DELIVERING
ON OUR
PLAN FOR
GROWTH
ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2021
On behalf of the Board and management of
Turners Automotive Group Limited, we are pleased
to present the Annual Report for the financial year
ended 31 March 2021.
Grant Baker
Chairman
Todd Hunter
Group Chief Executive Officer
Turners Cars North Shore
2
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
OUR VISION
OUR PLAN FOR GROWTH
FY21 AT A GLANCE
CHAIR AND CEO’S REPORT
OUR FY22 GROWTH MODEL
A GREEN SUBSCRIPTION OPPORTUNITY
EXPANDING OUR RETAIL NETWORK
FY21 FINANCIAL REVIEW
THE BOARD
THE EXECUTIVE TEAM
FINANCIALS
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5
6
8
13
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16
18
20
22
26
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Our vision is
to be NZ’s leading
ecosystem for
vehicle users.
AUTOMOTIVE RETAIL
■ New Zealand’s largest buyer and
seller of vehicles with more than
30,000 transactions every year
■ One car sold every 6 minutes
■ Branches and sites from
Whangarei to Invercargill
■ Awarded New Zealand’s number 1
most trusted vehicle dealership
brand two years in a row
■
“Bricks and Clicks” retail model,
combining our nationwide network
with the online experience
FINANCE
INSURANCE
CREDIT MANAGEMENT
■ Targeting high
quality consumer and
commercial lending –
primarily for automotive
customers
■ $322 million in gross
receivables (less
impairments)
■ More than 24,000 current
consumer loans
■ Average loan size
$12,000
■ Helping Kiwis with motor
vehicle, loan protection
and life insurance
solutions, distributed
through 943 licensed
car dealers, finance
companies & brokers, and
life insurance advisers as
well as online
■ 5,500+ policies sold
every month; 200,000+
active policies
■ $37.6 million in new
policies sold in FY21
■ Average 1,400 claims
paid out monthly; $20m
in claims paid out in FY21
■ A recognised leader in
the debt collection and
credit management
sectors, for both
corporate and SME
customers
■ $89 million in corporate
debt load in FY21; 36%
average recovery rate
■ $41 million-plus collected
from debtors in FY21
■ 2,291 SME customers
loading debt in FY21
OUR THREE-YEAR PLAN FOR GROWTH
The results of our
Simplify, De-Risk and
Growth strategies are
now becoming clear and
the changes we have
made are delivering both
market share growth
and margin expansion,
as well as de-risking the
business.
We have identified four
key areas underpinning
earnings growth and
these will be our focus
going forward.
RETAIL OPTIMISATION
Optimising the property network and customer experience
for retail consumers
VEHICLE PURCHASING DECISION-MAKING
Diagnostic tools and use of data tools to improve on the
percentage of profit making vehicles
PREMIUM LENDING
Use of comprehensive credit data to strengthen our risk
pricing strategy attracting higher quality borrowers, with
lower margins more than offset by much lower impairments
and losses
CONTINUED INVESTMENT IN DIGITAL AND
OMNI-CHANNEL CUSTOMER EXPERIENCE
Digital initiatives across all businesses to create efficiencies
and provide an enhanced customer experience
We have already found the right formula and will
continue to optimise these areas to drive further
earnings growth in all our businesses.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
FY21 AT A GLANCE
■ The used car market proved resilient, rebounding strongly
following COVID-lockdown, for the `high trust’ Turners
brand
■ Acceleration of digital strategy and rigorous cost
management saw strong profit lift in three of four divisions
■ Market share growth and margin expansion helping to
deliver record profit
■ Robust annuity earnings from Finance and Insurance
sectors validates the diversified business model
■ Auto Retail
FY21 FINANCIAL SNAPSHOT
■ Record earnings despite
a COVID-disrupted year
effectively reducing
trading to a 10-month
period
■ Revenue down 11% to
$296.5m
■ Net Profit Before Tax up
29% to $37.4m
Used vehicle market demonstrated resilience throughout
the year. Margin expansion driven by buying initiatives,
strong consumer demand and restrained supply
■ Underlying Net Profit
Before Tax up 19% to
$34.3m1
■ Finance
Continuing to grow share of premium tier, high quality
borrowers, with arrears at record lows
■
Insurance
A number of key competitive wins, risk pricing adjustment
and cost initiatives supporting operating profit growth of
50%
■ Credit Management
Decrease in revenue and profit due to market-wide
conservatism with respect to debt collection during first
phase of the pandemic, with debt load and collections
work recently reinitiated
■ Turners is in a position of strength to deliver
further on its growth plans
■ Net Profit After Tax up
28% to $26.9m
■ Record FY21 dividend of
20.0 cps (equating to a
gross yield of 8.1% per
annum based on a share
price of $3.42 as at 31
March 2021)
■ Earnings per share up 29%
to 31.4cps
Turners delivered
record earnings in
FY21, despite a
COVID-disrupted
year.
1Underlying Net Profit Before Tax is a non-GAAP measure
and excludes one-off or non-cash costs including
property sales and acquisitions, COVID-related support
and remuneration sacrifice, review and restructure costs
and profit normalisation (Turners’ estimated profit had
the business not been shut during lockdown). In FY21,
these totalled $3.1 million. A reconciliation can be viewed
on page 18.
S
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SEGMENT REVENUE
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■ 1H ■ 2H
350
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200
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150
200
100
150
50
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0
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FY17 FY18 FY19 FY20 FY21
0
FY17 FY18 FY19 FY20 FY21
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FY17 FY18 FY19 FY20 FY21
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FY17 FY18 FY19 FY20 FY21
NET PROFIT AFTER TAX
30
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FY17 FY18 FY19 FY20 FY21
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■ AUTO RETAIL ■ FINANCE ■ INSURANCE
FY17 FY18 FY19 FY20 FY21
50
■ CREDIT
FY17 FY18 FY19 FY20 FY21
0
FY17 FY18 FY19 FY20 FY21
SEGMENT OPERATING PROFIT
50
50
25
30
20
25
15
20
10
15
5
10
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FY17
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FY20 FY21
FY17
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FY18
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FY20 FY21
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FY19
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■ 1H ■ 2H
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FY18
FY19
FY20 FY21
25
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■ AUTO RETAIL ■ FINANCE ■ INSURANCE
■ CREDIT
FY20 FY21
FY19
FY18
FY17
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FY17 FY18 FY19 FY20 FY21
FY17 FY18 FY19 FY20 FY21
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FY17 FY18 FY19 FY20 FY21
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
CHAIR AND CEO’S REPORT
Many of the changes we
have made over the last
two to three years are
now starting to provide
strong traction and we
were pleased to report a
record profit and record
dividend in FY21.
The used car market proved resilient during the year and
rebounded strongly following the initial COVID-lockdowns.
We saw the benefits of the `high trust’ Turners brand during
this time as consumers turned to us for their vehicle needs.
Our team responded incredibly well to the pandemic. Their
high levels of engagement combined with the diversified
nature of the business, ensured we were well positioned as
we moved out of lockdown. “We went early” on our cost
reduction plans and a number of the changes we have made
in the business over the last few years put us in a position to
be able to take advantage of the opportunities available to us.
As a group, we have continued to build quality customer
experiences, and improve the quality of the work environment
for our people, which in turn will deliver quality returns for our
shareholders.
Margin expansion and market share gains are helping deliver
the bottom line growth that we knew was possible, and the
mix of diversified earnings is delivering the consistent growth
plus yield that shareholders are looking for.
Our company is in a real position of strength and
we are very confident in our growth plans.
STRONG FINANCIAL PERFORMANCE
Although a disrupted operating period saw FY21 revenue
down 11% to $296.5m, a strong response from the business,
including acceleration of our digital strategy and rigorous cost
management saw three of our four divisions lift profit strongly.
Only Credit Management was down on last year’s result with
a number of our corporate and bank customers reluctant to
pursue debt aggressively over the COVID-19 period.
Demonstrating the benefits of the Group’s diversified annuity
businesses, profit rose 50% in Insurance, 30% in Finance
and 11% in Automotive Retail, contributing to strong and
sustainable yield. Profit in the Credit Management business
was down 22%.
