ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2018
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
ABOUT US
We are building an integrated automotive and financial services group, providing wholesale
and retail customers with a ‘one stop shop’ for all their automotive purchasing, selling,
financing and insurance needs.
Turners is the biggest seller of second hand cars, trucks and machinery in NZ. We finance
them and insure them for mechanical breakdown, accident and loan repayments with the
best range of products in the market.
We also operate in the credit management sector, leveraging off our expertise in the
finance market.
AUTOMOTIVE
RETAIL
FINANCE AND
INSURANCE
CREDIT
MANAGEMENT
Controlling the buying
and selling of second
hand cars, trucks and
machinery to earn a
transactional margin
and delivering cross-
sell opportunities for
Finance and Insurance.
Turners and Buy Right
Cars combined is the
largest second hand
vehicle retailer in New
Zealand.
Helping customers with
simple and attractive
finance and insurance
products, and building
annuity revenue
streams.
Turners has a portfolio
of reputable businesses
offering finance and
insurance products to
customers across New
Zealand, including
personal finance, motor
vehicle loans and
insurance.
Helping businesses of
any size in New Zealand
and Australia with
better management of
their credit challenges.
Turners has a growing
presence in the credit
management sector in
both New Zealand and
Australia through its EC
Credit Control business.
2
3
4
OUR YEAR AT A GLANCE
FINANCIAL HIGHLIGHTS
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Successfully integrated Autosure and Buy Right Cars into the group
Integrated three separate finance operating entities into a single entity under the
Oxford Finance brand
Successfully merged existing insurance business into the newly acquired Autosure
Insurance business
Changed name to Turners Automotive Group Limited
Acquired insurance agent, Motorplus NZ Limited
Dual listed on the ASX
Completed $30 million capital raising, to support growth initiatives
Expanded property footprint with opening of four new retail sites for Cars and
Trucks & Machinery
Acquired new sites for retail development in Auckland, Wellington and Whangarei
Introduced Dealer Loyalty Scheme and issued first tranche of shares
Banking syndication finalised with ASB and BNZ (post balance date, May 2018)
Turners Automotive Retail division celebrated a significant milestone of being in
business for 50 years
GROUP REVENUE
UP 32%
$330.5m
PROFIT BEFORE TAX
UP 26%
$31.1m
NPAT
UP 33%
$23.4m
FULL YEAR DIVIDENDS
UP 7%
15.5 cents per share
S
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FY14
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FY17
FY18
4
5
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
CHAIR AND CEO’S REPORT
The past five years have been a period of strong growth
for Turners as we acquired businesses that expanded our
offer and strengthened our position in the market. From the
purchase of multiple smaller finance and insurance brands
and businesses, through to the major acquisitions of Turners
Auctions, Autosure Insurance and Buy Right Cars, our business
has gone from strength to strength.
This year, we deliberately focused on integrating our
businesses after this period of sustained acquisition growth.
We’ve simplified our brands to allow for better marketing and
promotion; merged our teams into centralised locations; built
common operating and funding platforms; and continued to
improve our systems and processes to ensure we operate as
efficiently as possible.
Thanks to the efforts of our support and administrative staff,
much of this work occurred seamlessly in the background.
Meanwhile, our business and sales teams continued to work
hard, identifying better ways to serve our customers and
realising new growth opportunities.
This resulted in another record year of results for the company
and Turners delivered on guidance yet again, reporting a
record Operating Profit (net profit before tax) of $31.1 million,
a 26% increase on the previous year. Net Profit After Tax rose
to $23.4 million, a 33% increase on FY17.
OPERATING ENVIRONMENT
Transactions in the used vehicle market were up marginally
on FY17, despite some softening earlier in the year during the
elections and dealing with the Marmorated Stink Bug and
Takata Airbag Recall in the latter part of the year. Used car
sales were similar to last year which was a record year; used
truck sales were up 5%; and sales of damaged and end of life
vehicles were up 11%.
The positive environment has led to increasing competition
with dealer numbers up 5% in FY18. This, along with
an increase in the supply of new and used vehicles, put
pressure on margins during the year. Pleasingly, we saw an
improvement in margins over summer and we continue to
focus on buying well and keeping aged stock under control.
In the finance sector, we are seeing indications of a tightening
credit cycle in different parts of the market, so we believe it is
time to focus on lending quality and organic growth. We are
also seeing intense competition for the originators within the
finance and insurance markets, with commissions being paid
to dealers at peak levels.
OPERATING PERFORMANCE
Our integrated business model remains at the heart of our
success, providing us with a myriad of advantages, from the
ability to offer an end to end customer journey and higher
margin transactions in our controlled channels, through to
better customer relationships, diversification of earnings and a
balanced mix of annuity and transactional revenue.
Autosure and Buy Right Cars were successfully integrated
into the group and have provided welcome scale and
improved our reach and competitiveness. Turners took
over management of Buy Right Cars from the vendors in
September 2017, a year earlier than expected. The new
management team is now settled in and dealing competently
with some legacy issues around aged inventory, and we are
starting to see the turn-around in performance we expected.
The earnout payment to the original owners has been
reduced accordingly. We remain very confident in the growth
prospects of this business and we are planning to grow the
network further over the next few years.
We have continued to build our investment into property,
with the aim of securing strategic sites to extend our footprint
or for reconfiguration of existing sites to drive improved retail
experience for further growth. We have allocated a proportion
of insurance reserves to support this property strategy as
it achieves better utilisation of capital in the business, and
improved insurance division returns.
We have further strengthened and diversified our funding
platform, reducing our reliance on individual sources and
our cost of funding, and providing headroom for continued
growth. As of May 2018, a new $140m banking syndication
is now in place with our partners, ASB and BNZ. At the same
time, we have been re-negotiating the pool parameters with
BNZ on the securitisation warehouse.
DIVIDEND
Your Directors remain passionate advocates for the business.
Indeed, a number of them are long term committed
investors, which strongly aligns their interests with those
of shareholders. Every Director brings to the table relevant
experience across a range of sectors and indepth knowledge
of the automotive, finance and insurance industries, and
robust debate and diversity of opinion is encouraged in the
boardroom.
Based on the ongoing positive performance of the group, the
Board declared a fully imputed final quarter dividend of 5.0
cents per share taking the full year dividends to 15.5 cents per
share. The Directors have also adopted an enhanced dividend
policy with an increase in the payout ratio to 50 - 60% of NPAT.
Earnings per share increased to 29.3 cents per share, up 15%
year on year.
STRATEGIC INITIATIVES FOR FY19
We are focused on growing market share by leveraging the
strength and unique benefits of our integrated business
model, and offering more products and services to more
customers across more channels. We will still consider mergers
and acquisitions where there is a strategic benefit, however,
we see the majority of our medium-term growth coming from
within the group.
An essential ingredient in our success will be building on the
“trust” kiwis have in the Turners brand, established over more
than 50 years of doing business in New Zealand.
The used vehicle market remains strong and the large number
of end of life vehicles needing replacement continues to
grow. As automotive sales increase, so does the demand for
automotive finance and insurance products.
We are targeting several key areas in the next year which will
drive our growth:
We are putting the customer at the heart of all we do, with
significant investments in training and people development,
further retail re-configuration, and other ways to improve
the quality of the customer experience, both physically and
online, across all our businesses.
In finance, we will be continuing the transition to higher
quality and more profitable lending.
We have a wealth of valuable data within our business that
informs us about our customers and the markets we operate
in. Transactional data, data about which cars need repairing,
purchasing habits, industry trends and more. We will be
looking to leverage this to engage with our customers, deliver
better service and identify new opportunities to do what we
do better.
SECTOR REVENUE
SECTOR OPERATING PROFIT
FY18 BORROWINGS BY SOURCE
STRATEGIC FOCUS FOR FY19
350
350
300
300
250
250
200
200
150
150
100
100
50
0
50
0
FY15
40
40
30
30
20
20
10
10
FY15
FY16
FY16
FY17
FY17
FY18
0
FY18
0
FY15
FY15
FY16
FY16
FY17
FY17
FY18
FY18
■ CREDIT MANAGEMENT ■ FINANCE AND INSURANCE ■ AUTOMOTIVE RETAIL
BANK
EQUITY
18+
SECURITISATION
BONDS
OTHER
MTF
CUSTOMER FIRST
QUALITY LENDING
Keep developing ‘Customer
First’ culture across all
businesses
Continue the transition
to higher quality, more
profitable lending
Improve the quality of the
customer experience –
both in-person and online
UTILISE OUR
WEALTH OF DATA
LEVERAGE OUR
ECO-SYSTEM
Access and drive value from
the wealth of data in the
business to engage with
our customers, and deliver
better service
Leverage our unique
automotive eco-system to
meet all of our customers’
needs
6
7
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 201825
+
5
+
11
+
1
+
40
Finally, we will be looking to leverage the benefits of our
unique automotive eco-system, identifying new opportunities
we can offer to customers and improved cross-selling across
the group.
TURNERS LIMITED
AN EXCITING FUTURE IN A GROWING MARKET
Consolidated statement of financial position for the year ended 31 March 2016
The Board remains confident in the long term sustainability
of the company and in management’s ability to deliver
increasing value for shareholders.
Assets
Cash and cash equivalents
Kiwis love their cars – more than 1.1 million transactions took
place in the last year alone – and we expect the demand for
second hand vehicles to continue, whether that be today’s
internal combustion engines or the electric vehicles of the
future. More than 20% of the current light vehicle fleet in New
Zealand is at or very close to the scrapping age, which gives
us the confidence in future demand for replacement vehicles
Finance receivables
(ICE or EV).
Financial assets at fair value through profit or loss
Trade receivables
Inventory
Other receivables and deferred expenses
Reverse annuity mortgages
Tax receivables
Intangible assets
Deferred tax asset
Property, plant and equipment
There will always be a need for a trusted business which can
provide multiple channels for customers to buy and sell cars,
both online and in the ‘real world’, and offer all the add-ons
that customers are looking for. We have recently undertaken
market research which shows that the Turners brand stands
out strongly as the most “trusted” brand in the used car market
and the brand that has the most awareness.
Other payables
Total assets
Liabilities
Deferred revenue
Tax payables
Derivative financial instruments
Borrowings
The used car market remains strong and we like the dynamics
of a market that is large in scale, highly fragmented, largely
non-discretionary in nature (particularly compared to the new
car market) and brand agnostic.
Life investment contract liabilities
Insurance contract liabilities
Total liabilities
Share capital
Other reserves
Retained earnings
Shareholders’ equity
Our dual listing on the ASX in July last year is providing the
company with access to a larger capital market to support
our growth strategy and we are seeing increasing interest
from Australian investors. We remain a proudly New Zealand
focused, owned and operated kiwi business. Our company
is well funded, has great brands and is well positioned to
continue growing, cementing our unique position as an
integrated automotive group and delivering increasing value
for our shareholders.
Total shareholders’ equity and liabilities
Total shareholders’ equity
Notes
2016
$’000
2015
$’000
10
11
12
13
14
15
16
19
20
21
22
23
24
32
32
25
13,810
18,455
9,575
14,156
167,598
8,505
9,734
11,108
-
4,024
105,338
362,303
22,270
6,049
990
49
174,816
15,629
12,688
232,491
136,127
(52)
(6,263)
129,812
362,303
12,339
17,350
7,394
8,984
142,827
5,946
13,253
8,319
433
8,532
103,595
328,972
17,790
7,476
71
-
156,995
16,378
9,260
207,970
135,294
(23)
(14,269)
121,002
328,972
Thank you to our shareholders, customers and staff for your
For and on behalf of the Board
ongoing support.
G.K. Baker
Grant Baker
Chairman Director
Chairman
Authorised for issue on 22 June 2016
Todd Hunter
Chief Executive Officer
P.A. Byrnes
Executive Director
The accompanying notes from part of these financial statements
8
CUSTOMER JOURNEYS
Nina is looking
to upgrade her
current 7 year
old car, finds
a late model
ex-rental at Buy
Right Cars and
trades in her
old car. Takes
out finance,
insurance and a
service plan.
Liz has returned
from overseas
and is looking
for a family
car to run the
kids around.
She takes
out finance,
insurance and a
service plan.
Tim is looking
for a used
import on
TradeMe and
finds the perfect
car through
a dealer in
Rotorua. He
trades in his
18 year old car
and takes out
finance and
insurance.
RESEARCH
PURCHASE
DISPOSAL
FINANCE
INSURANCE
SERVICE &
MAINTAIN
END
OF LIFE
Trademe.co.nz
Turners.co.nz
Buyrightcars.co.nz
AutoServices
AutoServices
RESEARCH
PURCHASE
DISPOSAL
FINANCE
INSURANCE
SERVICE &
MAINTAIN
END
OF LIFE
Trademe.co.nz
Turners.co.nz
AutoServices
AutoServices
RESEARCH
PURCHASE
DISPOSAL
FINANCE
INSURANCE
SERVICE &
MAINTAIN
END
OF LIFE
Trademe.co.nz
Buys from dealer
in Rotorua
Trades in old car
through dealer
Takes out finance and insurance
through dealer
Tim’s trade in
purchased by
Turners’ wholesale
division and
sold through
Damaged and
End of Life auction
AutoServices
9
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
AUTOMOTIVE RETAIL
FINANCE
Our goal is to be the retailer of choice for anyone wishing
to buy or sell a used vehicle, be it a car, a truck or a unit of
machinery. Our multi-channel platform ensures we are where
our customers are – online, on Trade Me, in our retail yards
nationwide and in our auction rooms. At the same time, our
finance and insurance offer allows us to meet all our customer
needs at the time of purchase.
We operate under two brands – Turners and Buy Right Cars –
and were involved in more than 50,000 customer transactions
last year for cars, trucks & machinery and damaged & end of
life vehicles.
The ongoing transition from wholesale to higher margin
retail customers continues, with 70% of transactions now
with retail customers (65% in FY17). These sales provide
us with more opportunities to sell finance and insurance
contracts. In addition, the percentage of ‘owned vehicles’ –
those purchased and onsold by Turners – increased to 50% of
transactions, up from 15% four years ago. These also generate
better margins and more finance opportunity.
The development of our national network continues to be
a priority and opens up additional opportunities for profit
contribution. In the last year alone, we opened four new
sites across our nationwide network, including relocations of
existing branches, and we have a strong pipeline of potential
sites and developments in place. Moving forward, we will have
more focus on developing new and existing retail car yards for
both our Turners and our Buy Right Cars brands.
At year end, we were pleased to announce the establishment
of a partnership with Auto Super Shoppes and their network
of 83 workshops. This allows us to now offer service and
maintenance packages through the Turners business. This is
an exciting opportunity and we believe it will make our offer
even more compelling for our customers
REVENUE $223.2 MILLON é 16%
OP PROFIT $16.6 MILLION é 8%
FY18 OP PROFIT
AUTO
RETAIL
41%
41+
Two well known and reputable
brands – Turners and Buy Right
Cars
National network of 24 car yards
and Trucks & Machinery sites
Turners involved in 50,000
customer transactions in FY18:
-
-
70% of transactions with
retail customers
50% of transactions are for
‘owned vehicles’
FY19 KEY FOCUS AREAS
¡
¡
¡
Drive a better customer
experience
Investment in property and
recruitment, training and
development
Redirection of Turners
Finance loans into Oxford
Finance in 2H19
It is estimated that more than 80% of used car buyers require
finance of some kind. Similarly, the majority of buyers will
need insurance cover.
Turners provides for this, offering a range of finance and
insurance products through our own retail channels, but also
through a network of more than 1,500 dealers and brokers
throughout New Zealand.
The market is highly competitive but we are continuing to
experience significant growth as we focus on delivering faster,
better and easier solutions for our customers. This resulted in
our finance book growing 39% in FY18.
We are continuing to tighten credit criteria to position the
business for the inevitable downward shift in the credit cycle.
There has been some arrears deterioration, most noticeably in
the MTF non-recourse book. However, we have implemented
a higher degree of scrutiny, resulting in lower loan volumes
but higher quality new lending.
MTF remains an exciting opportunity for our company and we
are benefitting from our 8% shareholding in the organisation.
As we’ve grown our finance offering, we’ve acquired a number
of different brands. In the past year, we have combined
these into a single entity, with a single technology platform,
under the Oxford Finance brand. From FY19, we will also
be redirecting Turners Finance from the Automotive Retail
division into the Finance division.
REVENUE $39.7 MILLON é 48%
OP PROFIT $11.7 MILLION é 16%
FY18 OP PROFIT
41+
FINANCE
29%
Consolidated into a single
operating brand and platform
under Oxford Finance
Finance book grew by 39% to
$293 million
Provided more than 14,000 loans
in FY18
Over $530 million in funding
available for finance receivables,
primarily from:
-
-
-
-
Securitisation
Banking syndication
Bonds
MTF Finance Receivables
Funding
FY19 KEY FOCUS AREAS
¡
¡
¡
Streamline the customer
experience by making it
quicker and easier
Use smart data analytics
to make better lending
decisions
Continue to re-position
finance ledgers towards
higher quality lending
10
11
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 201829
+
15
+
15
29
+
15
+
15
INSURANCE
CREDIT MANAGEMENT
The acquisition of Autosure in FY17 created the step change
in scale needed to compete in the sector, and we have
continued to grow, with the acquisition of Motorplus NZ last
year. This added about 6,000 polices to our insurance business
from 1 August 2017.
As with finance, the majority of retail vehicle buyers will need
some form of insurance cover. Over 90% of our insurance
business is motor vehicle related, and of this, the majority is for
motor vehicle breakdown insurance (MBI).
These policies are sold through our own retail channels as well
as a network of referrers.
We are working on integrating insurance products into our
digital finance selling platform, AutoApp, to improve the
customer experience and make it easier for dealers to transact
both insurance and finance products through the one system.
We pride ourselves on our ability to be agile, flexible and
innovative and are continually looking at new or improved
policies we can introduce to the market such as MBI for
Electric Vehicles.
Pleasingly, we achieved over our budget expectation for gross
written premium in FY18 and policy sales now exceed more
than 5,300 polices sold every month.
Our overall loss ratio was at 70% for the year, slightly above
budgeted levels. We have a number of initiatives in place,
both cost and revenue focused, that will reduce this loss ratio
to below 68% for the FY19 year.
As with our finance business, our focus in FY18 was on
integrating our insurance businesses into a single operating
entity under the Autosure brand.
REVENUE $46.9 MILLON é 283%
OP PROFIT $5.7 MILLION é 518%
FY18 OP PROFIT
INSURANCE
15%
41+
Consolidated into a single
operating brand and platform
under Autosure insurance
Acquisition of Motorplus NZ and
the transfer of 6,000 policies
More than 5,300 MBI and motor
vehicle insurance policies sold
every month
Gross written premium $40 million
15% increase in insurance policies
sold through Turners channels
FY19 KEY FOCUS AREAS
¡
¡
Continued focus on ‘pricing
for risk’ with data analytics
as a key enabler
Implement replacement
dealer retail selling system,
tightly integrated in finance
origination system AutoApp
EC Credit Control offers total credit management services for
its customers in New Zealand and Australia. It is a solid and
consistent performer, delivering good cashflow and profitable
returns, and has been a part of the Turners portfolio since
2012.
The past year has been focused on attracting and loading
higher quality debt, which has resulted in less debt load, but is
translating into improved collection.
The underlying business performed very well in FY18 when
considering the unredeemed voucher release is $700,000 less
than in FY17. Underlying profit has improved to $5.7m in FY18
from $5.0m in FY17
We continued to increase debt load from our key New
Zealand corporate accounts, reflecting positive market share
gains against our competitors. We still consider Australia to be
a big opportunity and significant effort is being directed into
this market.
On the technology front, we implemented an automated
dialler within the collections division which is resulting in up
to three times more calls being made on a daily basis.
We are in the early stages of a new strategic partnership
with Australian accounts receivable software provider, IODM.
We believe this alliance is a potential game changer for the
business, with EC Credit Control both onselling their products
and acting as IODM’s debt collection partner for all IODM’s
users.
This should see more and fresher debts referred and EC Credit
Control will also receive a share of the monthly subscription
revenue on the products it sells. Importantly, it broadens the
product offering into core business processes and is opening
up a number of opportunities to deliver more value to
customers over and above core debt collection.
REVENUE $18.7 MILLON
2%
OP PROFIT $6.1 MILLION 2%
FY18 OP PROFIT
CREDIT
MANAGEMENT
15%
41+
Improved collections performance
with up to 27.3% of debt collected
(FY17 26.3%)
Automated dialling technology
resulting in up to 3x as many daily
calls
Exciting new partnership with
Australian accounts receivable
software provider, IODM
Terms of Trade sales up 20% in the
NZ market
Unredeemed voucher liability
release $0.4m (FY17 $1.1m)
FY19 focus on Australian corporate
debt market
12
13
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 201829
+
15
+
15
29
+
15
+
15
FY18 FINANCIAL COMMENTARY
This financial commentary should be read in conjunction with the full financial statements and Notes to the Financial Statements in
this Annual Report.
FY18 FINANCIAL RESULTS
BALANCE SHEET
FY18 was a strong and positive year for Turners. The company
continued its record of achieving market guidance, with
operating profit of $31.1m at the top of the guidance range
and a 26% increase on the prior year.
Total assets increased by $95m, mainly due to growth in the
finance book, property investments in Automotive Retail
and the investment of $42m into term deposit for insurance
reserves.
Revenue was up 32% to $330.5m, positively impacted by both
the Buy Right Cars and Autosure acquisitions, and the organic
growth from Turners’ focus on the retail customer and the
growing finance book.
The margin compression in Buy Right Cars, particularly on
some older inventory units, was offset by an improvement
in Finance profits due to a higher level of lending; the step
change in Insurance from the Autosure acquisition; and good
underlying growth. This resulted in a record operating profit
of $31.1m.
Corporate and Other Costs of $0.7m increased compared to
FY17, due to ASX listing costs and acquisition amortisation
offset by a clawback on the Buy Right Cars earnout.
Net profit after tax (NPAT) lifted 33% to $23.4m as Turners
benefited from the acquisitions and integration efforts.
NPATA (NPAT with tax adjusted addback of amortised
acquisition intangibles) was up 42% to $24.9m.
Turners Automotive Group is a strong yielding stock, with a
quarterly dividend payment structure. Based on the ongoing
positive performance of the group, the Directors approved a
change in the Dividend Policy with an increase in the pay out
ratio to 50% to 60% of NPAT (previously 50% to 5% of NPAT).
A final quarter dividend of $5.0 cents per share (cps), took total
FY18 dividends to a record 15.5 cps, up 7% on the previous
year and representing a 50 - 55% pay out of NPAT.
A focus on a faster turnover of inventory and a reduction in
aged stock delivered improved working capital efficiency.
Turners significantly increased its investment into property
related capital projects, with $19m allocated during the year
to update and reposition the retail branch network to support
further growth.
FUNDING MIX
Shareholder equity as at 31 March 2018 was $214.3m (FY17:
$171.7m) and reflected the $30m capital raise in October
2017. The additional capital provides Turners with funding to
support the continued organic growth across the business
as well as capacity for additional growth initiatives including
property expansion.
Turners’ funding platform has been further diversified and
strengthened through a new $140m banking syndication
with ASB and BNZ banks. The new arrangement simplifies the
structure and provides additional funding headroom. It also
shifts a significant portion of debt from amortising profile to
committed term debt thereby freeing up cashflow to support
further organic growth.
FIVE YEAR FINANCIAL PERFORMANCE
Operating Revenue
Net Profit Before Tax (Operating Profit)
Net Profit After Tax
Earnings Per Share
Dividends Per Share
Financial Position
Finance Receivables
Total Assets
Borrowings
Shareholder Funds
FUNDING MIX
TOTAL ASSETS
Equity
Convertible bonds
Securitisation Funding (BNZ)
Bank Funding (Corporate BNZ & ASB)
MTF Finance Receivables Funding
Insurance Contract Liabilities
Life Investment Contract Liabilities
Payables and Deferred Revenue
Deferred tax liability
PROFIT BEFORE TAX
FY14
FY15
31
5
8
20.0
4.0
38
127
18
74
97
19
18
33.0
10.0
143
329
127
121
FY16
171.2
21.6
15.6
24.7
13.0
168.0
367
175
129.8
FY17
251.3
24.6
17.6
25.5
14.5
207.1
557
266
171.7
FY18
330.5
31.1
23.4
29.3
15.5
289.9
652
317
214.3
FY18
$M
%
OF TOTAL
FY17
$M
%
OF TOTAL
652
214
26
133
97
59
48
7
49
19
557
172
26
69
122
49
43
13
43
20
33%
4%
20%
15%
9%
8%
1%
8%
3%
31%
5%
12%
22%
9%
8%
2%
8%
4%
S
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$
32
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28
26
24
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14
15
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Antony Vriens, Grant Baker, Alistair Petrie, John Roberts, Matthew Harrison, Paul Byrnes
BOARD
The Turners Board is focused on creating shareholder value as we continue our growth as an integrated automotive
and financial services business. Each director brings valuable skills, expertise and experience to the Board.
Grant Baker | Non-executive Chairman | Appointed September 2009
As businessmen go, Grant Baker is probably at the more unconventional end of the spectrum. The co-founder of The
Business Bakery has a number of successes under his belt, including the 42 Below vodka venture and Trilogy International,
which recently sold to Chinese Citic Group, amongst a number of other ventures he has been involved in.
With a 7.02% shareholding, Grant is long term committed investor in Turners Automotive Group. As an avid collector of
specialist vehicles and motor racing enthusiast, both as a competitor and as a backer of young up and coming drivers, he is
passionate about the strong Turners brand and its focus on cars. He has wide experience at a senior level in both public and
private New Zealand companies and has been Chairman of Turners Automotive Group since September 2009.
Paul Byrnes | Deputy Chairman and Non-executive Director | Appointed February 2004
Paul Byrnes is a chartered accountant, a professional director and an investor with over 25 years’ experience in senior and
CEO roles in private and listed companies. His career has included the management buyout of previously listed Holeproof
Industries, consulting and participation in merger and acquisition opportunities and business ‘turnaround’ management.
Paul was appointed CEO and Executive Director of Dorchester Pacific in May 2008 (now Turners Automotive Group), handing
over the CEO role to Todd Hunter in June 2016. Paul is entrepreneurial at heart but combines this with a wealth of top
class governance experience (Top Energy and Hellaby Holdings) and the real world CEO experience of bringing a finance
company positively out of the GFC. Paul has a 3.80% shareholding in Turners Automotive Group.
Matthew Harrison | Non-executive Director | Appointed December 2012
Matthew Harrison has extensive management experience and a background in finance and business administration. He is
the former Managing Director of EC Credit Control, the debt recovery business acquired in 2012 and has great experience
dealing with credit cycles and credit management. He joined EC Credit Control in 1998, following senior management roles
in the courier industry. Matthew joined the Turners Automotive Group Board in 2012 and represents his family interests,
which have a 8.02% combined holding in the company. Matthew is a self-confessed “car nut” and has owned some very
special cars over the years including a McLaren P1. He is very enthusiastic about the future of Turners and, given his large
shareholding and love for automobiles, is strongly committed to seeing Turners continue its successful journey.
