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ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2019
For more than 52 years, innovative thinking
has underpinned all that we do. It’s what has
made us the biggest second hand automotive
business in New Zealand and one of the
country’s most trusted automotive brands.
Innovative thinking allows us to find better ways
to serve our customers, helping them to buy
and sell cars and get finance and insurance, all
through one trusted source.
It enables us to identify better ways of working
together as a team, across our businesses and
our group, to achieve our ambitions.
It is driven by our people and their passion for
what they do, and we encourage an ‘anything is
possible’ attitude.
However, we know that innovation for the
sake of innovation is not the answer. Doing the
right thing is key and all our solutions must be
beneficial for our customers, our people and our
business.
This year, we are taking another step forward
with innovative thinking.
The automotive industry is changing and we are
looking ahead to ensure we are well positioned
to take advantage of future trends. This takes
innovative thinking - about our business and our
offer - and we are excited about our company’s
potential in this rapidly changing world.
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Since 2018, Turners has sponsored New Zealand’s
latest racing prodigy, 17 year old Liam Lawson. Liam
is the reigning NZ Toyota Racing Series champion and
NZ GP winner. Picked up by the Red Bull Junior Team this season,
Liam is currently in Europe racing in two series; the all new FIA F3
championship, featuring at 8 rounds of Formula 1 for the Dutch team
MP Motorsport; as well as the contesting the Formula European Masters
(FEM) with Motopark from Germany.
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EXPANSION OF NATIONAL RETAIL NETWORK: Relocation
of Whangarei site and opening of new sites in Porirua, New
Plymouth and Wellington City, as well as temporary branch in
Hamilton.
MANAGING HEADWINDS IN IMPORT MARKET: On both
supply and demand side, particularly in Auckland market.
REBRANDING OF BUY RIGHT CARS: Decision made to
rebrand Buy Right Cars to Turners, with project completed in
May 2019.
INCREASED REFERRER NETWORK: 11% increase in active
dealers selling Oxford Finance’s loans, with one in five loans
being ‘auto-approved’ through Turners’ Auto App online loan
approval platform.
FINANCE INTEGRATION: Turners Finance origination fully
committed to Oxford Finance from September 2018.
HIGHER QUALITY LENDING: Repositioning towards high
quality and more profitable lending, aided by the introduction
of comprehensive credit scoring.
IMPROVED INSURANCE LOSS RATIOS: Insurance claims loss
ratios have improved from 78% to 72%.
E FY19 AT A GLANCE
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FUNDING FOR GROWTH: Issue of new $25m, 3-year bond
programme, combined with securitisation warehouse and
banking syndication with the ASB and BNZ.
GROUP STRATEGY REVIEW: Commenced at end of 2018,
with a focus on leveraging strengths and core capabilities,
de-risking and simplifying the business and accelerating
growth in a capital efficient way.
FY20 KEY FOCUS AREAS
AUTO RETAIL: Develop and extend retail footprint, deliver
better digital and mobile customer experience, build
data tools to understand demand, develop new sourcing
opportunities.
FINANCE: Extend distribution through use of APIs and
partnerships, grow direct lending, further automate the credit
decision process.
INSURANCE: Increase distribution, launch new products
through delivery of retail system development, optimise
repair network.
CREDIT MANAGEMENT: Australian corporate customer
acquisition, MYOB / XERO integration, further enhance
Collections Scorecard.
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FINANCIAL SNAPSHOT
GROUP REVENUE
$336.6M
+2%
NET PROFIT BEFORE TAX
$29.0M
-7%
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FY15 FY16 FY17 FY18 FY19
FY15 FY16 FY17 FY18 FY19
$33.6M EXCL BRC BRAND WRITE DOWN, +8%
NET PROFIT AFTER TAX
$22.7M
-3%
FULL YEAR DIVIDENDS
17.0 CENTS PER SHARE
+10%
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FY15 FY16 FY17 FY18 FY19
FY15 FY16 FY17 FY18 FY19
SECTOR REVENUE
SECTOR OPERATING PROFIT
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FY15 FY16 FY17 FY18 FY19
FY15 FY16 FY17 FY18 FY19
■ AUTOMOTIVE RETAIL ■ FINANCE AND INSURANCE ■ DEBT MANAGEMENT
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Revenue was $336.6m for the year, with
$29.0m in Net Profit Before Tax (NPBT).
Excluding a $4.6m one-off, non-cash
adjustment related to the rebranding of
Buy Right Cars, the Company delivered
FY19 NPBT of $33.6m, above Q4 guidance
of $32m and ahead of last year’s result of
$31.1m. Net Profit After Tax (NPAT) was
$22.7m, down 3% from $23.4m in FY18. More
detail on our financial results is provided in
the commentary on page 14.
GROUP STRATEGY REVIEW
The dynamics of the automotive industry are
changing and we are changing our business
too.
In recent months, we have undertaken a
detailed strategic review of our business.
The result has been a decision to simplify
and de-risk the business as well as leverage
core capabilities and strengths (such as the
brand strength in Automotive Retail and the
Turners brand name) in order to accelerate
growth in a capital efficient manner.
We believe this approach will sharpen the
focus on meeting customer needs; improve
the efficiency of the business; and enhance
the returns generated for shareholders.
There is a strong desire to invest in the
brands and businesses where we have
already achieved a leading position. The
shift to a single brand strategy in Auto
Retail, completed in May 2019, is one of the
first projects implemented under the new
strategy.
We have also appointed Jardens (FNZC)
to conduct a strategic review of Oxford
Finance, which has commenced. Whilst
Oxford Finance is a well performing and
growing business with a strong network of
active dealers across the country, the review
of group strategy has highlighted that
building a loan book is very capital intensive
and we may be best to use our capital in
growing our core business in Automotive
Retail.
As a part of the review, we will consider
alternative ownership options for Oxford
Finance. Whatever the outcome, we will
continue to maintain our close relationship
with Oxford Finance and originate loans
through the Turners’ network. Oxford
Finance customers and the existing dealer
network will see no change to the leading
levels of service and quality they currently
experience.
We will also conduct a strategic review
of EC Credit Control in the next 12 to 24
months.
We are applying innovative thinking to
determine what the future will look like for
our company and we are pleased to share
this thinking with you on pages 12 and 13 of
this report.
THE USED CAR ECONOMY
While the used car market remained at
historically strong levels in FY19, with 1.13
million used car transactions in the year
to end of March, it definitely plateaued.
However, underlying medium term demand
is still robust, with over 950,000 cars at 20+
years old.
There continues to be pressure on import
margins. A current oversupply of import
cars is temporarily pushing down pricing
and increased compliance costs are also
having an adverse impact. From 2020, all
imports will be required to have Electronic
Stability Control, which will mostly impact
on the sub-$8,000 budget segment. Our
research shows that most Kiwis are in the
market for a vehicle under $10,000, and over
80% of buyers will purchase a vehicle under
$20,000.
Vehicle margins have recovered from the
low point in October/November last year
and local stock is delivering much stronger
margins. We are benefitting from our
strategy to increase the number of ‘owned’
vehicles we sell, which provide higher
margins.
New Zealand’s vehicle fleet continues to
age. There are over 3.8 million light vehicles
in the used vehicle fleet and around 20% of
these, or 950,000 vehicles, are at or very
near the scrapping age. The scrapping age
has been dropping and is now at 19.5 years
for an import and 17.5 years for a NZ new
car. We’re seeing more cars exiting the fleet
due to the cost of repairs increasing and a
stricter Warrant of Fitness regime.
The number of registered dealers has
dropped 4% to 3,377 over the last 12
months. We still see further consolidation as
inevitable and we are well positioned to take
advantage of this.
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IN FY19, TURNERS AUTOMOTIVE GROUP
CONTINUED THE WORK STARTED IN THE
PRIOR YEAR TOWARDS SIMPLIFICATION OF
OUR BUSINESS, WITH A FOCUS ON ORGANIC
GROWTH.
We are now seeing the benefits from the launch
of core brands for each business, common
operating and funding platforms and centralised
locations for our teams. Our business is more
streamlined and more efficient, allowing us to
generate synergies across the group and better
leverage our collective knowledge.
Our expanding retail network and focus on
better quality lending are also generating
positive gains for the business and remain a
focus for the year ahead.
After adjusting for one-off and non-cash items,
Turners’ underlying results for the year were
flat on the last year, mainly due to market
headwinds in the used import vehicle sector
and the impact of impairments from MTF
non-recourse lending (which has now been
discontinued). Some pleasing improvements
were noted in damaged vehicle volumes and
sales and loss ratios in the insurance business.
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OPERATIONAL PERFORMANCE
Our ability to meet all our customer’s
automotive needs remains a lynchpin of our
business and offers a myriad of advantages.
We can provide an end-to-end customer
journey within our own channels which provide
higher margin transactions, we develop better
customer relationships and we can easily
adapt to meet customer needs with new and
innovative solutions.
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.
■ AUTOMOTIVE RETAIL
• Revenue: $225.7m +1%
• Operating Profit: $18.3m +10%
• Underlying Op Profit: $14.7m -8%
• 631 staff
• National network of 32 sites and yards
• NPS customer score of 64
Automotive Retail was the largest contributor to
the group in FY19, generating 67% of operating
revenue and 63% of operating profit. Revenue
was slightly up on the prior year to $225.7m,
with operating profit increasing 10% to $18.3m.
This included $3.4m in one-off property gains
associated with the NZTA settlement for Albany.
During the year, the division operated through
two brands, however, as part of the drive
for simplification, a decision was made to
consolidate to a single brand in Auto Retail and
rebrand Buy Right Cars to Turners Cars. This
project has now been completed. The move to a
single brand provides the opportunity to further
leverage the high levels of awareness and the
very strong trust that Kiwis place in the Turners
brand and will also enable marketing and other
cost synergies.
Turners continued to benefit from its national
network and strong online channels, which
provide diversity across regional markets. The
business delivered a 13% increase in operating
profit, offsetting the downturn in Buy Right Cars
which has been adversely impacted by the soft
Auckland market where all but one of its sites
are located.
Approximately 49% of retail sales are cars
owned by Turners, which generate better
margins and an increased opportunity to cross
sell finance and insurance products. Of the
vehicles being sold on consignment, a higher
number of these are ex-lease cars which provide
less margin but provide good late model “NZ
new” cars for sale. While import vehicle margins
are well down, Turners has implemented a
number of initiatives to improve local stock
buying, which delivers higher margins.
Turners has also continued to grow its share of
the niche end-of-life market and is increasingly
being recognised by insurance companies as the
provider of choice.
Our property strategy remains an important
driver for this business. A proportion of reserves
from our insurance business has been allocated
to support the property expansion and assist
in better utilisation of capital in the business.
During the year, we relocated the Whangarei
site and opened two new sites in Wellington and
New Plymouth, both of which are performing
above expectations. The new North Shore
branch is expected to open towards the end
of the 2Q20 and we have plans for a further
seven sites around the country for which two
contracts are already in place.
■ FINANCE
• Revenue: $44.2m +11%
• Operating Profit: $11.1m -5%
• Underlying Op Profit: $10.3m -6%
• Finance book (excluding Turners Finance)
grew by 9% to $254m as at 31 March 2019
• 70 staff
• Average Equifax credit score 547 in 2H19
(450 in 2H18)
The Finance division delivered an 11% increase
in operating revenue to $44.2m, however,
segment profit decreased slightly to $11.1m due
to increased impairments from the MTF non-
recourse offer. In the core lending book, good
progress is being made on repositioning the
borrower profile towards high quality and more
profitable lending, aided by the introduction of
comprehensive credit scoring in March 2019.
We take our responsibilities seriously and
continue to monitor our customer on-boarding
processes to ensure that we are compliant with
legislation including the Credit Contracts and
Consumer Finance Act and the Responsible
Lending Code.
8
From August 2018, all new loans originated by
Turners Cars are being directed into Oxford
Finance, and the Turners Finance loan book
with MTF will be run down over the next two
years, and we believe has now been adequately
provisioned. New loans originated by Turners
Cars added $28m to the Oxford Finance loan
book in FY19, which grew 9% to $254m as at 31
March 2019.
The number of active dealers selling Turners’
finance offer continues to grow and was up 11%
year on year to 419. One in five loans are now
being “auto-approved” through Turners’ Auto
App online loan approval platform, which makes
it easier and faster for dealers and customers to
gain a response on loan applications.
■ INSURANCE
• Revenue: $48.5m +3%
• Operating Profit: $8.2m +126%
• Underlying Op Profit: $5.2m +137%
• Net Earned Premium $38.0m
• 49 staff
• More than 6,600 Motor Vehicle Breakdown,
Loan Protection and Motor Vehicle
insurance policies sold every month
Autosure has around 50% share of the motor
vehicle mechanical breakdown insurance market.
It is a lower risk insurance business which
provides good returns and offers leverage for
the group through the ability to use insurance
reserves to invest in property. Operating revenue
for the year was up 3% to $48.5m, with segment
profit of $8.2m, which included a $3.0m gain on
sale of an investment property.
The number of new policy sales increased, with
an 8% increase in policies sold through Turners’
Automotive Retail business. Loss ratios have
improved across all insurance products through
the benefits of risk pricing work and tight cost
control in claims management. MBI (Mechanical
Breakdown Insurance) loss ratios were at 72%
for the year, down from 78% the year before,
with a further improvement targeted.
The final step in the large integration project
to combine all Turner’s insurance brands was
completed this year, with the migration to a new
front end retail system which was implemented
in April 2019. A refreshed suite of insurance
products as well as new pricing and vehicle
categories for Mechanical Breakdown insurance
have been launched.
■ CREDIT MANAGEMENT
• Revenue: $18.2m -3%
• Operating Profit: $6.3m +4%
• Underlying Op Profit: $6.2m +9%
• Total debt load $237m, up 15% year on year
• Unredeemed voucher release $0.2m
• 87 staff
EC Credit Control continues to deliver consistent
results with revenue of $18.2m down slightly
on the prior year and segment profit up 4% to
$6.3m. The unredeemed voucher release was
under $0.2m (FY18: $0.4m) and similar levels are
expected to be maintained in FY20.
EC Credit Control’s share of the New Zealand
market continues to grow, with increased debt
load from new and existing customers. Australia
remains more challenging and we continue
to focus on winning new Australian corporate
clients.
The business continues to reap benefits from
the investment into Auto-dialler technology
which is delivering significant cost efficiencies
and an increasing number of calls and
connected calls. This combined with the use
of the debtor scorecard we have developed is
delivering better collections results faster for our
customers.
In total, 28% more debtor actions were taken in
FY19 and total debt load was up 15% to $237m.
Our ability to meet all our
customer’s automotive needs
remains a lynchpin of our
business and offers a myriad
of advantages.
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TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2016
Notes
2016
$’000
2015
$’000
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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
Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Trade receivables
Inventory
Finance receivables
We have identified a number of growth
Other receivables and deferred expenses
Reverse annuity mortgages
opportunities across all businesses, which
Property, plant and equipment
take advantage of the changing dynamics
Tax receivables
of the industry – digital disruption, increased
Deferred tax asset
Intangible assets
regulation, an increasing shift to online
Total assets
channels, alternative ownership models and
industry consolidation. The new strategy will
Liabilities
help position Turners to take advantage of
Other payables
Deferred revenue
investments in these opportunities as they
Tax payables
arise.
Derivative financial instruments
Borrowings
Accessing and analysing the wealth of
Life investment contract liabilities
valuable data within each business is a
Insurance contract liabilities
priority. This will provide us with better
Total liabilities
insights and, with innovative thinking, could
Shareholders’ equity
substantially improve the way consumers
Share capital
buy and sell vehicles.