We remain committed to delivering a strong and sustainable
yield to shareholders and were pleased to deliver record
dividends of 20 cents per share in FY21. This is a payout ratio
of 64% of net profit after tax.
Our funding remains at conservative levels,
with plenty of headroom to support our growth
plans. During the year, we increased the size
of the securitisation warehouse with BNZ
from $250m to $300m which is a strong vote
of confidence from their credit analysis and
scrutiny.
OPERATING PERFORMANCE
BY DIVISION
Turners’ Auto Retail, Finance and Insurance
divisions all delivered significantly improved
earnings. Only Credit Management had an
earnings decrease year on year, which was
due to the reduced debt load during the last
12 months as many of the large banks stopped
collection actions due to the reputational risk
during COVID-19.
Record dividends
in FY21 equated to
a gross yield of
8.1% p.a*
*based on a share price of $3.42
as at 31 March 2021
AUTO RETAIL
Revenue $201.0m – 11%
Operating Profit $15.4m +11%
The Auto Retail division revenue was 11% lower
at $201.0m, reflecting fewer units, an impact of
the national and regional lockdowns. Volumes
have recovered in the second half of the year
and improving margins have been a significant
driver of profitability. Margin expansion is due
to a number of buying initiatives and a result
of tight supply of cars nationally, due to supply
constraints for new cars.
Reducing the cost base was a key priority
out of lockdown. The used car market has
demonstrated resilience, not just rebounding
after lockdowns, but through the economic
cycle.
FINANCE
Revenue $47.9m +5%
Operating Profit $15.8m +30%
The Finance division is now a significant
contributor to group earnings and has gone
from strength to strength over the last 12
months, with the highest segmental NPBT.
Revenue for FY21 was $47.9m, up 5% on last
year. NPBT was $15.8m up 30% of the year
prior, continuing to gain market share in the
high quality borrower segment of customers,
providing more than 45% of the new loans
written each month in the premium risk tier.
Targeting high-quality borrowers means arrears
are at record low levels with Consumer arrears
at 4.2% and Commercial arrears at 1.8%. Finance
has retained a COVID-19 arrears provision buffer
to allow for any unemployment increase in
future months.
INSURANCE
Revenue $41.9m -5%
Operating Profit $9.4m +50%
Insurance revenue decreased 5% to $41.9m
due to the impact of national and regional
lockdowns.
8
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Gross Written Premium (GWP) increased for the
year due to a number of key competitive wins
and risk pricing adjustments and despite the
lockdowns was 2% ahead of FY20. NPBT was
up 50% to $9.4m on higher margins, reduced
claims, lower overhead costs, and the finish
of amortising the acquired premium portfolio
as part of the Autosure acquisition from Vero
in 2017. Progress on building our distribution
over the year included two sizeable system
integration projects completed with Marac
Finance and MTF Finance. Combined claims
ratios improved from 69% in FY20 to 60% in
FY21.
CREDIT MANAGEMENT
Revenue $12.8m -29%
Operating Profit $5.1m -22%
Credit Management revenue decreased 29%
to $12.8m, due to the impact of COVID-19 and
the market-wide conservatism with respect to
debt collection during the first phase of the
pandemic. Debt load was down 47% to $119m
over the FY21 year as a result of this reputation
management. Many large corporate customers
only recently once again began initiating
collection actions. Despite revenue being down
29%, NPBT was only down 22% to $5.1m. The
division is working closely with referrers to
manage and improve customer outcomes as we
operate in an environment where bad debts are
likely to increase and debt collection services
will see increasing demand. We have now seen
lenders who were prioritising reputation over
collections, reinitiate debt load and collections
work. A similar pattern was experienced post
the GFC, before a busy collection period began.
SUSTAINABILTY
Our drive to create a better business
encompasses not only delivering returns to our
shareholders, but also supporting our people,
our communities and our environment.
As would be expected, the focus of our
sustainability strategy in FY21 was primarily
around looking after the welfare of our staff and
the needs of our customers. At no other time
has the importance of supporting our people
been more evident and staff welfare and safety
was a priority. We were able to keep many staff
working from home and financially supported
those who were unable to work.
We have implemented Peakon, an employee
engagement survey which gives our people
a regular opportunity to provide feedback
on a whole range of topics, including
employee engagement. We have seen positive
improvement in our scores since launch
and are very pleased with the high levels of
engagement right across the group.
Peakon Employee Engagement Scores
8.3
8.2
8.1
8
7.9
7.8
7.7
7.6
Aug-20
Oct-20
Dec-20
Mar-21
Across nearly 700 employees we are
averaging 8+ out of 10 to the question
“how likely is it that you would recommend
Turners Auto Group as a place to work?”.
Health and safety remains a priority and at the
start of the pandemic, we moved quickly to
create new ways of working, to keep our people
and our customers safe during this time.
We believe in doing the right thing for our
customers and our people, and are committed
to ethical and fair conduct. During FY21, we
dealt with 1,700+ customer hardship situations
in Oxford Finance and successfully rehabilitated
96% of those over the last 12 months.
We are conscious that we operate in a sector
which has a high carbon footprint and are
in the process of measuring our own carbon
impact. We are helping by removing old and
end of life cars off the road and are making a
serious investment into increasing our Turners
Subscription electric vehicle fleet, which makes
it more accessible for people to try and drive an
EV car.
We also take sustainability into account when
building new sites and premises. We are piloting
solar power installations in two of our sites and
have committed to rainwater retention systems.
LOOKING FORWARD
A STRONG FOCUS ON ORGANIC GROWTH
Our growth plan has developed over the last 24
months and we are confident our actions will
deliver continuing growth over the next three
years.
Four key areas will underpin our earnings
growth. These will be a combination of both
physical and digital investments and initiatives
are already underway.
1. Retail Optimisation across people, property
and processes.
2. Vehicle purchasing decision-making using
data and tools to help identify new sourcing
opportunities and ensure our vehicle buyers
are maximising opportunities
3. Growing premium lending within Finance
4. Continued investment in digital and
improving our omni-channel customer
experience which allows customers to
engage with us however, whenever and
wherever they want.
Our focus is on organic growth which will be
funded out of retained earnings and we are
continually assessing ways to make our business
more capital efficient.
Net Profit Before Tax Bridge ($M)
Within three years we
are targeting profit
before tax of $45
million. This would
equate to a dividend
payout of 24cps.
48
46
44
42
40
38
36
34
32
30
0.8
0.5
45.0
0.7
2.2
3.5
37.4
F Y 2 1
A uto R etail
Fin a n ce
C re dit
Insura n ce
C orp
F Y 2 4
10
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2016
Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
FY22 OUTLOOK
Trade receivables
Inventory
Notes
10
11
12
13
2016
$’000
13,810
18,455
9,575
14,156
Finance receivables
Reverse annuity mortgages
Other receivables and deferred expenses
Shareholders should expect to see a further
improved result in FY22 and, accordingly, a
corresponding increase in FY22 dividends.
Property, plant and equipment
Deferred tax asset
Tax receivables
167,598
11,108
8,505
9,734
4,024
14
20
16
19
15
-
Intangible assets
105,338
21
Total assets
FY22 to date has seen a continuation of the positive
Liabilities
momentum Turners has enjoyed over the past 10 months.
Other payables
Deferred revenue
In Automotive Retail, we are expecting the supply-constrained
Tax payables
market to continue for 12-18 months due primarily to impacts
Derivative financial instruments
on the new car supply chain. New lending in the finance
Borrowings
business will be strong and our expectation is that arrears
Life investment contract liabilities
will continue to improve, as the weighting towards newly
Insurance contract liabilities
Total liabilities
introduced premium loans grows as a percentage of the book.
In Insurance, we expect new policy sales to be buoyant and
Shareholders’ equity
claims ratios to stabilise. Lastly, in Credit Management, debt
Share capital
recovery is returning as corporate customers start to get back
Other reserves
to business as usual.
Retained earnings
Total shareholders’ equity
The Turners business and, in particular, the Auto Retail and
Total shareholders’ equity and liabilities
Credit Management businesses are highly cash generative
which gives us the opportunity to deliver growth + yield for
shareholders.
We have full confidence that our growth plans will support our
For and on behalf of the Board
continued positive momentum in FY22. We look forward to
delivering another year of value to our people, our customers
and our shareholders.