Alistair Petrie | Non-executive Director | Appointed February 2016
Alistair Petrie has over 15 years of senior management experience in both private and listed companies in the agribusiness
sector. He has extensive knowledge in sales and marketing in both international and domestic environments, which
is particularly useful for some of the challenges and opportunities Turners has importing vehicles from Japan. He has
a number of directorships and represents the interests of Bartel Holdings, which has a 7.95% shareholding in Turners
Automotive Group. Alistair worked for many years at Turners & Growers, the original parent company of Turners Auctions,
which provides a nice connection at Board level back to those foundational brand values of “trust and integrity”.
John Roberts | Independent Director | Appointed July 2015
John Roberts has extensive experience in the financial services industry, having held the role of Managing Director of
credit bureau Veda International for 10 years, during which time the Veda Advantage business was successfully listed on
the ASX. John previously had over 15 years in advertising, with CEO roles with Saatchi & Saatchi in New Zealand and Asia
Pacific, before heading up MasterCard in New Zealand for three years. John’s advertising and branding experience has been
invaluable across a number of projects within the business and he continues to add value and thought leadership around
the use of data and analytics, drawing on his Veda NZ experience.
Antony Vriens | Independent Director | Appointed January 2015
Antony Vriens has been a director and chairman of Turners’ insurance subsidiary, DPL Insurance (now Autosure), since 2012.
He is a highly experienced insurance industry professional, with demonstrated success as a senior executive and consultant
in insurance and wealth management businesses within Australia and New Zealand.
Antony currently holds the position of VP of Technical Insurance Services for Manulife Asia. He brings a hands on, practical
and commercial approach and a strong technology focus to his Board role. His relationships across the insurance industry
and regulators are highly valuable to the Turners business and his collaborative approach is embraced by both the board
and management.
16
17
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 LEADERSHIP TEAM
Turners’ management team comprises individuals with the experience, skills and qualities to help lead
Turners into the future.
Todd Hunter
Chief Executive Officer
Aaron Saunders
Group Chief Financial Officer
Simon Gould-Thorpe
Group Chief Information Officer
Sonya Rose
Group General Manager Human
Resources
Greg Hedgepeth
CEO Turners Automotive Retail
Dion Jones
General Manager Finance
James Searle
Group General Manager
Insurance
David Wilson
Chief Executive Officer
EC Credit Control
Jeremy Rooke
General Manager Digital
Strategy
Todd Hunter | Chief Executive Officer
Todd is a strong and experienced senior executive, with a background in marketing, sales and accounting in both large
global and domestic businesses. He joined Turners Automotive Retail in 2006 and was appointed CEO in August 2013.
In 2015, he was appointed COO of the wider Turners Automotive Froup and named CEO in 2016. Todd is a chartered
accountant and holds a Bachelor of Commerce degree from Auckland University.
Aaron Saunders | Group Chief Financial Officer
Aaron joined Turners Group NZ in 2006. He has a strong background in financial and management accounting, at both a
strategic and operating level in local and international markets. Over the last 20 years, Aaron has worked across a broad
range of company sizes and industries including vehicle importation and distribution, broadcasting and the finance sector.
Aaron is a full member of the New Zealand Institute of Chartered Accountants and holds a Bachelor of Commerce degree
from Auckland University.
Simon Gould-Thorpe | Group Chief Information Officer
Simon joined Turners Automotive Retail in 2010, with over 20 years of achievement and demonstrated success in
Information Technology. He has brought with him extensive experience in multiple industries including finance & insurance,
food production and automotive.
Sonya Rose | Group General Manager Human Resources
Sonya joined Turners in August 2012. She has over 12 years’ experience in all aspects of human resources, with particularly
strong knowledge of employment relations, change management employee engagement. Sonya has worked across a range
of industries and organisations including central and local government and private enterprise.
Greg Hedgepeth | CEO Turners Automotive Retail
Greg joined Turners in 2017 as CEO of the Automotive Retail Division. Greg has overall responsibility for the Turners Cars,
Trucks & Machinery and Damaged & End of Life Vehicle business and Buy Right Cars. He is an experienced automotive
executive and has previously held a number of senior roles with BMW Group NZ and Armstrong Motor Group, one of NZ’s
largest private owned retail automotive networks. With a BCom in Marketing from Auckland University and a number of
years working for Saatchis both in NZ and the US, Greg brings a strong sales and marketing focus to his role.
Dion Jones | Group General Manager Finance
Dion joined Turners Group NZ in 2013 as the Head of Turners Finance. He was appointed to his current role of Group GM
– Finance in February 2017 and has oversight of all Finance Companies within the Turners Automotive Group. Dion has a
comprehensive understanding of the finance and insurance sector, ranging from the development of credit qualifications
through to holding senior sales and management positions. Before joining Turners, Dion worked at APM, Sovereign and ASB
Bank.
James Searle | Group General Manager Insurance
James is responsible for operational performance and development of life and consumer (vehicle and finance related)
insurance products. James has over 25 years’ experience in the New Zealand insurance industry having worked across
underwriting, portfolio management, relationship management and marketing roles for major insurance companies
including IAG and Lumley General Insurance.
David Wilson | Chief Executive Officer EC Credit Control
Dave joined EC Credit in 2007 and was previously in the role of Group Sales Manager. He was appointed to his current role
in April 2015. Dave has worked in the credit management industry since 2001 and has over 20 years’ experience and held
senior positions in banking, finance and recruitment industries.
Jeremy Rooke | General Manager Digital Strategy
Jeremy joined Turners Automotive Group in 2009 with responsibility for overseeing business analysis and software
development. His current role involves leading the application of new technologies, business models and channels to
enable and expand Turners’ digital capabilities. He holds degrees in Law and Arts, and prior to Turners, worked as a business
analyst and projects manager on several large transformative IT programmes, most notably in the insurance sector.
18
19
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
FINANCIAL REPORTS
FOR THE YEAR ENDED
31 MARCH 2018
22 Independent Auditor’s Report
28 Consolidated Statement of Comprehensive Income
29 Consolidated Statement of Changes in Equity
30 Consolidated Statement of Financial Position
31 Consolidated Statement of Cash Flows
32 Notes to the Financial Statements
20
21
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2018
Level 9
45 Queen Street
Auckland 1010
New Zealand
PO Box 3899
Auckland 1140
New Zealand
T +64 9 309 0463
F +64 9 309 4544
E enquiries@staplesrodway.com
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2018
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Turners Automotive Group Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Turners Automotive Group Limited and its
subsidiaries ('the Group') on pages 28 to 83, which comprise the consolidated statement of financial position
as at 31 March 2018, and the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at 31 March 2018, and its consolidated financial performance
and its consolidated cash flows for the year then ended in accordance with New Zealand Equivalents to
International Financial Reporting Standards ('NZ IFRS') and International Financial Reporting Standards ('IFRS').
Our report is made solely to the Shareholders of Turners Automotive Group Limited, in accordance with the
Companies Act 1993. Our audit work has been undertaken so that we might state those matters which we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than Turners Automotive Group Limited and the
Shareholders of Turners Automotive Group Limited, for our audit work, for our report or for the opinions we
have formed.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) ('ISAs (NZ)'). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with
Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New
Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (‘IESBA Code’), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor and provider of other assurance services we have no relationship with, or
interests in, Turners Automotive Group Limited or any of its subsidiaries. The provision of these other assurance
services has not impaired our independence.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements of the current year. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Key audit matters are selected from the matters
communicated with the Directors, but are not intended to represent all matters that were discussed with them.
Key Audit Matter
How our audit addressed the key audit matter
Impairment testing of Goodwill and Other Indefinite Life
Intangible Assets
As disclosed in Note 20 of the Group’s consolidated
financial statements the Group has goodwill of $92.5m
allocated across four of the Group’s cash-generating
units (‘CGUs’) and brand assets of $71.4m allocated
across three of the Group’s CGUs. Goodwill and brand
were significant to our audit due to the size of the assets
and the subjectivity, complexity and uncertainty
inherent in the measurement of the recoverable amount
of these CGUs for the purpose of the required annual
impairment test. The measurement of a CGUs
recoverable amount includes the assessment and
calculation of its ‘value in-use’.
Management has completed the annual impairment test
for each of these four CGUs as at 31 March 2018.
This annual impairment test involves complex and
subjective estimation and judgement by Management
on the future performance of the CGUs, discount rates
applied to future cash flow forecasts, and future market
or economic conditions.
Management has also engaged an external valuation
expert to assist in the annual impairment testing of the
four CGUs.
Our audit procedures among others included:
Evaluating Management’s determination of the Group’s four
CGUs based on our understanding of the nature of the Group’s
business and the economic environment in which the
segments operate. We also analysed the internal reporting of
the Group to assess how the CGUs are monitored and
reported.
Challenging Management’s assumptions and estimates used
to determine the recoverable value of its Indefinite Life
Intangible Assets, including those relating to forecasted
revenue, cost, capital expenditure and discount rates, by
adjusting for future events and corroborating the key market
related assumptions to external data. Procedures included:
o
o
o
o
o
o
o
o
o
Evaluating the logic of the value-in-use calculations
supporting their annual impairment test and testing the
mathematical accuracy of these calculations;
Evaluating Management’s process regarding the
preparation and review of forecasts;
Comparing forecasts to Board approved forecasts;
Evaluating the historical accuracy of the Group’s
forecasting to actual historical performance;
Evaluating the forecast growth assumptions;
Evaluating the inputs to the calculation of the discount
rates applied;
Engaging our own internal valuation experts to evaluate
the logic of the value-in-use calculation and the inputs to
the calculation of the discount rates applied;
Evaluating Management’s sensitivity analysis for
reasonably possible changes in key assumptions; and
Performing our own sensitivity analyses for reasonably
possible changes in key assumptions, the two main
assumptions being: the discount rate and forecast
growth assumptions.
Evaluating the related disclosures about indefinite life
intangible assets which are included in Note 20 in the Group’s
consolidated financial statements.
22
23
22
23
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2018
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2018
Key Audit Matter
How our audit addressed the key audit matter
Valuation of Finance Receivables
As disclosed in Note 14 of the Group’s consolidated
financial statements the Group has finance receivable
assets of $289.8m. Finance receivable assets were
significant to our audit due to the size of the assets and
the subjectivity, complexity and uncertainty inherent in
the timing of the recognition of impairment in respect of
finance receivables and the amount of that impairment.
The assessment of impairment is made at both an
individual finance receivable level, for individually
significant receivables, and a collective level for groups
of finance receivables with similar credit risk
characteristics.
Management has prepared impairment models to
complete its assessment of impairment for the Group’s
finance receivables as at 31 March 2018.
This assessment involves complex and subjective
estimation and judgement by Management on credit
risk and the future cash flows of the finance receivables.
Valuation of Insurance Contract Liabilities
As disclosed in Note 33 of the Group’s consolidated
financial statements the Group has insurance contract
liabilities of $48.4m. The Group’s insurance contract
liabilities were significant to our audit due to the size of
the liabilities and the subjectivity, complexity and
uncertainty inherent in estimating the impact of claims
events that have occurred but for which the eventual
outcome remains uncertain.
Management has engaged an external actuarial expert
to estimate the Group’s insurance contract liabilities as
at 31 March 2018.
Our audit procedures among others included:
Evaluating the design and operating effectiveness of the key
controls over finance receivable origination, ongoing
administration and impairment model data and calculations;
For individually assessed finance receivables, examining those
finance receivables and forming our own judgements as to
whether the impairment provision recognised by Management
was appropriate;
For the collectively assessed finance receivables, challenging
and evaluating the logic of Management’s impairment models
and the key assumptions used with our own experience. Also,
testing key inputs used in the collective impairment models
and the mathematical accuracy of the calculations within the
models;
Evaluating the related disclosures about finance receivables,
and the risks attached to them which are included in Note 14 in
the Group’s consolidated financial statements.
Our audit procedures among others included:
Evaluating the design and operating effectiveness of the key
controls over insurance contract origination, ongoing
administration, integrity of data provided to Management's
external actuarial expert used in the estimation process and
management’s review of the estimates;
Evaluating the competence, capabilities, objectivity and
expertise of Management's external actuarial expert and the
appropriateness of the expert's work as audit evidence for the
relevant assertions;
Agreeing the data provided to Management's external
actuarial expert to the Group’s records;
Engaging our own actuarial expert to assist in understanding
and evaluating:
o
o
the work and findings of the Group’s external actuarial
expert engaged by Management;
the Group’s actuarial methods and assumptions to assist
us in challenging the appropriateness of actuarial
methods and assumptions used by Management;
Assessing the selection of methods and assumptions with a
view to identifying management bias;
Evaluating the related disclosures about insurance contract
liabilities, and the risks attached to them which are included in
Note 33 in the Group’s consolidated financial statements.
Other Information
The Directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 31 March 2018 (but does not include the consolidated
financial statements and our auditor’s report thereon).
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Directors for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of the consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the Group for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
24
25
24
25
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2018
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2018
As part of an audit in accordance with ISAs (NZ), we exercise professional judgement and maintain professional
From the matters communicated with the Directors, we determine those matters that were of most significance
scepticism throughout the audit. We also:
in the audit of the consolidated financial statements of the current year and are therefore the key audit matters.
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
public interest benefits of such communication.
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
Matters Relating to the Electronic Presentation of the Audited Consolidated Financial Statements
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
This audit report relates to the consolidated financial statements of Turners Automotive Group Limited and its
of the Group’s internal control.
subsidiaries for the year ended 31 March 2018 included on Turners Automotive Group Limited’s website. The
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
Directors of Turners Automotive Group Limited are responsible for the maintenance and integrity of Turners
and related disclosures made by management.
Automotive Group Limited’s website. We have not been engaged to report on the integrity of Turners
Conclude on the appropriateness of the use of the going concern basis of accounting by the Directors and,
Automotive Group Limited’s website. We accept no responsibility for any changes that may have occurred to
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
the consolidated financial statements since they were initially presented on the website.
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
The audit report refers only to the consolidated financial statements named above. It does not provide an
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion on any other information which may have been hyper linked to or from these consolidated financial
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
statements. If readers of this report are concerned with the inherent risks arising from electronic data
However, future events or conditions may cause the Group to cease to continue as a going concern.
communication, they should refer to the published hard copy of the audited consolidated financial statements
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
and related audit report dated 28 June 2018 to confirm the information included in the audited consolidated
the disclosures, and whether the consolidated financial statements represent the underlying transactions
financial statements presented on this website.
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
Legislation in New Zealand governing the preparation and dissemination of consolidated financial statements
activities within the Group to express an opinion on the consolidated financial statements. We are
may differ from legislation in other jurisdictions.
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
The engagement partner on the audit resulting in this independent auditor’s report is D I Searle.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
STAPLES RODWAY AUCKLAND
Auckland, New Zealand
28 June 2018
26
27
26
27
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group Limited
Consolidated statement of comprehensive income for the year ended 31 March 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2018
Turners Automotive Group Limited
Consolidated statement of changes in equity for the year ended 31 March 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
Revenue from continuing operations
Other income
Cost of goods sold
Interest expense
Impairment provision expense
Subcontracted services expense
Employee benefits (short term)
Commission
Advertising expense
Depreciation and amortisation expense
Property and related expenses
Systems maintenance
Claims
Movement in life insurance liabilities
Credit legal fee service expense
Other expenses
Profit before taxation
Taxation (expense)/benefit
Profit for the year
Other comprehensive income for the year (which may subsequently be reclassified to
profit/loss), net of tax
Cash flow hedges
Foreign currency translation differences
Total other comprehensive income
Total comprehensive income for the year
Earnings per share (cents per share)
Basic earnings per share
Diluted earnings per share
Notes
2018
$’000
2017
$’000
7
7
7
7
7
33
8
9
9
325,047
5,423
249,338
1,671
(137,332)
(14,344)
(6,380)
(10,777)
(51,911)
(12,107)
(4,001)
(5,627)
(10,644)
(1,822)
(32,021)
(82)
(844)
(116,997)
(11,350)
(2,026)
(8,520)
(40,862)
(7,446)
(3,431)
(2,863)
(9,391)
(1,468)
(6,491)
(1,056)
(838)
(11,445)
(13,639)
31,133
(7,773)
23,360
24,631
(7,057)
17,574
(170)
2
(168)
41
(6)
35
23,192
17,609
29.26
25.49
28.87
25.03
The accompanying notes form part of these financial statements
Balance at 31 March 2016
Transactions with shareholders in their capacity as owners
Capital contributions (net of issue costs)
Employee share based payments
Dividend paid
Share
capital
$’000
136,127
Notes
26
27
28
32,682
-
-
Total transactions with shareholders in their capacity as owners
32,682
Comprehensive income
Profit
Other comprehensive income
Total comprehensive income for the year, net of tax
-
-
-
Cash flow
Share Translation
hedge Retained
options
reserve
reserve
earnings
$’000
-
-
208
-
208
-
-
-
$’000
(17)
$’000
(35)
-
-
-
-
-
(6)
(6)
-
-
-
-
-
41
41
Total
$’000
$’000
(6,263)
129,812
-
-
(8,595)
(8,595)
32,682
208
(8,595)
24,295
17,574
17,574
-
35
17,574
17,609
Balance at 31 March 2017
168,809
208
(23)
6
2,716
171,716
Transactions with shareholders in their capacity as owners
Capital contributions (net of issue costs)
Employee share based payments
Dividend paid
26
27
28
30,339
-
-
Total transactions with shareholders in their capacity as owners
30,339
Comprehensive income
Profit
Other comprehensive income
Total comprehensive income for the year, net of tax
-
-
-
-
493
-
493
-
-
-
-
-
-
-
-
2
2
-
-
-
-
-
(170)
(170)
-
-
30,339
493
(11,417)
(11,417)
(11,417)
19,415
23,360
23,360
-
(168)
23,360
23,192
Balance at 31 March 2018
199,148
701
(21)
(164)
14,659
214,323
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
28
29
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Consolidated statement of financial position for the year ended 31 March 2018
TURNERS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated statement of financial position for the year ended 31 March 2016
for the year ended 31 March 2018
TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2016
Turners Automotive Group Limited
Consolidated statement of cash flows for the year ended 31 March 2018
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2018
2018
$’000
2016
2016
$’000
$’000
25,145
2017
$’000
2015
2015
$’000
$’000
69,069
167,598
142,827
14,156
13,810
18,455
53,378
13,810
11,323
18,455
38,596
9,575
9,575
289,799
14,156
-
167,598
11,747
8,505
9,997
9,734
4,820
11,108
35,945
-
-
170,982
4,024
4,024
651,732
105,338
8,505
9,734
11,108
12,339
17,350
10,320
12,339
12,663
17,350
44,642
7,394
7,394
207,143
8,984
8,984
88
142,827
8,489
5,946
9,222
13,253
4,000
8,319
18,909
433
433
172,088
8,532
8,532
556,633
103,595
5,946
8,319
13,253
105,338
103,595
362,303
362,303
328,972
328,972
34,875
28,091
22,270
6,049
226
22,270
5,506
6,049
18,786
990
990
5,029
49
49
111
174,816
317,373
15,629
7,127
12,688
48,376
232,491
437,409
15,629
12,688
174,816
232,491
17,790
7,476
7,611
17,790
5,624
7,476
20,173
71
71
1,808
-
-
-
156,995
265,889
16,378
12,847
9,260
9,260
42,874
207,970
384,917
156,995
16,378
207,970
136,127
136,127
199,148
(52)
(52)
516
(6,263)
14,659
129,812
214,323
362,303
651,732
129,812
362,303
(6,263)
135,294
135,294
168,809
(23)
(23)
191
(14,269)
2,716
121,002
171,716
328,972
556,633
121,002
328,972
(14,269)
Assets
Assets
Inventory
Trade receivables
Finance receivables
Cash and cash equivalents
Financial assets at fair value through profit or loss
Cash and cash equivalents
Assets
Financial assets at fair value through profit or loss
Cash and cash equivalents
Trade receivables
Financial assets at fair value through profit or loss
Inventory
Trade receivables
Finance receivables
Inventory
Derivative financial instruments
Finance receivables
Other receivables and deferred expenses
Other receivables and deferred expenses
Reverse annuity mortgages
Reverse annuity mortgages
Reverse annuity mortgages
Investment property
Property, plant and equipment
Property, plant and equipment
Tax receivables
Intangible assets
Deferred tax asset
Deferred tax asset
Total assets
Intangible assets
Intangible assets
Total assets
Total assets
Liabilities
Other receivables and deferred expenses
Property, plant and equipment
Tax receivables
Liabilities
Other payables
Other payables
Liabilities
Financial liability at fair value through profit or loss
Other payables
Deferred revenue
Deferred revenue
Deferred revenue
Deferred tax
Tax payables
Tax payables
Tax payables
Derivative financial instruments
Borrowings
Derivative financial instruments
Derivative financial instruments
Borrowings
Borrowings
Life investment contract liabilities
Life investment contract liabilities
Life investment contract liabilities
Insurance contract liabilities
Insurance contract liabilities
Total liabilities
Total liabilities
Insurance contract liabilities
Total liabilities
Share capital
Other reserves
Shareholders’ equity
Shareholders’ equity
Shareholders’ equity
Share capital
Share capital
Other reserves
Other reserves
Retained earnings
Retained earnings
Total shareholders’ equity
Total shareholders’ equity
Total shareholders’ equity and liabilities
Total shareholders’ equity and liabilities
Total shareholders’ equity and liabilities
Total shareholders’ equity
Retained earnings
For and on behalf of the Board
For and on behalf of the Board
For and on behalf of the Board
G.K. Baker
G.K. Baker
G.K. Baker
Chairman Director
Chairman Director
Chairman Director
Notes
Notes
Notes
10
11
10
12
11
13
12
14
13
10
11
12
13
14
15
16
19
14
15
15
16
16
17
19
19
20
20
20
21
21
21
22
22
23
23
24
22
23
24
32
32
24
25
32
33
32
33
25
25
26
P.A. Byrnes
P.A. Byrnes
P.A. Byrnes
Executive Director
Deputy chairman
Executive Director
Cash flows from operating activities
Interest received
Receipts from customers
Interest paid
Payment to suppliers and employees
Income tax paid
Net cash outflow from operating activities before changes in operating assets and
liabilities
Net increase in finance receivables
Net decrease in reverse annuity mortgages
Net (increase)/decrease of financial assets at fair value through profit or loss
Net (withdrawals)/contributions from life investment contracts
Changes in operating assets and liabilities arising from cash flow movements
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant, equipment, intangibles and held for sale assets
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of subsidiaries and investments
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Net bank loan advances/(repayments)
Proceeds from the issue of shares
Proceeds from the issue of bonds
Other borrowings
Dividend paid
Net cash inflow/(outflow) from financing activities
Net movement in cash and cash equivalents
Add opening cash and cash equivalents
Cash included with purchase of subsidiaries
Translation difference
Closing cash and cash equivalents
Represented By:
Cash at bank
Notes
2018
$’000
2017
$’000
41,925
281,031
(9,609)
(266,124)
(5,824)
27,909
216,948
(8,237)
(216,489)
(5,044)
41,399
15,087
(75,248)
(36,403)
66
(41,937)
(5,765)
1,246
9,156
(2,645)
(122,884)
(28,646)
(81,485)
(13,559)
3,944
(21,859)
(839)
(3,754)
(22,508)
39,005
29,656
-
2,837
(11,417)
60,081
340
(7,295)
(1,106)
(63,346)
(71,407)
82,288
13,374
19,784
-
(8,595)
106,851
(43,912)
21,885
69,069
-
(12)
25,145
13,810
33,378
(4)
69,069
30
18
10
25,145
69,069
Closing cash and cash equivalents
25,145
69,069
Authorised for issue on 22 June 2016
Authorised for issue on 22 June 2016
Authorised for issue on 28 June 2018
The accompanying notes form part of these financial statements
The accompanying notes from part of these financial statements
The accompanying notes from part of these financial statements
The accompanying notes from part of these financial statements
The accompanying notes from part of these financial statements
The accompanying notes form part of these financial statements
30
31
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
1. REPORTING ENTITY
Turners Automotive Group Limited, (formerly Turners Limited) ('the Company') is incorporated and domiciled in New Zealand. Turners
Automotive Group Limited is registered under the Companies Act 1993.
Turners Automotive Group Limited is a FMC reporting entity for the purposes of the Financial Markets Conduct Act 2013.
The consolidated financial statements of Turners Automotive Group Limited and its subsidiaries (together ‘the Group’) have been prepared
in accordance with the Companies Act 1993 and the Financial Markets Conduct Act 2013.
The Group is a for profit entity.
The Group's principal activities are:
automotive retail (second hand vehicle retailer)
finance and insurance (loans and insurance products); and
debt management (collection services).
The financial statements were authorised for issue by the directors on 28 June 2018.
2. BASIS OF PREPARATION
2.1 Statement of Compliance
These financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP').
They comply with New Zealand Equivalents to International Financial Reporting Standards ('NZ IFRS') and other applicable Financial
Reporting Standards, as appropriate for profit oriented entities. These financial statements also comply with International Financial
Reporting Standards ('IFRS').
2.2 Basis of measurement
The financial report has been prepared under the historical cost convention, as modified by revaluations for certain classes of assets and
liabilities to fair value and life insurance contract liabilities and related assets to net present value as described in the accounting policies
below.
2.3 Functional and Presentation Currency and Rounding
These financial statements are presented in New Zealand Dollars ($) which is the Company's functional currency. All values are rounded to
the nearest thousand ($000), except when otherwise indicated.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been
applied consistently by Group entities.
3.1 Adoption of new and revised Standards and Interpretations
New standards and amendments and interpretations to existing standards that came into effect during the current accounting period
beginning on 1 April 2017
Disclosure Initiative (Amendments to NZ IAS 7 ‘Statement of Cash Flows’)
Entities are now required to explain changes in their liabilities arising from financing activities. This includes changes arising from cash flows
(eg drawdowns and repayments of borrowings) and non cash changes such as acquisitions, disposals, accretion of interest and unrealised
exchange differences.
The adoption of Amendments to NZ IAS 7 'Statement of Cash Flows' has only had an impact on disclosure in the Group's financial
statements for the year ended 31 March 2018.
3.2 New standards and amendments and interpretations to existing standards that are not yet effective for the current
accounting period beginning on 1 April 2017
The following relevant standards and interpretations have been issued at the reporting date but are not yet effective.
NZ IFRS 9 'Financial Instruments'
NZ IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. It
replaces the guidance in NZ IAS 39, 'Financial Instruments: Recognition and Measurement', that relates to the classification and
measurement of financial instruments. NZ IFRS 9 retains but simplifies the mixed measurement model and establishes three primary
measurement categories for financial assets: amortised cost, fair value through other comprehensive income ('OCI') and fair value through
profit and loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option
at inception to present changes in fair value in OCI not recycling.
There is now a new expected credit losses model that replaces the incurred loss impairment model used in NZ IAS 39. For financial
liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other
comprehensive income, for liabilities designated at fair value through profit or loss.
NZ IFRS 9 also relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an
economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management
actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared
under NZ IAS 39
The effective date is annual reporting periods beginning on or after 1 January 2018, the 31 March 2019 financial statements.