Other reserves
Retained earnings
We are excited about what the future
Total shareholders’ equity
Total shareholders’ equity and liabilities
holds for our company and the changing
landscape ahead of us. Delivering value to our
shareholders remains a priority and we look
forward to providing a further update at our
For and on behalf of the Board
Annual Shareholder’s Meeting in Auckland on
18 September 2019.
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
DIVIDEND
The Board was pleased to declare a final
quarter fully imputed dividend of 5.0 cents
per share, taking total FY19 dividends to 17
cents per share, up from 15.5 cents in FY18.
Following the strategy work, and for the
second year in a row, the Directors have
approved a change in the Dividend Policy,
increasing the payout ratio from 60-70% of
NPAT (previously 50-60% of NPAT).
The Board continues to believe the share
price undervalues the business, and 2.6m
shares have been acquired under the Share
Buyback scheme, which equates to about
3% of shares on issue. The scheme was put
on hold during the strategic review and the
Board will revisit the buy-back programme
in the near-term based on how the stock
performs.
OUTLOOK
We have identified our Automotive Retail
business as Turner’s core strength. The long-
term dynamics of this market are strong
with hundreds of thousands of ageing
vehicles needing to be replaced over the
next decade. We are well positioned to take
advantage of this, as well as the expected
consolidation of the dealer network.
Expansion of the national network will
continue as we strengthen Turners’ omni-
channel approach – ensuring that it has a
strong and consistent customer experience
in all channels where consumers are
looking to buy or sell cars, including online,
through social media or ‘in person’. We
will also continue to develop our inhouse
property expertise and leverage reserves
within the insurance business to deliver on
the property strategy and enhance capital
efficiency.
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E “The automotive industry
is changing and we are
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looking ahead to ensure
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take advantage of future
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trends. This requires
innovative thinking
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- about our business
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and our offer - and we
are excited about our
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company’s potential in
this changing world.”
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to view and test drive a car, more and more of the customer
experience is transitioning online… and the number of online
purchases is also growing. In our other businesses, such as
finance and insurance, there’s an even greater shift to online
where our customers can transact conveniently and quickly.
industry disruption from alternative ownership models which
could see people moving away from owning one, two or more
cars per household, to flexible ownership and subscription
models.
THE USED-CAR INDUSTRY IS ON THE CUSP OF SOME
SIGNIFICANT CHANGES, CREATING BOTH OPPORTUNITIES
AND THREATS
it’s all about customers wanting to be informed and able to
access the best option at the best price in the easiest way to
meet their needs.
Industry consolidation is inevitable and we are in the midst of
this right now.
• Big data and technology are changing how and where we do
• Customers are more informed than ever and delivering great
• Finally, looking at the big picture, there’s potentially greater
• While most of our customers still like to visit a physical site
• Aggregator and comparison sites are proliferating… again,
• Regulation and compliance across all our businesses is
customer outcomes is vital to survive and prosper.
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increasing.
business.
•
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We have a number of strengths – a strong
balance sheet, a large customer base, a
great consumer brand and rich data assets.
This puts us in a unique position to partner
with other parties to harness the changing
market dynamic. Our criteria for any
investment is that it must be highly adjacent
to the auto market, have alignment with the
Turners’ brand, and significantly improve the
way customer needs are met.
WHAT DOES THIS MEAN FOR OUR
STAKEHOLDERS?
We’ll have a narrower focus concentrating
on growing the brands where we have
a dominant position. We’ll be more
competitive with a leaner, more competitive
business model. We’ll be more customer
relevant, capital efficient, have a lower risk
profile and less complex business model,
which will allow us to continue to offer high
yielding shareholder returns.
We’re looking to the future to ensure the
sustainability of our business in a changing
industry and we’re excited about the
potential this offers.
LOOKING AT OUR BUSINESS IN THIS
CONTEXT, THERE ARE FOUR THINGS
THAT STAND OUT
• The strength of the Turners brand
• The complexity of our existing business
model
• The opportunity available in NZ’s ageing
vehicle fleet
• And the growing customer demand for
digitisation.
Our ambition is for Turners is to be
New Zealand’s best place to buy
and sell vehicles with continually
high customer satisfaction. We’ve
identified three key strategic pathways
that we believe will help us achieve
our goal and improve the return for
shareholders.
SIMPLIFY THE BUSINESS
With single brands for each of our sectors;
a focus on core products and a strategic
review of business units where we don’t hold
dominant market position.
DE-RISK THE BUSINESS
By continuing to write higher quality loans,
early adoption of comprehensive credit
reporting, actively engaging with regulators
in regards to compliance and regulatory
changes, and focusing on loan origination
rather than underwriting credit risk.
GROW THE BUSINESS
By continuing to expand our auto retail
footprint across NZ, shifting marketing
investment into digital platforms, leveraging
data analytics to buy and sell smarter,
evolving the customer experience in person
and online, and looking for innovation and
disruptive opportunities within the auto
sector.
Work has already started in much of these
areas with projects such as the brand
consolidation now completed. More recently,
we have appointed Jardens (FNZC) to
conduct a strategic review of Oxford
Finance. And we have engaged experts in
social media and data analytics to build our
online presence and strategy.
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with the full financial statements and Notes to the Financial
Statements in the FY19 Annual Report.
Revenue grew to $336.6m in FY19, up 2% from $330.5m in FY18,
with Automotive Retail contributing 67% of operating revenue.
Excluding the $4.6m adjustment for the Buy Right Cars brand
write-off, net profit before tax (NPBT) was $33.6m, above Q4
guidance and ahead of last year’s result.
Underlying NPBT excludes those items which are one-off or
non-cash costs. Property sales and acquisitions had the biggest
impact this year, with proceeds from the sale of property and
the settlement from NZTA following the compulsory acquisition
of the North Shore site. The other major item is the Buy
Right Cars brand write off adjustment of $4.6m. The total
unredeemed voucher release for EC Credit Control was under
$0.2m, with similar levels expected in FY20.
Y This financial commentary should be read in conjunction
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Turners Group and the insurance business were the biggest
contributors to operating profit. In Automotive Retail, the gains
made by Turners Group were offset by Buy Right Cars, which is
being affected by the tough market conditions in the Auckland
used import market. The finance result was impacted by
impairments in the high risk MTF non-recourse lending, which
we have now discontinued. Insurance reflects improvements in
claims management, as well as a $3.0m gain on the sale of an
investment property in Wiri. EC Credit delivered an increase on
the back of improving New Zealand collections performance.
Finally, corporate and other costs includes the one off non-
cash impact of the Buy Right Cars brand write off of $4.6m
(compared to a release of earn out consideration in the prior
year).
A reconciliation of Underlying to Reported NPBT is below.
FY18:FY19 NET PROFIT BEFORE TAX
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35
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25
20
15
10
5
0
Auto Retail
Insurance
Corporate...
Adjustment...
FY18
Finance
Collection...
FY19
Adjusted...
$000s
Underlying NBPT
Other Adjustments
EC Vouchers
Worsley Prestige revaluation
MTF Share revaluation
Acquisition adjustments
Sale of Property
Property Settlement Albany site
Total Adjustments
Reported NPBT
FY19
25,775
164
830
0
-4,570
3,457
3,393
3,274
29,049
FY18
25,953
Var
-0.7%
433
820
590
2,664
673
0
5,180
31,133
-36.8%
-6.7%
FY19 Net Profit After Tax (NPAT) was $22.7m, compared to $23.4m in FY18.
NPATA is NPAT with tax adjusted addback of amortised acquisition intangibles.
This was down 3% to $24.4m.
DIVIDEND
Turners Automotive Group is a strong yielding stock, with a quarterly dividend payment structure.
A final quarter fully imputed dividend of 5.0 cents per share took full year dividends to 17 cents per
share, up from 15.5 cents in FY18. Following the strategy work, and for the second year in a row, the
Directors have enhanced the dividend policy with an increase in the payout ratio to 60% to 70% of
NPAT (previously 50% to 60% of NPAT).
BALANCE SHEET
Turners has a strong balance sheet. The cash balance reduced year on year due to the investment
of insurance reserves into longer dated term deposits. The change in Finance Receivables reflects
growth in Oxford Finance offset by the rundown in the MTF non-recourse ledger. Property, plant and
equipment increased due to development of new sites in Whangarei and North Shore. The increase
in Insurance contract liabilities reflects growth in Autosure policy sales.
$000s
Cash and cash equivalents
Financial assets at fair value
FY19
FY18
15,866
66,252
25,145
53,378
Finance Receivables
290,017
289,799
Inventory
Property, Plant and Equipment
Other Assets
Intangible Assets
Total Assets
Borrowings
Other Payables
Deferred Tax
Insurance Contract Liabilities
Other Liabilities
Total Liabilities
38,859
39,084
37,370
166,734
654,182
312,863
33,906
13,918
51,785
15,336
38,596
35,945
37,887
170,982
651,732
317,373
38,588
18,786
48,376
14,286
427,808
437,409
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FUNDING MIX
Turners’ funding platform was further strengthened during the year, with the issue of a
new $25m, 3-year Bond programme. Combined with the Securitisation Warehouse and
the banking syndication with the ASB and BNZ, this provides the Group with a diversified
funding structure and adequate headroom for forecast business growth.
The previous Bond programme matured in September 2018, with 52% conversion into shares.
FIVE YEAR FINANCIAL PERFORMANCE
$ Millions
Total Revenue
Net Profit Before Tax
Net Profit After Tax
Earnings Per Share*
Dividends Per Share*
Financial Position
Finance Receivables
Total Assets
Borrowings
Shareholder Funds
Shares on issue
(Millions as at 31 March)*
FY15
FY16
FY17
FY18
FY19
97.3
19.0
18.1
32.8
10.0
142.8
329.0
157.0
121.0
63.1
170.3
251.0
330.5
336.6
21.6
15.6
24.7
13.0
167.6
367.1
174.8
129.8
63.4
24.6
17.6
25.5
14.5
207.1
556.6
265.9
171.7
74.5
31.1
23.4
29.3
15.5
289.8
651.7
317.4
214.3
84.8
29.0
22.7
26.2
17.0
290.0
654.2
312.9
226.4
86.9
*FY15 adjusted for 10:1 share consolidation which occurred in March 2016
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D GRANT BAKER
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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 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 2.86% 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 7.73% 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.
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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 with companies that have a focus on growth and innovation,
and he represents the interests of Bartel Holdings, which has a 10.99%
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”. Alistair has a BSC (hons) from
Newcastle Upon Tyne university and an EMBA from Melbourne University.
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
is currently a director of Centrix, a leading credit rating agency in NZ, and
this keeps him connected with the financial sector and the NZ credit cycle.
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 financial services industry professional, with demonstrated
success as a senior executive and consultant in insurance and wealth
management businesses across Asia Australia and New Zealand. Antony
currently holds the position of VP of Technical Insurance Services for
Manulife Asia responsible for digital transformation. 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.
MARTIN BERRY
Independent Director | Appointed August 2018
Martin Berry is a seasoned global financial services executive, having run
large international businesses for the likes of ANZ, Citibank, Barclays and
Standard Chartered. He later focused on more entrepreneurial ventures
with a successful track record of having built, acquired and sold several
companies with values in excess of USD $100m. Martin has a strong focus
on technology and emerging opportunities with networks and business
relationships throughout the Pacific and Asian region. He founded and
now runs venture capital firm Brandhaus Capital Partners out of Singapore,
investing across the region with a strong focus on fintech. Martin’s
experience in the financial services sector combined with his entrepreneurial
acumen are an asset for the Turners group.
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Todd Hunter
Chief Executive Officer
Aaron Saunders
Group Chief Financial Officer
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. Before joining Turners Auction in 2006
Todd worked for Microsoft NZ and Ernst and Young. He was appointed CEO of NZX listed Turners
Auctions in 2013, and took on the CEO role for the wider Turners Automotive Group in 2016. Todd is
a chartered accountant and holds a Bachelor and Diploma of Commerce 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 from Auckland
University.
Simon Gould-Thorpe
Group Chief Information Officer
Simon joined Turners in 2010. With over 30 years’ experience in IT, he has led dynamic and innovative
IT Teams to success across a wide range of industries. His current role has seen the delivery of
significant advancements to assist Turners business transformation, including the development
of new core systems and the introduction of key business and process automation. Turners IT
utilizes leading technologies and follows best practice IT management including DevOps and Agile
methodologies.
Simon Gould-Thorpe
Group Chief Information Officer
Greg Hedgepeth
CEO Turners Automotive Retail
Greg Hedgepeth
CEO Turners Automotive Retail
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Greg joined Turners in 2017 as CEO of the Automotive Retail Division, with responsibility for Turners
Cars, Trucks & Machinery and the Damaged & End of Life business. 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 Bachelor of
Commerce 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.
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 appointed to his current role in April 2015. He has over 20
years’ experience in the banking, finance and recruitment industries, and has worked in the credit
management industry since 2001. Dave has a Diploma in Business Studies.
Jeremy Rooke
General Manager Digital Strategy
Jeremy joined Turners Automotive Group in 2009. His role involves leading the application of new
technologies, business models and channels to enable and expand Turners’ digital capabilities.
Jeremey 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.