22
23
24
32
32
25
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
Grant Baker
G.K. Baker
Chairman
Chairman Director
Authorised for issue on 22 June 2016
Todd Hunter
Group Chief Executive Officer
P.A. Byrnes
Executive Director
The accompanying notes from part of these financial statements
2015
$’000
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
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
We have identified key work
streams in each of our divisions.
In Auto Retail, stock acquisition
is the single most important area
of investment. Strategically this
is where our competitive moat
becomes even wider. In Finance,
simplifying and automating as
much of our lending process
is the number one priority. In
Insurance, continuing to expand
our distribution is the top of the
work stream list; and in Credit
Management, investing in data
initiatives to improve contact
rates will be the most important
area we will be working on.
OUR FY22 GROWTH MODEL
AUTO RETAIL
■ Stock acquisition – secure the right cars at the right price
■ Reduce risk of mis-pricing through the implementation
and capture of vehicle diagnostic data
■ Continue to invest in promoting the Turners brand - build
market share
■ Retail optimisation – developing and launching Rotorua
and Nelson
FINANCE
■ Expand distribution
■ Keep improving credit quality through data driven risk
pricing
■ Simplify and automate lending process
■ Reduce early settlements
INSURANCE
■ Expand distribution through partnership strategy
and sales integration into other businesses
■ Cost and claims management discipline
■ Use of data analytics to further enhance risk pricing
and support market share growth
CREDIT MANAGEMENT
■ Grow SME debt load
■ Build on data initiatives to drive up contact rates
with debtors
■ Continue to develop Debtor self service portal,
Xero/MYOB
■ Continue working closely with corporates to
manage reputational risk
12
13
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
A GREEN SUBSCRIPTION OPPORTUNITY
Consumer interest in
Turners Subscription
platform is steadily
building and the addition
of electric vehicles is
proving an added bonus
for those looking for a
‘greener’ drive.
Turners now has more than twenty electric vehicles available
for subscription from as low as $112 per week. The initial
ten vehicles were co-funded through the Energy Efficiency
and Conservation Authority (EECA) low emission vehicles
contestable fund, a programme designed to accelerate EV
uptake in New Zealand.
Turners Subscription provides customers with the opportunity
to try cars that they ordinarily may not consider purchasing,
such as electric vehicles. We know with EVs the large capital
outlay is a major impediment to uptake.
Subscription is a great way to make EVs far
more accessible to more Kiwis and allow people
to really experience an EV and assess whether it
will work for them before committing to the full
cost of purchase.
The Saunders-Smeath family from Northland
were amongst the first in New Zealand to
make use of an innovative new Electric Vehicle
subscription service available from Turners.
“We’ve learnt a lot about EV’s and their
potential with regards to sustainability
opportunities now and into the future,” said
Chris Saunders. “We had some preconceived
ideas about what it might be like, so the chance
to drive the vehicle for an extended time has
been quite an eye-opener.”
Asked whether they would consider buying an
EV, Chris said “Yes, after the experience we’ve
had, we certainly would consider doing so.”
Turners Subscription launched in October 2020
and uptake has been growing from customers
looking for the flexibility and convenience that a
subscription service offers.
Instagram https://www.instagram.com/
turnerssubscription/
Website www.turnerssubscription.co.nz
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15
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Cars Westgate
EXPANDING OUR RETAIL NETWORK
We continue to optimise our
Auto Retail network as we
aim to be closer and more
accessible to our customers
and progress the transition
from wholesale to retail. We
regularly assess new regions
and sites and see a significant
opportunity in provincial
New Zealand.
In FY21, we expanded our portfolio as follows:
■ Dunedin (May 20) – replaced an existing site with a
new site almost double the size (9,000m2) and created
a much better retail experience for customers.
■ Westgate Auckland (Oct 20) – Opened a new retail-
optimised site in the up and coming development area
of Westgate in West Auckland.
■ Otahuhu Auckland (Jan 21) – established a new retail
site in Otahuhu as part of the reconfiguration of the
Auckland footprint which included exiting the large
wholesale facility at Penrose.
We have been building up a portfolio of
property assets within Turners Automotive
Group over the last seven years. We have
been able to leverage some of the insurance
company reserves to invest in these properties
to support the Auto Retail division. The
developed properties are on the balance sheet
at a cost of $47.3m.
Based on valuations received at FY21 year
end, the conservative market valuation of the
developed properties is now at $61.3m which
represents an unrealised gain of $14m. We
have recently purchased two new properties to
develop in Rotorua and Nelson which will come
onstream in FY22. These will take our property
portfolio to 9 sites.
Site
$Millions
Developed sites
John Seddon Drive, Porirua*
160 Roscommon Road, Auckland*
Walton Street, Whangarei*
Francella St, Christchurch*
Archers Road, Auckland
Mt Richmond, Auckland
Matipo Lane, Palmerston North
Total Developed sites
Development sites (settled in FY22)
Nelson (purchased in March 2021)
Rotorua (purchased in April 2021)
*Properties owned by DPL Insurance Limited
Original
Cost
31-Mar-21
Valuation
Unrealised
Gain
9.7
10.7
6.5
2.7
17.0
13.6
1.1
61.3
1.9
4.1
1.1
0.9
3.4
2.3
0.3
14.0
7.8
6.6
5.4
1.8
13.6
11.3
0.8
47.3
4.0
5.5
16
17
FY21 FINANCIAL REVIEW
This financial
commentary should
be read in conjunction
with the full financial
statements and Notes to
the Financial Statements
in the FY21 Annual
Report.
REVENUE
The disrupted operating period saw FY21 revenue down 11%
to $296.5m. Auto Retail, Finance and Insurance sales were
directly impacted by the hard lockdown in April/May, and
the later regional lockdowns to a lesser extent. The used car
market recovered strongly following lockdown, with a positive
impact on revenue in the second half for all three businesses.
The Finance book also reflects better quality business written
at lower interest rates. Credit management revenue impacted
by lack of debt load from major banks as they managed
reputational risk.
PROFIT
Turners Net Profit Before Tax of $37.4m was a 29% increase on
the prior year.
Demonstrating the benefits of the Group’s diversified annuity
businesses, profit rose 50% in Insurance, 30% in Finance and
11% in Automotive Retail. Profit in the Credit Management
business was down 22%.
Auto Retail’s result was underpinned by stronger commercial
business and improved margins on owned inventory. Finance
was driven by writing higher quality new business and the
resulting improved arrears performance; and Insurance result
reflects improvement in claims ratios and cost base.
Net Profit After Tax was up 28% to $26.9m.
Underlying Net Profit Before Tax was up 19% to $34.3m2.
While there were a number of COVID-related impacts to profit
in 1H21, there were no one-off adjustments in 2H21. Turners’
run rate is expected to continue at this rate of $3 million-plus
in operating profit per month.
$MILLIONS
PERIOD
Profit before tax actual
Oxford strategic review costs
Property exit and lease adjustments*
NZ Government COVID Support
Staff/Directors Rem Sacrifice
Employee restructure costs
Profit normalisation (Apr/May 20)
Underlying operating result
H2 Operating Profit Run Rate
H1
H1
H1
H1
H1
FY21
37.4
-
(1.3)
(5.1)
(1.0)
0.8
3.5
34.3
18.7
VAR
29%
FY20
29.1
0.2
(0.5)
-
28.8
19%
*A number of properties have been exited as part of Turners’ retail optimisation and cost management plan. Property
adjustment includes IFRS 16 adjustment of $1.9m benefit offset by property exit costs of $1.3m, and rent relief of $700k
2Underlying Net Profit Before Tax is a non-GAAP measure and excludes one-off or non-cash costs including property sales and acquisitions, COVID-
related support and remuneration sacrifice, review and restructure costs and profit normalisation (Turners’ estimated profit had the business not been
shut during lockdown). In FY21, these totalled $3.1 million.
BALANCE SHEET
The balance sheet has the capacity to support growth.
The cash balance has now reduced to ‘normal’ levels following the precautionary increase in cash
held in April and May 2020 due to the COVID pandemic.
Inventory reduction is due to improved stock turn and management of aged stock.
Growing property portfolio with completed sites valued at $61.3 million at FY21 year end (on the
balance sheet at cost of $47.3m).