The indicative impacts of implementing NZ IFRS 9 are as follows:
Classification and measurement of financial instruments:
The Group's financial assets and liabilities include only those measured, at amortised cost, at fair value through profit or loss; and at
fair value through other comprehensive income. The Group anticipates that the classification and measurement of its financial assets
will remain unchanged under NZ IFRS 9.
Impairment model change from incurred losses to expected credit losses:
The introduction of the expected credit losses impairment model is expected to involve a change in the timing of when impairment
losses are recognised.
Trade and other receivables
With regards to the Group’s trade receivables, the Group's incurred credit losses from these financial assets have historically not been
material. Consequently the introduction of the expected credit losses impairment model is not expected to have a material impact on
the Group’s financial statements, given the Group’s low exposure to counterparty default risk as a result of the Group’s credit risk
management processes that are in place.
Finance receivables
With regards to the Group’s trade receivables, the Group's incurred credit losses from these financial assets have historically been
material. Consequently, the introduction of the expected credit losses (‘ECL’) impairment model is expected to have a material impact
on the Group’s financial statements. The Group has undertaken a preliminary assessment on the possible impact that the introduction
of the ECL impairment model will have on the Group’s finance receivable impairment provisioning. The preliminary analysis indicates
that as at 31 March 2018 it would have resulted in an increase in finance receivable provisioning between $1.2m to 1.7m. The Group is
continuing to undertake further analysis.
Hedge accounting
The Group has hedging arrangements, however these are immaterial and the recognition and measurement of these arrangements
under NZ IFRS 9 will remain largely unchanged
The Group will adopt NZ IFRS 9 for the accounting period beginning on 1 April 2018.
NZ IFRS 15 'Revenue from Contracts with Customers'
NZ IFRS 15 'Revenue from Contracts with Customers' introduces a five step process for revenue recognition with the core principle being
for entities to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is,
payment) to which the entity expects to be entitled in exchange for those goods or services. The five step approach is as follows:
Step 1: Identify the contracts with the customer;
Step 2: Identify the separate performance obligations;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price; and
Step 5: Recognise revenue when a performance obligation is satisfied.
NZ IFRS 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed
comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple element arrangements.
The effective date is annual reporting periods beginning on or after 1 January 2018, the 31 March 2019 financial statements.
Under NZ IFRS 15 the Group would recognise revenue when (or as) it satisfies a performance obligation by transferring a promised good or
service to a customer (which is when the customer obtains control of that good or service). A performance obligation may be satisfied at a
point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer).
For a performance obligation satisfied over time, a company would select an appropriate measure of progress to determine how much
revenue should be recognised as the performance obligation is satisfied.
Currently the Group's revenue streams from contracts with customers that fall within the scope of NZ IFRS 15 are the following:
Sale of goods
Commission and auction income
Collections income
The Group has undertaken a preliminary assessment on the possible impact NZ IFRS 15 will have on the Group’s financial statements. The
preliminary analysis indicates that the standard is unlikely to have a material impact however further analysis is ongoing.
The Group will adopt NZ IFRS 15 for the accounting period beginning on 1 April 2018.
NZ IFRS 16 'Leases'
NZ IFRS 16 'Leases' will replace NZ IAS 17 ‘Leases’. NZ IFRS 16 eliminates the distinction between operating and finance leases for
lessees and will result in lessees bringing most leases onto their Statements of Financial Position.
The main changes affect lessee accounting only – lessor accounting is mostly unchanged from NZ IAS 17.
NZ IFRS 16 introduces the following:
Use of a control model for the identification of leases. This model distinguishes between leases and service contracts on the basis of
whether there is an identified asset controlled by the customer.
32
33
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Distinction between operating and finance leases is removed. Assets (a right of use asset) and liabilities (a lease liability reflecting
future lease payments) will now be recognised in respect of all leases, with the exception of certain short term leases and leases of low
value assets
The effective date is annual reporting periods beginning on or after 1 January 2019, the 31 March 2020 financial year. Earlier application is
permitted, if NZ IFRS 15 Revenue from Contracts with Customers has also been adopted.
The indicative impacts of implementing NZ IFRS 16 are as follows for all leases that the Group is a party to:
Initial recognition and measurement:
Recognition of a right of use (‘ROU’) asset. Initial measurement of the ROU asset would include the initial present value of the lease
liability, the initial direct costs, prepayments made to lessor, less any lease incentives received from the lessor and restoration, removal
and dismantling costs; and
Recognition of a lease liability, which would reflect the initial measurement of the present value of lease payments, including
reasonably certain renewals.
Subsequent measurement:
ROU asset: Depreciate the ROU asset based on NZ IAS 16 ‘Property, plant and equipment’.
Lease liability: Accrete liability based on the effective interest method, using a discount rate determined at lease commencement (as
long as a reassessment and a change in the discount rate have not occurred) and reduce the liability by payments made.
NZ IFRS 16 will have a material impact on the Group's financial statements and will be dependent on the leases that the Group is a party to
as at the beginning of the year ended 31 March 2020. The Group’s operating lease commitments as at 31 March 2018 are set out in note
31, measurement of the lease liability and asset under NZ IFRS 16 is yet to be fully assessed.
The Group will adopt NZ IFRS 16 for the accounting period beginning on 1 April 2019.
NZ IFRS 17 Insurance Contracts
NZ IFRS 17, ‘Insurance Contracts’, will replace NZ IFRS 4, ‘Insurance Contracts’. Under the NZ IFRS 17, insurance contract liabilities will
be calculated at the present value of future insurance cash flows with a provision for risk. The discount rate applied will reflect current
interest rates. If the present value of future cash flows would produce a gain at the time an insurance contract is issued, the model would
also require a "contractual service margin" to offset the day 1 gain. The contractual service margin would be amortized over the life of the
insurance contract. There would also be a new income statement presentation for insurance contracts, including a revised definition of
revenue and additional disclosure requirements. NZ IFRS 17 will also have accommodations for certain specific types of insurance
contracts. Short-duration insurance contracts will be permitted to use a simplified unearned premium liability model until a claim is incurred.
For some contracts, in which the cash flows are linked to underlying items, the liability value will reflect that linkage.
The effective date is annual reporting periods beginning on or after 1 January 2021, the 31 March 2022 financial year.
The Group is yet to assess the impact of NZ IFRS 17. The Group intends to adopt NZ IFRS 17 no later than the financial year beginning 1
April 2021.
3.3 Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity.
The Group measures goodwill at the acquisition date as:
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the aquiree; plus
if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less
the net recognised amount of the identifiable assets acquired and liabilities assumed.
When an excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a
business combination are expensed as incurred.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity,
then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss or other comprehensive income as appropriate.
Acquisition of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill
is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based
on a proportionate amount of the net assets of the subsidiary.
Subsidiaries
Subsidiaries are all entities controlled by the Group. The financial statements of subsidiaries are included in consolidated financial
statements from the date that control commences until the date that control ceases.
Loss of control
On loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other
components of equity related to the subsidiary. Any surplus or deficit arising on loss of control is recognised in profit or loss. If the Group
retains an interest in the previous subsidiary, the interest is measured at fair value at the date control is lost. Subsequently it is accounted
for as an equity-accounted investee or as an available for sale asset depending on the influence retained.
Investments in associates (equity accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.
Investments in associates are accounted for using the equity method and are recognised initially at cost. The cost of the investment includes
transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of
equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant
influence commences until the date that significant influence ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
3.4 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currency of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in
the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in
foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured
based on historical costs are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to New
Zealand Dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to New Zealand
Dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve
(translation reserve) in equity. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the
cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on
disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the
relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its
investment in an associate or joint venture, that includes a foreign operation, while retaining significant influence or joint control, the relevant
proportion of the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable
future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and are presented in the translation reserve in equity.
3.5 Revenue and expense recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and that the revenue can be reliably
measured. The principal sources of revenue are sales of goods, sales of service, interest income, fees, commissions, and insurance
premium income.
Sales of goods
Sales of goods comprise sales of motor vehicle and commercial goods owned by the Group. Sales of goods are recognised when the risks
and rewards of ownership are transferred, which is when the customer gains control of the goods. This normally occurs on receipt of a
deposit, full payment or approval of financing.
Sales of service
Sales of service comprise auction commission and other auction revenue, collection income, fee and commission revenue. Sales of service
income is recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction
assessed on the basis of the actual service provided as a proportion of the total services to be provided.
Interest income and expense
Interest income and expense is recognised in the profit or loss using the effective interest method.
The effective interest method calculates the amortised cost of a financial asset or financial liability and allocates the interest income or
interest expense over the relevant period. The calculation includes all fees paid or received and directly related transaction costs that are an
integral part of the effective interest rate. The interest income or expense is allocated over the life of the instrument and is measured for
inclusion in profit and loss by applying the effective interest rate to the instruments amortised cost.
34
35
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Lending and funding - fees and commissions
Lending fee income (such as booking and establishment fees) that is integral to the effective yield of a loan held at amortised cost is
capitalised as part of the amortised cost and deferred over the life of the loan using the effective interest method. Lending fees not directly
related to the origination of a loan (account maintenance fee) are recognised over the period of service.
Incremental and directly attributable costs (such as commissions) associated with the origination of a financial asset (such as loans) and
financial liabilities (such as borrowings) are capitalised as part of the amortised cost and deferred over the life of the financial instrument
using the effective interest method.
Premium income and acquisition costs
Recurring premiums on life insurance contracts are recognised as revenue when payable by the policyholder. Where policies provide for the
payment of amounts of premiums on specific due dates, such premiums are recognised as revenue when due. Unpaid premiums are only
recognised as revenue during the days of grace and are not recognised where policies are deemed to have lapsed at reporting date.
General insurance premiums comprise the total premiums payable for the whole period of cover provided by contracts entered into during
the reporting period and are recognised on the date on which the policy commences. Premiums include any adjustments arising in the
reporting period for premium receivables written in respect of business written in prior accounting periods. Premiums collected by
intermediaries, but not yet received, are assessed based on known sales and are included in written premium.
Unearned premiums are those proportion of premiums written in a year that relate to periods of risk after the reporting date. Unearned
premiums are calculated on a daily pro rata basis. The proportion attributable to subsequent periods is deferred as a provision for unearned
premiums.
Under life investment contracts deposits are received from policyholders which are then invested on behalf of the policyholders. No premium
income is recognised as revenue. Fees deducted from members' accounts are accounted for as fee income.
Those direct and indirect costs incurred during the financial period arising from the acquiring or renewing of insurance contracts are deferred
to the extent that these costs are recoverable out of future premiums from insurance contracts. All other acquisitions costs are recognised
as an expense when incurred.
Subsequent to initial recognition, the deferred acquisitions cost asset (DAC) for life insurance contracts is amortised over the expected life of
the contracts. DAC for general insurance contracts is amortised over the period in which the revenues are earned.
An impairment review is performed at each reporting date or more frequently when an indication of impairment arises. When the
recoverable amount is less than the carrying value, an impairment loss is recognised in profit or loss. DACs are also considered in the
liability adequacy test for each reporting period.
DACs are derecognised when the related contracts are either settled or disposed of.
Voucher income
Voucher income is initially recognised as an unredeemed voucher liability. Voucher income is recognised when the voucher is redeemed.
For those vouchers that are unredeemed and have an expiry date, income is recognised on expiry. For those vouchers that are
unredeemed and have no expiry date, voucher income is recognised after a period of time based on historical non-redemption patterns.
Estimates are readjusted as necessary based on movements in the actual non-redemption patterns.
Other income
Dividend income is recorded in the profit or loss when the Group’s right to receive the dividend is established.
Claims expense
Claims expenses represent claim payments adjusted for the movement in the outstanding claims liability.
General insurance claims expenses are recognised when claims are notified with the exception of claims incurred but not reported for which
a provision is estimated. Life insurance contract claims are recognised when a liability has been established. Claims under life investment
contracts represent withdrawals of investment deposits and are recognised as a reduction in the life investment contract liabilities.
Other expense recognition
All other expenses are recognised in profit or loss as incurred.
3.6 Financial assets
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
financial assets were acquired. Financial assets are classified as current assets if expected to be settled within 12 months, otherwise they
are classified as non-current.
Financial assets at fair value through profit or loss
This category has two sub categories: financial assets held for trading, and those designated at fair value through profit or loss at inception.
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.
The Group’s financial assets at fair value through profit or loss comprise investment in unitised funds, fixed interest securities, term deposits
and foreign exchange derivatives.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
The Group’s loans and receivables comprise cash and cash equivalents, trade receivables, finance receivables, reverse annuity mortgages
and other receivables.
Held to maturity investments
The Group does not have any financial assets classified as held to maturity.
Available for sale financial assets
The Group does not have any financial assets classified as available for sale.
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
through profit or loss. 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 or 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 financial assets at fair value through profit or loss are
included in the profit or loss in the period in which they arise. Realised and unrealised gains and losses arising from changes in the fair
value of securities classified as available for sale are recognised in other comprehensive income, except for foreign exchange movements
on monetary assets, which are recognised in profit or loss. When securities classified as available for sale are sold or impaired, the
accumulated fair value adjustments are included in profit or loss as gains and losses from investment securities. Dividend income from
financial assets at fair value through profit or loss is recognised in the income statement as part of other income when the Group’s right to
receive payments is established.
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably
estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation, and where observable data indicate that there is measurable decrease in the estimated future cash flows, such as changes
in economic conditions that correlate with defaults. For the loans and receivables category, the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that
have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and
the amount of the loss is recognised through profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount
rate for measuring any impairment loss is current effective interest rate determined under the contract. As a practical expedient, the Group
may measure impairment on the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount
of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised
(such as an improvement in the debtor’s credit rating), the reversal of previously recognised impairment loss is recognised in the through
profit or loss.
3.7 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, 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. Bank overdrafts are shown within borrowings on the statement of financial position.
3.8 Finance, trade and other receivables and reverse annuity mortgages
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment.
Collectability of receivables is reviewed on an ongoing basis. Individual debts which are known to be uncollectible are written off. A provision
for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered objective
evidence of impairment.
The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. The amount of the provision is recognised in profit or loss.
If, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after
the impairment was recognised (such as an improvement in the debtor's credit rating), the previously recognised impairment loss is
reversed and the reversal is recognised in profit or loss.
Subsequent recoveries of amounts written off are recognised in profit or loss.
3.9 Financial liabilities
Financial liabilities are classified at initial recognition, as financial liabilities at fair value through profit or loss, payables, borrowings or as
derivatives designated as hedging instruments in an effective hedge, as appropriate.
36
37
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Financial liabilities at fair value through profit or loss
This category has two sub categories: financial liabilities held for trading, and those designated at fair value through profit or loss at
inception. A financial liability 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.
The Group’s financial liabilities at fair value through profit or loss comprise contingent consideration and foreign exchange derivatives.
Payables
The Group’s payables comprise trade and other payables.
Borrowings
The Group’s borrowings comprise bank and non-bank borrowings and bonds.
3.10 Trade and other payables
These amounts represent unsecured liabilities for goods and services provided to the Group prior to the end of the financial year which are
unpaid. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method. As trade and other payables as usually paid within 30 days, they are carried at face value.
3.11 Contingent consideration
Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business
combination. When the contingent consideration meets the definition of a financial liability, it is subsequently re-measured to fair value at
each reporting date. The key assumptions take into account are the probability of meeting each performance target and the discount factor.
3.12 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the
borrowings using the effective interest method.
3.13 Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments (forward exchange contracts and interest rate swaps) to hedge its risks associated with
foreign currency and interest rate fluctuations. In the money derivative financial instruments are financial assets, while out of the money
derivative financial instruments are financial liabilities.
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); or (c)
hedges of a net investment in a foreign operation (net investment hedge).
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 fair values or cash flows of hedged items.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts accumulated
in equity are reclassified in profit or loss in the periods when the hedged item affects 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), 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.
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 that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to profit or loss.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting or hedge accounting has not been adopted in relation to them. Changes
in the fair value of these derivative instruments are recognised immediately in profit or loss.
3.14 Insurance contracts
Insurance contracts are those contracts that transfer significant insurance risk and are accounted for in accordance with the requirements of
NZ IFRS 4 Insurance Contracts. The Group issues the following insurance contracts:
Long-term insurance contracts with fixed and guaranteed terms, these contracts insure events associated with human life (for example,
death) over a long duration;
Temporary life insurance contracts covering death disablement, disability and redundancy risks; and
Short term motor vehicle contracts covering comprehensive, third party and mechanical breakdown risks.
The liability for life insurance contracts is determined in accordance with Appendix C of NZ IFRS 4 Insurance Contracts and Professional
Standard No 20 of the New Zealand Society of Actuaries. In terms of these standards, the liability is determined using the methodology
referred to as Margin on Service (MoS). Under MoS the excess premium received over claims and expenses, 'the profit margin', is
recognised over the life of the contract in a manner that reflects the pattern of risk accepted from the policyholder 'the service'. Longer-term
lines of business (annuities, funeral plan) are valued using the projection method, and shorter-term life and longer-term life contracts written
on yearly renewable premiums, are valued using the accumulation method, as provided for in NZ IFRS 4.
General insurance contract liabilities include claims provision and the provision for unearned premium. The outstandings claims provision is
based on the estimated ultimate cost of all claims incurred but not settled at the reporting date, whether reported or not, together with
related claims handling cost and a reduction for the expected value of salvage and other recoveries. Delays can be experienced in the
notification and settlement of claims, therefore the ultimate cost of these cannot be known at reporting date and are estimated based on
past experience. The liability is not discounted for the time value of money and is derecgonised when the obligation to pay the claim expires,
is discharged or is cancelled.
The provision for unearned premiums represent the portion of premiums received or receivable that relates to risks that have not yet expired
at the reporting date. The provision is recognised when contracts are entered into and premiums are charged, and is brought to account as
premium income over the term of the contract in accordance with the pattern of insurance service provided under the contract.
Liability adequacy testing is performed in terms of NZ IFRS 4 in order to test the adequacy of all insurance liabilities recorded in the
statement of financial position, net of deferred acquisition costs. Liability adequacy testing is performed at a portfolio level of contracts that
are subject to broadly similar risks and are managed together as a single portfolio.
3.15 Life investment contracts
Life investment contracts are those contracts with minimal insurance risk and are accounted for in accordance with NZ IAS 18 Revenue
(refer note 3.5) and NZ IAS 39 Financial instruments: Recognition and Measurement (refer note 3.6). The life investment contacts are unit-
linked and fair value of a unit linked contract is determined using the current unit values that reflect the fair value of the financial assets
backing the contract, multiplied by the number of units attributable to the contract holder.
3.16 Inventories
Inventories comprise primarily motor vehicles held for sale and are stated at the lower of cost or net realisable value. Cost comprises
purchase price, shipping cost, compliance cost and other sundry related costs. Estimated selling prices are based upon recent observed
vehicle sales prices for comparable vehicles. Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
3.17 Investment property
Investment property is held for capital appreciation and comprises land that was transferred from finance receivables through the exercise
Group’s security interest in a finance receivable that was in default.
Investment property is initially recognised at cost (fair value on date of transfer) and subsequently carried at fair value .The fair value of
investment properties is determined by a qualified independent external valuer (refer note 17).
Any gains or losses arising from a change in fair value of the investment property is recognised in profit or loss. Subsequent expenditure is
charged to the asset's carrying amount 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 costs are charged to profit or loss during the period in
which they are incurred.
Investment properties are not depreciated for accounting purposes.
3.18 Property, plant and equipment
Property, plant and equipment are recognised in the statement of financial position at cost less accumulated depreciation and impairment
losses. Land is not depreciated. Depreciation is calculated on all other property, plant and equipment on a diminishing value or straight-line
basis to allocate the costs, net of any residual amounts, over their useful lives.
The rates for the following asset classes are:
Diminishing value
Straight line
Leasehold improvements, furniture and
fittings, office equipment
Computer equipment
Motor vehicles and equipment
Signs and flags
7.5 - 60.0%
31.2 - 48.0%
26.0 - 31.2%
-
3 - 15 years
3 - 5 years
3 - 7 years
3 - 12 years
3.19 Intangible assets
Intangible assets comprise goodwill, acquired separable corporate brands, acquired customer relationships and computer software.
Goodwill and corporate brands are indefinite life intangibles subject to annual impairment testing.
Goodwill represents the excess of fair value attributed to investments in subsidiaries over the fair value of the underlying net assets,
including intangible assets, at the date of acquisition.
The Group has determined that all assets of the Group’s subsidiary, DPL Insurance Limited, are assets backing policy liabilities and are
managed and reported in accordance with a mandate approved by the DPL Insurance Limited’s Board.
38
39
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
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 segment.
Corporate brands and customer relationships acquired as part of a business combination are capitalised separately from goodwill as
intangible assets if their value can be measured reliably on initial recognition and it is probable that the expected future economic benefits
that are attributable to the asset will flow to the Group.
Corporate relationship assets are amortised on the straight line basis over the expected life (3 – 5 years) of the relationship and are
recognised in the statement of financial position at cost less accumulated amortisation and impairment losses.
Computer software is recognised in the statement of financial position at cost less accumulated amortisation and impairment losses.
Direct costs associated with the purchase and installation of software licences and the development of software for internal use are
capitalised where project success is probable and the capitalisation criteria is met. Cost associated with planning and evaluating computer
software and maintaining a system after implementation are expensed. Computer software costs are amortised on a diminishing value basis
(rate of 50%) or on a straight-line basis (one to five years).
3.20 Leases in which the Group is lessee
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 profit or loss on a straight-line basis
over the period of the lease.
3.21 Taxation
Income tax for the period comprises current and deferred tax. Current and deferred tax are recognised as an expense or income in the profit
or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in
equity), in which case the tax is also recognised outside profit or loss.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at balance
date after taking advantage of all allowable deductions under current taxation legislation and any adjustment to tax liabilities in respect of
previous years.
Deferred tax is provided using the liability method, providing for temporary differences between the amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the amount of assets and liabilities, using tax rates enacted or substantively enacted as at balance
date.
Deferred taxation assets arising from temporary differences or income tax losses, are recognised only to the extent that it is probable that a
future taxable profit will be available against which the asset can be utilised. Deferred taxation assets are reduced to the extent that it is no
longer probable that the related tax asset will be realised. Any reduction is recognised in profit or loss.
3.22 Impairment of non-financial assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually or more frequently
if events or changes in circumstances indicate that they might be impaired. Intangible assets not yet available for use are tested for
impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired.
Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. The Group conducts an annual internal review of asset values, which is used as a source of information to assess for any
indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also
monitored for indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.
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. Value in use is determined by estimating future cash flows
from the use and ultimate disposal of the asset and discounting these to their present value using a pre-tax discount rate that reflects
current market rates and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating units). Impairment losses directly reduce the carrying amount of
assets and are recognised in profit or loss.
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting
date.
3.23 Managed funds and other fiduciary activities
DPL Insurance Limited, a wholly owned subsidiary, acted as a promoter for a number of superannuation funds with assets managed by a
third party investment manager. The assets and liabilities of these funds are included in the financial statements.
Arrangements exist to ensure the activities of the superannuation funds are managed independently from the other activities of the
company.
3.24 Employee benefits
Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave are recognised in respect of employees' services up to the reporting date. They are
measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured at 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 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 corporate bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
Profit sharing and bonus plans
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 an accrual where contractually obliged or
where there is a practice that has created a constructive obligation.
Share based payments
The cost of options issued to employees under the Group’s share option plan is measured by reference to fair value of the options at the
date on which they are granted. Service and non-market performance conditions are not taken into account when determining the grant date
fair value, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments
that will ultimately vest. Market conditions are reflected within the grant date fair value.
The cost of equity settled transactions is recognised over the vesting period. If the service condition is not met during the vesting period the
expense is revised to reflect the best available estimate of the number of equity instruments expected to vest. Where awards include market
and non-vesting conditions, the transactions are treated as vested irrespective of whether the market or non-vesting conditions is satisfied,
provided that all other performance and/or service conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share refer note 9).
Superannuation plans
The Group pays contributions to superannuation plans, such as Kiwisaver. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
3.25 Statement of cash flows
The statement of cash flows has been prepared using the direct approach modified by netting certain cash flows in order to provide more
meaningful disclosure to better reflect the activities of the Group's customers or the party providing funding to the Group than those of the
Group. These include reverse annuity mortgages, finance receivables and borrowings.
3.26 Comparatives
Where necessary, comparative information has been reclassified and represented for consistency with current year.
4. USE OF ESTIMATES AND JUDGEMENTS
In preparing the financial statements in accordance with NZ IFRS, IFRS and applicable reporting standards management has made
judgements, estimates and assumptions that affect the application of accounting policies and about the future that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
period. Actual results could differ from those estimates.
Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. The principal areas of judgement in preparing these financial
statements are set out below.
Provision for impairment on loan receivables
An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its
loan and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current
economic trends and changes in the customer payment terms when making a judgment to evaluate the adequacy of the allowance for
impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on
historical loss experience for assets with similar credit risk characteristics and adjusted as necessary on the basis of current observable data
to reflect the effect of current conditions. If the expectation is different from the estimation, such difference will impact the carrying value of
receivables (refer notes 7 and 14).
Impairment of goodwill
The carrying value of goodwill is assessed at least annually to ensure that it is not impaired. Performing this assessment generally requires
management to estimate future cash flows to be generated by the related investment or cash-generating unit, which entails making
judgements, including the expected rate of growth of revenues, margins expected to be achieved and the appropriate discount rate to apply
when valuing future cash flows (refer note 20).
Liabilities arising from claims made under insurance contracts
Liabilities arising from claims made under insurance contracts are estimated based on the terms of cover provided under an insurance
contract.
The estimation of the ultimate liability arising from claims made under insurance contracts is based on a number of actuarial techniques that
analyse experience, trends and other relevant factors. The estimate process involves using Group specific data, relevant industry data and
general economic data, including but not limited to, claim frequencies, average claim sizes and historical trends (refer note 33A).
40
41
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Impairment of corporate brands
The carrying values of brands are assessed at least annually to ensure that it is not impaired. Performing this assessment generally requires
management to estimate future cash flows to be generated by the related investment or a cash-generating unit, which entails making
judgements, including the expected rate of growth of revenues, margins expected to be achieved and the appropriate discount rate to apply
when valuing future cash flows (refer note 20).
Unredeemed voucher liabilities
The Group's estimate of the unredeemed voucher liability is based on historic redemption patterns. Changes in the redemption pattern of
unredeemed vouchers could affect the reported value of this liability. At year end, the Group readjusted the unredeemed prepaid collection
voucher liability write off methodology based on movements in the actual redemption patterns to reflect the continued decline in the
redemption of historically issued prepaid collection vouchers. The change in accounting estimate resulted in a $0.7m (2017: $1.8m)
decrease in the unredeemed voucher liability (note 23).
Business combinations
Management uses valuation techniques to determine the fair values of the various elements of a business combination. Judgement is used
in the determination of the fair value of the consideration and the value on intangible assets arising on acquisition (for example corporate
brands and customer relationships) The fair value of contingent consideration is dependent on the outcome of many variables that affect
future profitability (see note 18).
Valuation of investment properties
The fair value of the investment property has been determined by an independent qualified valuer. Note 17 sets out the valuation
methodology, key assumptions and sensitivity analysis. The fair value of the investment property is subjective and changes to the
assumptions can have a significant impact on profit and the fair value.