James Searle
Group General Manager
Insurance
David Wilson
Chief Executive Officer
EC Credit Control
Jeremy Rooke
General Manager Digital Strategy
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FINANCIAL REPORTS
FOR THE YEAR ENDED
31 MARCH 2019
24 Independent Auditor’s Report
31 Consolidated Statement of Comprehensive Income
32 Consolidated Statement of Changes in Equity
33 Consolidated Statement of Financial Position
34 Consolidated Statement of Cash Flows
35 Notes to the Financial Statements
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2019
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2019
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24 Level 9, 45 Queen Street, Auckland 1010PO Box 3899, Auckland 1140New Zealand T:+64 9 309 0463F:+64 9 309 4544E:auckland@bakertillysr.nzW:www.bakertillysr.nzINDEPENDENT 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 31 to 93, which comprise the consolidated statement of financial position as at 31 March 2019, 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 2019, 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. 25 In addition to this, principals and employees of our firm deal with the Group on normal terms within the ordinary course of trading activities of the business of the Group. This 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 five of the Group’s cash-generating units (‘CGUs’) and brand assets of $67.1m allocated across two of those CGUs. Goodwill and brand assets 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 five CGUs as at 31 March 2019. Management has engaged an external valuation expert to assist in the annual impairment testing of the five CGUs. 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. Our audit procedures among others included: Evaluating Management’s determination of the Group’s five 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: oEvaluating the logic of the value-in-use calculations supporting Management’s annual impairment test and testing the mathematical accuracy of these calculations; oEvaluating Management’s process regarding the preparation and review of forecasts; oComparing forecasts to Board approved forecasts; oEvaluating the historical accuracy of the Group’s forecasting to actual historical performance; oChallenging and evaluating the forecast growth assumptions; oEvaluating the inputs to the calculation of the discount rates applied; oEngaging 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; oEvaluating Management’s sensitivity analysis for reasonably possible changes in key assumptions; and oPerforming 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. INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2019
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2019
26
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26 Key Audit Matter How our audit addressed the key audit matter Valuation of Finance Receivables including the adoption of NZ IFRS 9 Financial Instruments As disclosed in Note 14 of the Group’s consolidated financial statements the Group has finance receivable assets of $290.0m. Finance receivable assets were significant to our audit due to the size of the assets and the subjectivity, complexity and uncertainty inherent in the recognition of impairment in respect of finance receivables and the amount of that impairment. Management has prepared impairment models to complete its assessment of impairment for the Group’s finance receivables as at 31 March 2019. This assessment involves complex and subjective estimation and judgement by Management on credit risk and the future cash flows of the finance receivables. As disclosed in Note 31 and Note 14, on 1 April 2018, the Group adopted NZ IFRS 9 Financial Instruments, which resulted in the Group having to develop new impairment models to assess impairment under the expected credit losses model specified in NZ IFRS 9.In accordance with the transitional provisions outlined in NZ IFRS 9, the Group has applied the cumulative effect method and therefore the comparative information has not been restated and continues to be reported under NZ IAS 39. As at 31 March 2018, the Group had finance receivable assets of $289.8m, as disclosed in Note 31, on 1 April 2018 upon adoption of NZ IFRS 9, the Group finance receivable assets were restated from $289.8m to $286.6m. 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; Challenging and evaluating Management’s assessment of the impact of adopting NZ IFRS 9, the logic, key assumptions, and calculation of its new impairment models against the requirements specified in NZ IFRS 9 for recognising expected credit losses on financial assets; 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 as at 1 April 2018 (on adoption of NZ IFRS 9) and as at 31 March 2019 (at reporting date). Also, testing key inputs used in the impairment models and the mathematical accuracy of the calculations within the models; Evaluating the related disclosures about the adoption NZ IFRS 9 in Note 31 in the Group’s consolidated financial statements; Evaluating the related disclosures (including the accounting policies) about finance receivable assets, and the risks attached to them which are included in Note 5 and 14 in the Group’s consolidated financial statements. 27 Key Audit Matter How our audit addressed the key audit matter Valuation of Insurance Contract Liabilities As disclosed in Note 34 of the Group’s consolidated financial statements the Group has insurance contract liabilities of $51.8m. 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 2019. 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: othe work and findings of the Group’s external actuarial expert engaged by Management; othe 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 identify management bias; Evaluating the related disclosures about insurance contract liabilities, and the risks attached to them which are included in Note 34 in the Group’s consolidated financial statements. INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2019
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2019
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29
28 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 2019 (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. 29 As part of an audit in accordance with ISAs (NZ), we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve 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 are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of the use of the going concern basis of accounting by the Directors and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions 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 disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 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. INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2019
Turners Automotive Group Limited
Consolidated statement of comprehensive income for the year ended 31 March 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2019
Notes
2019
$’000
2018
$’000
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
Insurance deferred acquisition costs
Impairment of intangible brand asset
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
7
7
7
7
7
34
8
9
9
328,358
8,221
325,047
5,423
(133,126)
(137,332)
(14,952)
(7,892)
(12,888)
(52,756)
(14,581)
(3,918)
(5,785)
(10,945)
(1,471)
(26,804)
(718)
(423)
(4,300)
(16,971)
29,049
(6,330)
22,719
(14,344)
(6,380)
(10,777)
(51,911)
(12,107)
(4,001)
(5,627)
(10,644)
(1,822)
(32,021)
(82)
3,387
-
(15,676)
31,133
(7,773)
23,360
(364)
(26)
(390)
(170)
2
(168)
22,329
23,192
26.21
29.26
27.28
28.87
30
The accompanying notes form part of these financial statements
31
The accompanying notes form part of these financial statements
30 From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Matters Relating to the Electronic Presentation of the Audited Consolidated Financial Statements This audit report relates to the consolidated financial statements of Turners Automotive Group Limited and its subsidiaries for the year ended 31 March 2019 included on Turners Automotive Group Limited’s website. The Directors of Turners Automotive Group Limited are responsible for the maintenance and integrity of Turners Automotive Group Limited’s website. We have not been engaged to report on the integrity of Turners Automotive Group Limited’s website. We accept no responsibility for any changes that may have occurred to the consolidated financial statements since they were initially presented on the website. The audit report refers only to the consolidated financial statements named above. It does not provide an opinion on any other information which may have been hyper linked to or from these consolidated financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the audited consolidated financial statements and related audit report dated 28 June 2019 to confirm the information included in the audited consolidated financial statements presented on this website. Legislation in New Zealand governing the preparation and dissemination of consolidated financial statements may differ from legislation in other jurisdictions. The engagement partner on the audit resulting in this independent auditor’s report is D I Searle. BAKER TILLY STAPLES RODWAY AUCKLAND Auckland, New Zealand 28 June 2019 Turners Automotive Group Limited
Consolidated statement of changes in equity for the year ended 31 March 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Turners Automotive Group Limited
TURNERS LIMITED
TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2019
Consolidated statement of financial position for the year ended 31 March 2016
Consolidated statement of financial position for the year ended 31 March 2016
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the year ended 31 March 2019
Balance at 31 March 2017
Transactions with shareholders in their capacity as owners
Capital contributions (net of issue costs)
Employee share based payments
Dividend paid
Share
capital
$’000
168,809
Notes
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
Balance at 31 March 2018
199,148
Change in accounting policies
Impact of the implementation of NZ IFRS 15
Impact of the implementation of NZ IFRS 9
Balance at 1 April 2018 (restated)
Transactions with shareholders in their capacity as owners
Capital contributions (net of issue costs)
Capital buy back
Employee share based payments
Dividend paid
31
31
26
26
27
28
Total transactions with shareholders in their capacity as owners
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
$’000
(23)
$’000
$’000
6
2,716
171,716
Total
$’000
-
493
-
493
701
-
-
-
-
-
-
-
-
-
-
-
2
2
-
-
-
-
-
(170)
(170)
-
-
30,339
493
(11,417)
(11,417)
(11,417)
19,415
23,360
23,360
-
(168)
23,360
23,192
(21)
(164)
14,659
214,323
-
-
-
-
-
-
(345)
(2,292)
(2,637)
(345)
(2,292)
(2,637)
-
-
-
-
-
-
199,148
701
(21)
(164)
12,022
211,686
13,388
(6,141)
-
-
7,247
-
-
-
-
-
326
-
326
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(26)
(26)
(364)
(364)
-
-
-
13,388
(6,141)
326
(15,214)
(15,214)
(15,214)
(7,641)
22,719
22,719
-
(390)
22,719
22,329
Assets
Assets
Cash and cash equivalents
Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Cash and cash equivalents
Financial assets at fair value through profit or loss
Trade receivables
Financial assets at fair value through profit or loss
Trade receivables
Inventory
Trade receivables
Inventory
Finance receivables
Inventory
Finance receivables
Other receivables, deferred expenses and contract assets
Finance receivables
Other receivables and deferred expenses
Reverse annuity mortgages
Other receivables and deferred expenses
Reverse annuity mortgages
Investment property
Reverse annuity mortgages
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Tax receivables
Intangible assets
Tax receivables
Deferred tax asset
Total assets
Deferred tax asset
Intangible assets
Intangible assets
Total assets
Liabilities
Total assets
Other payables
Liabilities
Financial liability at fair value through profit or loss
Liabilities
Other payables
Contract liabilities
Other payables
Deferred revenue
Deferred tax
Deferred revenue
Tax payables
Tax payables
Tax payables
Derivative financial instruments
Derivative financial instruments
Derivative financial instruments
Borrowings
Borrowings
Borrowings
Life investment contract liabilities
Life investment contract liabilities
Life investment contract liabilities
Insurance contract liabilities
Insurance contract liabilities
Insurance contract liabilities
Total liabilities
Total liabilities
Total liabilities
Shareholders’ equity
Shareholders’ equity
Shareholders’ equity
Share capital
Share capital
Share capital
Other reserves
Other reserves
Other reserves
Retained earnings
Retained earnings
Retained earnings
Total shareholders’ equity
Total shareholders’ equity
Total shareholders’ equity
Total shareholders’ equity and liabilities
Total shareholders’ equity and liabilities
Total shareholders’ equity and liabilities
Notes
Notes
Notes
10
10
11
10
11
12
11
12
13
12
13
14
13
14
15
14
15
16
15
16
17
16
19
19
19
20
20
20
21
21
21
22
22
23
22
23
24
23
24
25
24
32
34
32
32
34
32
25
26
25
2019
2016
$’000
2016
$’000
$’000
15,866
13,810
66,252
13,810
18,455
12,471
18,455
9,575
38,859
9,575
14,156
290,017
14,156
167,598
10,955
167,598
8,505
8,294
8,505
9,734
5,650
9,734
11,108
39,084
11,108
-
166,734
-
4,024
654,182
4,024
105,338
105,338
362,303
362,303
33,906
116
22,270
2,642
22,270
6,049
13,918
6,049
990
4,570
990
49
524
49
174,816
312,863
174,816
15,629
7,484
15,629
12,688
51,785
12,688
232,491
427,808
232,491
136,127
206,395
136,127
(52)
452
(52)
(6,263)
19,527
(6,263)
129,812
226,374
129,812
362,303
654,182
362,303
2018
2015
$’000
2015
$’000
$’000
25,145
12,339
53,378
12,339
17,350
11,323
17,350
7,394
38,596
7,394
8,984
289,799
8,984
142,827
11,747
142,827
5,946
9,997
5,946
13,253
4,820
13,253
8,319
35,945
8,319
433
170,982
433
8,532
651,732
8,532
103,595
103,595
328,972
328,972
38,588
226
17,790
1,793
17,790
7,476
18,786
7,476
71
5,029
71
-
111
-
156,995
317,373
156,995
16,378
7,127
16,378
9,260
48,376
9,260
207,970
437,409
207,970
135,294
199,148
135,294
(23)
516
(23)
(14,269)
14,659
(14,269)
121,002
214,323
121,002
328,972
651,732
328,972
Balance at 31 March 2019
206,395
1,027
(47)
(528)
19,527
226,374
For and on behalf of the Board
For and on behalf of the Board
For and on behalf of the Board
The accompanying notes form part of these financial statements
G.K. Baker
G.K. Baker
G.K. Baker
Chairman Director
Chairman Director
Chairman Director
Authorised for issue on 22 June 2016
Authorised for issue on 28 June 2019
Authorised for issue on 22 June 2016
P.A. Byrnes
P.A. Byrnes
P.A. Byrnes
Executive Director
Deputy chairman
Executive Director
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
32
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
33
Turners Automotive Group Limited
Consolidated statement of cash flows for the year ended 31 March 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Notes
2019
$’000
2018
$’000
1. REPORTING ENTITY
Turners Automotive Group Limited, ('the Company') is incorporated and domiciled in New Zealand. Turners Automotive Group Limited is
registered under the Companies Act 1993.
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
45,023
279,472
(12,184)
(272,052)
(10,752)
41,925
281,031
(9,609)
(266,124)
(5,824)
29,507
41,399
(34,926)
2,545
(12,163)
16
(75,248)
66
(41,937)
(5,765)
(44,528)
(122,884)
Net cash (outflow)/inflow from operating activities
30
(15,021)
(81,485)
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
Sale/(purchase) of 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
Translation difference
Closing cash and cash equivalents
Represented By:
Cash at bank
9,388
(10,646)
(2,107)
-
41
4,098
(22,013)
(839)
(3,733)
(21)
(3,324)
(22,508)
20,570
7,100
(561)
(2,837)
(15,214)
9,058
39,005
29,656
-
2,837
(11,417)
60,081
(9,287)
(43,912)
25,145
8
15,866
69,069
(12)
25,145
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
credit management (collection services).
The financial statements were authorised for issue by the directors on 28 June 2019.
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
Except as detailed in note 31, 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 2018 that materially impact the Group’s financial statements are as follows:
•
•
The other standards did not have a material impact on the Group’s financial statements and did not require retrospective adjustment.
NZ IFRS 15 'Revenue from Contracts with Customers'; and
NZ IFRS 9 'Financial Instruments'.
Refer to note 31 for the impact of implementing these new standards.
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 2018
The following relevant standards and interpretations have been issued at the reporting date but are not yet effective.
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.
10
15,866
25,145
The main changes affect lessee accounting only – lessor accounting is mostly unchanged from NZ IAS 17.
Closing cash and cash equivalents
15,866
25,145
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.
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 accompanying notes from part of these financial statements
The effective date is annual reporting periods beginning on or after 1 January 2019, the financial year beginning 1 April 2019.
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:
•
Initially the ROU asset would be measured its carrying amount as if NZ IFRS 16 had been applied since the commencement of the lease,
but discounted using the Group's incremental borrowing rate at the date of initial application; and
34
The accompanying notes form part of these financial statements
35
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
•
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. The Group’s operating lease commitments as at 31 March 2019
are set out in note 32.
The Group has elected to adopt the Cumulative effect approach under which the Group will not restate comparative information.
Based on existing lease arrangements, the preliminary assessment of the adoption of IFRS 16, is expected to result in the recognition of the
following:
As at 1 April 2019, the recognition of the following on the Group’s Statement of Financial Position:
•
•
•
a ROU asset of $30.3m;
a lease liability of $36.9m;
a net movement in deferred tax of $1.8m (comprised of an increase in deferred tax assets of $10.3m and deferred tax liabilities of $8.5m);
and
a decrease in retained earnings of $4.8m.
•
For the year ended 31 March 2020, the recognition of the following on the Group’s Statement of Comprehensive Income:
•
•
•
•
a decrease in rental expense (included within Property and related expenses) of $8.6m;
an increase in depreciation expense of $6.4m;
an increase in finance costs of $1.9m; and
a decrease in tax expense of $0.1m.
As at 31 March 2020, the recognition of the following on the Group’s Statement of Financial Position:
•
•
•
a ROU asset of $23.9m;
a lease liability of $30.1m; and
a net movement in deferred tax of $1.7m (comprised of an increase in deferred tax assets of $8.4m and deferred tax liabilities of $6.7m);
and
a decrease in retained earnings of $4.5m.
•
For the year ended 31 March 2020, overall there would be no impact on the Group’s Statement of Cash flows, however there would be an
increase in net cash from operating activities of $6.6m and corresponding decrease in net cash from/(used in) financing activities $6.6m.
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 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
The principal sources of revenue are sales of goods, sales of service, interest income, fees, commissions, and insurance premium income.
3.5.1 Revenue from contracts with customers
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 customer
gains control of the goods. This normally occurs on receipt of a deposit, full payment or approval of financing.
36
37
‑
related warranties associated with goods cannot be purchased separately and they serve as an assurance that the products sold comply
upon specifications and cover the standard period established by legislation.
Sales
with agreed
‑
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
There is no material amount of variable consideration under these contracts nor is there the existence of a significant financing component.
Sales of service
Auction commission is recognised at a point in time in the accounting period in which the service is rendered. Payment for services is normally
deducted from the proceeds from the sale. Other than those provided by legislation no warranties are provided by the Group. There is no
material amount of variable consideration under these contracts nor is there the existence of a significant financing component.
Other sales revenue comprises services rendered preparing the asset for sale and commission earned on the sale of third party products.
Services rendered while preparing the asset for sale are recognised over time in the accounting period in which the service is rendered, and
a contract asset is recognised for amounts relating to services rendered not yet invoiced. Payment for services rendered are either deducted
from the proceeds from the sale or raised as a trade receivable. Other than those provided by legislation no warranties are provided by the
Group. There are no rebated or volume discounts. Commissions earned on the sale of third party products is recognised at a point in time
when the sale is made. Payment is usually received when the sale is made. Other than those provided by legislation no warranties are
provided by the Group. There are no rebates or volume discounts.
Collection income, which is largely fees and commission earned for collecting debt on behalf of third parties and the sale of customised terms
of trade documents, is recognised at a point in time in the accounting period in which the service is rendered, by reference to completion of
the specific transaction assessed on the basis of the actual service provided as a proportion of the total service to be provided. Payment is
either deducted from the monies collected or raised as trade receivable and therefore a contract liability is recognised over the period in which
the services are performed representing the Group’s right to consideration for the services performed to date. If the consideration promised
includes a variable amount for rebates, refunds or credit, then the Group estimates the amount of variable consideration, to the extent that it
is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur, and recognises a contract liability.
Other than those provided by legislation no warranties are provided by the Group. Costs to obtain contracts such as commissions are
recognised as contract assets and incurred when the related revenue for the contract is released to profit or loss.