The change in Finance receivables reflects quality ledger growth in Oxford.
The property, plant and equipment increase is due to the development of the new site in Otahuhu
and the purchase of a site in Nelson.
Borrowings reflect some de-leveraging that occurred post lockdown, offset by funding to support
the growth in Oxford finance lending.
$MILLIONS
FY21
FY20
Cash and cash equivalents
Financial assets at fair value
Inventory
Finance receivables
Property, plant and equipment
Right of use Assets
Intangible asset
Other assets
Total Assets
Borrowings
Other payables
Deferred tax
Insurance contract liabilities
Lease liabilities
Other Liabilities
Total Liabilities
Shareholders Equity
12
70
30
330
60
24
166
26
718
340
38
11
53
29
14
485
233
33
65
44
293
53
25
167
29
708
350
28
10
51
33
13
485
223
FUNDING MIX
Turners’ funding remains at conservative levels and is optimised to support growth plans.
Three quarters of debt (77%) relates to finance receivables, of which nearly a quarter of those
receivables are supported by Turners’ equity. This means we have plenty of capacity from a capital and
funding point of view to keep Oxford Finance growing. Oxford Finance has an equity to total assets
ratio of 23% and currently has capacity to underpin a further 18 months growth in the finance book.
The Securitisation funding facility limit was increased to $300m (including capital contribution from
TRA), to support growth in Oxford.
$MILLIONS
LIMIT
DRAWN
UNDRAWN
Receivables – Securitisation (BNZ)
Receivables – Banking Syndicate (ASB/BNZ)
Receivables – MTF
Corporate & Property (incl Bond)
Inventory (ASB)
Totals
276
50
3
95
30
239
20
3
69
9
454
340
37
30
-
26
21
114
18
19
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
THE BOARD
GRANT BAKER
Non-executive Chairman | Appointed September 2009
Grant Baker has wide experience at a senior level in both public and
private New Zealand companies. He has been involved in a number of
successful ventures, including 42 Below Vodka and Trilogy International.
He is chairman on NZX listed Me Today Limited and was chairman of 42
Below Vodka and Trilogy International.
With a 7.54% shareholding, Grant is a long term committed investor in
Turners Automotive Group and has been Chairman of Turners Automotive
Group since September 2009. As an avid collector of specialist vehicles
and a motor racing enthusiast, both as a competitor and as a backer
of young up and coming drivers. He is currently chairman of the Liam
Lawson Supporters Partnership and is passionate about the strong
Turners brand and its focus on cars.
PAUL BYRNES
Deputy Chairman and Independent 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 2.90%
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 7.65% combined holding in the company. Matthew is a self-
confessed “car nut” and has collected and owned a variety of special
cars over the years. He is very enthusiastic about the future of Turners
and, given his large shareholding and love for automobiles, is strongly
committed to seeing Turners continue its successful journey.
ALISTAIR PETRIE
Non-executive Director | Appointed February 2016
Alistair Petrie has over 15 years of senior management experience in both
private and listed companies in the agribusiness sector. He has extensive
knowledge in sales and marketing in both international and domestic
environments, which is particularly useful for some of the challenges
and opportunities Turners has importing vehicles from Japan. He has a
number of directorships with companies that have a focus on growth
and innovation, and he represents the interests of Bartel Holdings, which
has a 11.17% 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 entrepreneurial ventures
where he has successfully built, acquired and exited several companies
with values in excess of USD $600m. Martin later founded and now runs
venture capital firm Launcho Ventures out of Singapore investing in early
stage tech companies.
20
21
THE EXECUTIVE TEAM
TODD HUNTER
Group Chief Executive
Officer
AARON SAUNDERS
Group Chief Financial Officer
SIMON GOULD-THORPE
Group Chief Information
Officer
GREG HEDGEPETH
CEO Turners Automotive
Retail
JAMES SEARLE
Group General Manager
Insurance
JEREMY ROOKE
Group Chief Digital Officer
MATTHEW GANNAWAY
CEO EC Credit Control
MARYANNE BURNS
Group General Manager
People & Culture
GUY BRYDEN
COO Oxford Finance
TODD HUNTER
Group 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 utilises
leading technologies and follows best practice
IT management including DevOps and Agile
methodologies.
GREG HEDGEPETH
CEO Turners Automotive Retail
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.
With a Bachelor of Commerce majoring in
marketing from Auckland University he has
successfully completed numerous marketing
roles, followed by a number of years working
for Saatchi & Saatchi in NZ and other
advertising agencies overseas. Greg brings a
strong strategic sales and marketing focus to
his current role.
JAMES SEARLE
Group General Manager Insurance
James is responsible for the sustainable and
profitable growth of DPL Insurance and leads
the company’s focus on delivering outstanding
outcomes for our customers. James has over
30 years’ experience in the New Zealand
insurance industry with his previous roles
encompassing all aspects of insurance; sales
and marketing, intermediated distribution
management and underwriting including
portfolio acquisitions. James joined Turners
Automotive Group in 2011 and holds a Diploma
of Business (Marketing) from Auckland
University.
JEREMY ROOKE
Group Chief Digital Officer
Jeremy joined Turners Automotive Group in
2009. His role involves leading the application
of new technologies, business models
and channels to transform Turners’ digital
capabilities.Jeremy brings over 20 years of
IT experience having worked on several large
transformative IT programmes in NZ and
Australia, most notably in the insurance sector.
Jeremy holds degrees in Law and Arts from
Auckland University.
MATTHEW GANNAWAY
CEO EC Credit Control
Matt joined EC Credit Control in 2003 and has
worked in many different areas of the business
prior to becoming CEO in 2021. He holds a
business degree from Massey University and
has a strong technology focus to drive better
outcomes. With a long career in the credit
management industry, Matt brings a wealth of
experience and expertise.
MARYANNE BURNS
Group General Manager People & Culture
Maryanne joined Turners in 2019. She has 20
years of experience as a Human Resources
Professional in a broad range of industries
in New Zealand. These include automotive,
financial services, insurance, environmental
solutions, importation and distribution.
Maryanne has led multiple transformational
people projects across a number of businesses.
GUY BRYDEN
COO Oxford Finance
Guy Joined Turners in 2018, and is responsible
for Finance and Operations at Oxford Finance.
Before joining Turners Guy held a number
of roles in the banking industry, including 3
years working in London for Mizuho Bank
in corporate finance. Guy is a chartered
accountant and holds a Bachelor of Commerce
from Otago University.