The derecognition of finance receivables
The Group follows the guidance in NZ lAS 39, 'Financial Instruments: Recognition and Measurement', in transactions where substantially all
the risks and rewards of ownership of a financial asset are neither retained nor transferred, the Group derecognises the transferred asset if
control over that asset is relinquished. The rights and obligations retained in the transfer, such as servicing assets and liabilities, are
recognised separately as assets and liabilities, as appropriate. If control over the asset is retained, the Group continues to recognise the
asset to the extent of its continuing involvement, which is determined by the extent to which it remains exposed to changes in the value of
the transferred asset. This determination of whether risks and rewards of ownership of a financial asset are neither retained nor transferred
requires significant judgement (refer note 14).
Fair value measurement
The fair value of financial instruments that are not quoted in active markets are determined using discounted cash flow models. To the
extent practical, models use observable data however normal volatilities require management to make estimates. Changes in assumptions
about these factors could affect the reported fair values of financial instruments (refer note 11 and 22).
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is
regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or
regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. 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 by
using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in
level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. The fair value of level 3
instruments are determined by using valuation techniques based on a range of unobservable inputs. The Group establishes fair value by
using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially
the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. Investments in
equity instruments that do not have a quoted market price in an active market and whose fair values cannot be reliably measured are
recognised and subsequently carried at cost.
Specific valuation techniques used to value financial instruments in each level are detailed in notes 5.5 and 17.
5. RISK MANAGEMENT
The financial condition and operating results of the Group are affected by a number of key financial and non-financial risks. Financial risks
include credit risk, liquidity risk and market risk. The non-financial risks include insurance risk, which is covered in note 33, and fair value
risk relating to the Group’s Investment property.
5.1 Financial instrument by category
Carrying value
Financial assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Loans and receivables
Trade receivables
Finance receivables
Other receivables and deferred expenses
Reverse annuity mortgages
Financial liabilities
Other payables
Financial liability at fair value through profit or loss
Borrow ings
2018
$’000
25,145
53,378
11,323
289,799
7,342
9,997
396,984
24,043
226
317,373
341,642
2017
$’000
69,069
10,320
12,663
207,143
6,015
9,222
314,432
19,485
7,611
265,889
292,985
5.2 Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations, and
arises principally from the Group's cash and cash equivalents, derivative financial instruments, financial assets at fair value through profit or
loss (excluding equities held in unitised funds), trade receivables, finance receivables, reverse annuity mortgages, and other receivables.
The Group’s cash and cash equivalents, derivative financial instruments and financial assets at fair value through profit or loss (excluding
equities in unitised funds) are placed with registered banks.
Management assesses the credit quality of trade customers, taking into account their financial position, past experience and other factors.
Individual risk limits are set based on these assessments. The use of credit limits by trade customers is regularly monitored by
management. Sales to public customers are settled in cash, bank cheques or using major credit cards, mitigating the credit risk.
To manage credit on finance receivables the Group performs credit evaluations on all customers requiring advances. The approval process
considers a number of factors including: borrower’s past performance, ability to repay, amount of money to be borrowed against the security
and the creditworthiness of the guarantor/co-borrower involved.
The Group operates a lending policy with various levels of authority depending on the size of the loan. A lending and credit committee
operates and overdue loans are assessed on a regular basis by this body.
Risk grades categorise loans according to the degree of risk of financial loss faced and focuses management on the attendant risks. The
current risk grading framework consists of three grades reflecting varying degrees of risk of default and the availability of collateral or other
credit risk mitigation. They are as follows:
neither past due or impaired - compliance with all terms, good security value, and no adverse events affecting the borrower;
past due but not impaired - payments past due, compliance with most of the terms, concerns over security value, concerns over future
events that may affect the borrower; and
impaired - non-compliance with terms or evidence of impairment of security held, or adverse event affecting the borrower.
The Group implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types
for finance receivables are:
mortgages over properties, with the maximum loan to value rate being 75%;
mortgages over houses for reverse annuity mortgages;
charges over vehicle stock for dealer floorplans;
chattel paper where the Group acts as a wholesale funder;
charges over business assets such as equipment; and
charges over motor vehicles.
For motor vehicle and equipment finance receivables, estimates of the value of collateral are assessed at the time of borrowing, and are not
updated unless the receivable is being assessed for specific impairment. The allowance for impairment includes the Group's estimate of the
value of collateral held.
For Life investment linked contracts the investments credit risk is appropriate for each particular product and the risk is borne by the policy
holder. There is no significant risk assumed by the Group.
42
43
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
5.3 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its obligations associated with financial liabilities as they fall due.
The Group endeavours to maintain sufficient funds to meet its commitments based on forecasted cash flow requirements. Due to the
dynamic nature of the underlying businesses, flexibility is maintained by having diverse funding sources and adequate committed credit
facilities. Management has internal control processes and contingency plans to actively manage the lending and borrowing portfolios to
ensure the net exposure to liquidity risk is minimised. The exposure is reviewed on an on-going basis from daily procedures to monthly
reporting as part of the Group's liquidity management process.
The liquidity risk for cash flows payable on the life investment contracts liabilities that are unit linked contracts is managed by holding a pool
of readily tradable investment assets (included in financial assets at fair value through profit or loss) and deposits on call. The liability and
supporting assets have been excluded from the maturity analysis below because there is no contractual or expected maturity date for the
life investment contracts and the readily tradable investment assets offset any liquidity risk. The liquidity risk on other insurance cash flows
is managed by holding designated percentages of insurance reserves in liquid assets such as cash and cash equivalents.
The table below analyses the Group’s financial liabilities and net settled derivative financial instruments into relevant maturity groupings
based on the remaining period at reporting date to contractual maturity date. The amounts disclosed in the tables are the contractual and
the expected undiscounted cash flows.
2018
Other payables
Derivative cash flow hedges
Borrow ings
Expected undiscounted cash flows:
Other payables
Derivative cash flow hedges
Borrow ings
2017
Other payables
Borrow ings
Expected undiscounted cash flows:
Other payables
Borrow ings
0-6 months
$’000
7-12
months
$’000
13-24
months
$’000
25-60
months
$’000
60+ months
$’000
Total
$’000
24,043
29
88,066
112,138
24,043
29
42,352
66,424
19,485
18,750
38,235
19,485
18,750
38,235
-
30
30,690
30,720
-
30
28,281
28,311
-
50,998
50,998
-
51,002
51,002
-
37
193,070
193,107
-
37
30,728
30,765
-
172,340
172,340
-
60,132
60,132
-
15
18,615
18,630
-
15
83,505
83,520
-
50,440
50,440
-
62,102
62,102
-
-
-
-
-
-
274,473
274,473
-
-
-
-
131,645
131,645
24,043
111
330,441
354,595
24,043
111
459,339
483,493
19,485
292,528
312,013
19,485
323,631
343,116
5.4 Market Risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices, will affect the Group's
income or the value of its holdings of financial instruments.
5.4.1 Insurance business
For the investment linked policies the market risk is transferred to the policy holder. The Group earns fees on investment linked policies that
are based on the amount of assets invested and it may receive lower fees should markets fall. Asset allocation for investment linked policies
is decided by the Policy Holder.
In the other insurance business, market risk arises when there is a mismatch between the insurance policy liabilities and the assets backing
those liabilities. Refer to note 33K for insurance liabilities interest rate sensitivity. The insurance business has no significant currency and
equity risk.
5.4.2 Interest rate risk
Interest rate risk is the risk of loss to the Group arising from adverse changes in interest rates. The Group's financing activities are exposed
to interest rate risk in respect of its interest earning assets and interest bearing liabilities. Changes to interest rates can impact the Group's
financial results by affecting the interest spread earned on these assets and liabilities.
Interest rates are managed by assessing the demand for funds, new lending, expected debt repayments and maintaining a portfolio of
financial assets and liabilities, including derivative financial instruments, with a sufficient spread between the Group's lending and borrowing
activities. Exposure to interest rates is monitored by the Board of Directors on a monthly basis.
The interest rates earned on finance receivables are fixed over the term of the contract. When approving interest rates for individual loan
advances, interest rate risk is measured in accordance with the approved lending policy. The Group uses interest rate swap contracts to
convert a portion of its variable rate debt to fixed rate debt. No exchange of principal takes place. The notional principal amount of interest
rate swaps at 31 March 2018 was $70m (2017: $nil) and weighted average interest was 2.24%.There was no hedge ineffectiveness
recognised in profit or loss during the period (2017: $nil).
Turners Finance Limited borrows at fixed rates to fund finance receivables. The terms and the amounts of the finance payables are matched
to each corresponding finance receivable, for which the lending rates are also fixed at inception, thus eliminating the cash flow interest rate
risk on these financial instruments.
The table below summarises the sensitivity of the Group’s financial assets and liabilities to interest rate risk.
Interest rate risk
2018
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Finance receivables
Reverse annuity mortgages
Financial Liabilities
Financial liability at fair value through profit or loss
Derivative cash flow hedges
Borrow ings
Total increase/(decrease)
2017
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Finance receivables
Derivative cash flow hedges
Reverse annuity mortgages
Financial Liabilities
Financial liability at fair value through profit or loss
Borrow ings
Total increase/(decrease)
Carrying amount
$’000
-1% Profit
$’000
-1% Equity +1% Profit +1% Equity
$’000
$’000
$’000
25,145
42,500
289,799
9,997
226
111
317,373
69,069
122
207,143
88
9,222
7,611
265,889
(251)
(425)
(2,323)
(100)
2
-
2,588
(509)
(691)
(1)
(1,590)
-
(92)
(181)
(306)
(1,673)
(72)
1
(827)
1,863
(1,195)
(498)
(1)
(1,145)
52
(66)
251
425
2,323
100
(2)
-
(2,588)
509
691
1
1,590
-
92
181
306
1,673
72
(1)
636
(1,863)
1,004
498
1
1,145
(50)
66
76
2,169
(129)
55
1,562
(41)
(76)
(2,169)
129
(55)
(1,562)
43
5.4.3 Currency risk
The Group is exposed to currency risk arising from various currency exposures, primarily with respect to the Australian Dollars (‘AUD’) and
Japanese Yen (‘JPY’). Currency risk arises from the future commercial transactions, recognised assets and liabilities and net investment in
foreign operations.
To ensure the net exposure to EC Credit Control (Aust) Pty Ltd, which has AUD as its functional currency, is kept to an acceptable level, the
Group has a comprehensive transfer pricing policy and converts the AUD unredeemed voucher liability (refer note 23) into a NZD liability by
selling the AUD liability to the New Zealand entity that will be providing the relevant services to settle the liability when the voucher is
redeemed.
To limit its exposure to JPY, the Group hedges the anticipated cash flows (mainly purchased inventory) when the commitment is made. All
projected purchases qualify as ‘highly probable’ forecast transactions for hedge accounting purposes.
The table below summarises the Group’s financial exposure to currency risk.
Currency risk
in NZD'000
Net exposure to AUD
Net exposure to JPY
2018
NZ$'000
122
525
2017
NZ$'000
465
-
44
45
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
The table below summaries the Group’s sensitivity to +/- 10% foreign exchange fluctuations.
In NZD'000
2018
AUD
JPY
67
(306)
2017
AUD
JPY
-
-
(5)
(43)
42
440
(55)
251
4
34
-
-
(47)
(361)
-10% Profit -10% Equity +10% Profit +10% Equity
5.4.4 Equity price risk
Equity price risk is the risk that the Group's profit or loss will fluctuate as a result of changes in share prices. The Group is exposed to equity
price risk through its investment in MTF Shares. A +1%/-1% movement in the MTF share price will increase/(decrease) profit and equity by
$36k/($36k) (2017: $30k/($30k)).
5.5 Assets and liabilities carried at fair value:
The fair value of assets and liabilities carried at fair value as well as the methods used to calculate fair value are summarised in the table
below.
Level 1
Level 2
Level3
the fair value is calculated using quoted prices in active markets.
the fair value is estimated using inputs other than quoted prices in level 1 that are observable for the assets or liability, either
directly (as prices) or indirectly (derived from prices).
the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
2018
Fair value assets:
Financial assets at fair value through profit or loss - Insurance
Financial assets at fair value through profit or loss - investment in equities
Financial assets at fair value through profit or loss - term deposits
Investment property
Fair value liabilities:
Financial liability at fair value through profit or loss
Derivative cash flow hedges
2017
Fair value assets:
Financial assets at fair value through profit or loss - Insurance
Financial assets at fair value through profit or loss - investment in equities
Financial assets at fair value through profit or loss - term deposits
Derivative cash flow hedges
Investment property
Fair value liabilities:
Financial liability at fair value through profit
or loss
Level 1
Level 2
Level 3
$’000
$’000
$’000
Total
$’000
-
-
42,500
-
42,500
-
-
-
-
-
122
-
-
122
7,249
3,629
-
-
10,878
-
111
111
7,190
3,008
-
88
-
10,286
-
-
-
4,820
4,820
226
-
226
-
-
-
-
4,000
4,000
7,249
3,629
42,500
4,820
58,198
226
111
337
7,190
3,008
122
88
4,000
14,408
-
-
7,611
7,611
Fair value insurance
The financial assets in this category back life investment contract liabilities and are investments in managed funds. The fair value of the
investments in the managed funds are determined by reference to published exit prices, being the redemption price based on the market
price quoted by the fund manager, ANZ New Zealand Investments Limited (refer 5.4.1).
Fair value assets - investment in equities
The fair value of the investment in equities has been estimated by reference to recent transactions with MTF shares (refer 5.4.4).
Fair value liability - term deposits and fixed interest securities
Term deposits are recognised at fair value based on the interest rate set at inception of the term deposit (refer 5.4.2).
Fair value - investment property
The fair value of investment property was determined by an independent registered valuer using the comparable sales methodology (refer
note 17).
This is a level 3 fair value measurement and the key output used in determining the consideration is the probable sales price. A change in
sales price of +/- 5% would increase/(decrease) the total fair value and profit or loss by $0.2m/($0.2m).
Financial liability at fair value through profit or loss – contingent consideration
The fair value of the contingent consideration was determined using estimates of the expected pay out discounted at current borrowing
rates.
These financial liabilities are exposed to interest rate risk as disclosed above.
Buy Right Cars
On 29 July 2016, contingent consideration of $6.3m was recognised and re-measured to $6.8m on 31 March 2017.
The fair value estimate, at acquisition date, of the contingent consideration was determined by discounting the probability adjusted earn out
consideration of $6.8m by 4.8%.
This is a level 3 fair value measurement and the key unobservable assumptions used in determining the probability adjusted earn out
consideration was the probability of achieving 65% to 150% of the annual net profit performance target established in the sales and
purchase agreement for the two earn periods.
During the year ended 31 March 2018 $2.6m was released to profit or loss as the period 2 earn out targets are not expected to be met
(2017: a charge of $0.5m was recognised in profit or loss for the contingent consideration arrangement as the assumed probability adjusted
earn out consideration was increased from $3.4m to $3.5m and the discount rate changed from 4.8%to 4.55%).
Autosure
On 31 March 2017, contingent consideration of $0.8m was recognised and not re-measured as the acquisition took place on the 31 March
2017. The maximum consideration to be paid is $1.0m.
The fair value estimate, at acquisition date, of the contingent consideration was determined by discounting the probability adjusted earn out
consideration of $ 0.8m by 4.55%.
This is a level 3 fair value measurement and the key unobservable assumptions used in determining the probability adjusted earn out
consideration was the probability of achieving 96% to 100% of the gross written premium target established in the sales and purchase
agreement.
During the year ended 31 March 2018 the asset was released to profit or loss as the earn out consideration targets were not met.
Derivative cash flow hedges
The fair value of forward exchange contracts is determined using forward exchange rates at balance date, with the resulting value
discounted to present value. The fair value of interest rate swaps is calculated as the present value of estimated future cash flows based on
observable yield curves.
Reconciliation of recurring level 3 fair value movements:
Reconciliation of recurring level 3 fair value measurements
Assets
Opening balance
Transfer from finance receivables (exercise security interest)
Revaluation at reporting date - investment property
Closing balance
2018
$'000
4,000
-
820
4,820
2017
$'000
-
3,500
500
4,000
46
47
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Liabilities
Opening balance
On acquisition contingent consideration - Motorplus
On acquisition contingent consideration - Buy Right Cars
On acquisition contingent consideration - Autosure
Revaluation at reporting date
Settlement of period one and part of period tw o earn out consideration
Closing balance
2018
$'000
7,611
221
-
-
(3,190)
(4,416)
226
2017
$'000
-
-
6,342
775
494
-
7,611
During the year there were no movements of fair value assets or liabilities between levels of the fair value hierarchy.
6. SEGMENTAL INFORMATION
6.1 Description of segments
Management has determined the operating segments based on the components of Turners Automotive Group Limited and its subsidiaries
(the Group) that engage in business activities, which have discrete financial information available and whose operating results are regularly
reviewed by the Group's chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors.
The Board of Directors makes decisions about how resources are allocated to the segments and assesses their performance.
Geographically the Group's business activities are located in New Zealand and Australia.
No businesses were acquired in the financial year ending 31 March 2018. During the financial year ending 31 March 2017, the Group
acquired the business of Buy Right Cars and Autosure. Buy Right Cars has been aggregated into the 'Automotive retail' segment as Buy
Right Cars, together with Turners Group NZ Limited, operate in the automotive sector remarketing motor vehicles and other related activity.
Autosure has been aggregated into the 'Insurance segment' as Autosure, together with DPL Insurance, operate in the insurance market,
marketing and administering consumer insurance products and other related activity.
Five reportable segments have been identified as follows:
Automotive retail:
Collection services:
Finance:
Insurance:
Corporate & other:
Remarketing (motor vehicles, trucks, heavy machinery and commercial goods) and purchasing goods for sale.
Collection services, credit management and debt recovery services to the corporate and SME sectors.
Geographically the collections services segment business activities are located in New Zealand and Australia.
Provides asset based finance to consumers and SME's.
Marketing and administration of a range of life and consumer insurance products.
Corporate centre.
Operating segments
Revenue
Automotive retail
Finance
Collection services - New Zealand
Collection services - Australia
Insurance
Corporate & other
Total
segment
revenue
2018
$’000
226,434
39,747
13,075
9,488
46,923
1,911
337,578
Inter-
segment
revenue
2018
$’000
(3,222)
-
(3,886)
-
-
-
(7,108)
Revenue
from
external
customers
2018
$’000
223,212
39,747
9,189
9,488
46,923
1,911
330,470
Total
segment
revenue
2017
$’000
193,472
26,818
13,127
9,783
12,255
466
255,921
Inter-
segment
revenue
2017
$’000
(783)
-
(3,804)
-
-
(325)
(4,912)
Revenue
from
external
customers
2017
$’000
192,689
26,818
9,323
9,783
12,255
141
251,009
Revenue from external customers reported to the Board of Directors is measured on the same basis as revenue reported in the profit or
loss. Inter-segment transactions are done on an arms-length basis. The Group has no customers representing 10% or more of the Group's
revenues.
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Operating profit
Automotive retail
Finance
Collection services - New Zealand
Collection services - Australia
Insurance
Corporate & other
Profit/(loss) before taxation
Income tax
Net profit attributable to shareholders
Automotive retail
Finance
Collection services - New Zealand
Collection services - Australia
Insurance
Corporate & other
Eliminations
Other material non-cash items
Automotive retail - impairment provisions
Finance - impairment provisions
Insurance - impairment provisions
Collection services - New Zealand - deferred revenue
Insurance - reverse annuity mortgage interest
Corporate & other - reverse annuity mortgage interest
Segment assets and liabilities
Automotive retail
Finance
Collection services - New Zealand
Collection services - Australia
Insurance
Corporate & other
Eliminations
2018
$’000
16,550
11,735
5,845
224
5,731
(8,952)
31,133
(7,773)
23,360
2017
$’000
15,397
10,156
6,006
239
928
(8,095)
24,631
(7,057)
17,574
Interest revenue
Interest expense
amortisation expense
Depreciation and
2018
$’000
9,311
34,432
12
-
1,997
22
45,774
(690)
45,084
2017
$’000
7,590
22,907
13
-
875
418
31,803
(325)
31,478
2018
$’000
(4,767)
(5,829)
-
-
-
(4,438)
(15,034)
690
(14,344)
Revenue
2018
$’000
-
-
-
433
869
-
1,302
Assets
2018
$’000
152,006
255,937
27,115
1,665
124,358
298,912
859,993
(208,261)
651,732
2017
$’000
(3,753)
(3,648)
-
-
-
(4,274)
(11,675)
325
(11,350)
2017
$’000
-
-
-
1,061
825
60
1,946
2017
$’000
134,160
174,134
25,974
1,908
118,722
266,403
721,301
(164,668)
556,633
2018
$’000
(2,351)
(348)
(91)
(2)
(681)
(2,154)
(5,627)
-
(5,627)
Expenses
2018
$’000
(423)
(5,929)
(28)
-
-
-
(6,380)
Liabilities
2018
$’000
115,071
199,374
5,756
1,181
69,213
89,443
480,038
(42,629)
437,409
2017
$’000
(2,286)
(329)
(92)
-
(91)
(65)
(2,863)
-
(2,863)
2017
$’000
(297)
(1,710)
(16)
-
-
(3)
(2,026)
2017
$’000
103,821
126,528
9,246
890
66,503
79,169
386,157
(1,240)
384,917
48
49
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Acquisition of property, plant & equipment, intangible assets and other non-current assets
7. PROFIT BEFORE TAX
Business combinations
Other
Automotive retail
Finance
Collection services - New Zealand
Insurance
Corporate & other
Automotive retail segment analysis
Auctions
Finance
Fleet
Buy Right Cars
Operating profit
Auctions
Finance
Fleet
Buy Right Cars
Division assets and liabilities
Auctions
Finance
Fleet
Buy Right Cars
Eliminations
2018
$’000
-
-
-
-
-
-
Revenue
from
external
customers
2018
$’000
41,183
14,568
108,047
59,414
223,212
2017
$’000
1,958
-
-
887
-
2,845
Total
division
revenue
2017
$’000
38,169
12,700
97,858
44,745
193,472
Total
division
revenue
2018
$’000
41,655
14,711
108,047
62,021
226,434
Inter-
division
revenue
2018
$’000
(472)
(143)
-
(2,607)
(3,222)
2018
$’000
21,515
418
140
8,384
10
30,467
Inter-
division
revenue
2017
$’000
(272)
-
-
(511)
(783)
2018
$’000
3,410
5,724
4,970
2,446
16,550
Assets
2018
$’000
44,395
66,294
14,595
28,549
153,833
(1,827)
152,006
2017
$’000
30,386
55,506
20,546
29,450
135,888
(1,728)
134,160
Liabilities
2018
$’000
24,038
60,133
8,373
23,045
115,589
(518)
115,071
2017
$’000
7,578
403
82
377
61
8,501
Revenue
from
external
customers
2017
$’000
37,897
12,700
97,858
44,234
192,689
2017
$’000
2,442
4,916
4,932
3,107
15,397
2017
$’000
13,044
50,694
14,876
25,724
104,338
(517)
103,821
Revenue from continuing operations includes:
Interest income
Bank accounts, short term deposits and investments
Finance receivables
Reverse annuity mortgages
Total Interest Income
Other revenue
Sales of goods
Commission and other auction revenue
Finance related insurance commissions
Loan fee income
Insurance and life investment contract income
Collection income
Bad debts recovered
Other revenue
Total Other Revenue
Total Operating Revenue
Other income comprises:
Revaluation gain on investments
Revaluation gain on investment property
Dividend income
Gain of sale of property, plant and equipment
Fair value gain on contingent consideration
Interest expense
Bank borrowings and other
Bonds
Total Interest Expense
Movement in impairment provisions
Provisions for:
Specific impaired finance receivables
Collective impairment provision for finance receivables
Collective impairment on reverse annuity mortgages
Finance receivables bad debts written off
Movement
Net operating profit includes the following specific expenses
Depreciation
- Plant, equipment & motor vehicles
- Leasehold improvements, furniture, fittings & office equipment
- Computer equipment
- Signs & flags
Intangible amortisation
Amortisation of software
Amortisation of customer relationships
Insurance contract liabilities amortisation
Amortisation of policies in force
Tax advisory fees
Donations
Directors’ fees
Post-employment benefits
Loss on sale of property, plant and equipment
Notes
2018
$’000
2017
$’000
1,343
42,872
869
45,084
163,622
46,730
4,718
2,766
41,685
18,665
887
890
279,963
325,047
590
820
349
1,000
2,664
5,423
12,516
1,828
14,344
619
5,300
28
433
6,380
614
747
436
82
1,587
594
1,567
5,627
121
15
425
1,314
23
206
30,387
885
31,478
139,153
37,942
6,839
2,187
10,467
19,093
1,058
1,121
217,860
249,338
729
500
358
84
-
1,671
9,357
1,993
11,350
282
285
17
1,442
2,026
490
824
313
92
1,144
-
-
2,863
221
10
458
738
53
14
14
16
50
51
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
2018
$’000
2017
$’000
Diluted earnings per share
The calculation of diluted earnings per share at 31 March was based on the diluted profit attributable to shareholders and a diluted weighted
average number of ordinary shares outstanding as follows:
Fees paid to auditor
Staples Rodway Auckland (auditor of the Group)
Audit of financial statements
Audit of annual financial statements
Other services
Other assurance services
- audit of DPL Insurance Limited solvency return
- Agreed Upon Procedures in relation to the EC Credit Control Limited trust account
Total other services
Total fees paid to Staples Rodway Auckland
8. TAXATION
Net operating profit before taxation
Income tax expense at prevailing rates
Tax impact of income not subject to tax
Tax impact of expenses not deductible for tax purposes
Tax assets recognised
Under provision in prior years
Taxation (expense)/benefit
Comprising:
Current
Deferred
Under provision in prior years
9. EARNINGS PER SHARE
441
6
3
9
450
2018
$’000
31,133
(8,722)
1,248
(437)
93
45
(7,773)
(9,205)
1,387
45
(7,773)
372
5
3
8
380
2017
$’000
24,631
(6,900)
239
(520)
-
124
(7,057)
(5,790)
(1,391)
124
(7,057)
Basic earnings per share
The calculation of basic earnings per share at 31 March was based on the profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, as follows:
Profit for the year ($'000)
Weighted average number of ordinary shares at 31 March
Basic earnings per share (cents per share)
Weighted number of shares
Opening balance
Shares issued for the purchase of Buy Right Cars
Shares issued for the share placement
Shares issued for the share purchase plan
Shares issued under the staff share scheme
Shares issued for the dealer share scheme
Shares issued for the conversion of bonds
2018
23,360
79,835,734
29.26
2017
17,574
68,931,984
25.49
2018
2017
74,523,527
132,270
4,377,211
775,873
26,684
169
-
79,835,734
63,431,637
410,795
2,183,174
-
-
-
2,906,378
68,931,984
Continuing operations
Add: interest expense relating to optional convertible bonds, net of tax
Add: Long term incentive expense relation to options
Profit for the year
Weighted number of ordinary shares (diluted)
Weighted average number of shares (basic)
Effect of the conversion of bonds
Effect of the exercise of the options
Weighted average number of shares (diluted)
Diluted earnings per share (cents per share)
10. CASH AND CASH EQUIVALENTS
The carrying value of cash and cash equivalents are denominated in the following currencies:
Australian dollars
Japanese yen
New Zealand dollars
2018
$’000
23,360
1,196
493
25,049
2017
$’000
17,574
1,196
208
18,978
79,835,734
6,816,220
107,222
86,759,176
68,931,984
6,816,220
61,845
75,810,049
28.87
25.03
2018
$’000
1,046
975
23,124
25,145
2017
$’000
632
-
68,437
69,069
The Group's insurance business is required to comply with the solvency standards for licensed insurers issued by the Reserve Bank of New
Zealand. The solvency standards specify the level of assets the insurance business is required to hold in order to meet solvency requirements,
consequently all cash and cash equivalents, held in the insurance business may not be a available for use by the wider Group. DPL
Insurance's cash and cash equivalents at 31 March 2018 were $9.2m (2017: $55.6m).