Voucher income
Voucher income is the proceeds from the sale of a voucher that on presentation entitles the holder to either load a debt for collection or
register of a security on the Personal Property Securities Register (‘PPSR’)., Voucher income is recognised, at a point in time, when the
voucher is redeemed and the debtor’s information is loaded into the collection system or a security is registered on the PPSR. Payment is
normally received when the voucher is sold, and voucher income is initially recognised as a contract liability. For those vouchers that are
unredeemed, 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 than those provided by legislation no warranties are provided
by the Group. There is no material amount of variable consideration under these contracts nor is there the existence of a significant
financing component. Costs to obtain contracts such as commissions are recognised as contract assets and incurred when the related
revenue for the contract is released to profit or loss.
For the accounting policies applied prior to the adoption of IFRS15 please refer to note 31.
3.5.2 Financial instruments
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.
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.
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.
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.
3.5.4 Other
Other income
Dividend income is recorded in the profit or loss when the Group’s right to receive the dividend is established.
Other expense recognition
All other expenses are recognised in profit or loss as incurred.
3.6 Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or
loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or
sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention
in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification
of the financial assets.
Classification of financial assets
Financial assets that meet the following conditions are measured subsequently at amortised cost:
•
the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
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.
•
3.5.3 Insurance Contracts
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.
Financial assets that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):
•
the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the
financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
•
By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).
Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset:
•
the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if
certain criteria are met; and
the Group may irrevocably designate a financial asset that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing
so eliminates or significantly reduces an accounting mismatch.
•
(i) Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period.
38
39
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
For financial assets other than purchased or originated credit
impaired on initial
recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit
losses, through the expected life of the financial asset, or, where appropriate, a shorter period, to the gross carrying amount of the financial
asset on initial recognition. For purchased or originated credit
adjusted effective interest rate is calculated
by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial
recognition.
impaired financial assets (i.e. assets that are credit
impaired financial assets, a credit
‑
‑
‑
‑
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal
repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity
amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before
adjusting for any loss allowance.
Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost and at FVTOCI.
impaired financial assets, interest income is calculated by applying the effective
For financial assets other than purchased or originated credit
interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit
impaired (see
below).
‑
‑
For financial assets that have subsequently become credit
the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit
so that the financial asset is no longer credit
amount of the financial asset.
impaired, interest income is recognised by applying the effective interest rate to
impaired financial instrument improves
impaired, interest income is recognised by applying the effective interest rate to the gross carrying
‑
‑
‑
Financial assets measured at amortised cost include cash and cash equivalents, trade receivables, finance receivables, reverse annuity
mortgages and other receivables.
•
(ii) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. Specifically:
•
Investments in equity instruments are classified as at FVTPL, unless the Group designates an equity investment that is neither held for
trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition.
Financial assets that do not meet the amortised cost criteria or the FVTOCI criteria are classified as at FVTPL. In addition, financial
assets that meet either the amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such
designation eliminates or significantly reduces a measurement or recognition inconsistency (so called ‘accounting mismatch’) that would
arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated
any financial assets as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in
profit or loss to the extent they are not part of a designated hedging relationship (see hedge accounting policy). Fair value is determined in
the manner described in note 5.5.
Financial assets measured at FVTPL include unitised funds, fixed interest securities and term deposits.
The Group has no financial assets measured at FVTOCI.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost and contract assets.
The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective
financial instrument.
The Group recognises lifetime ECL for trade receivables and contract assets. The expected credit losses on these financial assets are
estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date,
including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures
the loss allowance for that financial instrument at an amount equal to 12
month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial
instrument. In contrast, 12
month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial
instrument that are possible within 12 months after the reporting date.
‑
‑
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition,
the Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the
financial instrument at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward
looking information that is available without undue
cost or effort.
‑
The nature of the Group’s finance receivables (second tier retail and commercial lending) means there is little or no updated credit risk
information that is routinely obtained and monitored on an individual instrument until a customer breaches the contractual terms.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly
since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable
information that demonstrates otherwise.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and
revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes
past due.
(ii) Definition of default
The Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and
supportable information to demonstrate that a more lagging default criterion is more appropriate.
‑
impaired when one or more events that have a detrimental impact on the estimated
impaired financial assets
(iii) Credit
A financial asset is credit
future cash flows of that financial asset have occurred. Evidence that a financial asset is credit
following events:
a)
b) a breach of contract, such as a default or past due event (see (ii) above); and
c)
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
significant financial difficulty of the borrower;
‑
impaired includes observable data about the
‑
off policy
(iv) Write
The Group writes off a financial asset when there is information indicating that the borrower is in severe financial difficulty and there is no
realistic prospect of recovery, e.g. when the borrower has been placed under liquidation or has entered into bankruptcy proceedings. Financial
assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where
appropriate. Any recoveries made are recognised in profit or loss.
‑
v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there
is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted
by forward
looking information as described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date. No further
advances are allowed against financial assets in default.
‑
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in
accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.
If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period,
but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the loss allowance at
an amount equal to 12
month ECL at the current reporting date, except for assets for which simplified approach was used.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying
amount through a loss allowance account.
‑
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains
substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest
in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the
proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable is recognised in profit or loss
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL. However, financial
liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies
are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination,
(ii) held for trading or (iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if:
•
•
it has been acquired principally for the purpose of repurchasing it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual
pattern of short
it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument.
term profit
taking; or
•
‑
‑
40
41
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business combination may be
designated as at FVTPL upon initial recognition if:
•
•
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is
evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information
about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined contract to be
designated as at FVTPL.
•
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognised in profit or loss
to the extent that they are not part of a designated hedging relationship (see Hedge accounting policy).
However, for financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of
changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The
remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a financial liability’s
credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred
to retained earnings upon derecognition of the financial liability.
Fair value is determined in the manner described in note 5.5.
Financial liabilities measured at FVTPL include contingent consideration.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective
for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the
hedge) so that it meets the qualifying criteria again.
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as
cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve, limited to
the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when
the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results
financial liability, the gains and losses previously recognised in other comprehensive income
in the recognition of a non
financial asset or
and accumulated in equity are removed from equity and included in the initial measurement of the cost of the non
non
financial liability. This transfer does not affect other comprehensive income. Furthermore, if the Group expects that some or all of the loss
accumulated in the cash flow hedging reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.
financial asset or a non
‑
‑
‑
‑
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after
rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The
discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in cash flow
hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast
transaction is no longer expected to occur, the gain or loss accumulated in cash flow hedge reserve is reclassified immediately to profit or
loss.
for
trading, or (iii) designated as
For the accounting policy applied prior to the adoption of IFRS9 please refer to note 31.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held
at FVTPL, are measured subsequently at amortised cost using the effective interest method.
‑
‑
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The
difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit
or loss.
When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange
is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group
accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the
recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the
new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 percent different
from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the
difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification
should be recognised in profit or loss as the modification gain or loss within other gains and losses.
Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign
exchange forward contracts, and interest rate swaps.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair
value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and
effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both legal right and intention to offset.
A derivative is presented as a non
and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
current liability if the remaining maturity of the instrument is more than 12 months
current asset or a non
‑
‑
Hedge accounting
The Group designates certain derivatives as hedging instruments in respect of interest rate risk in cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge
and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in cash flows of the hedged
item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:
•
•
•
there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Insurance contracts
3.7
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 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.
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.
3.8 Life investment contracts
Life investment contracts are those contracts with minimal insurance risk and are accounted for in accordance with NZ IFRS 15 'Revenue
from Contracts with Customers' (refer note 3.5.1) and NZ IFRS 9 'Financial Instruments' (refer note 3.5.2). 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.
Inventories
3.9
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.
42
43
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
3.10 Investment property
Investment property is held for capital appreciation and comprises land that was transferred from finance receivables through the exercise of
the Group’s security interest in a finance receivable that was in default.
Investment property is initially recognised at fair value on date of transfer or purchase 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.
3.11 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.
3.15 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.
The rates for the following asset classes are:
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
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
3.12 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 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 (2 – 10 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).
3.13 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.
3.14 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.
3.16 Managed funds
DPL Insurance Limited, a wholly owned subsidiary, has saving plans, which are not open to new members, with assets managed by a third
party investment manager. The assets and liabilities of these funds are included in the financial statements.
3.17 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.
3.18 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.
3.19 Comparatives
Where necessary, comparative information has been reclassified and represented for consistency with current year. Comparative information
has not been restated for the impact on application of NZ IFRS 15 and NZ IFRS 9.
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
44
45
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
Significant increase in credit risk
As explained in note 3.6, ECL are measured as an allowance equal to 12 month ECL for performing assets, or lifetime ECL for doubtful or in
default assets. An asset moves to doubtful when its credit risk has increased significantly since initial recognition. IFRS 9 does not define what
constitutes a significant increase in credit risk. In assessing whether the credit risk of an asset has significantly increased the Group takes into
account qualitative and quantitative reasonable and supportable forward looking information.
Calculation of loss allowance
When measuring ECL the Group uses reasonable and supportable forward looking information, which is based on assumptions for the future
movement of different economic drivers and how these drivers will affect each other.
Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those
that the Group would expect to receive, taking into account cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given
time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
If the ECL rates on performing finance receivables increased/(decreased) by 1% higher (lower) as at 31 March 2019, the loss allowance on
finance receivables would have been $0.024 million higher/(lower).
If the ECL rates on doubtful or in default finance receivables increased/(decreased) 1% higher (lower) as at 31 March 2019, the loss allowance
on finance receivables would have been $0.153 million higher/(lower).
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 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). A sensitivity analysis of the recoverable amounts of the CGU’s is disclosed in note 20.
When estimating future cash flows, Management’s judgements include forecasting year-on-year movements in the operating assets of
individual CGUs such as:
•
for the Finance and Turners Group (NZ) CGUs, the movement in their portfolios of finance receivables and related movement in debt
financing;
for the Turners Group (NZ) and Buy Right Cars CGUs, the movement in inventory levels, trade payables and related movement trade
financing; and
for the DPL Insurance CGU, the movement in deferred insurance contract premiums and acquisition costs, and solvency capital
requirements.
•
•
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 34A).
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 $0.2m (2018: $0.7m) decrease in the
unredeemed voucher liability (note 23).
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 and NZ IFRS 9 'Financial Instruments', 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 3.6). Prior to derecognition, the Group assesses whether the finance receivables qualify for derecognition using the
criteria noted above.
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 is 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 34, and fair value risk
relating to the Group’s Investment property.
5.1 Financial instrument by category
Carryi ng val ue
Financial assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Amortised cost
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
2019
$’000
15,866
66,252
12,471
290,017
3,776
8,294
396,676
25,247
116
312,863
338,226
2018
$’000
25,145
53,378
11,323
289,799
6,111
9,997
395,753
24,043
226
317,373
341,642
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.
46
47
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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 four grades reflecting varying degrees of risk of default and the availability of collateral or other
credit risk mitigation. They are as follows:
•
•
•
•
performing – the counterparty has a low risk of default and does not have any past due amounts;
doubtful –amount is > 30 days past due or there has been a significant increase in credit risk since initial recognition;
in default - amount is > 90 days past due or evidence indicating the asset is credit impaired; and
write-off – there is evidence indicating the debtor is in severe financial difficulty and the Group has no realistic prospect of recovery.
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, with a maximum loan to value ratio of 30% at inception (no new reverse annuity
mortgages have been advanced since 2009);
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 finance receivables secured by collateral, 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.
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.
2019
Contractual undiscounted cash flows:
Other payables
Derivative cash f low hedges
Borrow ings
Expected undiscounted cash flows:
Other payables
Derivative cash f low hedges
Borrow ings
2018
Contractual undiscounted cash flows:
Other payables
Derivative cash f low hedges
Borrow ings
Expected undiscounted cash flows:
Other payables
Derivative cash f low hedges
Borrow ings
0-6 months
$’000
7-12
months
$’000
13-24
months
$’000
25-60
months
$’000
60+ months
$’000
Total
$’000
25,247
164
35,870
61,281
25,247
164
35,870
61,281
24,043
29
88,066
112,138
24,043
29
42,352
66,424
-
142
17,951
18,093
-
142
17,951
18,093
-
30
30,690
30,720
-
30
28,281
28,311
-
175
174,007
174,182
-
175
19,409
19,584
-
37
193,070
193,107
-
37
30,728
30,765
-
43
106,093
106,136
-
-
-
-
-
43
94,832
94,875
-
-
213,492
213,492
-
15
18,615
18,630
-
15
83,505
83,520
-
-
-
-
-
-
274,473
274,473
25,247
524
333,921
359,692
25,247
524
381,554
407,325
24,043
111
330,441
354,595
24,043
111
459,339
483,493
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 34K 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 2019 was $74m (2018: $70m) and weighted average interest was 2.23% (2018: 2.24%). There was no hedge
ineffectiveness recognised in profit or loss during the period (2018: $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.
48
49
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Carrying amount
$’000
-1% Prof it
$’000
-1% Equity +1% Prof it +1% Equity
$’000
$’000
$’000
2019
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 f low hedges
Borrow ings
Total increase/(decrease)
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 f low hedges
Borrow ings
Total increase/(decrease)
15,866
66,252
290,017
8,294
116
524
312,863
(159)
(663)
(2,900)
(83)
1
-
3,129
(675)
(114)
(477)
(2,088)
(60)
1
(1,404)
2,253
(1,889)
159
663
2,900
83
(1)
-
(3,129)
675
114
477
2,088
60
(1)
295
(2,253)
780
Carrying amount
$’000
-1% Prof it
$’000
-1% Equity +1% Prof it +1% Equity
$’000
$’000
$’000
25,145
53,378
289,799
9,997
226
111
317,373
(251)
(534)
(2,323)
(100)
2
-
3,174
(32)
(181)
(384)
(1,673)
(72)
251
534
2,323
100
1
(827)
2,285
(851)
(2)
-
(3,174)
32
181
384
1,673
72
(1)
636
(2,285)
660
5.4.3 Currency risk
The Group is exposed to currency risk arising from various currency exposures, primarily with respect to the Australian Dollars (‘AUD’) and
Japanese Yen (‘JPY’). Currency risk arises from the future commercial transactions, recognised assets and liabilities and net investment in
foreign operations.
To ensure the net exposure to EC Credit Control (Aust) Pty Ltd, which has AUD as its functional currency, is kept to an acceptable level, the
Group has a comprehensive transfer pricing policy and converts the AUD unredeemed voucher liability (refer note 23) into a NZD liability by
selling the AUD liability to the New Zealand entity that will be providing the relevant services to settle the liability when the voucher is redeemed.
To limit its exposure to JPY, the Group hedges the anticipated cash flows (mainly purchased inventory) when the commitment is made. All
projected purchases qualify as ‘highly probable’ forecast transactions for hedge accounting purposes.
The table below summarises the Group’s financial exposure to currency risk.
in NZD'000
Net exposure to AUD
Net exposure to JPY
The table below summaries the Group’s sensitivity to +/- 10% foreign exchange fluctuations.
2019
NZ$'000
224
1,560
2018
NZ$'000
122
525
In NZD'000
2019
AUD
JPY
2018
AUD
JPY
50
-10% Profit -10% Equity +10% Prof it +10% Equity
-
(177)
67
(306)
(25)
129
(5)
(43)
-
145
(55)
251
21
(105)
4
34
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) (2018: $36k/($36k)).
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.
2019
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 f low hedges
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 f low hedges
Level 1
Level 2
Level 3
$’000
$’000
$’000
Total
$’000
-
-
54,999
-
54,999
-
-
-
-
-
42,500
-
42,500
-
-
-
7,658
3,595
-
-
11,253
-
524
524
7,249
3,629
-
-
10,878
-
111
111
-
-
-
5,650
5,650
116
-
116
-
-
-
4,820
4,820
226
-
226
7,658
3,595
54,999
5,650
71,902
116
524
640
7,249
3,629
42,500
4,820
58,198
226
111
337
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 $0.3m/($0.3m).
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.
51
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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.
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.