22
23
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
FINANCIAL REPORTS
FOR THE YEAR ENDED
31 MARCH 2021
26 Independent Auditor’s Report
33 Consolidated Statement of Comprehensive Income
34 Consolidated Statement of Changes in Equity
35 Consolidated Statement of Financial Position
36 Consolidated Statement of Cash Flows
37 Notes to the Financial Statements
Turners Cars Westgate
24
25
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2021
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2021
26
27
26 Level 9, 45 Queen Street, Auckland 1010PO Box 3899, Auckland 1140New Zealand T:+64 9 309 0463E: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 33 to 86, which comprise the consolidated statement of financial position as at 31 March 2021, 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 2021, 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 the Group. Our audit work has been undertaken so that we might state to the Shareholders of the Group those matters 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 the Shareholders of the Group as a body, 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) International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (including International Independence Standards) (‘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. 27 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 matter How our audit addressed the key audit matter Impairment testing of Goodwill and Other Indefinite Life Intangible Assets As disclosed in Note 22 of the Group’s consolidated financial statements the Group has goodwill of $92.5m allocated across four of the Group’s cash-generating units (‘CGUs’) and brand assets of $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 four CGUs as at 31 March 2021. This annual impairment test involves complex and subjective estimation and judgement by Management on the future performance of the CGUs, discount rates applied to the future cash flow forecasts, the terminal growth rates, and future market and economic conditions. Management has also engaged an external valuation expert to assist in the annual impairment testing of the four CGUs. Our audit procedures among others included: •Understanding the Group’s internal controls relevant to the accounting estimates used to determine the recoverable value of the Group’s CGUs. •Evaluating Management’s determination of the Group’s four CGUs based on our understanding of the nature of the Group’s business and the economic environment in which the segments operate. We also analysed the internal reporting of the Group to assess how the CGUs are monitored and reported. •Evaluating the competence, capabilities, objectivity and expertise of Management's external valuation expert and the appropriateness of theexpert's work as audit evidence for the relevant assertions. •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 (including the consideration of the impact of the COVID-19 pandemic). Procedures included: oEvaluating the logic of the value-in-use calculations supporting Management’s annual impairment test and testing the mathematicalaccuracy 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 actualhistorical 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 the forecasts, inputs and any underlying assumptions with a view to identifying Management bias; oEvaluating Management’s sensitivity analysis for reasonably possiblechanges in key assumptions; and oPerforming our own sensitivity analyses for reasonably possible changes in key assumptions, the two main assumptions being: thediscount rate and forecast growth assumptions. •Evaluating the related disclosures about indefinite life intangible assetswhich are included in Note 22 in the Group’s consolidated financial statements. 26 Level 9, 45 Queen Street, Auckland 1010PO Box 3899, Auckland 1140New Zealand T:+64 9 309 0463E: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 33 to 86, which comprise the consolidated statement of financial position as at 31 March 2021, 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 2021, 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 the Group. Our audit work has been undertaken so that we might state to the Shareholders of the Group those matters 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 the Shareholders of the Group as a body, 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) International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (including International Independence Standards) (‘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. TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2021
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2021
28
29
28 Key audit matter How our audit addressed the key audit matter Valuation of Finance Receivables As disclosed in Note 14 of the Group’s consolidated financial statements, the Group has finance receivable assets of $330.2m. 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 expected credit losses and the amount of those expected credit losses. Management has prepared expected credit losses models to complete its assessment of expected credit losses for the Group’s finance receivables as at 31 March 2021 (including a COVID-19 related overlay of $1.4m). This assessment involves complex and subjective estimation and judgement by Management on credit risk and the future cash flows of the finance receivables. Our audit procedures among others included: •Understanding the Group’s internal controls relevant to the accounting estimates used to determine the recoverable value of the Group’s finance receivables. •Evaluating the design and operating effectiveness of the key controls over finance receivable origination, ongoing administration and expected credit losses model data and calculations. •Evaluating and challenging the logic, key assumptions, and calculation of Management’s expected credit losses provision for impairment for each finance receivable, examining those finance receivables and forming our own judgements as to whether the expected credit losses provision for impairment recognised by Management is appropriate (including the consideration of the impact of the COVID-19 pandemic). Procedures included: oAgreeing a representative sample of finance receivables to the signed loan agreement, client acceptance documents, mortgage documents, and registered valuations performed on acceptance; oInspecting security documentation to ensure that the and its subsidiaries holds a valid charge on security; oEvaluating the logic of the discounted cash flow calculations supporting Management’s expected credit losses provision for impairment and testing the mathematical accuracy of these calculations; oEvaluating the key assumptions and inputs into these discounted cash flow calculations (including the consideration of the impact of the COVID-19 pandemic on key assumptions); and oInspecting the borrowers' payment history for indicators of difficulties in the borrowers' ability to meet the loan obligations (including the consideration of the impact of the COVID-19 pandemic on key assumptions). •Evaluating the selection of estimation methods, inputs and any underlying assumptions with a view to identifying Management bias. •For individually assessed finance receivables, examining those finance receivables and forming our own judgements as to whether the expected credit losses provision recognised by Management was appropriate (including the consideration of the impact of the COVID-19 pandemic on the expected credit losses provision). •For the collectively assessed finance receivables, evaluating and challenging the logic of Management’s expected credit losses models and the key assumptions used with our own experience (including the consideration of the impact of the COVID-19 pandemic on key assumptions). Also, testing key inputs used in the expected credit losses models and the mathematical accuracy of the calculations within the models. •Evaluating the changes made to the provisioning model to capture the effect of the changing economic environment at 31 March 2021 compared to the economic environment at the date when the historical data used to determine the expected credit losses was collected (described in Note 4 to the Group’s consolidated financial statements). •Evaluating the related disclosures (including the accounting policies and accounting estimates) 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. 29 Key audit matter How our audit addressed the key audit matter Valuation and completeness of Insurance Contract Liabilities As disclosed in Note 35 of the Group’s consolidated financial statements the Group has insurance contract liabilities of $53.1m. 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 2021. Our audit procedures among others included: •Understanding and evaluating the Group’s internal controls relevant to theaccounting estimates used to determine the valuation of the Group’s insurance policyholder liabilities. •Evaluating the design and operating effectiveness of the key controls over insurance contract origination, ongoing administration, claims management and reporting and the integrity of the related data. •Evaluating the competence, capabilities, objectivity and expertise of Management's external actuarial expert and the appropriateness of theexpert'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; and othe Group’s actuarial methods and assumptions to assist us inchallenging the appropriateness of actuarial methods and assumptions used by Management. •Evaluating the selection of methods and assumptions with a view to identify Management bias. •Evaluating the related disclosures (including the accounting policies and accounting estimates) about insurance contract liabilities, and the risks attached to them, which are included in Note 35 in the Group’s consolidated financial statements. Other Information The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 31 March 2021 (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. TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2021
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2021
30
31
30 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. 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, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial 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 thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the Group’s internal control.Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand 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 conditionsthat may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude thata material uncertainty exists, we are required to draw attention in our auditor’s report to the relateddisclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify ouropinion. 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.31 Evaluate the overall presentation, structure and content of the consolidated financial statements, includingthe disclosures, and whether the consolidated financial statements represent fairly the underlyingtransactions and events in a manner that achieves fair presentation.Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible 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. 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 2021 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 24 June 2021 to confirm the information included in the audited consolidated financial statements presented on this website. TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2021
Turners Automotive Group Limited
Consolidated statement of comprehensive income for the year ended 31 March 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2021
Notes
2021
$’000
2020
$’000
Revenue
Other income
Cost of goods sold
Interest expense
