009 : Nil)
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
(g) Loans to/(from) Related Parties
Loans to/(from) Directors
- beginning of the period
- loans advanced
- loan repayments received
End of year
Consolidated
2010
$
2009
$
9,405,863
1,767,960
8,350,895
1,576,355
(25,236)
0
5,619
(19,617)
0
(25,236)
0
(25,236)
There is no allowance account for impaired receivables in relation to any outstanding balances, and no expense has been
recognised in respect of impaired receivables due from related parties.
32
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
Ray’s Outdoors Pty Ltd
Country of
Incorporation
Class of
Shares
2010
%
2009
%
Equity Holding
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
50
100
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.
Page 75
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
33 Business Combinations
During the period, the parent entity acquired the Ray’s Outdoors business as detailed below at (a). In addition, BCF Australia Pty
Ltd acquired certain assets and liabilities of Explore Outdoors during the period (see (b) below).
These acquisitions resulted in the recognition of the following goodwill:
Ray’s Outdoors
Explore Outdoors
(a)
Ray’s Outdoors
(i)
Summary of acquisition
$'000
8,461
960
9,421
On 31 May 2010, the parent entity acquired 100% of the issued share capital of Ray’s Outdoors 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 28 June 2009, the contribution to the Group revenue would have been $116.2 million. The contribution to
Group net profit after tax is not material. 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 28 June 2009, together with the consequential tax effects.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Purchase consideration
Cash paid
Consideration in shares
Total purchase consideration (referred to (ii) below)
Less: Provisional allocation of fair value of net identifiable assets acquired (see below)
Goodwill recognised on acquisition
(ii) Purchase considerations
The assets and liabilities recognised as a result of the acquisition are as follows:
$'000
51,685
1,548
53,233
(44,772)
8,461
Cash
Other Receivables
Inventory (net of provisions)
Plant & Equipment
Brand name
Deferred make good
Tax Assets
Trade Payables
Provision for Employee Entitlements
Make-good provision
Other Payables
Deferred tax liability
Net Identifiable Assets Acquired
Fair Value
$’000
71
345
27,139
12,000
20,000
702
1,361
(7,500)
(1,647)
(1,389)
(99)
(6,211)
44,772
Page 76
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
33 Business Combinations (continued)
The goodwill is attributable to Ray’s Outdoors strong position and profitability in the outdoor and leisure market and the synergies
expected to arise from the acquisition.
Outflow of cash to acquire subsidiary, net of cash acquired
Total purchase consideration
Less: Consideration in shares
Less: Balances acquired
Cash
Outflow of cash
(b) Explore Outdoors
Consolidated
2010
$’000
53,233
(1,548)
(70)
(1,618)
51,615
Acquisition by controlled entity
On 27 October 2009, BCF Australia Pty Ltd acquired certain assets and assumed certain liabilities of the Explore
Outdoors Dubbo business from an entity external to the Group.
Net assets acquired are as follows:
Purchase consideration
Cash Paid
Total purchase consideration
Less: Provisional allocation of fair value of net identifiable assets acquired (refer below)
Goodwill recognised on acquisition
$’000
1,331
1,331
371
960
The goodwill is attributable to Explore Outdoors Dubbo strong position and profitability in the leisure market and
synergies expected to arise after the company’s acquisition
Page 77
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
33 Business Combinations (continued)
Fair value of identifiable net assets acquired
Inventory (net of provisions)
Gift voucher liability
Employee entitlements
Other creditors
Net identifiable assets acquired
$’000
387
(6)
(8)
(2)
371
The amounts recognised by the vendor immediately before acquisition for each class of asset and liability are not
significantly different from the fair values included in the table above.
The acquired business contributed revenues of $2.03 million to the Group for the period 27 October 2009 to 3 July
2010. If the acquisition had occurred on 28 June 2009, the contribution to Group revenue would have been $2.78
million. The contribution to Group net profit after tax is not material.
34
Net tangible asset backing
Net tangible asset per ordinary share
35
Deed of cross guarantee
Consolidated Entity
2010
Cents
$1.28
2009
Cents
69¢
Super Cheap Auto Group Limited, Super Cheap Auto Pty Ltd, BCF Australia Pty Ltd, Super Retail Group Services Pty Ltd,
Goldcross Cycles Pty Ltd, Ray’s Outdoors Pty Ltd and SCA Equity Plan Pty Ltd are parties to a Deed of Cross Guarantee under
which each company guarantees the debts of the others. This Deed of Cross Guarantee was amended on 8 June 2010 to include
Ray’s Outdoors Pty Ltd. 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, Statement of Comprehensive Income and a summary of movements in
consolidated retained earnings
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 3 July 2010 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, Goldcross Cycles Pty Ltd, Ray’s Outdoors Pty Ltd and SCA Equity Plan Pty Ltd.