Reconciliation of recurring level 3 fair value movements:
Reconciliation of recurring level 3 fair value measurements
Assets
Opening balance
Revaluation at reporting date - investment property
Closing balance
Liabilities
Opening balance
On acquisition contingent consideration - Motorplus
Revaluation at reporting date
Settlement of period one and part of period tw o earn out consideration
Closing balance
2019
$'000
4,820
830
5,650
2019
$'000
226
-
(110)
-
116
2018
$'000
4,000
820
4,820
2018
$'000
7,611
221
(3,190)
(4,416)
226
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.
Five reportable segments have been identified as follows:
Automotive retail:
Finance:
Credit management: Collection services, credit management and debt recovery services to the corporate and SME sectors.
Remarketing (motor vehicles, trucks, heavy machinery and commercial goods) and purchasing goods for sale.
Provides asset based finance to consumers and SME's.
Insurance:
Corporate & other:
Geographically the collections services segment business activities are located in New Zealand and Australia.
Marketing and administration of a range of life and consumer insurance products.
Corporate centre.
Operating segments
OPERATING SEGMENTS
Revenue
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Total
segment
revenue
2019
$’000
228,672
44,193
18,196
49,206
17
340,284
Inter-
segment
revenue
2019
$’000
(2,963)
-
-
(742)
-
(3,705)
Revenue
f rom
external
customers
2019
$’000
225,709
44,193
18,196
48,464
17
336,579
Total
segment
revenue
2018
$’000
226,434
39,747
18,677
46,923
1,911
333,692
Inter-
segment
revenue
2018
$’000
(3222)
-
-
-
-
(3,222)
Revenue
from
external
customers
2018
$’000
223,212
39,747
18,677
46,923
1,911
330,470
Operating profit
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Profit/(loss) before taxation
Income tax
Net profit attributable to shareholders
2019
$’000
18,274
11,112
6,321
8,227
(14,885)
29,049
(6,330)
22,719
2018
$’000
16,550
11,735
6,069
3,645
(6,866)
31,133
(7,773)
23,360
Interest revenue
Interest expense
amortisation expense
Depreciation and
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Eliminations
Other material non-cash items
Automotive retail - impairment provisions
Finance - impairment provisions
Insurance - reverse annuity mortgage interest
Corporate & other - write down of brand and collateral
Segment assets and liabilities
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Eliminations
2019
$’000
8,383
38,544
9
2,434
17
49,387
(218)
49,169
2018
$’000
9,311
34,432
12
1,997
22
45,774
(690)
45,084
2019
$’000
(4,206)
(6,596)
-
-
(4,368)
(15,170)
218
(14,952)
Revenue
2019
$’000
-
-
846
-
846
Assets
2019
$’000
132,839
276,356
31,685
135,001
195,673
771,554
(117,372)
654,182
2018
$’000
(4,767)
(5,829)
-
-
(4,438)
(15,034)
690
(14,344)
2018
$’000
-
-
869
-
869
2018
$’000
152,006
253,832
28,780
124,358
205,356
764,332
(112,600)
651,732
2019
$’000
(2,457)
(413)
(104)
(2,746)
(65)
(5,785)
-
(5,785)
Expenses
2019
$’000
(503)
(7,436)
-
(4,570)
(12,509)
Liabilities
2019
$’000
88,065
216,996
5,686
73,293
83,030
467,070
(39,262)
427,808
2018
$’000
(2,351)
(348)
(93)
(2,767)
(68)
(5,627)
-
(5,627)
2018
$’000
(423)
(5,929)
-
-
(6,352)
2018
$’000
115,071
188,217
6,937
69,213
78,356
457,794
(20,385)
437,409
52
53
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Acquisition of property, plant & equipment, intangible assets and other non-current assets
7. PROFIT BEFORE TAX
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Eliminations
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
Total
division
revenue
2019
$’000
46,536
17,111
101,479
63,546
228,672
Inter-
division
revenue
2019
$’000
(2,805)
-
-
(158)
(2,963)
Revenue
from
external
customers
2019
$’000
43,731
17,111
101,479
63,388
225,709
Total
division
revenue
2018
$’000
41,655
14,711
108,047
62,021
226,434
Other
2019
$’000
11,478
671
135
14,884
74
27,242
(14,489)
12,753
Inter-
division
revenue
2018
$’000
(472)
(143)
-
(2,607)
(3,222)
2019
$’000
5,975
7,927
5,243
(871)
18,274
Assets
2019
$’000
45,182
43,877
17,925
27,937
134,921
(2,082)
132,839
2018
$’000
44,395
66,294
14,595
28,549
153,833
(1,827)
152,006
Liabilities
2019
$’000
17,330
36,328
11,923
23,084
88,665
(600)
88,065
2018
$’000
21,515
418
140
8,384
10
30,467
(7,615)
22,852
Revenue
from
external
customers
2018
$’000
41,183
14,568
108,047
59,414
223,212
2018
$’000
3,410
5,724
4,970
2,446
16,550
2018
$’000
24,038
60,133
8,373
23,045
115,589
(518)
115,071
Revenue from continuing operations includes:
Interest income
Bank accounts, short term deposits and investments
Finance receivables
Reverse annuity mortgages
Total interest income
Operating revenue
Sales of goods
Commission and other sales revenue
Finance related insurance commissions
Loan fee income
Insurance and life investment contract income
Collection income
Bad debts recovered
Other revenue
Total operating revenue
Revenue from continuing operations
Other income comprises:
Revaluation gain on investments
Revaluation gain on investment property
Dividend income
Gain of sale of property, plant and equipment
Gain on compulsory acquisition on leasehold premise by the NZTA
Fair value gain on contingent consideration
Revenue from contracts with customers
Over time
Automotive retail
Commission and other sales revenue
Insurance
Motor vehicle insurance commissions
At a point in time
Automotive retail
Sales of goods
Auction commissions
Credit management
Collection income
Voucher income
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
Notes
2019
$’000
2018
$’000
1,791
46,532
846
49,169
159,438
48,965
4,199
2,950
42,968
18,187
897
1,585
279,189
328,358
-
830
391
3,607
3,393
-
8,221
23,352
1,731
25,083
159,438
25,613
16,506
1,681
13,241
1,711
14,952
914
6,890
(47)
135
7,892
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
14
14
16
54
55
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
Fees paid to auditor
Baker Tilly 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 Baker Tilly 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
2019
$’000
675
864
519
96
1,435
630
1,566
5,785
104
5
637
1,164
-
442
7
3
10
452
2019
$’000
29,049
(8,134)
2,035
(125)
-
(106)
(6,330)
(10,030)
3,958
(258)
(6,330)
2018
$’000
614
747
436
82
1,587
594
1,567
5,627
121
15
425
1,314
23
441
6
3
9
450
2018
$’000
31,133
(8,722)
1,248
(437)
93
45
(7,773)
(9,205)
1,387
45
(7,773)
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
9. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 31 March was based on the profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, as follows:
Profit for the year ($'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 conversion of bonds
Shares issued for the dealer share scheme
Share cancel from the share buy back
2019
22,719
86,671,483
26.21
2018
23,360
79,835,734
29.26
2019
2018
84,802,612
-
-
-
-
2,303,925
20,766
(455,820)
86,671,483
74,523,527
132,270
4,377,211
775,873
26,684
-
169
-
79,835,734
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:
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
2019
$’000
22,719
598
326
23,643
2018
$’000
23,360
1,196
493
25,049
86,671,483
-
-
86,671,483
79,835,734
6,816,220
107,222
86,759,176
27.28
28.87
2019
$’000
663
142
15,061
15,866
2018
$’000
1,046
975
23,124
25,145
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 available for use by the wider Group. DPL Insurance's
cash and cash equivalents at 31 March 2019 were $2.2m (2018: $9.2m).
Cash and cash equivalents at 31 March 2019 of $4.6m (2018: $4.9m) belong to the Turners Marque Warehouse Trust 1 are not available to the
Group.
56
57
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Insurance:
Investments in unitised funds
Term deposits
Other:
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
Investments with external investment managers
ANZ New Zealand Investments Limited - Unitised Funds
2019
$’000
7,658
54,999
3,595
66,252
1,309
1,350
3,141
1,858
7,658
2018
$’000
7,249
42,500
3,629
53,378
3,055
1,351
1,143
1,700
7,249
7,658
7,249
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
-
58,594
58,594
-
46,129
46,129
All term deposits held in the insurance business may not be available for use by the wider Group (refer note 10). DPL Insurance's term deposits
at 31 March 2019 were $55.0m (2018: $42.5m).
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 from financial assets at fair value through profit or loss at reporting date, excluding investments in unitised
funds, is the carrying value. The financial assets in this category, excluding equity investments, 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.
Refer to note 5 for more information on the risk management policies of the Group.
12. TRADE RECEIVABLES
Performing
Doubtful
In default
Impairment provision
Net trade receivables
Trade receivables are a current asset, with terms of trade usually 30 days or less.
2019
$’000
11,633
807
323
12,763
(292)
12,471
2018
$’000
10,068
1,255
275
11,598
(275)
11,323
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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 default 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 doubtful 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
Movement in the impairment provision:
Opening balance
Impairment charge/(release) included in other operating expenses
Amounts written off
2019
$’000
-
-
-
323
323
722
59
26
-
807
275
27
(10)
292
2018
$’000
16
15
-
244
275
447
16
-
792
1,255
203
103
(31)
275
The Group recognises lifetime expected credit loss for trade receivables. Tithe expected credit loss rate is 2.3%. 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
1,099
11,372
12,471
918
10,405
11,323
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 from trade receivables 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.
13. INVENTORY
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
2019
$’000
40,391
30
40,421
(1,562)
38,859
2018
$’000
39,631
14
39,645
(1,049)
38,596
1,049
513
1,562
776
273
1,049
58
59
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
14. FINANCE RECEIVABLES
Commercial loans
Finance leases
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
Gross financial receivables are summarised as follows:
Performing
Doubtful
In default
Movement in specific impaired receivables
Opening balance
Additions
Amounts moved to doubtful
Amounts recovered
Amounts written off
The aging of loans specifically assessed are as follows:
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
In default
2019
$’000
25,831
6,860
266,518
3,069
1,098
303,376
(1,915)
(17,680)
6,236
290,017
147,101
142,916
290,017
2019
$’000
262,160
25,247
15,969
303,376
2,342
1,179
(283)
(422)
(439)
2,377
1,944
1,305
572
1,695
2,377
7,893
2018
$’000
27,665
4,902
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
990
1,471
-
(47)
(72)
2,342
894
1,422
445
929
2,342
6,032
The following table details the risk profile of the Group's provision matrix for finance receivables collectively assessed for impairment. As the
Group's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss
allowance based on past due status is not further distinguished between the Group's different customer base.
31 March 2019
Performing
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
In default
1April 2018 (restated)
Performing
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
In default
Movement in the impairment provisions:
Specific impairment provision
Opening balance
Impairment charge/(release) through profit or loss
Amounts written off
Collective impairment provision
Opening balance
Change in accounting policy
Impairment charge/(release) through profit or loss
Amounts written off
Gross
Collective
Expected
finance
impairment
loss rate
%
0.90
receivables
$’000
262,160
provision
$’000
2,358
8.72
19.95
29.25
55.72
81.29
0.92
8.51
20.55
25.04
47.16
59.67
10,552
4,036
1,200
3,943
13,592
295,483
258,947
10,687
3,319
1,230
4,892
10,546
289,621
2019
$’000
1,592
914
(591)
1,915
2019
$’000
9,702
3,184
6,890
(2,096)
17,680
920
805
351
2,197
11,049
17,680
2,387
909
682
308
2,307
6,293
12,886
2018
$’000
973
619
-
1,592
2018
$’000
5,055
-
5,300
(653)
9,702
Total impairment provision
19,595
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
2019
$’000
Fair
value
2019
$’000
Carrying
amount
2018
$’000
Fair
value
2018
$’000
Finance receivables
290,017
290,326
289,799
289,951
60
61
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
The fair values are based on cash flows discounted using a weighted average interest rate of 14.46% (2018: 15.01%).
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 $184m.
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 $114.5m finance receivables were sold to the Trust (2018: $144.5m). As at 31 March 2019 the carrying value of finance
receivables in the Trust was $175.3m (2018: $145.6m).
15. OTHER RECEIVABLES, DEFERRED EXPENSES AND CONTRACT ASSETS
Other receivables and prepayments
Insurance deferred acquisition costs
Contract assets
- Amount relating to services rendered not yet invoiced
- Contract fulfilment costs
Current
Non-current
2019
$’000
5,129
4,015
1,538
273
10,955
6,961
3,994
10,955
2018
$’000
6,302
4,214
1,231
-
11,747
7,411
4,336
11,747
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
2019
$’000
8,344
(50)
8,294
-
8,294
8,294
97
(47)
50
2018
$’000
10,094
(97)
9,997
-
9,997
9,997
69
28
97
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
Reverse annuity mortgages
Carrying
amount
2019
$’000
8,294
Fair
value
2019
$’000
9,333
Carrying
amount
2018
$’000
Fair
value
2018
$’000
9,997
11,866
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.
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.
Carrying amount of financial assets included in other receivables
3,776
6,111
17. INVESTMENT PROPERTY
The carrying amounts of the financial assets included in other receivables are denominated in the following currencies:
Australian dollars
New Zealand dollars
3
3,773
3,776
5
6,106
6,111
Expected credit losses on contract assets and other receivables is 0%.
Investment property
Movements in carrying amounts
Opening balance
Net change in fair value
Closing balance
The investment property is 26.8 hectares of residentially zoned land at Sanctuary Hill, 358 Worsleys Road, Christchurch.
2019
$’000
5,650
4,820
830
5,650
2018
$’000
4,820
4,000
820
4,820
62
63
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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 Staff Share Plan Trustees 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
Turners Finance Limited
Turners Fleet Limited
Turners Group NZ Limited
Turners Property Holdings Limited
EC Web Services Limited
Vehicle trade
Trustee
Insurance
Collection services
Collection services
Collection services
Finance
Collection services
Finance
Vehicle and commercial goods trade
Auctions
Property
Dormant
Ownership
Interest Held
2019
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%
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%
66.6%
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.
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.
In May 2018, Dorchester Oxford Limited, Oxford Finance Limited, Southern Finance Limited and Dorchester Finance Limited were amalgamated
to become Dorchester Finance Limited which changed its name on amalgamation to Oxford Finance Limited.
In August 2018, Smart Group Services Limited, Turners International Holding Limited, Turners Smart Autocentre Limited and Turners Group NZ
Limited were amalgamated to become Turners Group NZ Limited and Dorchester Life Trustees Limited, Dorchester RAMS Limited, Dorchester
Turners Limited, EGPTM Limited, EGPTT Limited and Turners Automotive Group Limited were amalgamated to become Turners Automotive
Group Limited.