Impairment provision expense
Subcontracted services expense
Employee benefits
Commission
Advertising expense
Depreciation and amortisation expense
Systems maintenance
Claims
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
Revaluation of financial assets at fair value through OCI
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
8
9
9
296,512
7,015
332,174
500
(116,036)
(135,003)
(11,266)
(3,986)
(14,888)
(52,023)
(12,721)
(2,349)
(11,418)
(2,365)
(21,843)
(17,257)
37,375
(10,511)
26,864
1,023
(430)
33
626
(14,853)
(6,044)
(17,149)
(55,458)
(13,368)
(2,743)
(11,919)
(1,747)
(25,952)
(19,373)
29,065
(8,112)
20,953
(447)
(310)
(12)
(769)
27,490
20,184
31.40
24.35
31.54
24.35
The accompanying notes form part of these financial statements
32
The accompanying notes form part of these financial statements
33
32 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 N S de Frere. BAKER TILLY STAPLES RODWAY AUCKLAND Auckland, New Zealand 24 June 2021 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Consolidated statement of changes in equity for the year ended 31 March 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2021
Revaluation
of financial
assets at Cash flow
Share Translation
fair value
hedge Retained
options
reserve through OCI
reserve
earnings
$’000
1,027
$’000
(47)
$’000
(528)
$’000
19,527 226,374
Share
capital
$’000
206,395
Notes
-
-
-
-
-
-
-
-
(5,666)
(5,666)
(5,666)
(5,666)
(528)
13,861 220,708
Balance at 31 March 2019
Change in accounting policies
Impact of the implementation of NZ IFRS 16
Balance at 1 April 2019 (restated)
206,395
1,027
(47)
Transactions with shareholders in their capacity as owners
Capital contributions (net of issue costs)
Capital buy back
Cancellation of options
Dividend paid
28
28
29
30
97
(3,192)
-
-
1,027
(1,027)
-
-
Total transactions with shareholders in their capacity as owners
(2,068)
(1,027)
Comprehensive income
Profit
Other comprehensive income
Total comprehensive income for the year, net of tax
-
-
-
Balance at 31 March 2020
204,327
Transactions with shareholders in their capacity as
owners
Capital buy-back
Employee share based payments
Dividend paid
28
29
30
(30)
-
-
Total transactions with shareholders in their capacity as owners
(30)
Comprehensive income
Profit
Other comprehensive income
Total comprehensive income for the year, net of tax
-
-
-
-
-
-
-
-
255
-
255
-
-
-
-
-
-
-
-
(12)
(12)
(59)
-
-
-
-
-
33
33
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
97
(3,192)
(14,742)
(14,742)
(14,742)
(17,837)
20,953
20,953
-
(769)
20,953
20,184
(310)
(310)
(447)
(447)
(310)
(975)
20,072 223,055
-
-
-
-
-
-
-
-
-
-
(430)
(430)
1,023
1,023
-
-
(30)
255
(17,200)
(17,200)
(17,200)
(16,975)
26,864
26,864
-
26,864
626
27,490
Total
$’000
Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
10
Notes
Notes
11
Turners Automotive Group Limited
Consolidated statement of financial position as at 31 March 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the year ended 31 March 2021
TURNERS LIMITED
TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2016
Consolidated statement of financial position for the year ended 31 March 2016
2021
Notes
$’000
2020
$’000
Assets
Inventory
Trade receivables
Finance receivables
Financial assets at fair value through profit or loss
Trade receivables
Assets
Inventories
Cash and cash equivalents
Cash and cash equivalents
Finance receivables
Financial assets at fair value through profit or loss
Other receivables, deferred expenses and contract assets
Trade receivables
Derivative financial instruments
Inventory
Financial assets at fair value through OCI
Finance receivables
Reverse annuity mortgages
Other receivables and deferred expenses
Property, plant and equipment
Reverse annuity mortgages
Right-of-use assets
Property, plant and equipment
Property, plant and equipment
Investment property
Tax receivables
Intangible assets
Deferred tax asset
Deferred tax asset
Total assets
Intangible assets
Intangible assets
Other receivables and deferred expenses
Reverse annuity mortgages
Tax receivables
Liabilities
Tax payables
Total assets
Total assets
Liabilities
Other payables
Liabilities
Contract liabilities
Other payables
Other payables
Deferred tax
Deferred revenue
Deferred revenue
Tax payables
Tax payables
Derivative financial instruments
Derivative financial instruments
Borrowings
Borrowings
Lease liabilities
Life investment contract liabilities
Life investment contract liabilities
Insurance contract liabilities
Insurance contract liabilities
Total liabilities
Total liabilities
Derivative financial instruments
Borrowings
Life investment contract liabilities
Insurance contract liabilities
Total liabilities
Shareholders’ equity
Share capital
Shareholders’ equity
Shareholders’ equity
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 and liabilities
Total shareholders’ equity and liabilities
Total shareholders’ equity and liabilities
Total shareholders’ equity
12
13
14
15
16
17
19
20
21
22
23
24
25
26
27
35
35
10
10
11
11
12
12
13
13
14
14
15
15
16
16
19
19
20
20
21
21
22
22
23
23
24
24
32
32
32
32
25
25
28
2016
2016
11,867
$’000
$’000
70,396
7,155
30,189
13,810
13,810
330,165
18,455
18,455
9,575
9,575
14,156
14,156
8,116
40
570
167,598
167,598
8,505
8,505
4,152
9,734
9,734
60,258
23,559
11,108
11,108
5,950
-
-
166,034
4,024
4,024
718,451
105,338
105,338
2015
2015
32,771
$’000
$’000
64,988
8,609
44,371
12,339
12,339
293,037
17,350
17,350
7,394
7,394
8,984
8,984
142,827
142,827
5,946
5,946
8,572
-
1,000
4,913
52,788
24,850
13,253
13,253
8,319
8,319
433
5,650
433
166,843
8,532
8,532
708,392
103,595
103,595
362,303
362,303
328,972
328,972
38,243
28,048
2,313
11,297
22,270
22,270
6,049
6,049
990
3,453
990
49
49
339,611
-
174,816
174,816
15,629
15,629
28,747
12,688
12,688
8,116
232,491
232,491
53,101
2,085
10,080
17,790
17,790
7,476
7,476
71
2,772
71
-
985
-
350,364
156,995
156,995
16,378
16,378
9,260
9,260
32,511
7,072
207,970
207,970
51,420
484,881
485,337
136,127
136,127
(52)
204,297
(52)
(6,263)
(6,263)
(463)
135,294
135,294
(23)
(14,269)
(14,269)
204,327
(23)
(1,344)
129,812
129,812
29,736
362,303
362,303
233,570
121,002
121,002
20,072
328,972
328,972
223,055
718,451
708,392
Balance at 31 March 2021
204,297
255
(26)
(740)
48
29,736 233,570
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
P.A. Byrnes
P.A. Byrnes
P.A. Byrnes
Executive Director
Executive Director
Deputy chairman
34
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
35
Authorised for issue on 22 June 2016
Authorised for issue on 22 June 2016
Authorised for issue on 24 June 2021
The accompanying notes from part of these financial statements
The accompanying notes from part of these financial statements
The accompanying notes form part of these financial statements
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Consolidated statement of cash flows for the year ended 31 March 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Net cash (outflow)/inflow from operating activities
32
10,878
(32)
Cash flows from operating activities
Interest received
Receipts from customers
Receipt of government subsidies
Interest paid - borrowings
Interest paid - lease liabilities
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
Cash flows from investing activities
Proceeds from sale of property, plant, equipment and intangibles
Purchase of property, plant, equipment and intangibles
Purchase of investments
Sale of investments
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Net bank loan advances/(repayments)
Principal elements of lease payments
Buy back of shares
Dividend paid
Net cash inflow/(outflow) from financing activities
Net movement in cash and cash equivalents
Add opening cash and cash equivalents
Closing cash and cash equivalents
Represented By:
Cash at bank
Closing cash and cash equivalents
Notes
2021
$’000
2020
$’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.
41,598
256,676
5,247
(9,193)
(1,461)
(222,063)
(8,166)
43,874
289,275
-
(10,822)
(2,034)
(285,795)
(11,460)
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).
62,638
23,038
The financial statements were authorised for issue by the directors on 24 June 2021.
(48,654)
1,134
(4,090)
(150)
(27,826)
3,964
704
88
(51,760)
(23,070)
563
(8,641)
-
234
(7,844)
(392)
(6,346)
-
(17,200)
(23,938)
(20,904)
32,771
11,867
913
(19,245)
(1,310)
473
(19,169)
61,038
(6,998)
(3,192)
(14,742)
36,106
16,905
15,866
32,771
2. BASIS OF PREPARATION
2.1 Statement of Compliance
These financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP').
They comply with New Zealand Equivalents to International Financial Reporting Standards ('NZ IFRS') and other applicable Financial
Reporting Standards, as appropriate for profit oriented entities. These financial statements also comply with International Financial Reporting
Standards ('IFRS').
2.2 Basis of measurement
The financial report has been prepared under the historical cost convention, as modified by revaluations for certain classes of assets and
liabilities to fair value and life insurance contract liabilities and related assets to net present value as described in the accounting policies
below.
2.3 Functional and Presentation Currency and Rounding
These financial statements are presented in New Zealand Dollars ($) which is the Company's functional currency. All values are rounded to
the nearest thousand ($000), except when otherwise indicated.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been
applied consistently by Group entities.
3.1 Adoption of new and revised Standards and Interpretations
Except for the early adoption of COVID-19 Rent Concessions (Amendment to NZ IFRS 16), no new standards and amendments and
interpretations to existing standards came into effect during the current accounting period beginning on 1 April 2020 that materially impacted
the Group’s financial statements and require retrospective adjustment.
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 2020
The following relevant standards and interpretations have been issued at the reporting date but are not yet effective.
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 amortised 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.
10
11,867
32,771
The effective date is annual reporting periods beginning on or after 1 January 2023.
11,867
32,771
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 2023.
The accompanying notes form part of these financial statements
3.3 Basis of consolidation
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.
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.
36
The accompanying notes form part of these financial statements
37
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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 translated to the functional currency
at the exchange rate at that date. The foreign currency gains or losses 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 translated 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 translation 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 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 full payment or approval of financing.
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. There is no material amount of variable consideration
Sales
with agreed
‑
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 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
rebates 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 when the service is rendered. Payment is either deducted from the monies collected or
raised as trade receivable. Proceeds received are recognised as a contract liability 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 proceeds received from voucher sales are 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.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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.
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.