Page 78
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
35 Deed of cross guarantee (continued)
Income Statement
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
Statement of comprehensive income
Profit for the year
Other comprehensive income
Cash flow hedgings
Income tax relating to components of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Summary of movements in consolidated retained earnings
Consolidated
2010
$'000
2009
$'000
862,697
149
862,846
760,646
336
760,982
(484,194)
(438,514)
(104,255)
(41,402)
(68,241)
(103,231)
(8,689)
(810,012)
52,834
(15,531)
37,303
37,303
(1,274)
0
(1,274)
36,029
(88,485)
(38,784)
(59,475)
(83,303)
(11,976)
(720,537)
40,445
(9,357)
31,088
31,088
3,027
0
3,027
34,115
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
67,084
50,939
0
37,303
(21,497)
(15)
31,088
(14,928)
Retained profits at the end of the financial year
82,890
67,084
Page 79
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
35 Deed of cross guarantee (continued)
(b) Statement of Financial Position
Set out below is a consolidated statement of financial position as at 3 July 2010 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, Goldcross Cycles Pty
Ltd, Ray’s Outdoors Pty Ltd and SCA Equity Plan Pty Ltd.
Consolidated
2010
$'000
2009
$'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
29,106
17,075
227,910
274,091
401
98,043
7,293
103,781
209,518
483,609
66,335
8,912
7,989
9,979
93,215
13,217
100,000
0
10,426
123,643
216,858
266,751
182,158
1,703
82,890
266,751
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
152,222
Page 80
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
36
Reconciliation of profit from ordinary activities after income tax to net cash inflow from
operating activities
Consolidated
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) /decrease in receivables
- (increase) in inventories
- (decrease)/increase in payables
- increase in provisions
- (decrease) in deferred tax
Net cash inflow from operating activities
37
Earnings per share
2010
$000
38,053
22,730
516
784
10,477
96
1,128
(2,756)
(18,226)
2,664
(2,906)
52,560
2009
$000
32,135
18,283
144
322
13,749
(85)
(5,701)
(27,617)
32,132
2,649
(3,342)
62,669
The 2009 basic and diluted earnings per share have been restated to reflect the impact of the current year issue of shares and the
share placement plan (refer Note 24(a)) in order to achieve a comparable calculation to the 2010 basic and diluted earnings per
share. This change takes into account the bonus element included in these issues for ordinary shares as they were made at a
discount to market price.
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
2010
Cents
34.0
33.0
2009
Cents
29.9
29.7
Consolidated Entity
2010
Number
2009
Number
111,859,967
2,303,494
107,493,918
711,244
114,163,461
108,205,162
2010
$’000
2009
$000
38,053
32,135
38,053
32,135
(i) Options and Performance Rights
Options and performance rights 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 81
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
38
Share-based payments
(a) Executive Performance Rights
The Company has established the Super Cheap Auto Executive Performance Rights Plan (“Performance Rights”) to assist in
the retention and motivation of executives of Super Cheap Auto (“Participants”).
It is intended that the Performance Rights 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 Performance Rights, rights may be offered to Participants selected by the Board. Unless otherwise determined by
the Board, no payment is required for the grant of rights under the Rights Plan.
Subject to any adjustment in the event of a bonus issue, each right is an option to subscribe for one Share. Upon the
exercise of a right by a Participant, each Share issued will rank equally with other Shares of the Company.
Performance Rights issued under the plan may not be transferred unless approved by the Board. The table below
summarises rights granted under the plan.
Fair Value of Rights Issued
Grant Date
Consolidated - 2010
1 September 2009
(b) Executive Option Plan
Balance
at start of
the year
(Number)
Granted
during
the year
(Number)
Exercised
during
the year
(Number)
Expired
during
the year
(Number)
Balance
at the end
of the
year
(Number)
Unvested
at the end
of the
year
(Number)
-
-
375,165
375,165
-
-
-
-
375,165
375,165
375,165
375,165
The Company has established the Super Cheap Auto Executive Share Option Plan (“Option Plan”). The Company had
established the 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.