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
19. PROPERTY, PLANT AND EQUIPMENT
Leasehold
improvements,
furniture, fittings
& office
equipment
Plant, equipment
& motor vehicles
Computer
equipment
Signs & flags
$’000
$’000
$’000
$’000
3,632
(1,622)
2,010
1,391
(382)
(675)
2,344
4,613
(2,269)
2,344
3,169
(1,093)
2,076
948
(400)
(614)
2,010
3,632
(1,622)
2,010
12,652
(2,987)
9,665
8,550
(706)
(864)
16,645
20,495
(3,850)
16,645
6,866
(2,153)
4,713
6,368
(669)
(747)
9,665
12,652
(2,987)
9,665
2,023
(1,257)
766
441
2
(519)
690
2,467
(1,777)
690
1,735
(995)
740
470
(8)
(436)
766
2,023
(1,257)
766
471
(319)
152
264
(6)
(96)
314
729
(415)
314
462
(237)
225
12
(3)
(82)
152
471
(319)
152
Land
$’000
23,352
-
23,352
-
(4,261)
-
19,091
19,091
-
19,091
11,155
-
11,155
14,215
(2,018)
-
23,352
23,352
-
23,352
Total
$’000
42,130
(6,185)
35,945
10,646
(5,353)
(2,154)
39,084
47,395
(8,311)
39,084
23,387
(4,478)
18,909
22,013
(3,098)
(1,879)
35,945
42,130
(6,185)
35,945
2019
At cost
Accumulated depreciation
Opening carrying amount
Additions
Disposals & translation difference
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
2018
At cost
Accumulated depreciation
Opening carrying amount
Additions
Disposals & translation difference
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
64
65
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
20. INTANGIBLE ASSETS
Brand
Opening carrying amount at cost
Impairment
Closing carrying amount
Goodwill
Opening carrying amount at cost
Foreign exchange adjustment
Closing carrying amount
Software
At cost
Accumulated amortisation
Opening carrying amount
Additions
Amortisation
Closing carrying amount
At cost
Accumulated amortisation
Closing carrying amount
Corporate relationships
At cost
Accumulated amortisation
Opening carrying amount
Additions - business combinations
Amortisation
Closing carrying amount
At cost
Accumulated amortisation and impairment provision
Closing carrying amount
2019
$’000
71,400
(4,300)
67,100
92,524
10
92,534
6,235
(4,390)
1,845
2,107
(1,435)
2,517
8,342
(5,825)
2,517
6,510
(1,297)
5,213
-
(630)
4,583
6,510
(1,927)
4,583
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
Total intangible assets carrying amount
166,734
170,982
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
23,998
9,272
35,627
10,860
92,534
12,777
23,988
9,272
35,627
10,860
92,524
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
2019
$’000
21,500
45,600
-
67,100
2018
$’000
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 - 12.7%; year 3 - 3.2%; year 4 - 2.5%; year 5 - 2.5%
and a terminal rate of 1.5% (2018: year 2 - 23%; year 3 - 3%, years 4 - -15%; year 5 - 1% and 2% terminal rate). A pre-tax discount rate of 13.1%
(2018: 12.4% ) 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 (2018: 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 0.5% (2018:
increasing and reducing the
terminal growth rate by 1%) and increasing and decreasing the discount rate by 1% (2018: 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 - 0.2%; year 3 - 5%, year 4 - 5% and year 5 - 5% and a
terminal rate of 1.5% (2018: year 2 - 11%; year 3 - 6%, year 4 - 4%; year 5 - 5.0% and a terminal rate of 2.0%). A pre-tax discount rate of 13.6%
(2018: 14.0% ) 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 (2018: 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 0.5% (2018: increasing and reducing the terminal
growth rate by 1%) and increasing and decreasing the discount rate by 1% (2018: 1%). These reasonably possible changes in rates did not
cause any impairment.
Finance CGU
The year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - 30.7%, year 3 - 20.4%, year 4 - 5.0%, year 5 - 5.0%
and a terminal rate of 1.5% (2018: 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 18.1%
(2018: 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 (2018: 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 0.5% (2018; 1%) increasing and decreasing the discount rate by
1% (2018: 1%). These reasonably possible changes in rates did not cause any impairment.
66
67
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Automotive retail CGU
Turners Group (NZ) (TGNZ)
The year 1 forecast cash flows were extrapolated using the following growth rates; year 2 - 22.3%; year 3 - 19.3%, years 4 - 15.6%; year 5 - 2.0%
and a terminal rate of 1.5% (2018: year 2 - 5%; year 3 - 7%, years 4 to 5 - 5% and a terminal rate of 2.0%). A pre-tax discount rate of 17.1%
(2018: 18.1% ) 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 (2018: 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 0.5% (2018: increasing and reducing the terminal growth rate
by 1%) and increasing and decreasing the discount rate by 1% (2018: 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 - 14.6%; year 3 - 11.0%, years 4 - -9.3%; year 5 -
12.8% and a terminal rate of 1.5% (2018: year 2 - -60%; year 3 - 8%, years 4 to 5 - 5.0% and a terminal rate of 2.0%) . A pre-tax discount rate of
12.5% (2018: 12.9%) 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 (2018: 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 0.5% (2018: increasing and reducing the terminal growth rate
by 1%) and increasing and decreasing the discount rate by 1% (2018: 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
2019
$’000
12,743
4,127
225
16,811
33,906
2018
$’000
16,168
4,169
221
18,030
38,588
25,247
24,043
1,738
536
22,973
25,247
865
614
22,564
24,043
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.
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
2019
$’000
116
2018
$’000
226
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. CONTRACT LIABILITIES
Unredeemed debt and PPSR voucher liability
Motor vehicle insurance rebate liability
Movement in contract liabilities
Unredeemed debt and PPSR voucher liability
Opening balance
Change in accounting policy
Additions
Release to profit or loss
Release to profit or loss
Income relating to current year
Income relating to prior years
Motor vehicle insurance rebate liability
Opening balance
Change in accounting policy
Additions
Release to profit or loss
Release to profit or loss
Income relating to current year
Income relating to prior years
24. DEFERRED TAXATION
2018
$’000
1,793
-
1,793
2,226
-
786
(1,219)
1,793
557
662
1,219
2019
$’000
2,502
140
2,642
1,793
617
1,773
(1,681)
2,502
485
1,196
1,681
-
100
-
40
140
(40)
-
(40)
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
Change in accounting policy
Charge to profit or loss
Closing balance
2019
$’000
18,786
(910)
(3,958)
13,918
2018
$’000
20,173
-
(1,387)
18,786
68
69
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
The charge to profit or loss is attributable to the following items:
Corporate relationships
Policy in force asset
Loan impairment provision
Brand write off
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
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
2019
$’000
(146)
(438)
(1,428)
(1,204)
(264)
42
(520)
(3,958)
14,627
(709)
13,918
5,558
2,062
7,620
18,788
1,165
439
1,146
21,538
2018
$’000
(146)
(438)
(1,474)
-
223
164
284
(1,387)
16,138
2,648
18,786
3,229
1,542
4,771
19,992
1,344
877
1,344
23,557
13,918
18,786
7,010
10,744
(5,875)
11,879
5,707
5,743
(4,440)
7,010
Policy holder tax losses
The policy holder tax losses carried forward at 31 March 2019 are $4,949,000 (2018: $4,753,000). The policy holder tax 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
2019
$’000
251,282
(105)
251,177
2018
$’000
230,712
(253)
230,459
37,055
-
58,603
2,837
25,000 25,561
(87)
25,474
(369)
24,631
312,863
317,373
34,981 111,399
214,028
277,882
317,373
312,863
Secured bank borrowings
In May 2018 the Group entered into a 3 year syndicated funding facility, including a 1 year working capital facility, with the Bank of New Zealand
and ASB Bank and a self liquidating trade finance facility with ASB Bank. The facilities replaced the Group's bank borrowing excluding
securitisation which remains with the Bank of New Zealand.
The bank borrowings, together with trade and lease premise guarantees of $0.9 million (2018: $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, Turners Finance Limited and EC
Credit (Aust.) Limited. Current interest rates on the bank borrowings are variable and average 3.88% (2018: 3.65%). The Group's securitisation
financing arrangement with the Bank of New Zealand as described in note 14.
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.
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.
Vendor property funding
The 3% vendor property funding was repaid in November 2018 and was secured over property.
Bonds
On 1 October 2018 Turners Automotive Group issued secured subordinated fixed rate bonds with a fixed maturity on 30 September 2021.
Interest is fixed at 5.5% and is paid quarterly in arrears in equal amounts. The bonds rank behind the indebtedness owing under the bank
facilities and are guaranteed by Turners Automotive Group Limited, Oxford Finance Limited, Buy Right Cars (2016) Limited, EC Credit (NZ)
Limited, Estate Management Services Limited, Payment Management Services Limited, EC Web Services Limited, Turners Group NZ Limited,
Turners Fleet Limited and Turners Property Holdings Limited.
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 was fixed at 6.5%. On 1 October 2018, the 6.5%
convertible bonds were settled by repaying $7,505,000 in cash, exchanging $4,814,000 for the new 5.5% subordinated bonds and issuing
4,646,037 ordinary shares at $2.85 per share ($13,241,000). On the same day $25,000,000 5.5% subordinated bonded with a 3 year term were
issued.
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
2019
$’000
312,863
Fair
value
2019
$’000
312,863
Carrying
amount
2018
$’000
317,373
Fair
value
2018
$’000
317,388
The fair values are based on cash flows discounted using a weighted average borrowing rate of 3.91% (2018: 4.24%).
Contractual repricing dates
1 year or less
Over 1 to 2 years
Over 2 to 5 years
2019
$’000
2018
$’000
269,343 283,205
13,282 19,714
30,712 14,794
313,337 317,713
70
71
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
Financing cash flows (i)
Other - netted off finance receivables
Non-cash changes
Bank
borrowings
$’000
Motor Trade
Finance
$’000
191,565 49,021
39,005
- 9,582
Vendor
property
funding
Bonds
$’000
- 25,303
$’000
- 2,837
-
- -
(111)
171
230,459 58,603 2,837 25,474
-
-
20,570
-
(2,837)
- 561
-
(21,548)
-
-
Deferred borrowing costs
Balance at 31 March 2019
(i) Financing cash flows make up the net amount of proceeds from borrowings and repayments of borrowings in the statement of cash flows.
- -
251,177
37,055
148
-
(282)
24,631
26. SHARE CAPITAL
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
Shares cancel for share buy back
Total issued and authorised capital
Dollar value of ordinary shares
Opening balance
Shares issued for the conversion of bonds
Shares issued for the share placement
Shares issued for the share purchase plan
Shares issued for the purchase of Buy Right Cars
Shares issued under the staff share scheme
Shares issued for the dealer share scheme
Shares purchased and cancelled under share buy back
Share issue costs
Total issued capital
2019
2018
84,802,612
-
-
-
-
79,050
4,646,037
(2,639,635)
86,888,064
74,523,527
227,729
8,278,146
1,656,104
86,192
30,914
-
84,802,612
2019
$'000
199,148
13,241
-
-
-
-
200
(6,141)
(53)
206,395
2018
$'000
168,809
-
25,000
5,001
683
265
92
-
(702)
199,148
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
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 return on the capital allocated. The process of allocating capital
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 34G.
27. SHARE OPTIONS
No options were granted in the current financial year. 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.
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
immediately.
lapse) and the participant's other Options will
The weighted average fair value of the options granted in the previous financial year, using the Binomial Tree option pricing model, was $0.36 per
option. The significant inputs in the model were, the share price at grant date of $3.53, the exercise price of $3.60, volatility of 21.5%, 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 and an annual risk free
rate of 2.63%.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 $326,000 (2018: $493,000).
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
2019
$
3.32316
-
-
Options
2019
000's
2,203
-
-
3.32316
2,203
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
Exercise
price
$
3.32316
3.60000
3.32316
3.60000
3.32316
3.60000
2.99195
3.60000
Exercise
price
2018
$
2.99195
3.60000
3.60000
3.32316
Options
2019
000's
251
300
251
300
251
300
250
300
Options
2018
000's
1,003
1,700
(500)
2,203
Options
2018
000's
251
300
251
300
251
300
250
300
72
73
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
28. DIVIDENDS
Interim dividend for the year ended 31 March 2018 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 for the year ended 31 March 2018 of $0.05 (31 March2017: $0.045) per fully
paid ordinary share, imputed paid on 21 July 2018 (2017: 21 July 2017)
Interim dividend for the year ended 31 March 2019 of $0.04 (31 March 2018: $0.03) per fully
paid ordinary share, imputed, paid on 30 October 2018 (2018: 3 November 2017).
Interim dividend for the year ended 31 March 2019 of $0.04 (31 March 2018: $0.03) per fully
paid ordinary share, imputed, paid on 3 January 2019 (22 December 2017).
2019
$’000
3,816
2018
$’000
2,980
4,240
3,353
3,596
2,540
3,562
15,214
2,544
11,417
Dividends not recognised at year end
In addition to the above dividend in 2019, after year end the directors recommended the payment of the following dividend:
Interim dividend of $0.040 (31 March 2018: $0.045) per fully paid ordinary share, imputed,
payable on 30 April 2019 (2018: 20 April 2018)
Final dividend of $0.05 (31 March 2018: $0.05) per fully paid ordinary share, imputed, payable
on 18 July 2019 (2018: 18 July 2018).
29. TRANSACTIONS WITH RELATED PARTIES
3,489
3,816
4,344
4,240
Major shareholders, directors and closely related persons to them are considered related parties of the Group.
Shares
During the financial year ending 31 March 2018, 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.
Bonds
In the financial year ending 31 March 2017, Bartel Holdings Limited (major shareholder) subscribed for $8,000,000 6.5% bonds with a maturity
date of 30 September 2018. Interest of $260,000 (2018: $520,000) was paid to Bartel Holding Limited on the bonds during the year. The bonds
were converted into 2,807,018 ordinary shares on 1 October 2018 (refer note 25).
Turners Automotive Group Limited Employee Share Scheme
During the financial year ended 31 March 2018, the Company issued 282,040 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.
As at 31 March 2019, 41,746 shares (2018: 198,918) were issued and allocated to employees under the scheme.
At 31 March 2019 balance on the loans outstanding to the share scheme were $63,458 (2018: $120,094). The loans bear interest at 5%, are for
a 3 year term with fortnightly repayments and the Group has unlimited recourse against the participants in the Scheme.
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Key management personnel compensation
The key management personnel are all the Directors of the Company and Group General Managers. Compensation of key management
personnel for the years ended 31 March 2019 and 31 March 2018 was as follows:
($'000)
Short-
term
benefits
$'000
Post-
employment
benefits
$'000
Other long-
term
benefits
$'000
Share-based
payments
$'000
Total
$'000
Year ended 31 March 2019
3,004
- 77 326 3,407
Year ended 31 March 2018
3,583
- 78 493 4,154
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 94 to 97. 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 revenue
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
Write off of intangible brand asset
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/(decrease) in contract liabilities
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
2019
$’000
22,719
7,943
(3,660)
5,785
(846)
1,620
(799)
341
330
(209)
2,839
(830)
-
4,300
(259)
(263)
(851)
(5,220)
132
(34,926)
2,545
(12,163)
16
(3,565)
(15,021)
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
9,761
-
(75,248)
66
(41,937)
(5,765)
(366)
(81,485)
74
75
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
31 CHANGE IN ACCOUNTING POLICY
Impact of the adoption of NZ IFRS 15 and NZ IFRS 9.
This note explains the impact of the adoption of NZ IFRS 15 ‘Revenue from Contracts with Customer’ and NZ IFRS 9 ‘Financial
Instruments’.
The Group adopted NZ IFRS 15 and NZ IFRS 9 from 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.
The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying
each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a
contract and the costs directly related to fulfilling the contract.
For the revenue streams impacted by this standard please refer to note 3.5.
Impact of the adoption of NZ IFRS 15 on the Group’s financial statements
The Group elected to apply the cumulative effect method, with no restatement of comparative period amounts. The cumulative effect of
applying the new standard is included as an adjustment to the opening balance of retained earnings recognised in the Statement of changes
in equity for the year ended 31 March 2019.
The Group’s revenue recognition policies remain largely the same with the following exceptions:
Sales of service- Collection income
The Group has concluded that collection income should be recognised when the service is rendered. The adoption of NZ IFRS 15 has
impacted the timing of when some collection income and the related costs are recognised resulting ($273,000) adjustment to opening retained
earnings (net of tax and deferred tax).
Motor Vehicle Insurance (MVI) Commission Income
The Group has used the portfolio approach to account for contracts of the same nature. It has been assessed that MVI commission income
should be recognised over the policy term. The adoption of NZ IFRS 15 has impacted the timing of when MVI Commission Income should
be recognised resulting in a ($72,000) adjustment to retained earnings (net of deferred tax).
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. 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.