Under life investment contracts deposits are received from policyholders which are then invested on behalf of the policyholders and recognised
as Financial assets at fair value through profit or loss. 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 Government grants
Government grants are not recognised as income until there is reasonable assurance that the Group will comply with the conditions attaching
to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in
which the Group recognises as expenses the related costs for which the grants are intended to compensate.
3.5.5 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.
38
39
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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.
•
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.
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 expected credit losses. The gross carrying amount of a financial asset is the amortised cost of a financial asset
before adjusting for any expected credit losses.
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
•
40
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 equity securities, unitised funds, fixed interest securities and term deposits.
(iii) Finance assets at FVTOCI
Equity securities which are not held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category.
These are strategic investments and the Group considers this classification to be more relevant.
On disposal of these equity securities, any related balance within the FVTOCI reserve is reclassified to retained earnings.
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
month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial
instrument. In contrast, 12
instrument that are possible within 12 months after the reporting date. Homogeneous loans are assessed on a collective basis (collective
impairment provision) and non-homogeneous loans are assessed individually (specific impairment provision).
‑
‑
(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 such as:
•
•
actual or expected changes in economic indicators (i.e. change in employment rates); and
‑
for non-homogeneous loans significant changes in the value of the collateral supporting the loan or changes in the operating results
of the borrower.
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 another default criteria is more appropriate.
‑
impaired financial assets
(iii) Credit
A financial asset is credit
asset have occurred. Evidence that a financial asset is credit
a)
b) a breach of contract, such as a default or past due event (see (ii) above); and
c)
significant financial difficulty of the borrower;
‑
‑
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial
impaired includes observable data about the following events:
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.
‑
41
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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, after collection/realisation costs, 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 gains or losses 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.
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.
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.
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.
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
•
‑
‑
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.
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 foreign currency and 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.
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
Hedge effectiveness is determined using the critical terms method (‘CTM’). Under the CTM, the critical terms of the derivative instruments
must match or be closely aligned with the critical terms of the hedged item. Hedge ineffectiveness is measured by using the hypothetical
derivative method. This method compares the hedging instrument to a hypothetical derivative (in which the fair value is determined by the
credit-risk free benchmark rate) and the ineffective portion is measured by the extent to which the cumulative change in fair value of the
hedging instrument exceeds the change in fair value of the hypothetical derivative (in absolute terms).
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
and accumulated in equity are removed from equity and included in the initial measurement of the cost of the non
financial asset or
financial liability. This transfer does not affect other comprehensive income. Furthermore, if the Group expects that some or all of the loss
non
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
‑
‑
‑
‑
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.
for
trading, or (iii) designated as
‑
‑
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
42
43
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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.
3.7 Right-of-use assets and lease liabilities
A lease is a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group leases various offices, warehouses, retail stores and equipment. Rental contracts are typically made for fixed periods of 3 to 8
years but may have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range of
different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the
Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis consistent with the estimated consumption of
the economic benefits embodied in the underlying asset.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payment that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in
a similar economic environment with similar terms and conditions. Subsequent to initial recognition, lease liabilities are measured at the
present value of the remaining lease payments (the lease payments that are unpaid at the reporting date). Lease liabilities are remeasured to
reflect changes to lease terms, changes to lease payments and any lease modifications not accounted for as separate leases.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Subsequent to initial recognition, lease assets are measured at cost (adjusted for any remeasurement of the associated lease liability), less
accumulated depreciation and any accumulated impairment loss. Right-of-use assets are assessed for impairment whenever events or
circumstances arise that indicate the asset may be impaired. An asset’s carrying amount is written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its estimated recoverable amount
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or
loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office
furniture.
The Group has applied the practical expedient for all COVID-19 rent concessions received during the reporting period
Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to
maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only
by the Group and not by the respective lessor.
A deferred tax asset is raised for the tax impact of the changes in recognised lease related assets and liabilities.
In the Statement of cash flows, the Group has presented:
•
Short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement of
the lease liability as part of operating activities;
Cash paid for the interest portion of a lease liability as either operating activities or financing activities, as permitted by NZ IAS 7 Statement
of Cash Flows (the Group has opted to include interest paid as part of operating activities, consistent with its presentation of interest paid
on financial liabilities); and
Cash payments for the principal portion for a lease liability, as part of financing activities.
•
•
Insurance contracts
3.8
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.
•
•
44
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 outstanding 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 derecognised 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 recognised 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.
3.9 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.
3.10 Inventories
Inventories comprise primarily motor vehicles held for sale and are stated at the lower of cost or net realisable value. Cost comprises purchase
price, shipping cost, compliance cost and other sundry related costs. Estimated selling prices are based upon recent observed vehicle sales
prices for comparable vehicles. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale.
3.11 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 21).
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.
3.12 Property, plant and equipment
Property, plant and equipment are recognised in the statement of financial position at cost less accumulated depreciation and impairment
losses. Land is not depreciated. Depreciation is calculated on all other property, plant and equipment on a diminishing value or straight-line
basis to allocate the costs, net of any residual amounts, over their useful lives.
The rates for the following asset classes are:
Buildings
Leasehold improvements, furniture and
fittings, office equipment
Computer equipment
Motor vehicles and equipment
Signs and flags
Diminishing value
-
7.5 - 60.0%
31.2 - 48.0%
26.0 - 31.2%
-
Straight line
2%
3 - 15 years
3 - 5 years
3 - 7 years
3 - 12 years
3.13 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.
45
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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).
3.14 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.
3.15 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.
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).
When options are exercised or cancelled, the option reserve relating to the options exercised or cancelled is reclassified to share capital.
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.
4. USE OF ESTIMATES AND JUDGEMENTS
In preparing the financial statements in accordance with NZ IFRS, the Board and management are required to make judgements, estimates
and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. 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.
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.
COVID-19
It is not possible to estimate the full impact of the COVID-19 pandemic’s short and long-term effects. As at the date of the signing of these
consolidated financial statements, all reasonably known and available information with respect to the COVID-19 pandemic, has been taken
into consideration and all reasonably determinable adjustments have been made in preparing these consolidated financial statements.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is determined by estimating future cash flows
from the use and ultimate disposal of the asset and discounting these to their present value using a pre-tax discount rate that reflects current
market rates and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units). Impairment losses directly reduce the carrying amount of assets and are
recognised in profit or loss.
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
3.16 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.
While actual results achieved in the 31 March 2021 financial statements have been better than expected in the COVID-19 environment,
residual market uncertainty regarding the economic impact of the pandemic remains. Consequently, Management have concluded that
retaining COVID-19 overlay provisions relating to the impairment provisions for inventory and loans receivables is appropriate.
The principal areas of judgement in preparing these financial statements are set out below.
Inventories - impairment provision
Inventories comprise primarily motor vehicles held for sale and are stated at the lower of cost or net realisable value. Cost comprises the
purchase price, shipping cost, compliance cost and other sundry related costs. 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. Estimated selling prices are
based upon recent observed vehicle sales prices for comparable vehicles.
The COVID-19 overlay provision of $0.5m included in the inventories impairment provision as at 31 March 2020 has been retained in the
provision as at 31 March 2021.
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. The Group presumes a
significant increase in credit risk subsequent to initial recognition when contractual payments are more than 30 days overdue. 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 has used reasonable and supportable forward looking information, which is based on estimates for the future
movement of different economic drivers (i.e. unemployment rates and government stimulus) 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.
46
47
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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.
The COVID-19 overlay provision of $1.0m included in the finance receivables expected credit loss provision as at 31 March 2020 has been
increased to $1.4m as at 31 March 2021.
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 22). A sensitivity analysis of the recoverable amounts of the CGU’s is disclosed in note 22.
When estimating future cash flows, Management considered the impact of the COVID-19 pandemic on the Group’s performance and
judgements, including the forecasting of the year-on-year movements in the operating assets of individual CGUs such as:
•
•
•
for the Finance and Auto Retail CGUs, the movement in their portfolios of finance receivables and related movement in debt financing;
for the Auto Retail CGU, the movement in inventory levels, trade payables and related movement in 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 35).
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 22).
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 $0.1m (2020: $0.1m) decrease in the
unredeemed voucher liability (note 24).