Cash and cash equivalents at 31 March 2018 of $4.9m (2017: $2.1m) belong to the Turners Marque Warehouse Trust 1 are not available to
the Group.
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Insurance:
Investments in unitised funds
Other:
Term deposits
Investment in equities
Total
Investments in unitised funds comprise:
New Zealand and overseas equities
Fixed Interest securities
Cash
New Zealand and overseas property securities
Total
2018
$’000
7,249
42,500
3,629
53,378
3,055
1,351
1,143
1,700
7,249
2017
$’000
7,190
122
3,008
10,320
2,857
1,293
1,264
1,776
7,190
52
53
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Investments with external investment managers
ANZ New Zealand Investments Limited - Unitised Funds
2018
$’000
7,249
2017
$’000
7,190
The carrying amounts of the financial assets at fair value through profit or loss, excluding investments in unitised funds, are denominated in the
following currencies:
Australian dollars
New Zealand dollars
-
46,129
46,129
5
3,125
3,130
All term deposits held in the insurance business may not be a available for use by the wider Group (refer note 10). DPL Insurance's term
deposits at 31 March 2018 were $42.5m (2017: $nil).
Interest rate and currency risk
A summarised analysis of the sensitivity of financial assets at fair value through profit or loss, excluding investments in unitised funds (as
market risk on unitised funds is transferred to the policy holder), to interest rate risk and currency risk can be found in note 5.4.
Credit risk
The maximum exposure to credit risk at the reporting date is the carrying value of financial assets at fair value through profit or loss, excluding
investments in unitised funds. The financial assets in this category are invested in term deposits with banks. For Life investment linked
contracts (investment in unitised funds) the investments credit risk is borne by the policy holder, there is no significant credit risk assumed by
the Group.
Movement in the impairment provision:
Opening balance
Acquisition impairment balance
Impairment charge/(release) included in other operating expenses
Amounts written off
2018
$’000
203
-
103
(31)
275
2017
$’000
204
-
1
(2)
203
Amounts charged to the impairment provision are generally written off when there is no expectation of recovering additional cash.
The carrying amounts of the Group's trade receivables are denominated in the following currencies:
Australian dollars
New Zealand dollars
918
10,405
11,323
918
11,745
12,663
Currency risk
A summarised analysis of the sensitivity of financial assets included in other receivables to currency risk can be found in note 5.4.
Fair value and credit risk
Due to the short-term nature of trade receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to
credit risk at the reporting date is the carrying amount of trade receivables. Credit risk is concentrated predominantly in New Zealand within the
motor trade sector and private household sector, there is no concentration of credit risk on any individual customer.
Refer to note 5 for more information on the risk management policies of the Group.
Refer to note 5 for more information on the risk management policies of the Group.
12. TRADE RECEIVABLES
Neither past due nor impaired
Past due but not impaired
Impaired
Impairment provision
Net trade receivables
Trade receivables are a current asset.
2018
$’000
10,068
1,255
275
11,598
(275)
11,323
2017
$’000
11,152
1,511
203
12,866
(203)
12,663
Impaired receivables
If a trade receivable falls overdue and the Group is unable to enter into an arrangement to recover the amount owed then the receivable is
classified as impaired.
The age of impaired trade receivables is as follows:
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
The age of past due but not impaired trade receivables is as follows:
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
16
15
-
244
275
447
16
-
792
1,255
171
24
1
7
203
277
157
255
822
1,511
13. INVENTORIES
Motor vehicles
Commercial goods
Less provision for stock obsolescence
Inventories are a current asset.
Movement in provisions for stock obsolescence
Opening balance
Movement
Closing balance
2018
$’000
39,631
14
39,645
(1,049)
38,596
776
273
1,049
2017
$’000
45,402
16
45,418
(776)
44,642
468
308
776
54
55
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
14. FINANCE RECEIVABLES
Commercial loans
Consumer loans
Property development & investment loans
Legacy
Gross finance receivables
Specific impairment provision
Collective impairment provision
Deferred fee revenue and commission expenses
Current
Non-current
Impaired finance receivables
Gross finance receivables are summarised as follows:
Neither past due nor impaired
Past due but not impaired
Impaired
Gross
The age of impaired finance receivables is as follows:
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
The age of past due but not impaired finance receivables is as follows:
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
Specific impaired financial receivables
Opening balance
Additions
Amounts now collectively assessed
Amounts recovered
Amounts written off
Movement in the impairment provisions:
Specific impairment provision
Opening balance
Impairment charge/(release) through profit or loss
Amounts written off
2018
$’000
32,567
253,168
8,492
1,426
295,653
(1,592)
(9,702)
5,440
289,799
144,001
145,798
289,799
2018
$’000
258,433
28,902
8,318
295,653
2,140
147
357
5,674
8,318
12,988
4,957
2,020
8,937
28,902
4,001
-
5,630
(438)
(875)
8,318
973
619
-
1,592
2017
$’000
28,476
175,584
7,069
2,001
213,130
(973)
(5,055)
41
207,143
99,349
107,794
207,143
2017
$’000
197,885
11,244
4,001
213,130
333
92
60
3,516
4,001
5,442
2,444
775
2,583
11,244
6,400
1,904
-
(2,764)
(1,539)
4,001
1,952
282
(1261)
973
Collective impairment provision
Opening balance
Acquisition impairment balance
Impairment charge/(release) through profit or loss
Amounts written off
Total impairment provision
2018
$’000
5,055
-
5,300
(653)
9,702
11,294
Interest rate and foreign exchange risk
A summarised analysis of the sensitivity of finance receivables to interest rate risk can be found in note 5.4.2.
The Group's finance receivables are all denominated in NZD.
Fair value and credit risk
Carrying
amount
2018
$’000
Fair
value
2018
$’000
Carrying
amount
2017
$’000
2017
$’000
4,824
-
285
(54)
5,055
6,028
Fair
value
2017
$’000
Finance receivables
289,799
289,951
207,143
206,786
The fair values are based on cash flows discounted using a weighted average interest rate of 15.01% (2017: 15.51%).
The maximum exposure to credit risk is represented by the carrying amount of finance receivables which is net of any provision for impairment.
The reported credit risk exposure does not take into account the fair value of any collateral, in event of the counterparties failing to meet their
contractual obligation.
Refer to note 5 for more information on the risk management policies of the Group.
Securitisation
The Group has a wholesale funding facility with the Bank of New Zealand (BNZ) under which it securitises finance receivables through The
Turners Marque Warehouse Trust 1 (the Trust). Under the facility, BNZ provide funding to the Trust secured by finance receivables sold to the
Trust from the finance sector. The facility is for a 24 month term that will be renewed annually. The facility is for $163m.
The Trust is a special purpose entity set up solely for the purpose of purchasing finance receivables from the finance sector with the BNZ
funding up to 92% of the purchase price with the balance funded by sub-ordinated notes from the Group. The New Zealand Guardian Trust
Company Limited has been appointed Trustee for the Trust and NZGT Security Trustee Limited as the security trustee. The Company is the
sole beneficiary.
The Group has the power over the Trust, exposure, or rights, to variable returns from its involvement with the Trust and the ability to use its
power over the Trust to affect the amount of the Group's returns from the Trust. Consequently the Group controls the Trust and has
consolidated the Trust into the Group financial statements.
The Group retains substantially all the risks and rewards relating to the finance receivables sold and therefore the finance receivables do not
qualify for derecognition and remain on the Group's consolidated statement of financial position.
During the financial year $144.5m finance receivables were sold to the Trust (2017: $74.8m). As at 31 March 2018 the carrying value of
finance receivables in the Trust was $145.6m (2017: $73.0m).
56
57
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
15. OTHER RECEIVABLES AND DEFERRED EXPENSES
Deferred acquisition costs
Other receivables and prepayments
Current
Non-current
Carrying amount of financial assets included in other receivables
The carrying amounts of the financial assets included in other receivables are denominated in the following currencies:
Australian dollars
New Zealand dollars
2018
$’000
4,214
7,533
11,747
7,411
4,336
11,747
7,342
5
7,337
7,342
2017
$’000
1,353
7,136
8,489
5,234
3,255
8,489
6,015
6
6,009
6,015
Fair value and credit risk
The carrying value of these receivables is assumed to approximate their fair value. The maximum exposure to credit risk at the reporting date
is the fair value of the financial assets included in other receivables. There is no concentration of credit risk to any individual customer or sector.
Refer to note 5 for more information on the risk management policies of the Group.
16. REVERSE ANNUITY MORTGAGES
Reverse annuity mortgages
Provision for impairment
Current
Non-current
Movement in provisions for impairment
Opening balance
Impairment charge/(release) through profit or loss
Closing balance
Interest rate
2018
$’000
10,094
(97)
9,997
-
9,997
9,997
69
28
97
2017
$’000
9,291
(69)
9,222
1,892
7,330
9,222
52
17
69
A summarised analysis of the sensitivity of reverse annuity mortgages to interest rate risk can be found in note 5.4.2.
The Group's reverse mortgage annuities are all denominated in NZD.
Fair value and credit risk
Carrying
amount
2018
$’000
Fair
value
2018
$’000
Carrying
amount
2017
$’000
Fair
value
2017
$’000
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
The maximum exposure to credit risk is represented by the carrying amount of reverse annuity mortgages which is net of any provision for
impairment. The reported credit risk exposure does not take into account the fair value of any collateral, in event of the counterparties failing to
meet their contractual obligation. All reverse annuity mortgages are secured by residential property in New Zealand.
17. INVESTMENT PROPERTY
Investment property
Movements in carrying amounts
Opening balance
Transfer from finance receivables (exercise security interest)
Net change in fair value
Closing balance
2018
$’000
4,820
4,000
-
820
4,820
2017
$’000
4,000
-
3,500
500
4,000
The investment property is 26.8 hectares of residentially zoned land at Sanctuary Hill, 358 Worsleys Road, Christchurch.
The investment property was valued at reporting date by a Property Institute of New Zealand registered valuer, Jones Lang LaSalle Limited,
Valuation & Advisory. Jones Lang LaSalle Limited is an external independent valuation company with appropriate recognised professional
qualifications and recent experience in the location and category of property being valued. Fair values have been determined using a
comparable sales approach methodology, having regard to current market conditions and comparable sales within the locality. Subjective
adjustments have been applied where necessary to account for variations in location, land, improvements, time adjustment and overall quality.
No income has been earned and no direct operating expenses, other than council rates, have been incurred on the investment property. There
are no restrictions on the disposal or the remittance of proceeds on disposal.
18. INVESTMENT IN SUBSIDIARIES
Subsidiary
Buy Right Cars (2016) Limited
Dorchester Finance Limited
Dorchester Oxford Limited
Dorchester Staff Share Plan Trustees Limited
Dorchester Turners Limited
DPL Insurance Limited
EC Credit Control (Aust) Pty Limited
EC Credit Control (NZ) Limited
Estate Management Services Limited
Oxford Finance Limited
Payment Management Services Limited
Southern Finance Limited
Turners Finance Limited
Turners Fleet Limited
Turners Group NZ Limited
Turners Property Holdings Limited
Dorchester Life Trustees Limited
Dorchester RAMS Limited
EC Web Services Limited
EGPTM Limited
EGPTT Limited
Smart Group Services Limited
Turners International Holdings Limited
Turners Smart Autocentre Limited
Vehicle trade
Finance
Holding company
Trustee
Holding company
Insurance
Collection services
Collection services
Collection services
Finance
Collection services
Finance
Finance
Vehicle and commercial goods trade
Auctions
Property
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Ownership
Interest Held
2018
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
66.6%
100.0%
100.0%
100.0%
100.0%
100.0%
2017
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
66.6%
100.0%
100.0%
100.0%
100.0%
100.0%
Reverse annuity mortgages
9,997
11,866
9,222
10,721
The fair value of reverse annuity mortgages is estimated using a discounted cash flow model based on a current market interest rate for similar
products after making allowances for impairment.
All subsidiaries have a balance date of 31 March and, with the exception of EC Credit Control (Aust) Pty Limited (incorporated in Australia), all
subsidiaries are incorporated in New Zealand.
58
59
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
The Group has a wholesale funding facility with the Bank of New Zealand (BNZ) under which it securitises finance receivables through The
Turners Marque Warehouse Trust 1 (the Trust). The Group has the power over the Trust, exposure, or rights, to variable returns from its
involvement with the Trust and the ability to use its power over the Trust to affect the amount of the Group's returns from the Trust.
Consequently the Group controls the Trust and has consolidated the Trusts into the Group financial statements.
On 1 May 2018, Dorchester Oxford Limited, Oxford Finance Limited, Southern Finance Limited and Dorchester Finance Limited were
amalgamated to become Dorchester Finance Limited which changes its name on amalgamation to Oxford Finance Limited.
Acquisition of businesses in the year ending 31 March 2017
ACQUISITION OF BUY RIGHT CARS
On 29 July 2016, the Group purchased the business of Buy Right Cars Limited, an Auckland based used motor vehicle import and dealership
network . The acquisition significantly increases the Group's footprint and presence in the key Auckland market and achieves a number of the
Group's strategic objectives, including stepping up imports of used vehicle, achieving better control of the motor vehicle compliance process
and control over origination in the finance and insurance businesses as a high percentage of their car sales are financed.
Fair value of consideration transferred
Cash
Ordinary shares (612,000)
Contingent consideration
Identified assets acquired and liabilities assumed
Inventories
Property, plant and equipment
Other assets
Intangible assets - brand value
Payables
Deferred tax
Identifiable net assets
Goodwill on acquisition
Consideration transferred settled in cash
Acquisition costs charged to expenses
Net cash paid relating to acquisition
29/07/2016
$'000
29,344
1,854
6,342
37,540
26,980
1,958
12
4,300
(5,366)
(1,204)
26,680
10,860
29,344
169
29,516
Contingent consideration
At acquisition date contingent consideration of $6.3m was recognised. The contingent consideration arrangement requires the Group to make
earn out payments on the first and second anniversary of the acquisition, in cash and shares (maximum of 30% of earn out payment), to Buy
Right Cars Limited. The earn out payments are based on the earn out consideration adjusted by the performance percentage. The
performance percentage is calculated by comparing the actual annual net profit before tax (NPBT) to the target annual NPBT included in the
sale and purchase agreement.
During the year Group made the first earn out payment totalling $3.4m, $2.7 in cash and $0.7 in shares, and $1.0m in cash towards the second
earn out payment. No provision has been made for any further payment for the second earn out as the business is not expected to meet the
second earn out targets included n the sale and purchase agreement.
Identified assets acquired and liabilities assumed
The fair value of the brand has been determined using the income approach and by applying the relief from royalty method. The fair value of
all other assets and liabilities was determined using the cost approach.
Goodwill
The goodwill of $10.9m is primarily related to growth expectation, expected future profitability and synergistic opportunities, particularly in
finance and insurance and extended foot print in the used car market and brand.
Contribution to Group results
In the eight months to 31 March 2017 the business contributed revenue of $44.2 million and profit of $2.1 million to the Group's consolidated
results. If the acquisition had occurred on 1 April 2016, management estimates that the Group consolidated revenue would have been
$272.9m and the Group consolidated profit for the year would have been $18.6m.
ACQUISITION OF AUTOSURE
In November 2016 the Group entered in to an agreement to purchase part of the Autosure business from Vero Insurance New Zealand
Limited. This acquisition included the Autosure brand, corporate relationships and the in-force portfolio of mechanical breakdown, guaranteed
assed protection, payment protection, credit contract indemnity and extended warranty insurance contract liabilities. The acquisition was
completed on 31 March 2017 being the date on which the transfer of in-force Autosure insurance portfolio received approval from the Reserve
Bank of New Zealand. The purchase of Autosure aligns with the Group's strategy of building on organic growth with acquisitions of reputable
businesses and brands that build capability and scale in the integrated automotive financial services market.
Fair value of consideration transferred
Cash
Contingent consideration
Identified assets acquired and liabilities assumed
Cash
Receivables
Property, plant and equipment
Intangible asset - brand
Intangible asset - corporate relationships
Intangible asset - software
Trade and other payables
Deferred tax
Insurance liabilities
Less: intangible asset- portfolio-in-force
Identifiable net assets
Goodwill on acquisition
Consideration transferred settled in cash
Cash received on portfolio transfer
Net cash outflow on acquisition
Acquisition costs charged to expenses
Net cash paid relating to acquisition
$'000
31/03/2017
$'000
34,000
775
34,775
33,378
400
523
21,500
5,200
400
(971)
(8,792)
(28,615)
23,023
11,752
34,000
(33,378)
622
446
1,068
(33,315)
4,700
Contingent consideration
At acquisition date contingent consideration of $0.8m was recognised. The contingent consideration arrangement requires the Group to make
an earn out payment on the first anniversary of the acquisition, in cash, to Vero Insurance New Zealand Limited. The earn out payment is
based on the earn out consideration adjusted by the performance percentage. The performance percentage is calculated by comparing the
actual annual gross written premium to the target annual gross written premium included in the sale and purchase agreement.
No contingent payment was made to Vero Insurance New Zealand Limited as the actual annual gross written premium minimum performance
percentage did not meet the target included in the sales and purchase agreement.
Identified assets acquired and liabilities assumed
The fair value of corporate relationships was determined using the income approach, discounting future estimated cash flows by a risk adjusted
weighted average cost of capital. The fair value of the portfolio-in-force intangible asset represents the difference between the assumed
insurance liabilities, measured in accordance with the Group’s existing accounting policies, and the fair value of
the future claim and
administration obligations arising in respect of those contracts. The fair value of the brand has been determined using the income approach
and by applying the relief from royalty method. The fair value of all other assets and liabilities was determined using the cost approach.
Goodwill
Goodwill of $11.8 million is primarily related to growth expectations, expected future profitability, the substantial skill, expertise of the work force
and synergies arising from the utilisation of Autosure's repairer network by our existing insurance business and from cross selling on insurance
and finance to an extended dealer network and customer base.
Contribution to Group results
As the effective date of the purchase was 31 March 2017, the business has made no material net contribution to the Group's consolidated
results. If the acquisition had occurred on 1 April 2016, management estimates that the Group consolidated revenue would have been
$283.6m and the Group consolidated profit before acquisition amortisation for the year would have been $23.0m.
60
61
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
19. PROPERTY, PLANT & EQUIPMENT
Leasehold
improvements,
furniture, fittings
& office
equipment
Plant,
equipment &
motor vehicles
Computer
equipment
Signs & flags
$’000
$’000
$’000
$’000
3,169
(1,093)
2,076
948
(400)
(614)
2,010
3,632
(1,622)
2,010
2,002
(639)
1,363
640
878
(315)
(490)
2,076
3,169
(1,093)
2,076
6,866
(2,153)
4,713
6,368
(669)
(747)
9,665
12,652
(2,987)
9,665
4,155
(1,389)
2,766
1,805
968
(2)
(824)
4,713
6,866
(2,153)
4,713
1,735
(995)
740
470
(8)
(436)
766
2,023
(1,257)
766
1,827
(1,331)
496
-
557
-
(313)
740
1,735
(995)
740
462
(237)
225
12
(3)
(82)
152
471
(319)
152
416
(145)
271
-
48
(2)
(92)
225
462
(237)
225
Land
$’000
11,155
-
11,155
14,215
(2,018)
-
23,352
23,352
-
23,352
6,212
-
6,212
-
4,943
-
-
11,155
11,155
-
11,155
Total
$’000
23,387
(4,478)
18,909
22,013
(3,098)
(1,879)
35,945
42,130
(6,185)
35,945
14,612
(3,504)
11,108
2,445
7,394
(319)
(1,719)
18,909
23,387
(4,478)
18,909
2018
At cost
Accumulated depreciation
Opening carrying amount
Additions
Disposals, transfers & translation
difference
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
2017
At cost
Accumulated depreciation
Opening carrying amount
Additions - business combinations
Additions
Disposals, transfers & translation
difference
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
62
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
20. INTANGIBLE ASSETS
Brand
Opening carrying amount at cost
Additions (refer note 18)
Closing carrying amount
Goodwill
Opening carrying amount at cost
Additions (refer note 18)
Foreign exchange adjustment
Closing carrying amount
Software
At cost
Accumulated amortisation
Opening carrying amount
Additions - business combinations (refer note 18)
Additions
Disposals and transfers
Amortisation
Closing carrying amount
At cost
Accumulated amortisation
Closing carrying amount
Corporate relationships
At cost
Accumulated amortisation
Opening carrying amount
Additions - business combinations (refer note 18)
Amortisation
Closing carrying amount
At cost
Accumulated amortisation and impairment provision
Closing carrying amount
2018
$’000
71,400
-
71,400
92,509
-
15
92,524
5,646
(3,053)
2,593
-
839
-
(1,587)
1,845
6,235
(4,390)
1,845
6,289
(703)
5,586
221
(594)
5,213
6,510
(1,297)
5,213
2017
$’000
45,600
25,800
71,400
69,888
22,612
9
92,509
4,256
(2,024)
2,232
400
1,105
-
(1,144)
2,593
5,646
(3,053)
2,593
1,089
(703)
386
5,200
-
5,586
6,289
(703)
5,586
Total intangible assets carrying amount
170,982
172,088
The impairment and amortisation is recognised in other operating expenses in profit or loss.
Impairment testing for cash-generating units (CGU) containing brands and goodwill
The aggregate carrying amounts of brands and goodwill allocated to the cash generating units are outlined below. Goodwill primarily relates to
growth expectations, expected future profitability and the substantial skill and expertise of
the cash generating unit.
Management have assessed that there is no foreseeable limit to the period of time over which the goodwill and brand is expected to generate
net cash inflows for the Group, and as such goodwill and brand have been assessed as having an indefinite useful life.
the work force of
Goodwill
Allocated to the insurance CGU/segment
Allocated to collection services CGU/segment
Allocated to the finance CGU/segment
Allocated to the automotive retail CGU/segment -Turners Group (NZ)
Allocated to the automotive retail CGU/segment - Buy Right Cars
12,777
23,988
9,272
10,860
35,627
92,524
12,777
23,973
9,272
10,860
35,627
92,509
63
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Brand
Allocated to the insurance CGU/segment
Allocated to the automotive retail CGU/segment -Turners Group (NZ)
Allocated to the automotive retail CGU/segment - Buy Right Cars
21,500
45,600
4,300
71,400
21,500
45,600
4,300
71,400
The recoverable amount of all CGUs has been determined based on value-in-use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are
extrapolated using the estimated long term growth rates stated below. The growth rate does not exceed the long-term average growth rate for
the products, industries, or country or countries in which the CGU operates. For each of the CGUs with goodwill and brand the key assumptions,
long term growth rate and discount rate used in the value-in-use calculations are as follows.
Insurance CGU
The year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - 23%; year 3 - 3%; year 4 - -15%; year 5 - 1% and a
terminal rate of 2% (2017: year 2 - 10%; year 3 - 7.5%, years 4 to 5 - 5% and 2% terminal rate). A pre-tax discount rate of 12.4% (2017: 11.2% )
was applied in determining the recoverable amount. The discount rate was established based on weighted average cost of capital taking into
account the specific attributes and size of the CGU (2017: weighted average cost of capital taking into account the specific attributes and size of
the CGU).
In assessing the impairment of the goodwill and brand value in the insurance CGU, a sensitivity analysis for reasonably possible changes in key
assumptions was performed. This included increasing and reducing the terminal growth rate by 1% (2017: reducing the year 3 - 5 growth rates
by 1.5%, increasing and reducing the terminal growth rate by 1%) and increasing and decreasing the discount rate by 1% (2017: 1%). These
reasonably possible changes in rates did not cause any impairment.
Collection services CGU
The year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - 11%; year 3 - 6%, year 4 - 4% and year 5 - 5% and a
terminal rate of 2.0% (2017: year 2 - 11%; year 3 - 6%, year 4 to 5 - 5.0% and a terminal rate of 2.0%). A pre-tax discount rate of 14.0% (2017:
14.8% ) was applied in determining the recoverable amount. The discount rate was established based on weighted average cost of capital
taking into account the specific attributes and size of the CGU (2017: weighted average cost of capital taking into account the specific attributes
and size of the CGU).
In assessing the impairment of the goodwill in the collection services CGU, a sensitivity analysis for reasonably possible changes in key
assumptions was performed. This included increasing and reducing the terminal growth rate by 1% (2017: reducing the year 2 - 5 growth rates
by 2.0%, increasing and reducing the terminal growth rate by 1%) and increasing and decreasing the discount rate by 1% (2017: 1%). These
reasonably possible changes in rates did not cause any impairment.
Finance CGU
For the period ended as at 31 March 2017, the goodwill allocated to the ‘finance CGU/segment’ was allocated to the Oxford Finance (OFL) and
Southern Finance (SFL) CGUs. Goodwill on the two CGUs was monitored separately. During the year ended 31 March 2018, the OFL and SFL
CGUs,
together with the group's Dorchester Finance (DFL) CGU, were combined into one CGU under the OFL brand. The finance
CGU/segment for the entire Group going forward will be managed as a single business. As a result, the internal reporting for the CGUs OFL,
SFL and DFL has been replaced with one report covering the combined businesses. Accordingly, the Group has reallocated the goodwill
previously allocated to OFL and SFL to the combined CGU, for the purposes of impairment testing. The Group performed an impairment review
as at 31 March 2017, prior to any restructuring, which did not identify any pre-existing impairment.
In the 31 March 2018 assessment, the year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - 290%; year 3 -
19%, year 4 to 5 - 5.0% and a terminal rate of 2.0%. A pre-tax discount rate of 19.0% was applied in determining the recoverable amount. The
discount rate was established based on the cost of equity of the finance businesses taking into account the specific attributes and size.
In assessing the impairment of the goodwill in finance businesses, a sensitivity analysis for reasonably possible changes in key assumptions
was performed. This included increasing and reducing the terminal growth rate by 1% increasing and decreasing the discount rate by 1%. These
reasonably possible changes in rates did not cause any impairment.
Oxford Finance (OFL) as at 31 March 2017
For the 31 March 2017 impairment testing, the year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - 10%; year
3 - 7.5%, years 4 to 5 - 5.0% and a terminal rate of 2.0%. A pre-tax discount rate of 19% was applied in determining the recoverable amount.