Page 82
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
38 Share-based payments (continued)
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 – 2010
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
220,000
2,825,000
300,000
0
65,000
0
0
0
75,000
0
0
0
0
0
0 207,500
0
0
0
0
0 150,000
0
0
0
0
0
0
0
0
797,500
0
0
0
0
0
0
0
0
37,500
50,000
0
0
0
0
0
0
100,000
0
135,000
200,000
200,000
0
0
0
75,000
100,000
100,000
0
55,000
0
225,000
300,000
300,000
0
0
0
150,000
200,000
200,000
180,000
180,000
220,000
220,000
87,500 1,940,000 1,200,000
Weighted average exercise price
$2.32
Nil
$2.38
$2.55
$2.66
Consolidated – 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
Page 83
NOTES TO THE FINANCIAL STATEMENTS (continued)
Super Cheap Auto Group Limited
For the period ended 3 July 2010
38 Share-based payments (continued)
Fair value of options granted
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 3 July 2010 included:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
options are granted for no consideration
exercise price: n/a (2009: $2.49)
grant date: n/a (2009: 1 August 2008)
expiry date: n/a (2009:1 August 2011)
share price at grant date: n/a (2009: $2.85)
expected price volatility of the company’s shares: n/a (2009: 33%)
expected dividend yield: n/a (2009: 5.0%)
risk-free interest rate: n/a (2009: 4.25%)
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.
39 Events occurring after balance date
No matter or circumstance has arisen since 3 July 2010 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.
40 Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Share-based payments
Cash flow hedges
Retained earnings
Profit or loss for the year
Total comprehensive income
Consolidated
2010
$’000
178,818
326,295
28,060
128,215
182,158
1,932
198
13,792
198,080
19,952
19,963
2009
$’000
146,893
240,805
47,409
139,586
84,627
1,068
187
15,337
101,219
18,133
18,176
Page 84
DIRECTORS’ DECLARATION
Super Cheap Auto Group Limited
For the period ended 3 July 2010
In the directors’ opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 26 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 consolidated entity's financial position as at 3 July 2010 and of its
performance 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 35 will be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in note 35.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
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 Wright
Director
P A Birtles
Director
Brisbane
24 August 2010
Page 85
AUDIT REPORT
Super Cheap Auto Group Limited
For the period 3 July 2010
(continued)
PricewaterhouseCoopers
ABN 52 780 433 757
Riverside Centre
123 Eagle Street
BRISBANE QLD 4000
GPO Box 150
BRISBANE QLD 4001
DX 77 Brisbane
Australia
Telephone +61 7 3257 5000
Facsimile +61 7 3257 5999
www.pwc.com/au
Independent auditor’s report to the members of
Super Cheap Auto Group Limited
Report on the financial report
We have audited the accompanying financial report of Super Cheap Auto Group Limited (the
company), which comprises the statement of financial position as at 03 July 2010, and the income
statement, the statement of comprehensive income, statement of changes in equity and statement
of cash flows for the year ended on that date, a summary of significant accounting policies, other
explanatory notes and the directors’ declaration for the Super Cheap Auto Group Limited (the
consolidated entity). The consolidated entity comprises the company and the entities it controlled at
the period end or from time to time during the financial period.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances. In Note 1, the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
Liability limited by a scheme approved under Professional Standards Legislation
Page 86
AUDIT REPORT
Super Cheap Auto Group Limited
For the period 3 July 2010
(continued)
Independent auditor’s report to the members of
Super Cheap Auto Group Limited (continued)
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Super Cheap Auto Group Limited is in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 03
July 2010 and of its performance for the period ended on that date; and
complying with Australian Accounting Standards
Accounting Interpretations) and the Corporations Regulations 2001; and
(including
the Australian
(b)
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 17 to 23 of the directors’ report for the
year ended 03 July 2010. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Super Cheap Auto Group Limited for the year ended 03
July 2010, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Brett Delaney
Partner
Brisbane
24 August 2010
Page 87
SHAREHOLDER INFORMATION
Super Cheap Auto Group Limited
For the period ended 3 July 2010
The shareholder information set out below was applicable as at 24 August 2010.