Impairment
The adoption of NZ IFRS 9 has fundamentally changed the Group’s accounting for impairment for financial assets by replacing NZ IAS 39’s
incurred loss approach with a forward-looking expected credit loss (ECL) approach.
NZ IFRS 9 requires the Group to record an allowance for ECLs for all financial receivables and other debt financial assets not held at fair
value through profit and loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective
interest rate.
Impact of the adoption of NZ IFRS 9 on the Group’s financial statements
The Group has chosen not to restate comparative information and adjustments required by the application of the new standard have been
made to the opening balance of retained earnings recognised in the Statement of changes in equity for the year ended 31 March 2019.
The Group’s classification of financial assets and liabilities under NZ IFRS 9 remains largely the same as it was under NZ IAS 39. Loans
and receivables under NZ IAS 39 are now named as Amortised cost. There have been no changes in categorisations.
The adoption of the ECL requirements of NZ IFRS 9 resulted in increases in impairment allowances for the Group’s Finance receivables.
The increase in allowance resulted in ($2,292,000) (net of deferred tax) adjustment to retained earnings.
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
The total impact on the Group’s retained earnings as at 1 April 2019 is as follows:
Impact of the adoption of NZ IFRS 9 and NZ IFRS 15 on the Statement of financial position as at 1 April 2018:
Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Trade receivables
Inventory
Finance receivables
Other receivables, def erred expenses and contract assets
Reverse annuity mortgages
Investment property
Property, plant and equipment
Intangible assets
Total assets
Liabilities
Other payables
Financial liability at fair value through prof it or loss
Contract liabilities
Def erred tax
Tax payables
Derivative financial instruments
Borrow ings
Lif e investment contract liabilities
Insurance contract liabilities
Total liabilities
Shareholders’ equity
Share capital
Other reserves
Retained earnings
Total shareholders’ equity
Total shareholders’ equity and liabilities
31-Mar-18
As originally
presented
$'000
1-Apr-18
NZ IFRS 15
adjustm ents
$'000
1-Apr-18
NZ IFRS 9
adjustm ents
$'000
1-Apr-18
restated
$'000
25,145
53,378
11,323
38,596
289,799
11,747
9,997
4,820
35,945
170,982
651,732
38,588
226
1,793
18,786
5,029
111
317,373
7,127
48,376
437,409
199,148
516
14,659
214,323
651,732
-
-
-
-
-
154
-
-
-
-
154
(195)
-
717
(20)
(3)
-
-
-
-
499
-
-
(345)
(345)
154
-
-
-
-
(3,184)
-
-
-
-
-
(3,184)
-
-
-
(892)
-
-
-
-
-
(892)
-
-
(2,292)
(2,292)
(3,184)
25,145
53,378
11,323
38,596
286,615
11,901
9,997
4,820
35,945
170,982
648,702
38,393
226
2,510
17,874
5,026
111
317,373
7,127
48,376
437,016
199,148
516
12,022
211,686
648,702
76
77
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Presentation of the Statement of comprehensive income for the year ended 31 March 2019 as if NZ IFRS 15 and NZ IFRS 9 had not been
adopted:
Presentation of the Statement of financial position as at 31 March 2019 as if NZ IFRS 15 and NZ IFRS 9 had not been adopted:
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
Insurance deferred acqisition costs
Impairment of intangible brand asset
Other expenses
Profit before taxation
Taxation (expense)/benefit
Profit for the year
Other com prehensive incom e for the year (w hich m ay
subsequently be reclassified to profit/loss), net of tax
Cash flow hedges
Foreign currency translation differences
Total other com prehensive incom e
31-Mar-19
reported
w ith
adopting
NZ IFRS 15 & 9
$'000
328,358
8,221
Year ended
31-Mar-19
NZ IFRS 15
adjustm ents
$'000
1,078
-
Year ended
31-Mar-19
NZ IFRS 9
31-Mar-19
reported
w ithout
adopting
adjustm ents NZ IFRS 15 & 9
$'000
329,436
8,221
$'000
-
-
(133,126)
(14,952)
(7,892)
(12,888)
(52,756)
(14,581)
(3,918)
(5,785)
(10,945)
(1,471)
(26,804)
(718)
(423)
(4,300)
(16,971)
29,049
(6,330)
22,719
(364)
(26)
(390)
-
-
-
-
40
(24)
-
-
-
-
-
-
-
-
(931)
163
(45)
118
-
-
-
-
-
378
-
-
-
-
-
-
-
-
-
-
-
-
378
(106)
272
-
-
-
(133,126)
(14,952)
(7,514)
(12,888)
(52,716)
(14,605)
(3,918)
(5,785)
(10,945)
(1,471)
(26,804)
(718)
(423)
(4,300)
(17,902)
29,590
(6,481)
23,109
(364)
(26)
(390)
Total com prehensive incom e for the year
22,329
118
272
22,719
There are no changes to the Statement of cash flows as a result of the adoption of NZ IFRS 15 and NZ IFRS 9.
Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Trade receivables
Inventory
Finance receivables
Other receivables, deferred expenses and contract assets
Reverse annuity mortgages
Investment property
Property, plant and equipment
Intangible assets
Total assets
Liabilities
Other payables
Financial liability at fair value through profit or loss
Contract liabilities
Deferred tax
Tax payables
Derivative financial instruments
Borrow ings
Life investment contract liabilities
Insurance contract liabilities
Total liabilities
Shareholders’ equity
Share capital
Other reserves
Retained earnings
Total shareholders’ equity
Total shareholders’ equity and liabilities
31-Mar-19
reported
w ith
adopting
NZ IFRS 15 & 9
$'000
Year ended
31-Mar-19
NZ IFRS 15
adjustm ents
$'000
15,866
66,252
12,471
38,859
290,017
10,955
8,294
5,650
39,084
166,734
654,182
33,906
116
2,642
13,918
4,570
524
312,863
7,484
51,785
427,808
206,395
452
19,527
226,374
654,182
-
-
-
-
-
(273)
-
-
-
-
(273)
193
-
(1,013)
87
(3)
-
-
-
-
(736)
-
-
463
463
(273)
Year ended
31-Mar-19
NZ IFRS 9
31-Mar-19
reported
w ithout
adopting
adjustm ents NZ IFRS 15 & 9
$'000
$'000
-
-
-
-
3,562
-
-
-
-
-
3,562
-
-
-
997
-
-
-
-
-
997
-
-
2,565
2,565
3,562
15,866
66,252
12,471
38,859
293,579
10,682
8,294
5,650
39,084
166,734
657,471
34,099
116
1,629
15,002
4,567
524
312,863
7,484
51,785
428,069
206,395
452
22,555
229,402
657,471
Accounting policies
For the Group’s current accounting policies for revenue recognition refer to accounting policy 3.5 on page 37 and for financial instruments
refer to accounting policy 3.6 on page 39 of the Group’s consolidated financial statements for the year ended 31 March 2019.
Group’s previous policies for revenue recognition:
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
78
79
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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.
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.
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
Group’s previous accounting policies for financial instruments
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.
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.
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.
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.
80
81
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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.
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.
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
32. COMMITMENTS AND CONTINGENT LIABILITIES
Operating lease commitments under non-cancellable operating leases:
Not later than 1 year
1-2 years
2-5 years
5+ years
2019
$’000
2018
$’000
9,136
6,447
9,302
7,626
32,511
9,473
8,064
10,262
3,154
30,953
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.
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.
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.
There are no options to purchase plant and equipment held under operating lease.
Capital Expenditure:
At reporting date the Group has no capital commitments (2018: nil).
Loan Commitments:
The Group has no material undrawn credit commitments at reporting date (2018: nil).
Contingent Liabilities:
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.
Buy Right Cars
The vendor of the business has brought legal action against the Company disputing the quantum of the final earn out. A trial date has been set
for 11 May 2020 with both parties seeking payment. The directors consider that on balance of probabilities no payment will be made to the
vendor.
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.
The Group has no other material contingent liabilities at reporting date.
2018
Autosure
DPL Insurance Limited (DPL) and Vero Insurance New Zealand Limited (Vero) 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 were seeking a payment. The
directors consider that on balance of probabilities DPL was likely to receive a payment. Pending the outcome of the determination, DPL may have
been required to make a payment to Vero. At time of issuing the 31 March 2018 financial statements, the timing and amount of any payment
could not be reliably estimated. In December 2018, the expert decided in DPL's favour with settlement received in January 2019.
On 3 May 2018, the Group entered into a syndicated funding facility with the Bank of New Zealand and ASB Bank, refer note 25 of the Group
annual report for the year ended 31 March 2018.
33. SUBSEQUENT EVENTS AFTER BALANCE DATE
In June 2019, all staff options were cancelled for no consideration, resulting in release of $1,027,000 from the share option reserve to retained
income.
82
83
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
34. Insurance related disclosures
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
2019 by Peter Davies, a Fellow of the New Zealand Society of Actuaries.
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 (2018: 28%). The net discount rates assumed
were as follows:
Whole of Life and Endowment Policies (including Funeral Plan)*
Quick Cover term life plan*
Term Insurance Policies
Caring Plan Funeral Benefit Policies
Annuity Policies
Consumer Credit and Key Person Loan Protection
2019
Treasury risk-free rates
Treasury risk-free rates
Not applicable
Not applicable
Treasury risk-free rates
Not applicable
2018
Treasury risk-free rates
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 2018:
March 2019:
2.61% per annum net of tax
1.83% 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 (2018: 2.0%).
c) Mortality Rates
Rates of mortality were assumed as follows:
For underwritten whole of life, endowment and term insurance policies: NZ97 (2018: 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 (2018: 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
(2018: 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) (2018: net claims + reinsurance)
Quick Cover term life plan (2018: net claims and reinsurance)
Annuities
Consumer Credit / Lifestyle
Motor business
Accidental death & redundancy – Stop Gap
Accidental death regular & single premium
Carrier
Premiums
Premiums
Not Applicable
Premiums
Gross claims
Gross claims
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)
$149 per policy per annum (2018: $149)
$9 per policy per annum (2018: $37)
$9 per policy per annum (2018: $74)
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Consumer credit plans (for loss recognition):
Annuity plans
Investment management expenses were assumed to be 1.0% (2018: 1.0%) of policy liabilities.
$9 per policy per annum (2018: $37)
$149 per policy per annum (2018: $149)
f) Inflation and Automatic Indexation of Benefits
Maintenance expenses are assumed to increase 2.0% per annum (2018: 2.0%). Investment management expenses are assumed to
remain a constant percentage of funds under management.
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 (2018: 5.0%), and nil for
annuity pension plan business (2018: 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 (2018: No change).
For the Funeral plan (ex Greenwich) product the rates of discontinuance are based on the pricing assumption for this product, beginning at
40% in year 1, and reducing ultimately to 6% per annum (2018:10% to 2%).
For Quick Cover the rates of discontinuance are based on the pricing assumption for this product, beginning at 40% in year 1, and reducing
ultimately to 10% per annum (2018: 25% to 12%).
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 (2018: $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 an increase in policy liabilities of $207,000 (2018: $121,000).
The policy liabilities are not affected by the revised expense assumptions (2018: $11,000).
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 2018.
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)
84
85
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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: 2.61% to 1.83% (2018: 3.08% to 2.61%)
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
2019
$’000
164
-
(207)
5,745
266
1,022
6,990
2018
$’000
137
(11)
(120)
2,491
294
823
3,614
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
2018
$’000
39,719
549
(439)
1,856
42,968 41,685
2019
$’000
40,416
792
(680)
2,440
382 398
104 76
75
792 549
306
Included within equity securities is dividend income of $Nil (2018: $Nil) and included within fixed interest securities is interest income of $Nil
(2018: $Nil). Included within total Investment Income is net realised and unrealised gains/(losses) on securities at fair value through profit or loss
of $792,000 (2018: $549,000).
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
Prior year adjustment
Taxation (expense)/benefit
Comprising:
Current
Deferred
Prior year adjustment
Deferred tax
Opening balance
Charge to profit or loss
Transition adjustment
Deferred tax on intangibles
Closing balance
The charge to profit or loss is attributable to the following items:
Insurance deductible reserves
Provisions and accruals
Prior year adjustment
Income tax losses on policyholder base
The policy holder tax losses carried forward at 31 March 2019 are $4,948,638 (2018: $4,783,224).
Imputation credit memorandum account
The policyholder imputation credit account has a closing balance at 31 March 2019 of $Nil (2018: $Nil).
2019
$’000
25,112
630
2,382
423
2,805
40
718
125
481
1,566
630
262
287
5,912
8,577
2,402
(826)
11
1,587
2,530
(954)
11
1,587
(9,395)
998
28
-
(8,369)
702
252
44
998
2018
$’000
28,882
658
2,126
(3,387)
(1,261)
39
82
114
284
1,566
594
390
215
6,914
4,195
1,175
(594)
-
581
296
285
-
581
(9,110)
(285)
-
-
(9,395)
(222)
(63)
-
(285)
86
87
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
Closing insurance contract liabilities
Policyholder liabilities contain the following components:
Future policy benefits
Future expenses
Future profit margins
Balance of future premiums
Re-insurance
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
2019
$’000
33,284
16,714
1.99
16,714
16,570
1.99
21,557
12,850
8,707
11,727
3,864
7,863
2019
$’000
48,376
4,519
(1,566)
456
51,785
57,964
6,283
5,250
(21,058)
5,348
(435)
(1,567)
51,785
262
6,577
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
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
7,127 12,847
607 340
1,611 1,754
(7,519)
(295)
7,484 7,127
(1,595)
(266)
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 bonus and future margins
Consumer Credit Protection & key person loan protection
Accidental death/redundancy
Term Life
General
General claims provisions
Saving plans
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
2019
$’000
1,245
279
3,651
5,093
7
65
38,236
3,644
7,484
(435)
59,269
7,484
51,785
59,269
113
-
3,020
3,133
2018
$’000
1,403
266
2,661
4,948
8
72
35,604
4,305
7,127
(891)
55,503
7,127
48,376
55,503
647
(57)
2,928
3,518
3,518
23,012
(23,397)
3,133
556
26,645
(23,683)
3,518
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.
88
89
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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 2019
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 2019
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 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
Statutory
$’000
7,598
(630)
324
270
7,562
(1,537)
(718)
(1,226)
(1,819)
2,262
1,216
3,478
(644)
2,834
Statutory
$’000
29,845
-
29,845
7,484
10,416
-
218
18,118
11,727
3,864
7,863
Statutory
$’000
6,375
(543)
443
860
7,135
(2,216)
(82)
(1,022)
(2,644)
1,171
979
2,150
(298)
1,852
Shareholder
$’000
32,818
-
92
1,763
34,673
(23,575)
-
(1,156)
(10,320)
(378)
5,477
5,099
(943)
4,156
Shareholder
$’000
68,364
37,694
106,058
-
41,369
8,369
5,437
55,175
21,557
12,850
8,707
Shareholder
$’000
33,344
(115)
555
2,252
36,036
(26,666)
-
(1,104)
(8,885)
(619)
2,664
2,045
(283)
1,762
Total
$’000
40,416
(630)
416
2,033
42,235
(25,112)
(718)
(2,382)
(12,139)
1,884
6,693
8,577
(1,587)
6,990
Total
$’000
98,209
37,694
135,903
7,484
51,785
8,369
5,655
73,293
33,284
16,714
16,570
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
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
Statement of financial position as 31 March 2018
Assets
Investments backing insurance policy liabilities
Other assets
Total assets
Statutory
$’000
25,787
-
25,787
Shareholder
$’000
61,288
38,288
99,576
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
Less: revaluation of investment property disclosed as property, plant and equipment
in the Group financial statements at cost
Operating profit (note 6)
7,127
9,254
-
512
16,893
8,894
5,603
3,291
-
39,122
9,395
4,262
52,779
17,905
11,404
6,501
2019
$’000
8,577
(350)
8,227
Total
$’000
87,075
38,288
125,363
7,127
48,376
9,395
4,774
69,672
26,799
17,007
9,792
2018
$’000
4,195
(550)
3,645
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.