The discount rate was established based on the cost of equity of OFL taking into account the specific attributes and size of OFL .
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
In assessing the impairment of the goodwill in OFL, a sensitivity analysis for reasonably possible changes in key assumptions was performed.
This included reducing the year 2 - 5 growth rates by 2.0%, increasing and reducing the terminal growth rate by 1% and increasing and
decreasing the discount rate by 1%. These reasonably possible changes in rates did not cause any impairment.
Southern Finance (SFL) as at 31 March 2017
For the 31 March 2017 impairment testing, the year 1 forecast cash flows were extrapolated using the following growth rates; year 2 to 5 - 5.0%
and a terminal rate of 2.0%. A pre-tax discount rate of 24.5% was applied in determining the recoverable amount. The discount rate was
established based on the cost of equity of SFL taking into account the specific attributes and size of SFL.
In assessing the impairment of the goodwill in SFL, a sensitivity analysis for reasonably possible changes in key assumptions was performed.
This included reducing the year 3 - 5 growth rates by 2.0%, increasing and reducing the terminal growth rate by 1% and increasing and
decreasing the discount rate by 1% These reasonably possible changes in rates did not cause any impairment.
Automotive retail CGU
Turners Group (NZ) (TGNZ)
The year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - 5%; year 3 - 7%, years 4 to 5 - 5% and a terminal
rate of 2.0% (2017: year 2 - 10%; year 3 - 7.5%, years 4 to 5 - 5% and a terminal rate of 2.0%). A pre-tax discount rate of 18.1% (2017: 17.4% )
was applied in determining the recoverable amount. The discount rate was established based on the cost of equity of TGNZ taking into account
the specific attributes and size of TGNZ (2017: cost of equity of TGNZ taking into account the specific attributes and size of TGNZ).
In assessing the impairment of the goodwill and brand value in TGNZ, a sensitivity analysis for reasonably possible changes in key assumptions
was performed. This included increasing and reducing the terminal growth rate by 1% (2017: reducing the year 2 - 5 growth rates by 2.0%,
increasing and reducing the terminal growth rate by 1%) and increasing and decreasing the discount rate by 1% (2017: 1%). These reasonably
possible changes in rates did not cause any impairment.
Buy Right Cars (BRC)
The year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - -60%; year 3 - 8%, years 4 to 5 - 5.0% and a terminal
rate of 2.0% (2017: year 2 - 10%; year 3 - 7.5%, years 4 to 5 - 5.0% and a terminal rate of 2.0%) . A pre-tax discount rate of 12.9% (2017:
13.5%) was applied in determining the recoverable amount. The discount rate was established based on weighted average cost of capital taking
into account the specific attributes and size of BRC (2017: weighted average cost of capital taking into account the specific attributes and size of
BRC).
In assessing the impairment of the goodwill and brand value in BRC, a sensitivity analysis for reasonably possible changes in key assumptions
was performed. This included increasing and reducing the terminal growth rate by 1% (2017: reducing the year 2 - 5 growth rates by 2.0%,
increasing and reducing the terminal growth rate by 1%) and increasing and decreasing the discount rate by 1% (2017: increasing and
decreasing the discount rate by 1%). These reasonably possible changes in rates did not cause any impairment.
21. OTHER PAYABLES
Accounts payable
Employee entitlements (short term)
Employee entitlements (long term)
Other payables and accruals
Carrying value of financial liabilities in other payables
The carrying amounts of the Group's financial liabilities in other payables are denominated in the following currencies:
Japanese Yen
Australian dollars
New Zealand dollars
2018
$’000
16,168
4,169
221
14,317
34,875
2017
$’000
14,147
4,080
475
9,389
28,091
24,043
19,485
865
614
22,564
24,043
3,249
899
15,337
19,485
Currency risk
A summarised analysis of the sensitivity of financial liabilities included in other payables to currency risk can be found in note 5.4.
64
65
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Fair value
Due to the short-term nature of the financial liabilities in other payables, their carrying value is assumed to approximate their fair value.
22. FINANCIAL LIABILITY AT FAIR VALUE THROUGH PROFIT OR LOSS
Contingent consideration
2018
$’000
226
2017
$’000
7,611
Interest rate and foreign exchange risk
A summarised analysis of the sensitivity of Financial liability at fair value through profit or loss to interest rate risk can be found in note 5.4.2.
The Group's deferred consideration liability is denominated in NZD.
23. DEFERRED REVENUE
Unredeemed vouchers
Prepaid income
24. DEFERRED TAXATION
2018
$’000
1,793
3,713
5,506
2017
$’000
2,226
3,398
5,624
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current assets against current liabilities and
when the deferred income taxes relate to the same fiscal authority. The movement on the deferred tax account is as follows:
Opening balance
Deferred tax acquired
Tax losses utilised
Deferred tax on brands
Prepaid tax refunded
Charge to hedging reserve
Charge to profit or loss
Closing balance
The charge to profit or loss is attributable to the following items:
Tax losses
Corporate relationships
Policy in force asset
Loan impairment provision
Insurance deductible reserves
Property, plant and equipment
Provisions and accruals
Deferred tax (assets)/liabilities to be recovered after more than 12 months
Deferred tax (assets)/liabilities to be recovered within 12 months
Closing balance
The deferred tax asset/liabilities have been recognised at 28%, the tax rate at which it is expected to reverse.
Deferred tax relates to the following:
Deferred tax assets:
Loan impairment provision
Provisions and accruals
Total deferred tax asset
66
2018
$’000
20,173
-
-
-
-
-
(1,387)
18,786
-
(146)
(438)
(1,474)
223
164
284
(1,387)
16,138
2,648
18,786
2017
$’000
8,744
-
26
9,996
-
16
1,391
20,173
994
-
188
55
11
143
1,391
(2,591)
22,764
20,173
3,676
183
3,859
1,729
1,417
3,146
Deferred tax liabilities:
Brand
Customer relationships
Insurance reserves - policies in force
Deferred expenses and accruals
Net deferred tax liabilities
Imputation credit memorandum account
Opening balance
Income tax payments/(refunds received)
Imputation credits utilised
Closing balance
Policy holder tax losses
The policy holder tax losses carried forward at 31 March 2018 are $4,753,000 (2017: $4,424,000).
The policy holder taxation losses are only available to be offset against future policy holder income.
25. BORROWINGS
Secured bank borrowings
Deferred borrowing costs
Non-bank borrowings
Motor Trade Finance
Vendor property funding
Bonds
Deferred issue costs
Total borrowings
Current
Non-current
19,992
1,344
877
432
22,645
19,992
1,456
1,316
555
23,319
18,786
20,173
5,707
5,743
(4,440)
7,010
3,111
4,212
(1,616)
5,707
2018
$’000
230,712
(253)
230,459
2017
$’000
191,708
(143)
191,565
58,603
2,837
49,021
-
25,561 25,561
(258)
25,303
(87)
25,474
317,373
265,889
111,399 51,861
214,028
205,974
265,889
317,373
Secured bank borrowings
The bank borrowings, together with trade and lease premise guarantees of $4.1 million (2017: $4.1 million), are secured by a first-ranking
general security agreement over the assets of the Company and its subsidiaries, excluding DPL Insurance Limited and Turners Finance Limited.
The Group has entered into the a securitisation financing arrangement with the Bank of New Zealand as described in note 14. Current interest
rates are variable and average 3.65% (2017: 3.91%).
In the 3 May 2018 the Group entered into a syndicated funding facility with the Bank of New Zealand and ASB Bank. The facility replaced the
Group's bank borrowing excluding securitisation which remained with the Bank of New Zealand. The syndicated facility is secured by a first-
ranking general security agreement over the assets of the Company and its subsidiaries, excluding DPL Insurance Limited, Turners Finance
Limited and EC Credit (Aust.) Limited.
Motor Trade Finance
Turners Finance Limited is a shareholder of a motor trade based company called Motor Trade Finance Limited (MTF). MTF provides the
services of a finance company, including funding, on a full recourse basis back to its shareholders. The carrying value of the investment is
$3,620,000 and is included in Financial asset at fair value through profit or loss (2017: $3,008,000).
MTF provides finance to Turners Finance Limited to fund the finance receivables. The MTF funding is secured by a chattel security over the
Turners Finance Limited's customer's asset securing the finance receivable and by a general security over the assets of Turners Finance
Limited.
Turners Finance Limited has also given undertakings to MTF as the nature and conduct of its business, and overall quality of the finance
receivables and aggregate. Turners Finance has complied with these undertakings in the current and prior financial year.
67
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Vendor property funding
The vendor property funding is secured over the purchased property, bears interest at 3% and is repayable of 9 November 2018.
26. SHARE CAPITAL
Bonds
On 30 September 2016 Turners Automotive Group Limited issued bonds with a fixed maturity on 30 September 2018 and a fixed return with the
option to convert to shares in Turners Limited or repayment in cash. The interest on the bonds is fixed at 6.5% . The bonds are secured by a
general security agreement over the assets of certain subsidiaries of Turners Automotive Group Limited and rank behind secured bank
borrowings. The Guarantors are Dorchester Turners Limited, Dorchester Finance Limited, Buy Right Cars (2016) Limited (formerly Dorchester
Life Management Limited), Dorchester Life Trustees Limited, EC Credit Control (NZ) Limited, Estate Management Services Limited, Payment
Management Services Limited, EC Web Services Limited, Oxford Finance Limited, Dorchester Oxford Limited, Dorchester RAMS Limited,
Turners Group NZ Limited, Smart Group Services Limited, Turners Fleet Limited, Turners International Holdings Limited, Turners Property
Holdings Limited and Turners Smart Autocentre Limited.
Borrowing covenants
The Group has complied with all borrowing covenants in the both the current and prior financial year.
Foreign currency risk
All the Group's borrowings are in NZD.
Fair value
Borrowings
Carrying
amount
2018
$’000
317,373
Fair
value
2018
$’000
317,388
Carrying
amount
2017
$’000
265,889
Fair
value
2017
$’000
266,416
The fair values are based on cash flows discounted using a weighted average borrowing rate of 4.24% (2017: 4.65%).
Contractual repricing dates
1 year or less
Over 1 to 2 years
Over 2 to 5 years
2018
$’000
2017
$’000
283,205 212,049
19,714 42,526
14,794 11,715
317,713 266,290
Reconciliation of borrowings arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or future cash flows will be classified in the Group's consolidated statement
of cash flows as cash flows from financing activities.
Balance at 31 March 2017
Financing cash flows (i)
Other - netted off finance receivables
Non-cash changes
Deferred borrowing costs
Balance at 31 March 2018
Bank
borrowings
Motor Trade
Finance
$’000
191,565 49,021
$’000
Vendor
property
funding
Bonds
$’000
- 25,303
$’000
39,005
- 2,837
-
- 9,582
-
-
(111)
-
-
230,459
58,603
2,837
171
25,474
Number of ordinary shares
Opening balance
Shares issued for the purchase of Buy Right Cars
Shares issued for the share placement
Shares issued for the share purchase plan
Shares issued under the staff share scheme
Shares issued for the dealer share scheme
Shares issued for the conversion of bonds
Total issued and authorised capital
Dollar value of ordinary shares
Opening balance
Shares issued for the purchase of Buy Right Cars
Shares issued for the share placement
Shares issued for the share purchase plan
Shares issued under the staff share scheme
Shares issued for the dealer share scheme
Shares issued for the conversion of bonds
Share issue costs
Total issued capital
2018
2017
74,523,527
227,729
8,278,146
1,656,104
86,192
30,914
-
84,802,612
63,431,637
612,000
4,553,477
-
-
-
5,926,413
74,523,527
2018
$'000
168,809
683
25,000
5,001
265
92
-
(702)
199,148
2017
$'000
136,127
1,854
13,410
-
-
-
17,453
(35)
168,809
Ordinary shares are fully paid with no par value. All ordinary shares have equal voting rights and share equally in dividends and surplus on
winding up.
Capital management
The Group’s capital consists of share capital, share option reserve, translation reserve, cash flow reserve and retained earnings. The Board
seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security
afforded by a sound capital position. The allocation of capital between its specific business operations and activities is, to a large extent, driven
by optimisation of the return on the capital allocated. The process of allocating capital to specific operations and activities is undertaken
independently of those responsible for the operation. The Group’s strategies in respect of capital management and allocation are reviewed
regularly by the Board of Directors.
The Group's funding covenants include minimum equity ratios. There have been no breaches of covenants. In addition to the above, the life
insurance company is required to retain equity for solvency purposes, refer note 33G.
27. SHARE OPTIONS
In July 2017, Senior Executives of the Company were granted 1,700,000 options at an exercise price of $3.60 under the Group's Share Option
Plan. The grant is split into four tranches of 425,000 options with the following vesting dates; 1 August 2017, 1 August 2018, 1 August 2019 and
1 August 2020. Each tranche expires two year after the vesting date.
In November 2016, the Chief Executive Officer of the Company was granted 1,002,692 options at an exercise price of $2.99195 under the
Group's Share Option Plan. The grant is split into four tranches of 250,673 options with the following vesting dates; 1 June 2017, 1 June 2018, 1
June 2019 and 1 June 2020. Each tranche expires two year after the vesting date.
(i) Financing cash flows make up the net amount of proceeds from borrowings and repayments of borrowings in the statement of cash flows.
68
69
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
If a participant in the Group Share Option Plan leaves (by any means and for any reason) the employment of the Company or any applicable
subsidiary, the participant’s options which have reached their vesting date, together with any other options as may be nominated at the
discretion of the Board of Directors of the Company in extraordinary circumstances (such as the redundancy, permanent disablement or death
of a participant), may be exercised within a period of 60 days (following which they will lapse) and the participant's other Options will lapse
immediately.
The weighted average fair value of the options granted, using the Binomial Tree option pricing model, was $0.36 per option (2017: $0.75 per
option). The significant inputs in the model were, the share price at grant date of $3.53 (2017: $3.79), the exercise price of $3.60 (2017:
$2.99195), volatility of 21.5% (2017: 30%), an expected option life for tranche 1 of 2.03 years, tranche 2 of 3.03 years, tranche 3 of 4.03 years,
tranche 4 of 5.03 years (2017: tranche 1 of 2.5 years, tranche 2 of 3.5 years, tranche 3 of 4.5 years, tranche 4 of 5.5 years) and an annual risk
free rate of 2.63% (2017: 2.43%).Volatility is measured as the standard deviation of changes in the Company's share price over a 12 month
period. The share based payment for the current financial year is $493,000 (2017: $208,000).
Movement in the number of share options outstanding and their related weighted average exercise prices are as follows:
Opening balance
Granted
Cancelled
Closing balance
Exercise
price
2018
$
2.99195
3.60000
3.60000
3.32316
Share options outstanding at balance sheet have the following expiry dates and exercise prices:
Expiry date
31 May 2019
31 July 2019
31 May 2020
31 July 2020
31 May 2021
31 July 2021
31 May 2022
31 July 2022
28. DIVIDENDS
Interim dividend for the year ended 31 March 2017 of $0.04 (31 March 2016: $nil) per fully
paid ordinary share, imputed, payable on 12 April 2017.
Final dividend for the year ended 31 March 2017 of $0.045 (31 March 2016: $0.07) per fully
paid ordinary share, imputed, paid on 21 July 2016 (un-imputed 28 July 2016).
Interim dividend for the year ended 31 March 2018 of $0.03 (31 March 2017: $0.03) per fully
paid ordinary share, imputed, paid on 3 November 2018 (2017: 30 September 2016).
Interim dividend for the year ended 31 March 2018 of $0.03 (31 March 2017: $0.03) per fully
paid ordinary share, imputed, paid on 22 December 2017 (23 December 2016).
Options
2018
000's
1,003
1,700
(500)
2,203
Exercise
price
$
2.99195
3.60000
2.99195
3.60000
2.99195
3.60000
2.99195
3.60000
Exercise
price
2017
$
-
2.99195
-
2.99195
Options
2018
000's
251
300
251
300
251
300
250
300
Options
2017
000's
-
1,003
-
1,003
Options
2017
000's
251
-
251
-
251
-
250
-
2018
$’000
2017
$’000
2,980
-
3,353
4,440
2,540
1,921
2,544
11,417
2,234
8,595
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Dividends not recognised at year end
In addition to the above dividend in 2018, after year end the directors recommended the payment of the following dividend:
Interim dividend of $0.045 (31 March 2017: $0.04) per fully paid ordinary share, imputed,
payable on 20 April 2018 (2017: 12 April 2017)
Final dividend of $0.05 (31 March 2017: $0.045) per fully paid ordinary share, imputed,
payable on 18 July 2018 (2017: 21 July 2017).
29. TRANSACTIONS WITH RELATED PARTIES
3,816
2,980
4,240
3,353
Major shareholders, directors and closely related persons to them are considered related parties of the Group.
Shares
During the financial year, as part of the Share Purchase Plan 1,861, 4,966 and 4,966 shares were issued to directors, Alistair Petrie, John
Roberts and Paul Byrnes respectively.
In the financial year ending 31 March 2017 the following shares were issued to major shareholders and a partner in the Business Bakery LP
(major shareholder):
Conversion of 30 September 2016 bonds
Bartel Holdings Limited
Montezemolo Holdings Limited
Sinclair Investment Trust
Share placement
Harrigens Trustees Limited
Number of
shares issued
2,322,853
655,049
67,911
169,779
Bonds
In the financial year ending 31 March 2017, Bartel Holdings Limited (major shareholder) subscribed for $8,000,000 6.5% bonds (note 25) with a
maturity date of 30 September 2018. Interest of $520,000 (2017: $260,000) was paid to Bartel Holding Limited on the bonds during the year.
In the financial year ending 31 March 2017,the following major shareholder, close members of the family of major shareholders and partners in
the Business Bakery LP (major shareholder) earned interest on the 30 September 2016 bonds:
Bartel Holdings Limited
Hugh Green Investments Limited
Montezemolo Holdings Limited
Sinclair Investment Trust
Action
on maturity
Converted to shares
Repaid in cash
Converted to shares
Converted to shares
Interest paid on
bonds
2017
$'000
308
108
87
9
204
Number of
bonds
6,840,804
2,400,000
1,929,120
200,000
4,529,120
Turners Automotive Group Limited Employee Share Scheme
During the financial year , the Company issued 282,040 (2017: nil) shares pursuant to an offer under the Turners Automotive Group Limited
Employee Share Scheme ('Scheme'), the shares were issued for $3.02, the market value of the shares on that date was $3.02. Participants in
the Scheme may not sell their shares for 18 months following issue or until their loans are repaid, whichever comes later. No shares were issued
under the scheme in the current financial year. No shares were issued in the prior year.
As at 31 March 2018, 198,918 shares (2017: 139,675) were issued and allocated to employees under the scheme and no shares (2017: 12,000)
were held as unallocated shares.
At 31 March 2018 balance on the loans outstanding to the share scheme were $120,094 (2017: $120,455). The loans bear interest at 5%, are
for a 3 year term with fortnightly repayments and the Group has unlimited recourse against the participants in the Scheme.
70
71
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Key management personnel compensation
The key management personnel are all the Directors of the Company and Group General Managers. Compensation of key management
personnel for the years ended 31 March 2018 and 31 March 2017 was as follows:
31. COMMITMENTS AND CONTINGENT LIABILITIES
2018
$’000
2017
$’000
9,473
8,064
10,262
3,154
30,953
8,976
7,611
12,379
4,344
33,310
Operating lease commitments under non-cancellable operating leases:
Not later than 1 year
1-2 years
2-5 years
5+ years
The group leases various premises under non cancellable operating lease agreements. The lease terms are between 5 and 10 years, and the
majority of lease agreements are renewable at the end of the lease period at market rates.
There are no options to purchase plant and equipment held under operating lease.
Capital Expenditure:
At reporting date the Group has no capital commitments (2017: $3.4m).
Loan Commitments:
The Group has no material undrawn credit commitments at reporting date (2017: nil).
Contingent Liabilities:
Autosure
DPL Insurance Limited (DPL) and Vero Insurance New Zealand Limited (Vero) have agreed to an expert determination to decide the appropriate
level of insurance reserves to be transferred to DPL Insurance for the acquisition of the Autosure business. Both parties are seeking a payment.
The directors consider that on balance of probabilities DPL is likely to receive a payment. Pending the outcome of the determination, DPL may
be required to make a payment to Vero. At the date of this report the timing and amount of any payment could not be reliably estimated.
The Group has no other material contingent liabilities at reporting date (2017: nil).
32. SUBSEQUENT EVENTS AFTER BALANCE DATE
On the 3 May 2018 the Group entered into a syndicated funding facility with the Bank of New Zealand and ASB Bank, refer note 25.
($'000)
Short-
term
benefits
$'000
Post-
employment
benefits
$'000
Other long-
term
benefits
$'000
Share-based
payments
$'000
Total
$'000
Year ended 31 March 2018
3,583
- 78 493 4,154
Year ended 31 March 2017
3,352
- 58 208 3,618
A loan of $125,000 outstanding at 31 March 2017, made to the executive director bearing interest at 7% was repaid on 19 June 2017.
Key management personnel that resigned during the year received no termination benefits and were paid only contractual employment
obligations. Key management do not have any post employment entitlements.
Directors that resigned during the year did not receive any termination benefits and directors do not have any post employment entitlements.
The Group has no transactions or loans with key management personnel, other than what is reported above and detailed in the statutory
information section on pages 84 to 87. Directors fees are detailed in note 7 and in the shareholder and statutory information section. The details
of the director share purchases are included in the statutory and shareholder information section.
30. RECONCILIATION OF NET SURPLUS WITH CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustment for non-cash and other items
Impairment (charge)/ release on finance receivables, reverse annuity mortgages and other receivables
Net (profit)/loss on sale fixed assets
Depreciation and amortisation
Capitalised reverse annuity mortgage interest
Deferred revenues
Fair value adjustments on assets/liabilities at fair value through profit and loss
Net annuity and premium change to policyholder accounts
Non-cash long term employee benefits
Non-cash adjustment to finance receivables effective interest rates
Deferred expenses
Fair value adjustment on investment property
Fair value adjustment to contingent consideration
Adjustment for movements in working capital
Net (increase)/decrease in receivables and pre-payments
Net (increase)/decrease in inventories
Net (increase)/decrease in current tax receivables
Net increase/(decrease) in payables
Net increase in finance receivables
Net decrease in reverse annuity mortgages
Net decrease of insurance assets at fair value through profit or loss
Net (withdrawals)/contributions from life investment contracts
Net increase in deferred tax
Cash flows from operating activities
2018
$’000
23,360
6,390
(1,000)
5,627
(869)
917
(1,139)
45
516
109
(7,135)
(820)
(2,845)
1,009
5,958
1,881
9,443
(75,248)
66
(41,937)
(5,765)
(48)
(81,485)
2017
$’000
17,574
2,026
(84)
2,863
(885)
4,678
(1,012)
(137)
179
83
(3,901)
(500)
-
(6,518)
(3,585)
2,159
2,071
(36,403)
1,246
9,156
(2,645)
76
(13,559)
72
73
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
33. Insurance related disclosures
Investment management expenses were assumed to be 1.0% (2017: 1.0%) of policy liabilities.
A. Actuarial policies and the methods
The actuarial report on insurance contract liabilities and prudential reserves for the current reporting period was prepared as at 31 March
2018 by Peter Davies, a Fellow of the New Zealand Society of Actuaries.
f) Inflation and Automatic Indexation of Benefits
Maintenance expenses are assumed to increase 2.0% per annum (2017: 2.0%). Investment management expenses are assumed to
remain a constant percentage of funds under management.
Life insurance contract liabilities
The value of life insurance contract liabilities has been determined in accordance with Professional Standard No. 20 of the New Zealand
Society of Actuaries. After making appropriate checks, the actuary was satisfied as to the accuracy of the data from which the amount of
policy liabilities has been determined.
The key assumptions used in determining policy liabilities are as follows:
a) Discount Rates
Discount rates used to determine the life insurance contract liabilities are based on an appropriate risk-free rate of return, taking account of
the term of the insurance contracts.
Tax was deducted at the rate of 28% on investment earnings net of investment expenses (2017: 28%). The net discount rates assumed
were as follows:
Whole of Life and Endowment Policies (including Funeral Plan)*
Term Insurance Policies
Caring Plan Funeral Benefit Policies
Annuity Policies
Consumer Credit and Key Person Loan Protection
2018
Treasury risk-free rates
Not applicable
Not applicable
Treasury risk-free rates
Not applicable
2017
Treasury risk-free rates
Not applicable
Not applicable
Treasury risk-free rates
Not applicable
* These rates are provided by Treasury as at 31 January, and are then adjusted to 31 March based on the movement in swap rates, as
quoted by the Reserve Bank, between January and March. Illustrative forward rates for the respective valuations are as follows:
Cash-flows in year 10:
March 2017:
March 2018:
3.08% per annum net of tax
2.61% per annum net of tax
b) Inflation Rates
In determining the future expected rate of return, general inflation was assumed to continue into the future at 2.0% per annum (2017: 2.0%).
c) Mortality Rates
Rates of mortality were assumed as follows:
For underwritten whole of life, endowment and term insurance policies: NZ97 (2017: NZ97).
For guaranteed issue regular premium funeral plans: NZ97 multiplied by a factor to reflect higher mortality at younger ages.
For annuities and Reverse Mortgages the Directors assumed mortality according to 90% of the NZ12-14 population tables (2017: PA(90)
table, reduced by four years). For the Cook Islands Annuity Pension Plan the assumed mortality table is the PA(90) table without adjustment
(2017: no change).
d) Profit Carriers
The policies were divided into major product groups with profit carriers as follows:
Major Product Groups
Participating Whole of Life and Endowment Policies
Non Participating Whole of Life and Endowment Policies
Lump Sum Funeral Benefit Policies (Caring Plan)
Term Insurance Policies
Funeral Plan Policies (Regular premium guaranteed issue)
Annuities
Consumer Credit / Lifestyle
Motor business
Accidental death & redundancy – Stop Gap
Accidental death regular & single premium
Carrier
Premiums
Premiums
Not Applicable
Premiums
Claims & reinsurance
Annuity payments
Not Applicable
Not Applicable
Not Applicable
Not Applicable
e) Investment and Maintenance Expenses
The maintenance expense and general growth and development expense allowances assumed for the main classes of business were as
follows:
Endowments
Funeral plans
Term life plans (for loss recognition)
Consumer credit plans (for loss recognition):
Annuity plans
$149 per policy per annum (2017: $118)
$37 per policy per annum (2017: $29)
$74 per policy per annum (2017: $59)
$37 per policy per annum (2017: $29)
$149 per policy per annum (2017: $118)
g) Taxation
The assumed future tax rates reflect the corporate tax rate applying in New Zealand with effect from 1 April 2011. The calculations have
been carried out on the basis of current life insurance income tax legislation.
h) Rates of Discontinuance
Rates of discontinuance are assumed to be 5.0% for whole of life, endowment and term insurance business (2017: 5.0%), and nil for
annuity pension plan business (2017: nil).
For the DPL Funeral plan the rates of discontinuance are based on company experience, beginning at 15% in year 1 and reducing
ultimately to 8% per annum (2017: No change).
For the Funeral plan (ex Greenwich) product the rates of discontinuance are based on the pricing assumption for this product, beginning at
10% in year 1, and reducing ultimately to 2% per annum.