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
1,406
1,491
324
223
44
21
There were 164 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
CITICORP NOMINEES PTY LIMITED
GEOMAR SUPERANNUATION PTY LTD
SUNCORP CUSTODIAN SERVICES PTYLIMITED & SUNCORP CUSTODIAN SERVICES PTY
LIMITED
ANZ NOMINEES LIMITED
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
AMP LIFE LIMITED
MR PETER ALAN BIRTLES
MR ROBERT EDWARD THORN
CITICORP NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
MR PETER ALAN BIRTLES
GRAHGER CAPITAL SECURITIES PTY LTD
GRAHGER CAPITAL SECURITIES PTY LTD
AUSTRALIAN REWARD INVESTMENT ALLIANCE
CITICORP NOMINEES PTY LIMITED
Ordinary shares
Number held
Percentage of
issued shares
53,028,254
13,105,096
12,681,918
9,203,071
5,791,364
5,458,613
1,370,000
1,317,640
1,264,011
911,161
736,523
650,000
648,368
646,114
541,654
539,566
539,566
535,391
500,000
500,000
500,000
476,078
404,010
41.53%
10.26%
9.93%
7.21%
4.54%
4.27%
1.07%
1.03%
0.99%
0.71%
0.58%
0.51%
0.51%
0.51%
0.42%
0.42%
0.42%
0.42%
0.39%
0.39%
0.39%
0.37%
0.32%
111,348,398
87.20%
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 24 August 2010 were:-
Name
SCA FT PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
C. Voting rights
The voting rights relating to each class of equity securities is as follows:
a) Ordinary Shares
Ordinary shares
Number held
Percentage of
issued shares
53,028,254
13,105,096
12,681,918
9,203,071
41.53%
10.26%
9.93%
7.21%
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
b) Options and Performance Rights
No voting rights.
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
KEMPSEY (02) 6562 1996
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
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
89 ANNUAL REPORT 2010
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
EMERALD (07) 4982 0088
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
INGHAM (07) 4776 1635
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
OXLEY (07) 3278 0830
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
MELROSE PARK (08) 8177 0048
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) 9894 7377
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
GLEN WAVERLEY (03) 9803 5298
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
MELTON (03) 8746 2302
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
PAKENHAM (03) 5940 8120
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
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KNOX CITY (03) 9887 0833
MOONEE PONDS (03) 9370 7033
RICHMOND (03) 9427 8844
WAURN PONDS (03) 5245 7222
RAY’S OUTDOORS
AUSTRALIAN CAPITAL TERRITORY
FYSHWICK (02) 6280 4066
NEW SOUTH WALES
ALBURY (02) 6041 5333
CAMPBELLTOWN (02) 4628 9299
CAMPERDOWN (02) 9557 9333
CARINGBAH (02) 9542 8988
CASTLE HILL (02) 8850 7544
ERINA (02) 4365 3688
KOTARA (02) 4957 2700
LIDCOMBE (02) 9647 1488
PENRITH (02) 4733 5744
PROSPECT (02) 9636 9266
QUEENSLAND
CAIRNS (07) 4041 0808
SOUTH AUSTRALIA
ADELAIDE CITY (08) 8231 3633
ELIZABETH (08) 8252 0166
ENFIELD (08) 8359 5866
HARBOUR TOWN (08) 8355 4333
VICTORIA
BALLARAT (03) 5331 1888
BENDIGO (03) 5442 1103
BRIGHTON (03) 9596 3816
DANDENONG (03) 9706 9050
FOUNTAIN GATE (03) 9704 1254
FRANKSTON (03) 9770 0012
GEELONG (03) 5229 3278
HOPPERS CROSSING (03) 9749 4129
MARIBYRNONG (03) 9318 4499
MELBOURNE CITY (03) 9347 7666
MENTONE (03) 9584 6644
MILDURA (03) 5021 0100
NORTH GEELONG (03) 52787633
NUNAWADING (03) 9877 8455
PRESTON (03) 9877 8455
SHEPPARTON (03) 5821 8900
SOUTH MORANG (03) 94041977
TAYLORS LAKES (03) 9449 4333
WARRNAMBOOL (03) 5562 9588
WAURN PONDS (03) 5241 8855
WESTERN AUSTRALIA
CANNINGTON (08) 9451 6044
MYAREE (08) 9317 8277
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
TE RAPA 0011 64 7 848 1270
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
AUSTRALIAN CAPITAL TERRITORY
FYSHWICK (02) 6280 8888
TUGGERANONG (02) 6293 1855
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
DUBBO (02) 6882 0233
NOWRA (02) 4421 2668
PENRITH (02) 4733 0110
PORT MACQUARIE (02) 6583 2455
RUTHERFORD (02) 4931 9346
TAREN POINT (02) 9525 0346
TUGGERAH (02) 4351 7655
TWEED HEADS (07) 5513 1244
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
MT ISA (07) 4743 0212
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
NOARLUNGA (08) 8186 5754
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
GEELONG (03) 5275 0238
LAVERTON (03) 9360 9433
MORNINGTON (03) 5976 8424
SHEPPARTON (03) 5822 4963
TRARALGON (03) 5176 5211
WARRNAMBOOL (03) 5561 0405
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
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ANNUAL REPORT 2010
90
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