2019
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
-
792
-
-
(69)
(611)
112
81
39,786
5,901
(25,112)
2,449
(14,559)
-
8,465
6,909
Total
$’000
39,786
6,693
(25,112)
2,449
(14,628)
(611)
8,577
6,990
7,484 51,785 59,269
7,658 90,551 98,209
- 37,694 37,694
- 14,024 14,024
1,170 15,090 16,260
90
91
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2019
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
1,089 8,253 9,342
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
and
(endowment
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
for
compensation
Nature of
claims
Benefits, defined by the insurance
contract, are determined by
the
contract and are not directly affected
by the performance of underlying
assets or the performance of the
contracts as whole
the
Benefits
arising
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 aim 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
Interest rate risk
Mortality rates
Discontinuance
Market 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
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
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)
2019
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%
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%
Ef fect on policy
liabilities
Ef fect on
f uture prof it
(224)
249
1
(1)
(4)
5
-
-
(217)
241
1
(1)
(4)
5
-
-
(48)
52
(28)
28
(242)
266
76
(86)
(50)
55
(30)
30
(253)
278
77
(87)
92
93
STATUTORY INFORMATION
STATUTORY INFORMATION
STATUTORY INFORMATION
Directors’ remuneration and other benefits
Grant Baker
Paul Byrnes
Martin Berry
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
Directors’ fees
$
150,000
75,000
46,875
75,000
75,000
75,000
75,000
During the year ended 31 March 2018 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 consultancy fees paid for the year ended 31 March 2018 were $396,925 GST.
During the year ended 31 March 2019 Mr Harrison received an additional $15,000 (2018: $7,500) in fees for services as chairman of the
Credit and Lending Committee.
During the year ended 31 March 2019 Mr Roberts received an additional $15,000 (2018: $7,500) in fees for his services as chairman of the
Audit and Risk Management Committee.
During the year ended 31 March 2019 Mr Vriens received an additional $35,000 (2018: $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
Grant Baker
Matthew Harrison
Grant Baker
Grant Baker
Grant Baker
Grant Baker
John Roberts
Grant Baker
Alistair Petrie
John Roberts
Paul Byrnes
29/05/2018
08/06/2018
08/06/2018
13/06/2018
15/06/2018
18/06/2018
11/07/2018
01/10/2018
28/11/2018
29/11/2018
03/12/2018
20/02/2019
100,000
2,464,124
138,846
207,644
200,000
92,356
50,075
17,544
100,000
10,000
16,000
(30,000)
299,435 Registered holder and beneficial interest
** Beneficial interest
** Beneficial interest
624,925 Beneficial interest
610,000 Beneficial interest
281,686 Beneficial interest
159,739 Beneficial interest
50,000 Registered holder and beneficial interest
247,000 Beneficial interest
25,150 Beneficial interest
39,936 Registered holder and beneficial interest
69,900 Registered holder and beneficial interest
** In specie distribution by The Business Bakery LP to its limited partners.
Directors’ relevant interest in quoted shares as at 31 March 2019
Grant Baker (own shareholding)
Paul Byrnes
Martin Berry
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
Shares
6,100,000
3,384,860
-
5,179,294
25,011
66,000
-
STATUTORY INFORMATION
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.
The following represents interests of directors in other companies as disclosed to Turners Automotive Group Limited and entered in the
Interests Register:
Grant Baker
Baker Consultants Limited
Montezemolo Holdings Limited
Paul Byrnes
Vic Road Restaurant Group 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
Zeafruit Limited
John Roberts
Apollo Foods Limited
Centrix Group Limited
Employee remuneration
During the year ended 31 March 2019, 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
2019
21
14
13
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
280,000 – 289,000
320,000 – 329,999
330,000 – 339,999
340,000 – 349,999
400,000 – 409,999
430,000 – 439,999
700,000 – 709,000
7
5
4
7
4
4
5
3
1
1
1
2
2
-
1
1
1
1
1
1
1
1
8
9
7
4
-
2
3
2
2
2
2
2
1
2
3
-
-
-
1
-
1
1
94
95
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).
Substantial Product Holders
The following information is given pursuant to section 293 of the Financial Markets Conduct Act 2013.
PRINCIPAL ORDINARY SHAREHOLDERS AS AT 31 MAY 2019
The following table shows the names and holdings of the 20 largest holdings of quoted ordinary shares (TRA) of the Company.
Rank Name
Shares
% of Issued
Capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Bartel Holdings Limited
National Nominees New Zealand Limited - NZCSD
Montezemolo Holdings Limited
Harrigens Trustees Limited
FNZ Custodians Limited
HSBC Nominees (New Zealand) Limited - NZCSD
JBWere (NZ) Nominees Limited
BNP Paribas Nominees (NZ) Limited - NZCSD
Paul Anthony Byrnes
Accident Compensation Corporation - NZCSD
Stephen John Sinclair & Jacqueline Margaret Sinclair & Roger Frederick Wallis
Paul Bernard Mora
John Jeffers Harrison
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited - NZCSD
Glenn Arthur Duncraft
New Zealand Permanent Trustees Limited - NZCSD
Custodial Services Limited
Cushla Mary Smithies
John Tomson
Philip George Lennon
SPREAD OF ORDINARY SHAREHOLDERS AS AT 31 MAY 2019
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
9,552,642
7,961,599
6,100,000
5,179,294
4,918,536
3,352,890
2,627,992
2,610,610
2,384,860
2,308,409
2,171,461
1,586,339
1,538,782
770,721
750,000
709,298
684,328
542,841
519,754
500,000
10.99
9.16
7.02
5.96
5.66
3.86
3.02
3.00
2.74
2.66
2.50
1.83
1.77
0.89
0.86
0.82
0.79
0.62
0.60
0.58
Total Holders
Shares
% of Issued
Capital
1,843
838
784
399
506
43
51
7
13
838,249
1,154,668
2,432,525
2,646,952
9,980,928
2,811,084
10,253,302
4,476,942
52,293,414
0.96
1.33
2.80
3.05
11.49
3.24
11.80
5.15
60.18
4,484
86,888,064 100.00
Domicile of Ordinary Shareholders
Number
%
Number
%
Shareholders
Shares
New Zealand
Australia
Other
Total
96
4,337
59
88
4,484
96.72
1.32
1.96
100.00
86,133,517 99.13
314,040 0.36
440,507
86,888,064
0.51
100.00
As at 31 March 2019 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.
Bartel Holdings Limited
Salt Funds Managers Limited
Millford Asset Management Limited
Montezemolo Holdings Limited
Harrigens Trustees Limited
Number of Shares
%
10.99
9.06
6.93
7.02
5.96
9,552,642
7,874,254
6,020,821
6,100,000
5,179,294
The total number of quoted voting products of the company on issue at 31 March 2019 was 86,888,064 paid ordinary shares.
97
Turners Limited FY19 Governance Report
TURNERS LIMITED FY19 GOVERNANCE REPORT
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
2019 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
28 June 2019 and has been approved by the Board of Turners.
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 2019 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 can also
be found at https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html.
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 document can also be found at
https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html. 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 94 of the
2019 Full Year Financial Statements.
TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
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 28
June 2019 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.
The Board currently comprises of seven Directors: a non-executive chairman, three 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
98
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TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
and must have no disqualifying relationships. The Board follows the guidelines of the NZX Listing
Rules.
Information on each director can be found at
https://www.turnersautogroup.co.nz/About+Us/Board+of+Directors.html and on page 18 of the
2019 Annual Report. Director’s interests are disclosed on pages 94 to 97 of the 2019 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 is committed to a culture that actively supports diversity and
inclusiveness and prevents or eliminates discrimination in any form. We believe that diversity and
inclusion of thought enables Turners to better respond to the ever changing environment we
operate in and better serve the diverse customer and stakeholder base we are accountable to.
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.
We in Turners believe 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 our stakeholders socially.
The Turners Board adopted a revised Diversity and Inclusion Policy in September 2018, which can be
found at https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html. The Board
requires management to provide regular reporting and monitoring on diversity within the Turners
workforce.
As at 31 March 2019, the gender balance of Turners Automotive Group Limited’s directors and
Turners’ people was as follows:
Directors
Females
Males
Turners’ people – 31 March 2019
Senior leadership
Management
Turners’ people
Total
31 March 2019
31 March 2018
-
7
Females
4
38
273
315
-
6
Males
24
81
426
531
Turners’ people – 31 March 2018
Senior leadership
Management
Turners’ people
Total
Females
8
39
267
314
Males
25
87
424
536
Senior leadership is defined as being the Chief Executive Officer and senior leaders within two
reporting lines of the Chief Executive Officer. Management is defined as having management
responsibility but not a senior leader.
Board Meetings and Attendance
The Board has 11 scheduled meetings a year, and had 2 special meetings in the 2019 financial year.
The table below sets out Directors’ attendance at Board and Committee meetings during FY19. In
total, there were 13 Board meetings; 2 Audit and Risk Management Committee meetings; and 4
Lending and Credit Committee meetings.
Board
Audit and Risk
Management
Committee
Lending and
Credit Committee
Total number of meetings held
Grant Baker
Paul Byrnes
Martin Berry
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
12
13
7
12
13
12
13
PRINCIPLE 3 – COMMITTEES
2
2
2
4
4
4
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) can be found at
https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html.
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
100
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TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
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.
As the Board believes that matters of remuneration and nominations are the responsibility of the
Full Board, Turners does not consider it necessary to comply with recommendations 3.3 and 3.4 of
the NZX Code and accordingly does not have a separate remuneration committee or nomination
committee. The Company will continue to monitor best practice in the governance area and update
its policies to ensure it maintains the most appropriate standards.
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.
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 at
https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html.
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 2019 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 2019 were Matthew Harrison (Chair),
Alistair Petrie and John Roberts. It met 4 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 at https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html.
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.
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 2019, 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 at
https://www.turnersautogroup.co.nz/Investor+Centre/Presentations+and+Results.html.
Non-financial information
The Board recognises the importance of non-financial disclosure. Given the Company’s size the
Board has elected not to comply with recommendation 4.3 of the NZX Code and has not adopted 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.
102
103
TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
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.
Details of individual Directors’ remuneration are detailed on page 94 of the 2019 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 75 and Remuneration of Employees information on page 95 of the 2019
Financial Statements.
Details of Group’s Share Option Plan are detailed in Note 27 of the 2019 Financial Statements. The
options were cancelled for no consideration in June 2019.
PRINCIPLE 5 – REMUNERATION
CEO 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.
Details of directors and executives’ remuneration and entitlements for the 2019 financial year are
detailed on pages 75 and 94 of the Annual Report. The Remuneration Policy is included in section 10
of Group’s Corporate Governance Code, which can be found at
https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.htm.
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 $665,000 and was approved by shareholders at the annual meeting in
September 2018.
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
$150,000
$75,000
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
FY19
FY18
531,205
505,000
47,520
20,683
578,725
525,683
101,275
161,000
46%
100%
680,000
686,683
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. For details on the grant refer to
Note 27 of the 2019 Financial Statements. The grant was cancelled for no consideration in June
2019.
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
104
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TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
TURNERS LIMITED FY19 GOVERNANCE REPORT cont.
Audit and Risk Committee Charter, which can be found at
https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html
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.
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 included in 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 (section 9 of the Turners Automotive Group Limited Corporate
Governance Code, which can be accessed at
https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html) 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 2019, 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 56 of the 2019 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 2018 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. In accordance with NZX Code, the Board ensured that the notice of the annual meeting
was posted to Turners’ website as soon as possible and at least 28 days prior to the meeting.
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
106
107
DIRECTORY
DIRECTORY
CORPORATE DIRECTORY
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
Email enquiries: info@turnersautogroup.co.nz
Web: www.turnersautogroup.co.nz
TURNERS LIMITED
Paul Byrnes
TURNERS LIMITED
Deputy chairman
Consolidated statement of financial position for the year ended 31 March 2016
Consolidated statement of financial position for the year ended 31 March 2016
Appointed 2 February 2004
AUDITOR
Baker Tilly Staples Rodway
Martin Berry
Independent Director
Appointed 17 August 2018
Matthew Harrison
Non-executive director
Appointed 12 December 2012
Assets
Assets
Cash and cash equivalents
Cash and cash equivalents
Alistair Petrie
Non-executive director
Appointed 24 February 2016
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Trade receivables
Trade receivables
Other receivables and deferred expenses
Other receivables and deferred expenses
Inventory
Inventory
John Roberts
Finance receivables
Finance receivables
Independent Director
Appointed 1 July 2015
Reverse annuity mortgages
Reverse annuity mortgages
Antony Vriens
Property, plant and equipment
Property, plant and equipment
Independent Director
Appointed 12 January 2015
Tax receivables
Tax receivables
Deferred tax asset
Deferred tax asset
Intangible assets
Intangible assets
Total assets
SHAREHOLDER INFORMATION
Total assets
Liabilities
Liabilities
Other payables
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.
Other payables
Deferred revenue
Deferred revenue
Tax payables
Tax payables
Insurance contract liabilities
Life investment contract liabilities
Derivative financial instruments
Borrowings
Financial calendar
Derivative financial instruments
First quarterly dividend
Borrowings
Annual meeting
Life investment contract liabilities
Half year results announced
Half year report
Insurance contract liabilities
Second quarterly dividend
Third quarterly dividend
End of financial year
Annual results announced
Annual report
Final dividend
Share capital
Other reserves
Shareholders’ equity
Shareholders’ equity
Total liabilities
Total liabilities
Share capital
Other reserves
Retained earnings
Retained earnings
Total shareholders’ equity
Total shareholders’ equity
October
September
November
December
January
April
31 March
May
June
July
BANKERS
Bank of New Zealand and ASB Bank
Notes
Notes
2016
2016
$’000
$’000
2015
2015
$’000
$’000
LAWYERS
Chapman Tripp
10
10
11
11
12
12
13
13
14
14
15
15
16
16
19
19
20
20
21
21
13,810
13,810
18,455
18,455
9,575
9,575
14,156
14,156
12,339
12,339
17,350
17,350
7,394
7,394
8,984
8,984
167,598
167,598
8,505
8,505
142,827
142,827
5,946
5,946
9,734
9,734
13,253
13,253
11,108
11,108
-
-
8,319
8,319
433
433
4,024
4,024
105,338
105,338
8,532
8,532
103,595
103,595
SHARE REGISTER
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna, Auckland
Private Bag 92119, Auckland 1142, New Zealand
22
Telephone: +64 9 488 8777
362,303
362,303
22,270
22,270
22
23
23
24
24
32
32
32
32
25
25
328,972
328,972
17,790
17,790
7,476
7,476
71
71
6,049
6,049
990
990
49
49
174,816
174,816
15,629
15,629
12,688
12,688
232,491
232,491
-
-
156,995
156,995
16,378
16,378
9,260
9,260
207,970
207,970
136,127
136,127
(52)
(52)
135,294
135,294
(23)
(23)
(6,263)
(6,263)
129,812
129,812
(14,269)
(14,269)
121,002
121,002
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
328,972
362,303
328,972
STOCK EXCHANGE
For and on behalf of the Board
For and on behalf of the Board
The Company’s shares trade on the NZSX operated by the NZX under the code TRA. The minimum marketable parcel on the NZX is 100
shares.
This annual report is dated 28 June 2019 and is signed on behalf of the board by:
G.K. Baker
G.K. Baker
G.K. Baker
Chairman
Chairman Director
Chairman Director
Authorised for issue on 22 June 2016
Authorised for issue on 22 June 2016
P.A. Byrnes
P.A. Byrnes
Deputy chairman
P.A. Byrnes
Executive Director
Executive Director
108
109
The accompanying notes from part of these financial statements
The accompanying notes from part of these financial statements
110
111
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