For Quick Cover the rates of discontinuance are based on the pricing assumption for this product, beginning at 25% in year 1, and reducing
ultimately to 12% per annum.
i) Surrender Values
The Company's current basis of calculating surrender values is assumed to continue in the future.
j) Rates of Future Supportable Participating Benefits
Rates of bonus supported by the participating fund are simple annual bonuses of $2.00 (2017: $2.00) per $1,000 of sum assured on
endowment policies.
k) Impact of changes in assumptions
The impact of the change in the discount rate is a reduction in policy liabilities of $121,000. (2017: $185,000).
The impact of the revised expense and mortality assumptions is an increase in policy liabilities of $11,000 (2017: $32,000).
l) Crediting Policy Adopted for Future Supportable Participating Benefits
For participating business the Company's policy is to distribute profits arising such that over long periods the returns to policy holders are
commensurate with the investment returns achieved on relevant assets, together with other sources of profit arising from this business. In
applying the policyholders' share of distributions to provide bonuses, consideration is given to achieving equity between generations of
policyholders and equity between the various classes and sizes of policies in force. Assumed future bonus rates included in policyholder
liabilities were set such that the present value of policyholder liabilities, allowing for the shareholders' right to participate in distributions,
equals the value of assets supporting the business. The supportable future bonus rate on this basis is zero.
Non-life insurance liabilities
The non-life insurance liabilities have been valued on the basis of their unearned premium. The unearned premium (net of deferred
acquisition cost) has been compared to the expected cost of future claims and administration costs to ensure non-life insurance liabilities
are sufficient to cover these costs.
B. Financial strength rating
The Insurance (Prudential Supervision) Act 2010 requires all licensed insurers to have a current Financial Strength Rating, given by an
approved rating entity. DPL Insurance Limited has been issued a Financial Strength Rating of B+ (Good) and an Issuer Credit Rating of
bbb- (Good), with the outlook assigned to both ratings as 'Stable' by A.M. Best. The rating was issued by A.M. Best on 29 June 2017.
The A.M Best company rating scale is
A++, A+ Superior
A, A- Excellent
B++, B+ Good
Issuer credit rating:
Investment grade
aaa (Exceptional)
aa (Superior)
a (Excellent)
bbb (Good)
B, B- Fair
C++, C+ Marginal
C, C- Weak
D Poor
E Under Regular Supervision
F In liquidation
S Suspended
Non-investment grade
bb (Fair)
b (Marginal)
ccc, cc (Weak)
c (Poor)
rs (Regulatory Supervision / Liquidation)
74
75
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
C. Surplus after taxation from insurance activities arose from:
E. Insurance related expenses
Insurance Contracts
Planned margin of revenues over expenses
Change in valuation assumptions
Change in discount rate: 3.08% to 2.61% (2017: 2.61% to 3.08%)
Difference between actual and assumed experience
Life investments contracts
Difference between actual and assumed experience
Investment returns on assets in excess of insurance
contract and investment contract liabilities
Surplus after taxation attributable to insurance activities
2018
$’000
137
(11)
(120)
2,491
294
823
3,614
2017
$’000
143
(32)
164
(552)
420
383
526
The disclosure of the components of operating profit after tax expense are required to be separated between policyholders’ and shareholders’
interests. We have included only one column, as policyholder profits arise only in respect of a small number of participating policies, and the
profits arising on these policies over the year were effectively zero. Accordingly all of the profits earned over the year are shareholder profits.
It is not currently possible to identify all experience variances separately for life investment contracts. The difference between actual and
assumed experience for life insurance contracts therefore includes some variances relating to life investment contracts.
D. Insurance and investment contract income
Insurance contract premiums
Investment revenue
Less: investment revenue paid to life insurance investment contracts
Other Revenues
Total insurance and investment contract income
Investment Income
Equity securities
Fixed interest securities
Property investments
2017
$’000
8,732
552
(409)
1,592
41,685 10,467
2018
$’000
39,719
549
(439)
1,856
398
76
75
549
470
96
(14)
552
Included within equity securities is dividend income of $Nil (2017: $Nil) and included within fixed interest securities is interest income of $Nil
(2017: $Nil). Included within total Investment Income is net realised and unrealised gains/(losses) on securities at fair value through profit or loss
of $549,000 (2017: $552,000).
76
Insurance contract claims
Reinsurance expenses
Insurance contracts
Policy acquisition expenses - commission costs
Deferred acquisition cost amortisation
Total insurance contract related expenses
Life investment contracts
Investment management expenses
Movement in life insurance liabilities
Net operating profit includes the following specific expenses
Audit fees for the audit of financial statements
Rental and lease costs
Amortisation of policies in force
Amortisation of customer relationships
Amortisation of other intangible assets
Depreciation
Employee benefits
F. Taxation
Net operating profit before taxation
Income tax expense at prevailing rates
Tax impact of expenses not deductible for tax purposes
Taxation (expense)/benefit
Comprising:
Current
Deferred
Deferred tax
Opening balance
Charge to profit or loss
Deferred tax on intangibles
Closing balance
The charge to profit or loss is attributable to the following items:
Insurance deductible reserves
Provisions and accruals
Income tax losses on policyholder base
The policy holder tax losses carried forward at 31 March 2018 are $4,783,224 (2017: $4,487,318).
Imputation credit memorandum account
The policyholder imputation credit account has a closing balance at 31 March 2018 of $Nil (2017: $Nil).
2018
$’000
28,882
658
2,126
(3,387)
(1,261)
39
82
114
284
1,567
594
391
215
6,914
4,195
1,175
(594)
581
296
285
581
(9,110)
(285)
-
(9,395)
(222)
(63)
(285)
2017
$’000
5,393
531
754
150
904
69
1,056
75
159
-
-
48
48
1,847
928
260
142
402
(50)
452
402
134
(452)
(8,792)
(9,110)
(55)
(397)
(452)
77
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
G. DPL Insurance Limited solvency calculation
In terms of the Insurance (Prudential Supervision) Act 2010, DPL Insurance Limited must comply with the Solvency Standard for Life Insurance
Business 2014 and the Solvency Standard for Non-life Business 2014. DPL Insurance Limited is required to hold minimum solvency capital of
$5.0 million and have a solvency margin of at least $0.
Actual solvency capital
Calculated minimum solvency capital
Coverage ratio on calculated margin (times)
Overall minimum capital requirement
Solvency margin on overall minimum requirement
Coverage ratio on overall minimum requirement (times)
Non-life insurance
Actual solvency capital
Calculated minimum solvency capital
Solvency margin on calculated minimum requirement
Life insurance
Actual solvency capital
Calculated minimum solvency capital
Solvency margin on calculated minimum requirement
H. Policyholder liabilities
Insurance contract liabilities
Opening insurance contract liabilities
Increase in insurance contract liabilities
Amortisation Intangible asset - policies in force
Increase in deferred acquisition costs
On acquisition insurance liabilities less policies in force (refer note 18)
Closing insurance contract liabilities
Policyholder liabilities contain the following components:
Future policy benefits
Future expenses
Future profit margins
Balance of future premiums
Re-insurance
On acquisition insurance liabilities
Life deferred acquisition costs
Intangible asset - policies in force
Life insurance contracts with a discretionary participation feature - the amount of the liabilities that
relates to guarantees
Other contracts with a fixed or guaranteed termination value - current termination value
2018
$’000
26,799
17,007
1.58
17,007
9,792
1.58
17,905
11,404
6,501
8,894
5,603
3,291
2018
$’000
42,874
8,142
(1,567)
(1,073)
-
48,376
58,792
6,578
2,810
(18,633)
4,774
-
(2,812)
(3,133)
48,376
250
6,610
2017
$’000
21,827
12,313
1.77
12,313
9,514
1.77
14,960
9,315
5,645
6,867
2,998
3,869
2017
$’000
12,688
3,310
-
(1,739)
28,615
42,874
17,589
611
1,403
(3,606)
1
33,315
(1,739)
(4,700)
42,874
398
2,241
Life investment contracts at fair value through profit or loss
Opening life investment contracts at fair value through profit or loss
Increase / (decrease) in life investment contract liabilities recognised through profit or loss
Deposit premium
Withdrawals
Activity, plan, and establishment fees
Closing life investment contract liabilities
12,847 15,629
283
340
2,306
1,754
(4,951)
(7,519)
(420)
(295)
7,127 12,847
The benefits offered under the Group's unit-linked investment contracts are based on the returns of selected equities and debt securities. This
investment mix is unique, and it cannot be associated to an individual benchmark index with a sufficiently high correlation. All financial liabilities
at fair value through profit and loss are designated by the Group to be in this measurement category. The liabilities originated from unit-linked
contracts are measured with reference to their respective underlying assets of these contracts. Changes in the credit risk of the underlying
assets do not impact the measurement of the unit-linked liabilities. The maturity value of these financial liabilities is determined by the fair value
of the linked assets, at maturity date.
Policyholder liabilities comprise
Annuities
Endowment
Whole of Life
Provision for bonuses and future margins
Consumer Credit Protection & key person loan protection
Accidental death/redundancy
Term Life
General
General claims provisions
Superlife policies
Superannuation funds:
Super Bond Retirement Plan
Deferred acquisition costs - life
Life investment contract liabilities
Insurance contract liabilities
General outstandings claim provision
Gross claims
Third party recoverables
IBNR provision
Reconciliation of movement in general gross claims liability
Opening Balance
Movement
Payments
Closing Balance
2018
$’000
1,403
266
3,772
1,336
4,948
8
72
35,605
4,305
7,127
-
(3,339)
55,503
7,127
48,376
55,503
647
(57)
2,928
3,518
556
26,645
(23,683)
3,518
2017
$’000
1,352
398
2,167
1,413
5,789
9
72
32,047
675
7,062
5,785
(1,048)
55,721
12,847
42,874
55,721
557
(85)
84
556
693
4,415
(4,552)
556
The policy liabilities in respect of annuities, endowment, whole of life, term life, super life and life bond have been established in accordance with
the policy conditions and maintained at a level equivalent to obligations due to policy holders as maturity or partial benefits.
78
79
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
I. Disaggregated information
DPL Insurance Limited has one statutory life fund. The disaggregated income statement and balance sheet between the statutory and
shareholder funds is as follows:
Statement of income for the year ended 31 March 2018
Insurance contract premiums
Outward reinsurance premium
Recoveries
Other insurance revenue
Insurance revenue
Claims expense
Movement in life insurance liabilities
Commission expense
Other expenses
Underwriting (loss)/profit
Investment income
Profit before taxation
Taxation
Profit after taxation
Statement of financial position as 31 March 2018
Assets
Investments backing insurance policy liabilities
Other assets
Total assets
Liabilities
Life investment contract liabilities
Insurance contract liabilities
Deferred taxation
Other liabilities
Total liabilities
Solvency
Actual Solvency capital
Minimum solvency capital
Solvency Margin
Statement of income for the year ended 31 March 2017
Insurance contract premiums
Outward reinsurance premium
Recoveries
Other insurance revenue
Insurance revenue
Claims expense
Movement in life insurance liabilities
Commission expense
Other expenses
Underwriting (loss)/profit
Investment income
Profit before taxation
Taxation
Profit after taxation
Statutory
$’000
6,375
(543)
443
860
7,135
(2,216)
(82)
(1,022)
(2,644)
1,171
979
2,150
(298)
1,852
Statutory
$’000
25,787
-
25,787
7,127
9,254
-
512
16,893
8,894
5,603
3,291
Statutory
$’000
2,418
(351)
353
690
3,110
(978)
(1,056)
(687)
(907)
(518)
956
438
(123)
315
Shareholder
$’000
33,344
(115)
555
2,252
36,036
(26,666)
-
(1,104)
(8,885)
(619)
2,664
2,045
(283)
1,762
Shareholder
$’000
61,288
38,288
99,576
-
39,122
9,395
4,262
52,779
17,905
11,404
6,501
Shareholder
$’000
6,315
(180)
552
911
7,598
(4,415)
-
(307)
(2,437)
439
51
490
(279)
211
Total
$’000
39,719
(658)
998
3,112
43,171
(28,882)
(82)
(2,126)
(11,529)
552
3,643
4,195
(581)
3,614
Total
$’000
87,075
38,288
125,363
7,127
48,376
9,395
4,774
69,672
26,799
17,007
9,792
Total
$’000
8,733
(531)
905
1,601
10,708
(5,393)
(1,056)
(994)
(3,344)
(79)
1,007
928
(402)
526
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
Statement of financial position as 31 March 2017
Assets
Investments backing insurance policy liabilities
Other assets
Total assets
Statutory
$’000
25,049
175
25,224
Shareholder
$’000
56,920
38,869
95,789
Liabilities
Life investment contract liabilities
Insurance contract liabilities
Deferred taxation
Other liabilities
Total liabilities
Solvency
Actual Solvency capital
Minimum solvency capital
Solvency Margin
Reconciliation of Profit before tax to Operating profit (note 6)
Profit before tax
Add: amortisation of customer relationships (included in corporate sector)
Add: amortisation of insurance reserves - policies in force (included in corporate sector)
Less: revaluation of investment property disclosed as property, plant and equipment
in the Group financial statements at cost
Operating profit (note 6)
12,847
5,104
-
231
18,182
6,867
2,998
3,869
-
37,770
9,110
3,872
50,752
14,960
9,315
5,645
2018
$’000
4,195
520
1,566
(550)
5,731
Total
$’000
81,969
39,044
121,013
12,847
42,874
9,110
4,103
68,934
21,827
12,313
9,514
2017
$’000
928
-
-
-
928
Restriction on assets
Access to the retained profits and capital in the statutory fund held for policyholders is restricted by the Insurance (Prudential Supervision) Act
2010.
The business undertaken and policies accepted by DPL Insurance Limited are a combination of investment linked and non-investment linked.
Investment linked business is business for which the life insurer issues a contract where the benefit amount is directly linked to the market value
of the investments held in the particular investment linked fund. Non-investment linked business is life insurance business other than investment
linked business.
2018
Premium income
Investment income
Claims expense
Other operating revenue
Other operating expenses
Investment revenues allocated to policyholders
Net profit before taxation
Net profit after taxation
Policy liabilities
Investment assets
Other assets
Other liabilities
Retained earnings
Investment linked
$’000
Non – investment
linked
$’000
-
549
-
-
(99)
(340)
110
79
39,061
3,094
(28,882)
4,110
(13,298)
-
4,085
3,535
Total
$’000
39,061
3,643
(28,882)
4,110
(13,397)
(340)
4,195
3,614
7,127 48,376 55,503
7,249 67,414 74,663
- 50,700 50,700
- 14,169 14,169
9,342
8,253
1,089
80
81
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018 TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
2017
Premium income
Investment income
Claims expense
Other operating revenue
Other operating expenses
Investment revenues allocated to policyholders
Net profit before taxation
Net profit after taxation
Policy liabilities
Investment assets
Other assets
Other liabilities
Retained earnings
Investment linked
$’000
Non – investment
linked
$’000
-
552
-
-
(126)
(283)
143
103
8,202
455
(5,393)
2,506
(4,985)
-
785
423
Total
$’000
8,559
1,007
(5,393)
2,506
(5,111)
(283)
928
526
12,847 42,874 55,721
12,766 59,377 72,143
- 48,870 48,870
- 13,213 13,213
1,010 4,718 5,728
The above information is disclosed prior to the elimination of any related party transactions or balances as the insurance contract
disclosures relate to DPL Insurance Limited.
J. Managed Funds and other Fiduciary Activities
DPL Insurance Limited acted as a promoter for a number of superannuation funds with assets managed by a third party investment
manager. The assets and liabilities of these funds are not included in the financial statements. Arrangements exist to ensure the activities of
the superannuation funds are managed independently from the other activities of the company.
Insurance Risk
K.
The insurance business of the Group involves a number of financial and non-financial risks. The financial risks are covered in note 5. Key
objectives in managing insurance risk are:
(i) To ensure sound business practices are in place for underwriting risks and claims management;
(ii) To achieve a target return on capital that is invested in order to take on insurance risk; and
(iii) To ensure solvency and capital requirements are met.
Life insurance
The life insurance business of the Group involves a number of non-financial risks concerned with the pricing, acceptance and management
of the mortality, and longevity risks accepted from policyholders. These risks are controlled through the use of underwriting procedures and
adequate premium rates and policy charges, all of which are approved by the Actuary. Tight controls are also maintained over claims
management practices to ensure the correct and timely payment of insurance claims.
Terms and conditions of life insurance contracts
The nature of the terms of the insurance contracts written by the Group is such that certain external variables can be identified on which
related cash flows for claim payments depend. The tables below provide an overview of the key variables upon which the amount of related
cash flows are dependent.
Type of contract
Non-participating life
insurance contracts
with
and
fixed
guaranteed terms
insurance
with
Life
contracts
discretionary
participating benefits
(endowment
and
whole of life)
Life
Contracts
Annuity
Details of the contract workings
Benefits paid on death or maturity
are fixed and guaranteed and not at
the discretion of the issuer
initial guaranteed
include a clearly
These policies
defined
sum
assured which is payable on death.
The guaranteed amount is a multiple
of the amount that is increased
throughout the duration of the policy
by the addition of regular bonuses
annually which, once added, are not
removed. Regular bonuses are also
added retrospectively
These policies provide guaranteed
regular payments to the life assured
82
for
Nature of compensation
claims
Benefits, defined by the insurance
the
contract, are determined by
contract and are not directly affected
by the performance of underlying
assets or the performance of the
contracts as whole
the
arising
Benefits
discretionary participation
feature
are based on the performance of a
specified pool of contracts or a
specified type of contract.
from
Key variables affecting cash
flows
Mortality, lapses, expenses and
market earnings on assets
backing the liabilities
Mortality, lapses, expenses and
market earnings on assets
backing the liabilities
The amount of the payment is set at
inception of the policy
Longevity, expenses and market
earnings on assets backing the
liabilities
Non-life insurance
The risk management activities include prudent underwriting, pricing, and management of risk, together with claims management, reserving
and investment management. The objective of these disciplines is to enhance the financial performance of the insurance operations and to
ensure sound business practices are in place for underwriting risks and claims management.
Claims
Variations in claim levels will affect reported profit and equity. The impact may be magnified if the variation leads to a change in actuarial
assumptions which cannot be absorbed within the present value of planned margins for a group of related products. Insurance risk may
arise through the reassessment of the incidence of claims, the trend of future claims and the effect of unforeseen diseases or epidemics.
Insurance risk is controlled by ensuring underwriting standards adequately identify potential risk, retaining the right to amend premiums on
risk policies where appropriate. The experience of the Group's life insurance business is reviewed regularly.
Concentration of insurance risk
The Group does not believe it has any major geographic concentration of insurance risk. The Group's policies aims to reduce concentration
risk by maintaining a portfolio of policyholders with a broad spread of insurance risk types, ages, sexes, occupation classes and geographic
locations. The group uses reinsurance to limit the insurance risk exposure for any one individual.
Sensitivity Analysis
The liabilities included in the reported results are calculated using certain assumptions about key variables as disclosed above. Sensitivity
analysis is conducted to assess the impact of actual experience being different to that assumed in the calculation of liabilities. Movements in
any variable will impact the profit and net assets of the Group. The tables below describe how a change in actual experience relative to that
expected will affect next financial year's expected shareholder profit.
Variable
Expense risk
Impact of movement in underlying variable
An increase in the level or inflationary growth of expenses over assumed levels will decrease profit and shareholders’
equity
Mortality rates
Interest rate risk Depending on the profile of the investment portfolio, the investment income of the Group will decrease as interest
rates decrease. This may be offset to an extent by changes in the market value of fixed interest investments. The
impact on profit and shareholder equity depends on the relative profiles of assets and liabilities, to the extent that
these are not matched
For insurance contracts providing death benefits, greater mortality rates would lead to higher levels of claims,
increasing associated claims cost and therefore reducing profit and shareholder equity
The impact of discontinuance rate assumption depends on a range of factors including the type of contract, the
surrender value basis (where applicable) and the duration in force. For example, an increase in discontinuance rates
at earlier durations of life insurance contracts usually has a negative effect on profit and shareholder equity.
However, due to the interplay between the factors, there is not always an adverse outcome from an increase in
discontinuance rates
For benefits which are not contractually linked to the underlying assets, the Group is exposed to Market Risk
Discontinuance
Market Risk
The table below illustrates how changes in key assumptions would impact the reported profit and liabilities of the Group.
Change in key assum ptions ($'000)
2018
Market risks
Increase in interest rates of 1%
Decrease in interest rates of 1%
Insurance risks
Increase in expenses of 10%
Decrease in expenses of 10%
Decrease in mortality by 10%
Increase in mortality by 10%
Worsening of discontinuance rate by 10%
Improvement in discontinuance rate by 10%
2017
Market risks
Increase in interest rates of 1%
Decrease in interest rates of 1%
Insurance risks
Increase in expenses of 10%
Decrease in expenses of 10%
Decrease in mortality by 10%
Increase in mortality by 10%
Worsening of discontinuance rate by 10%
Improvement in discontinuance rate by 10%
Effect on policy
liabilities
Effect on
future profit
(217)
241
1
(1)
(4)
5
-
-
(211)
234
1
(1)
(4)
4
-
-
(50)
55
(30)
30
(253)
278
77
(87)
(53)
57
(33)
33
(268)
294
80
(90)
83
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
STATUTORY INFORMATION
STATUTORY INFORMATION
STATUTORY INFORMATION
Directors’ remuneration and other benefits
Grant Baker
Paul Byrnes
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
Directors’ fees
$
110,000
55,000
55,000
55,000
55,000
20,000
During the year ended 31 March 2018 and 31 March 2017, Mr Byrnes was an executive for Turners Automotive Group Limited and has
been remunerated for his services on an arms length consultancy basis. The total fees paid for the year ended 31 March 2018 were
$396,925 GST exclusive (2017: $750,039 GST exclusive).
During the year ended 31 March 2018 Mr Harrison received an additional $7,500 (2017: $7,500) in fees for services as chairman of the
Credit and Lending Committee.
During the year ended 31 March 2018 Mr Roberts received an additional $7,500 (2017: $3,750) in fees for his services as chairman of the
Audit and Risk Management Committee.
During the year ended 31 March 2018 Mr Vriens received an additional $60,000 (2017: $60,000) in fees for his services as chairman of DPL
Insurance Limited.
Entries recorded in the interests register
There are no entries in the interests register.
Dealings in Turners Automotive Group Limited shares by Directors
Date of transaction
Shares
acquired/(disposed)
Consideration
(received)/paid $
Nature of relevant interest
Paul Byrnes
John Roberts
Alistair Petrie
11/10/2017
11/10/2017
11/10/2017
4,966
4,966
1,861
14,997 Registered holder and beneficial interest
14,997 Registered holder and beneficial interest
5,620 Beneficial interest
Directors’ relevant interest in quoted shares as at 31 March 2018
Grant Baker (The Business Bakery)
Grant Baker (own shareholding)
Paul Byrnes
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
Shares
8,461,723
2,985,801
3,314,860
5,040,448
15,011
32,456
-
Other Directorships
Mr Baker, Mr Byrnes and Mr Harrison are directors of Turners Staff Share Plan Trustees Limited which acts as Trustee of the Employee
Share Purchase Scheme Trust.
STATUTORY INFORMATION
The following represents interests of directors in other companies as disclosed to Turners Automotive Group Limited and entered in the
Interests Register:
Grant Baker
The Business Bakery LP
Baker Consultants Limited
Montezemolo Holdings Limited
GI Cancer Institute (NZ) Limited
Paul Byrnes
Bad Dog Restaurants Limited
Matthew Harrison
Harrigens Trustees Limited
JHFT Trustees Limited
GJG Trustees No.2 Limited
GJG Trustees Limited
MJH Consultants Limited
Alistair Petrie
RH Investment Trust
Dossor Trust
Bartel Holdings Ltd
Henergy Cage Free Ltd
Jellicoe St Enterprises Ltd
Avocado Export Council Inc
Avocado Industry Council Limited
John Roberts
Apollo Foods Limited
Centrix Group Limited
Employee remuneration
During the year ended 31 March 2018, the number of employees or former employees of the Group, not being directors of Turners
Automotive Group Limited, who received remuneration and other benefits in their capacity as employees, the value of which exceeded
$100,000 for the year was as follows:
Remuneration range
100,000 - 109,999
110,000 - 119,999
120,000 - 129,999
Number of employees
2018
13
11
10
130,000 - 139,999
140,000 - 149,999
150,000 - 159,999
160,000 - 169,999
170,000 - 179,999
180,000 - 189,999
190,000 - 199,999
200,000 – 209,999
210,000 - 219,999
220,000 - 229,999
230,000 - 239,999
240,000 - 249,999
250,000 – 259,999
260,000 – 269,999
270,000 – 279,999
320,000 – 329,999
340,000 – 349,999
390,000 – 399,999
420,000 – 429,000
430,000 – 439,999
590,000 – 599,999
630,000 – 639,000
8
9
7
4
-
2
3
2
2
2
2
2
1
2
3
-
1
-
-
1
-
1
2017
13
9
9
5
4
7
2
2
-
-
-
-
1
2
1
-
1
1
1
1
-
1
1
84
85
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
STATUTORY INFORMATION
STATUTORY INFORMATION
STATUTORY INFORMATION
STATUTORY INFORMATION
NZX LISTING
The Company's shares are listed on the NZX Main Board (equity securities market) operated by NZX Limited (NZX) and as a foreign exempt
entity on the ASX operated by ASX Limited (ASX).
PRINCIPAL ORDINARY SHAREHOLDERS AS AT 15 JUNE 2018
The following table shows the names and holdings of the 20 largest holdings of quoted ordinary shares (TRA) of the Company.
Substantial Product Holders
The following information is given pursuant to section 293 of the Financial Markets Conduct Act 2013.
As at 31 March 2018 the following shareholders are registered by the company as Substantial Product Holders in the Company, having
disclosed a relevant interest in quoted voting products under the Financial Markets Conduct Act 2013.
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
National Nominees New Zealand Limited - NZCSD
Bartel Holdings Limited
Harrigens Trustees Limited
HSBC Nominees (New Zealand) Limited - NZCSD
FNZ Custodians Limited
BNP Paribas Nominees (NZ) Limited -NZCSD
Montezemolo Holdings Limited
BNO Paribas Nominees (NZ) Limited -NZCSD
Paul Anthony Byrnes
Grant Baker + Donna Baker + Lewis Grant
Geoff Ross + Justine Ross + Chris Hocquard
Stephen John Sinclair + Jacquilin Margaret Sinclair + Roger Frederick Wallis
John Jeffers Harrison
Paul Bernard Mora
HSBC Nominees a/c NZ Superannuation Fund Nominees Limited - NZCSD
Custodial Services Limited
Custodial Services Limited
Glenn Arthur Duncraft
HSBC Nominees (New Zealand) Limited A/C State Street -NZCSD
MINT Nominees Limited - NZCSD
SPREAD OF ORDINARY SHAREHOLDERS AS AT 15 JUNE 2018
Shares
% of Issued
Capital
10,146,942
11.97
6,745,624
5,179,294
5,115,486
4,805,371
3,282,082
2,985,801
2,664,860
2,473,973
2,464,124
2,464,124
2,170,854
1,588,782
1,586,339
1,065,576
884,831
856,972
750,000
619,729
593,983
7.95
6.11
6.03
5.67
3.87
3.52
3.14
2.92
2.91
2.91
2.56
1.87
1.87
1.26
1.04
1.01
0.88
0.73
0.70
Range
1 – 999
1,000 - 1,999
2,000 - 4,999
5,000 - 9,999
10,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 - 999,000
1,000,000 plus
Total
Domicile of Ordinary Shareholders
New Zealand
Australia
Other
Total
86
Total Holders
Shares
% of Issued
Capital
1,909
855
741
369
382
37
43
7
15
863,412
1,180,924
2,295,343
2,434,745
7,556,832
2,427,948
8,536,066
4,768,110
54,739,232
1.02
1.39
2.71
2.87
8.91
2.86
10.07
5.62
64.55
4,358
84,802,612 100.00
Shareholders
Shares
Number
%
Number
%
4,210
58
90
4,358
96.60
1.33
2.07
100.00
73,862,488 87.10
239,438 0.28
10,700,686 12.62
84,802,612
100.00
Bartel Holdings Limited
The Business Bakery LP
Salt Funds Managers Limited
Millford Asset Management Limited
Harrigens Trustees Limited
Number of Shares
%
7.95
9.98
9.29
7.99
5.94
6,745,624
8,461,723
7,874,254
6,777,719
5,040,448
The total number of quoted voting products of the company on issue at 31 March 2018 was 84,802,612 paid ordinary shares.
87
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Limited FY18 Governance Report
TURNERS LIMITED FY18 GOVERNANCE REPORT
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
Turners’ Board of Directors has adopted a corporate governance framework which encourages the
highest standards of ethical conduct and provide accountability and control systems commensurate
with the risks involved.
The Board considers that this framework and governance practices for the year ended 31 March
2018 are generally in line with the NZX Corporate Governance Code released in 2017 (NZX Code),
except as stated within this report. In this regard, there are several items which Turners is
progressing to ensure compliance with the NZX Code. The information in this report is current as at
27 June 2018 and has been approved by the Board of Turners.
Additionally, the Board does not have a separate remuneration committee or nomination committee
as it believes these matters are the responsibility of the full Board. The Company will continue to
monitor best practice in the governance area and update its policies to ensure it maintains the most
appropriate standards.
The Corporate Governance Code and key policies are available on the Turners Automotive Group
Limited website: www.turnersautogroup.co.nz
Turners is listed on the NZX’s Main Board and is subject to regulatory control and monitoring by both
the NZX and the Financial Markets Authority (FMA).
PRINCIPLE 1 – CODE OF ETHICAL BEHAVIOUR
Directors should set high standards of ethical behaviour, model this behaviour and hold
management accountable for these standards being followed throughout the organisation.
The Board recognises that high ethical standards and behaviours are central to good corporate
governance and it is committed to the observance of a written Code of Ethics for the Group.
The Code of Ethics is the framework of standards by which the directors, employees, contractors for
personal services and advisers to Turners Automotive Group Limited and its related companies are
expected to conduct their professional lives and has been approved by the Board. It is intended to
facilitate decisions that are consistent with Group values, business goals and legal and policy
obligations, thereby enhancing performance outcomes.
Employees are expected to report any breaches of the Code in line with the processes outlined in
the Code of Ethics.
The Code of Ethics was last reviewed by the Board in March 2018. The Board believes that all
Directors conformed to the Code of Ethics during the 2018 financial year.
A copy of the Code of Ethics is given to all new employees when they join the Group. Any changes to
the Code of Ethics is communicated to staff through regular new letters. The Code of Ethics is also
available on the Company’s website.
Turners has a Securities Trading Code of Conduct to mitigate the risk of insider trading in Turners
securities by employees and Directors. A copy of this is available on Turners’ website. This was last
reviewed and updated in March 2018. Additional trading restrictions apply to Restricted Persons
including Directors and certain employees. Details of Directors’ share dealings are on page 84 of the
2018 Full Year Financial Statements.
PRINCIPLE 2 – BOARD COMPOSITION AND PERFORMANCE
To ensure an effective Board, there should be a balance of independence, skills, knowledge,
experience and perspectives.
The Turners Board is responsible for setting the strategic direction of the Company, overseeing the
financial and operational controls of the business, putting in place appropriate risk management
strategies and policies and enhancing its value for shareholders in accordance with good corporate
governance principles.
In addition to the Turners Corporate Governance Code, the Turners Board also operates under a
written charter which sets out the structure of the Board, role and responsibilities of Directors;
procedures for the nomination, resignation and removal of Directors; and identifies procedures to
ensure that the Board meets regularly, conducts its meetings in an efficient and effective manner
and that each Director is fully empowered to perform his or her duties as a Director of the Company
and to fully participate in meetings of the Board.
Day to day management of Turners is undertaken by the executive teams under the leadership of
the Chief Executive Officer, through a set of delegated authorities which are reviewed annually.
In discharging their duties, Directors have direct access to and may rely on information, financial
data and professional or expert advice provided by Turners’ senior management and external
advisers. Directors have the right, with the approval of the Chairman or by resolution of the Board,
to seek independent legal or financial advice at the expense of Turners for the proper performance
of their duties.
Board Composition and Appointment
The number of elected Directors and the procedure for their retirement and re-election at Annual
Shareholder Meetings is set out in the Constitution of the Company.
Turners considers that the nomination process for new Director appointments is the responsibility of
the whole Board and it does not have a separate Nomination Committee.
The Board takes into consideration tenure, capability, diversity and skills when reviewing Board
composition and new appointments.
At each Annual Shareholder Meeting, one-third of the current Directors retire by rotation and are
eligible for re-election. Any Directors appointed since the previous annual meeting must also retire
and are eligible for election.
When a director is newly appointed, Turners will enter into a written agreement with them setting
out the terms of their employment.
The Board supports the separation of the roles of Chairman and CEO. The Chair of Turners as at 27
June 2018 is non-executive director, Grant Baker, who has a 7.02% shareholding in Turners and is
therefore not considered independent under the Main Board Listing Rules.
88
89
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
The Board currently comprises of six Directors: a non-executive chairman, two independent
Directors, three non-executive directors. They are all elected based on the value they bring to the
Board and against set criteria detailed in Turners Corporate Governance Code. In order for a Director
to be independent, the Board has determined that he or she must not be an executive of Turners
and must have no disqualifying relationships. The Board follows the guidelines of the NZX Listing
Rules.
Information on each director is available on the Turners website and on page 16 of the 2018 Annual
Report. Director’s interests are disclosed on pages 84 to 85 00of the 2018 Financial Statements.
The Company encourages all Directors to undertake appropriate training and education so that they
may best perform their duties. This includes attending presentations on changes in governance, legal
and regulatory frameworks; attending technical and professional development courses; and
attending presentations from industry experts and key advisers. In addition, Directors receive
updates on relevant industry and Company issues, and briefings from key executives.
The Board regularly considers individual and collective performance, together with the skill sets,
training and development and succession planning required to govern the business.
Diversity
Turners Automotive Group Limited believes that diversity and inclusion of background, experiences,
thoughts and ways of working lead to greater creative and innovative solutions which ultimately
lead to a superior outcome for its stakeholders socially, economically and environmentally.
Diversity in Turners includes (but is not limited to) the following: gender, race, ethnicity and cultural
background, thinking, physical capability, age, sexual orientation, and religious or political belief.
The Turners Board adopted a Diversity and Inclusion Policy in September 2017 (a copy of which is
available on the Turners website). The Board is responsible for setting measurable objectives for
promoting diversity and inclusion within the Company and will do so from FY19 onwards.
As at 31 March 2018, the gender balance of Turners Automotive Group Limited’s directors and
senior management was as follows:
Directors
Females
Males
Officers
Females
Males
31 March 2018
31 March 2017
-
6
1
8
-
6
1
7
Officers are defined as being the Chief Executive Officer and specific direct reports of the CEO having
key functional responsibility.
Board Meetings and Attendance
The Board has 11 scheduled meetings a year,
The table below sets out Directors’ attendance at Board and Committee meetings during FY18. In
total, there were 12 Board meetings; 2 Audit and Risk Management Committee meetings; and 3
Lending and Credit Committee meetings.
90
Board
Audit and Risk
Management
Committee
Lending and
Credit Committee
Total number of meetings held
Grant Baker
Paul Byrnes
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
9
12
12
11
12
10
PRINCIPLE 3 – COMMITTEES
1
2
1
3
3
3
The Board should use committees where this will enhance its effectiveness in key areas, while still
retaining Board responsibility.
The Board has constituted two standing Committees being the Audit and Risk Management
Committee and the Lending and Credit Committee. Due to the size of the Company's Board, matters
normally dealt with by the remuneration and the nominations committees are dealt with by the full
Board.
Committees allow issues requiring detailed consideration to be dealt with separately by members of
the Board with specialist knowledge and experience, thereby enhancing the efficiency and
effectiveness of the Board. However the Board retains ultimate responsibility for the functions of its
Committees and determines their responsibilities.
The committees meet as required and have terms of reference (Charters), which are approved and
reviewed by the Board. Copies of committee Charters (Audit and Risk Management Committee’s is
included as an appendix in the Group’s Corporate Governance Code) are on the Turners’ website.
Minutes of each committee meeting are forwarded to all members of the Board, who are all entitled
to attend any committee meeting. Each committee is empowered to seek any information it
requires from employees in pursuing its duties and to obtain independent legal or other professional
advice.
The membership and performance of each Committee is reviewed annually.
From time to time, special purpose committees may be formed to review and monitor specific
projects with senior management.
Audit and Risk Management Committee
The role of the Audit and Risk Management Committee is to assist the Board in carrying out its
responsibilities under the Companies Act 1993 and the Financial Reporting Act 2013 regarding
accountancy practices, policies and controls relative to the Company’s financial position and make
appropriate enquiry into the audits of the Company’s financial statements. This responsibility
includes providing the Board with additional assurance about the quality and reliability of the
financial information issued publicly by the Company. All matters required to be addressed and for
which the committee has responsibility were addressed during the reporting period.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
A written charter outlines the Audit and Risk Management Committee’s delegated authority, duties,
responsibilities and relationship with the Board. The Charter is included as an appendix in the
Group’s Corporate Governance Code which is available on the Company’s website.
The committee must be comprised solely of Directors of Turners, have a minimum of three
members, have a majority of independent Directors and have at least one director with an
accounting or financial background. The makeup of the current members of this committee complies
with this recommendation. The Chair of the committee cannot be Chair of the Board.
Members as at 31 March 2018 were John Roberts (Chair), Antony Vriens and Matthew Harrison. It
met twice during the financial year.
Management and employees may only attend meetings at the invitation of the committee and the
committee routinely has committee-only time with the external and internal auditors without
management present.
Lending and Credit Committee
The Lending and Credit Committee reviews the lending and credit policies of Finance companies. It is
also responsible for the approval of lending policies, the approval/decline of loan applications in
terms of approval authority and reviews the recovery of overdue loans and doubtful debt provisions
in order to ensure that provisioning is satisfactory.
The Lending and Credit Committee members as at 31 March 2018 were Matthew Harrison (Chair),
Alistair Petrie and John Roberts. It met three times during the financial year.
Takeovers
Turners Automotive Group Limited is prepared in the event of a takeover. The Board has adopted a
written Takeover Response Policy (contained within the Turners Automotive Group Corporate
Governance Code) to follow in the event that a takeover notice or scheme of arrangement proposal
is imminent. This policy would involve Turners forming an Independent Takeover committee to
oversee disclosure and response, and engage expert legal and financial advisors to provide advice on
procedure.
PRINCIPLE 4 – REPORTING AND DISCLOSURE
The Board should demand integrity in financial and non-financial reporting, and in the timeliness
and balance of corporate disclosures
Turners Automotive Group Limited directors are committed to keeping investors and the market
informed of all material information about the Company and its performance and ensures
compliance with legislative and NZX listing rules.
The release of material information is guided by the Reporting and Disclosure section on the Group’s
Corporate Governance Code, and the Company’s Continuous Disclosure Policy, which are available
to view on the Company’s website.
In addition to all information required by law, Turners also seeks to provide sufficient meaningful
information to ensure stakeholders and investors are well informed, including financial and non
financial information.
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
Financial Information
The Board is responsible for ensuring that the financial statements give a true and fair view of the
financial position of the Company and have been prepared using appropriate accounting policies,
consistently applied and supported by reasonable judgements and estimates and for ensuring all
relevant financial reporting and accounting standards have been followed.
For the financial year ended 31 March 2018, the directors believe that proper accounting records
have been kept which enable, with reasonable accuracy, the determination of the financial position
of the Company and the Group and facilitate compliance of the financial statements with the
Financial Reporting Act 1993.
The Chief Executive and Chief Financial Officer have confirmed in writing to the Board that Turners’
external financial reports present a true and fair view in all material aspects.
Turners’ full and half year financial statements are available on the Company’s website.
Non-financial information
The Board recognises the importance of non-financial disclosure. Given the Company’s size the
Board has elected not to adopt a formal environmental, social and governance framework. The
Group has an Environmental, Social and Governance Policy in section 14 of the Group’s Corporate
Governance Code.
Turners’ discusses its strategic objectives and its progress against these in the Chair and CEO’s
commentary in shareholder reports, and at other investor events during the year including investor
presentations and the Annual Shareholders Meeting.
Turners is committed to using its resources responsibly and will look for opportunities to reduce any
negative environmental risk or impact from business operations, products and services.
The Company is committed to providing fair and responsible products and services that includes
adherence to the Responsible Lending Code, the Responsible Credit-Related Insurance Code,
Insurance (Prudential Supervision) Act 2010 and various other Acts. The Board will encourage
diversity and will not knowingly participate in business situations where Turners’ could be complicit
in human rights and labour standard abuses.
PRINCIPLE 5 – REMUNERATION
The remuneration of Directors and executives should be transparent, fair and reasonable.
The Board promotes the alignment of the interests of the directors, the CEO and management with
the long term interests of shareholders. Remuneration policies and structure are reviewed regularly
to ensure remuneration of management and directors is fair and reasonable in a competitive market
for the skills, knowledge and experience required by the Company.
The Board recognises that it is desirable that executive (including executive director) remuneration
should include an element dependent upon the performance of both the Group and the individual,
and should be clearly differentiated from non-executive director remuneration.
92
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
Details of directors and executives’ remuneration and entitlements for the 2018 financial year are
detailed on pages 72 and 84 of the Annual Report. The Remuneration Policy is included in section 10
of Group’s Corporate Governance Code.
Turners does not have a Remuneration Committee and matters pertaining to remuneration are dealt
with by the full Board.
Director Remuneration
The total remuneration pool available for Directors is fixed by shareholders. The Board determines
the level of remuneration paid to Directors from the approved collective pool. Directors also receive
reimbursement for reasonable travelling, accommodation and other expenses incurred in the course
of performing their duties.
The annual fee pool limit is $440,000 and was approved by shareholders at the annual meeting in
September 2015.
Any proposed increases in non-executive Director fees and remuneration will be put to shareholders
for approval. If independent advice is sought by the Board, it will be disclosed to shareholders as
part of the approval process.
Board Role
Chairman
Non-executive Director*
Approved
Remuneration
$110,000
$55,000
*Except for Antony Vriens who is paid $20,000 per annum in addition to fees paid in his capacity as
Chairman of DPL Insurance Limited.
Details of individual Directors’ remuneration are detailed on page 84 of the 2018 Annual Report.
Executive Remuneration
Executive remuneration consists of a fixed base salary, a variable short term bonus paid annually and
a long term incentive, a Share Option Plan. Bonuses are paid against targets agreed with executives
at the commencement of the year and are based on profitability, growth and personal objectives.
Details of executives’ remuneration and entitlements are detailed under Key Management
Compensation on page 72 and Remuneration of Employees information on page 85 of the 2018
Financial Statements.
Details of Group’s Share Option Plan are detailed on page 69 of the 2018 Financial Statements.
CEO Remuneration
The review and approval of the CEO’s remuneration is the responsibility of the Board.
The CEO’s remuneration comprises a fixed base salary, a variable short term bonus payable annually
and a long term incentive, participation in the Group’s Share Option Plan.
The CEO’s remuneration can be summarised as follows:
Salary
Benefits
Subtotal
Pay for Performance
Total
remuneration
STI
% STI
against
maximum
FY18
FY17
505,000
480,000
20,683
19,933
525,683
499,933
161,000
161,000
100%
100%
686,683
660,933
Short term incentive
A short term bonus is paid against profit targets agreed at the commencement of the year.
Long term incentive
In November 2016, the Chief Executive Officer of the Company was granted 1,002,692 options at an
exercise price of $2.99195 under the Group's Share Option Plan. The grant is split into four tranches
of 250,673 options with the following vesting dates; 1 June 2017, 1 June 2018, 1 June 2019 and 1
June 2020. Each tranche expires two year after the vesting date. The weighted average fair value of
the options granted, using the Binomial Tree option pricing model, was $0.75 per option.
If a participant in the Group Share Option Plan leaves (by any means and for any reason) the
employment of the Company or any applicable subsidiary, the participant’s options which have
reached their vesting date, together with any other options as may be nominated at the discretion
of the Board of Directors of the Company in extraordinary circumstances (such as the redundancy,
permanent disablement or death of a Participant), may be exercised within a period of 60 days
(following which they will lapse) and the participant's other Options will lapse immediately.
PRINCIPLE 6 – RISK MANAGEMENT
Directors should have a sound understanding of the material risks faced by the issuer and how to
manage them. The Board should regularly verify that the issuer has appropriate processes that
identify and manage potential and material risks.
Turners Automotive Group Limited is committed to proactively managing risk. While this is the
responsibility of the entire Board, the Audit and Risk Management Committee assists the Board and
provides additional oversight in regards to the risk management framework and monitoring
compliance with that framework. The Board’s approach to risk management is incorporated into the
Audit and Risk Committee Charter.
The Board delegates day to date management of the risk to the Chief Executive. The executive team
and senior management are required to regularly identify the major risks affecting the business and
develop structures, practices and processes to manage and monitor these risks.
The Board is satisfied that Turners has in place a risk management process to effectively identify,
manage and monitor Turners’ principal risks.
Turners maintains insurance policies that it considers adequate to meet its insurable risks.
Key financial and non-financial risks are included in note 5 of the financial statements.
94
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
TURNERS LIMITED FY18 GOVERNANCE REPORT cont.
Health and Safety
The Turners’ Board recognises that effective management of health and safety is essential for the
operation of a successful business, and its intent is to prevent harm and promote wellbeing for
employees, contractors and customers. The Board is responsible for ensuring that the systems used
to identify and manage health and safety risks are fit for purpose, being effectively implemented,
regularly reviewed and continuously improved.
Turners has a Health and Safety Policy which is monitored by a Group Health and Safety committee
assisted by Health and Safety co-ordinators in each business unit. Health and Safety reports,
including incident reports, for all business units are include the compliance section of the board
papers.
PRINCIPLE 7 – AUDITORS
The Board should ensure the quality and independence of the external audit process.
The Board’s approach to the appointment and oversight of the external auditor are outlined in
Turners’ External Audit Policy (recommend separating this out into stand alone policy) (section 9 of
the Turners Automotive Group Limited Corporate Governance Code) and ensures that audit
independence is maintained, both in fact and appearance, such that Turners Automotive Group
Limited’s external financial reporting is viewed as being highly reliable and credible.
The Audit and Risk Management Committee provides additional oversight of the external auditor,
reviews the quality and cost of the audit undertaken by the Company’s external auditors and
provides a formal channel of communication between the Board, senior management and external
auditors. The Committee also assesses the auditor’s independence on an annual basis. Procedures
are detailed in the Audit and Risk Committee Charter.
For the financial year ended 31 March 2018, Staples Rodway was the external auditor for Turners
Automotive Group Limited. Staples Rodway were first appointed as external auditor in 1999 and
were automatically re-appointed under the Companies Act 1993 at the 2017 Turners Automotive
Group Limited annual meeting. The last audit partner rotation was in 2016.
All audit work at Turners is fully separated from non-audit services, to ensure that appropriate
independence is maintained. The amount of fees paid to Staples Rodway for audit and other services
is identified on page 52 of the 2018 Annual Report.
Staples Rodway has provided the Turners’ Board with written confirmation that, in their view, they
were able to operate independently during the year.
Staples Rodway attends the annual meeting, and the lead audit partner is available to answer
questions from shareholders at that meeting. Staples Rodway attended the 2017 annual meeting.
Turners has a number of internal controls overseen by Audit and Risk Management Committee,
including controls for computerised information system, security, business continuity management,
insurance, health and safety, conflicts of interest, and prevention and identification of fraud. The
Group does not have a dedicated Group Internal Auditor role.
PRINCIPLE 8 – SHAREHOLDER RIGHTS AND RELATIONS
The Board should respect the rights of shareholders and foster constructive relationships with
shareholders that encourage them to engage with the issuer.
The Board is committed to open dialogue and to facilitating engagement with shareholders.
Turners has a calendar of communications and events for shareholders, including but not limited to:
Annual and Interim Reports
Market announcements
Annual Shareholder Meeting
Financial results calls
Other ad hoc investor presentations
Easy access to information through the Turners website www.turnersautogroup.co.nz
Access to management and the Board via email info@turnersautogroup.co.nz
The Company maintains a comprehensive website which provides access to key corporate
governance documents, copies of all major announcements, Company reports and presentations.
Shareholders are encouraged to attend the annual meeting and may raise matters for discussion at
this event. Shareholders have the ultimate control in corporate governance by voting Directors on or
off the Board. Voting is by poll, upholding the ‘one share, one vote’ philosophy.
In accordance with the Companies Act 1993, Turners’ Constitution and the NZX Main Board Listing
Rules, Turners refers major decisions which may change the nature of Turners’ to shareholders for
approval.
All shareholders are given the option to elect to receive electronic communications from the
Company.
In addition to shareholders, Turners has a wide range of stakeholders and maintains open channels
of communication for all audiences, including shareholders, brokers and the investing community, as
well as our staff, suppliers and customers.
ENDS
96
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
DIRECTORY
DIRECTORY
CORPORATE DIRECTORY
NOTES
DIRECTORS
Grant Baker
Chairman
Appointed 10 September 2009
REGISTERED OFFICE
Level 8, 34 Shortland Street, Auckland, New Zealand
PO Box 1232, Shortland Street, Auckland, 1140, New Zealand
Freephone: 0800 100 601
Telephone: +64 9 308 4950
Email enquiries: info@turnersautogroup.co.nz
Paul Byrnes
TURNERS LIMITED
Web: www.turnersautogroup.co.nz
Deputy chairman
Appointed 2 February 2004
Consolidated statement of financial position for the year ended 31 March 2016
Matthew Harrison
Non-executive director
Appointed 12 December 2012
TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2016
AUDITOR
Staples Rodway
Alistair Petrie
Non-executive director
Appointed 24 February 2016
Assets
Assets
Cash and cash equivalents
John Roberts
Independent Director
Appointed 1 July 2015
Trade receivables
Trade receivables
Cash and cash equivalents
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Inventory
Inventory
Antony Vriens
Finance receivables
Finance receivables
Independent Director
Other receivables and deferred expenses
Appointed 12 January 2015
Reverse annuity mortgages
Reverse annuity mortgages
Other receivables and deferred expenses
Property, plant and equipment
Property, plant and equipment
Tax receivables
Tax receivables
SHAREHOLDER INFORMATION
Deferred tax asset
Deferred tax asset
Intangible assets
Total assets
Intangible assets
Total assets
COMPANY PUBLICATIONS
The Company informs investors of the Company’s business
and operations by issuing an Annual Report, an Interim
Report and releasing announcements on the NZX’s website.
Liabilities
Liabilities
Notes
Notes
BANKERS
Bank of New Zealand and ASB Bank
2016
$’000
2016
$’000
2015
$’000
2015
$’000
10
11
12
LAWYERS
Chapman Tripp
13
14
15
16
19
20
10
11
12
13
14
15
16
19
20
13,810
18,455
9,575
14,156
13,810
18,455
12,339
17,350
9,575
14,156
7,394
8,984
12,339
17,350
7,394
8,984
167,598
167,598
142,827
142,827
8,505
9,734
8,505
9,734
5,946
13,253
11,108
11,108
-
-
4,024
4,024
8,319
433
8,532
5,946
13,253
8,319
433
8,532
21
105,338
21
105,338
SHARE REGISTER
Computershare Investor Services Limited
362,303
Level 2, 159 Hurstmere Road, Takapuna, Auckland
Private Bag 92119, Auckland 1142, New Zealand
Telephone: +64 9 488 8777
17,790
362,303
328,972
22,270
22
103,595
22,270
22
103,595
328,972
17,790
Other payables
Tax payables
Deferred revenue
Life investment contract liabilities
Other payables
Financial calendar
Deferred revenue
First quarterly dividend
Tax payables
Annual meeting
Derivative financial instruments
Derivative financial instruments
Half year results announced
Borrowings
Borrowings
Half year report
Second quarterly dividend
Insurance contract liabilities
Third quarterly dividend
Total liabilities
End of financial year
Annual results announced
Annual report
Shareholders’ equity
Shareholders’ equity
Final dividend
Share capital
Insurance contract liabilities
Total liabilities
Share capital
Life investment contract liabilities
Other reserves
Other reserves
Retained earnings
Retained earnings
Total shareholders’ equity
Total shareholders’ equity
October
September
November
December
January
April
31 March
May
June
July
23
24
32
32
23
24
32
32
6,049
6,049
7,476
7,476
990
49
990
49
71
-
71
-
174,816
174,816
156,995
156,995
15,629
12,688
15,629
12,688
16,378
9,260
16,378
9,260
232,491
232,491
207,970
207,970
25
25
136,127
136,127
135,294
135,294
(52)
(52)
(23)
(23)
(6,263)
(6,263)
(14,269)
(14,269)
Total shareholders’ equity and liabilities
Total shareholders’ equity and liabilities
ENQUIRIES
Shareholders with enquiries about transactions, change of address or dividend payments should contact Computershare Investor
Services on +64 9 488 8777. Other questions should be directed to the Company at the registered address.
362,303
362,303
328,972
328,972
129,812
129,812
121,002
121,002
STOCK EXCHANGE
The Company’s shares trade on the NZSX operated by the NZX under the code TRA. The minimum marketable parcel on the NZX is
For and on behalf of the Board
100 shares.
For and on behalf of the Board
This annual report is dated 28 June 2018 and is signed on behalf of the board by:
G.K. Baker
G.K. Baker
Chairman
Chairman Director
G.K. Baker
Chairman Director
P.A. Byrnes
Executive Director
P.A. Byrnes
P.A. Byrnes
Deputy chairman
Executive Director
Authorised for issue on 22 June 2016
Authorised for issue on 22 June 2016
The accompanying notes from part of these financial statements
The accompanying notes from part of these financial statements
98
99
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2018
Turners Automotive Group
Limited
Level 8, 34 Shortland Street
PO Box 1232, Auckland 1140
T: 0800 100 601
E: info@turnersautogroup.co.nz
www.turnersautogroup.co.nz