Determining lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be exercised. This assessment is reviewed if a significant event of significant change in circumstances occurs
which affects this assessment and that is within the Group’s control. All extension options have been assumed for the calculation of the
Groups’ lease liabilities.
Valuation of investment properties
The fair value of the investment property has been determined by an independent qualified valuer. Note 21 sets out the valuation
methodology, key assumptions and sensitivity analysis. The fair value of the investment property is subjective and changes to the
assumptions can have a significant impact on profit and the fair value.
The derecognition of finance receivables
The Group follows the guidance in NZ 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).
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting 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 21.
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 35, and fair value risk
relating to the Group’s Investment property (refer note 21).
5.1 Financial instrument by category
Carryi ng val ue
Financial assets
Financial assets at fair value through profit or loss
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 assets at fair value through OCI
Derivative financial instruments
Financial assets at fair value through OCI
Financial liabilities
Financial assets at fair value through profit or loss
Lif e investment contract liabilities
Amortised cost
Other payables
Borrow ings
Lease liabilities
Financial assets at fair value through OCI
Derivative financial instruments
2021
$’000
2020
$’000
11,867
70,396
32,771
64,988
7,155
330,165
4,146
4,152
40
570
428,491
8,609
293,037
3,390
4,913
-
1,000
408,708
8,116
7,072
26,945
339,611
28,747
19,700
350,364
32,511
-
985
5.2 Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations, and arises
principally from the Group's cash and cash equivalents, 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 and financial assets at fair value through profit or loss (excluding equities in unitised funds) are placed
with registered banks.
Management assesses the credit quality of trade customers, taking into account their financial position, past experience and other factors.
Individual risk limits are set based on these assessments. The use of credit limits by trade customers is regularly monitored by management.
Sales to public customers are settled in cash, bank cheques or using major credit cards, mitigating the credit risk.
To manage credit on finance receivables the Group performs credit evaluations on all customers requiring advances. The approval process
considers a number of factors including: borrower’s past performance, ability to repay, amount of money to be borrowed against the security
and the creditworthiness of the guarantor/co-borrower involved.
The Group operates a lending policy with various levels of authority depending on the size of the loan. A lending and credit committee operates
and overdue loans are assessed on a regular basis by this body.
48
49
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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 greater than 30 days;
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. Contractual and expected amounts agree, except for borrowing where expected maturity is the facility maturity date.
0-6 months
$’000
7-12
months
$’000
13-24
months
$’000
25-60
months
$’000
60+ months
$’000
Total
$’000
2021
Contractual undiscounted cash flows:
Other payables
Derivative financial instruments
Borrow ings
Lease liabilities
Expected undiscounted cash flows:
Other payables
Derivative financial instruments
Borrow ings
Lease liabilities
19,700
82
38,980
3,490
62,252
19,700
82
38,980
3,490
62,252
-
33
3,346
3,368
6,747
-
33
3,346
3,368
6,747
-
28
240,672
6,142
246,842
-
28
4,982
6,142
11,152
-
(183)
64,116
12,766
76,699
-
(183)
14,810
12,766
27,393
-
-
-
8,043
8,043
-
-
327,391
8,043
335,434
19,700
(40)
347,114
33,809
400,583
19,700
(40)
389,509
33,809
442,978
2020
Contractual undiscounted cash flows:
Other payables
Derivative financial instruments
Borrow ings
Lease liabilities
Expected undiscounted cash flows:
Other payables
Derivative financial instruments
Borrow ings
Lease liabilities
0-6 months
$’000
7-12
months
$’000
13-24
months
$’000
25-60
months
$’000
60+ months
$’000
Total
$’000
19,700
440
34,143
4,042
58,325
19,700
440
34,143
4,042
58,325
-
367
8,568
4,181
13,116
-
367
8,568
4,181
13,116
-
144
317,427
7,796
325,367
-
144
45,039
7,796
52,979
-
34
370
16,324
16,728
-
34
71,802
16,324
88,160
-
-
-
6,262
6,262
-
-
256,880
6,262
263,142
19,700
985
360,508
38,605
419,798
19,700
985
416,432
38,605
475,722
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 life investment policies 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 35K 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 2021 was $89m (2020: $75m) and weighted average interest was 0.97% (2020: 1.73%). There was no hedge
ineffectiveness recognised in profit or loss during the period (2020: $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.
Carrying amount
$’000
-1% Prof it
$’000
-1% Equity +1% Prof it +1% Equity
$’000
$’000
$’000
2021
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Finance receivables
Derivative financial instruments
Reverse annuity mortgages
Financial Liabilities
Borrow ings
Total increase/(decrease)
11,867
70,396
330,165
40
4,152
339,611
(119)
(704)
(3,302)
-
(42)
(86)
(507)
(2,377)
(1,643)
(30)
119
704
3,302
-
42
86
507
2,377
1,736
30
3,396
(771)
2,445
(2,198)
(3,396)
771
(2,445)
2,291
50
51
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Carrying amount
$’000
-1% Prof it
$’000
-1% Equity +1% Prof it +1% Equity
$’000
$’000
$’000
2020
Cash and cash equivalents
Financial assets at fair value through profit or loss
Finance receivables
Reverse annuity mortgages
Financial Liabilities
Derivative financial instruments
Borrow ings
Total increase/(decrease)
32,771
64,988
293,037
4,913
985
350,364
(328)
(650)
(2,930)
(49)
(236)
(468)
(2,110)
(35)
328
650
2,930
49
236
468
2,110
35
-
3,504
(453)
(1,983)
2,523
(2,309)
-
(3,504)
453
(6)
(2,523)
320
5.4.3 Currency risk
The Group is exposed to currency risk arising from various currency exposures, primarily with respect to the Australian Dollars (‘AUD’) and
Japanese Yen (‘JPY’). Currency risk arises from the future commercial transactions, recognised assets and liabilities and net investment in
foreign operations.
To ensure the net exposure to EC Credit Control (Aust) Pty Ltd, which has AUD as its functional currency, is kept to an acceptable level, the
Group has a comprehensive transfer pricing policy and converts the AUD unredeemed voucher liability (refer note 24) into a NZD liability by
selling the AUD liability to the New Zealand entity that will be providing the relevant services to settle the liability when the voucher is redeemed.
To limit its exposure to JPY, the Group hedges the anticipated cash flows (mainly purchased inventory) when the commitment is made. All
projected purchases qualify as ‘highly probable’ forecast transactions for hedge accounting purposes.
The table below summarises the Group’s financial exposure to currency risk.
in NZD'000
Net exposure to AUD
Net exposure to JPY
The table below summaries the Group’s sensitivity to +/- 10% foreign exchange fluctuations.
2021
NZ$'000
1,011
-
2020
NZ$'000
560
2,171
In NZD'000
2021
AUD
2020
AUD
JPY
-10% Profit -10% Equity +10% Prof it +10% Equity
-
112
-
(82)
29
170
-
-
67
(92)
(24)
(140)
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 (refer note 11). A +1%/-1% movement in the MTF share price will increase/(decrease) profit
and equity by $29k/($29k) (2020: $32k/($32k)).
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
Level 3
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 liabilities, 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.
2021
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
Derivative financial instruments
2020
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:
Derivative financial instruments
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
59,211
-
-
59,211
-
-
54,637
-
54,637
8,254
2,931
-
-
40
11,225
7,197
3,154
-
-
10,351
-
-
-
5,950
-
5,950
-
-
-
5,650
5,650
8,254
2,931
59,211
5,950
40
76,386
7,197
3,154
54,637
5,650
70,638
-
-
985
985
-
-
985
985
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 note 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 note 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 note 5.4.2).
Fair value - investment property
The fair value of the investment property was determined by an independent registered valuer using the comparable sales methodology (refer
note 21).
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).
These financial liabilities are exposed to interest rate risk as disclosed above.
Derivative financial instruments
The fair value of forward exchange contracts is determined using forward exchange rates at balance date, with the resulting value discounted
to present value. The fair value of interest rate swaps is calculated as the present value of estimated future cash flows based on observable
yield curves.
Reconciliation of recurring level 3 fair value movements:
Assets
Opening balance
Revaluation at reporting date - investment property
Closing balance
2021
$'000
5,650
300
5,950
2020
$'000
5,650
-
5,650
During the year there were no movements of fair value assets or liabilities between levels of the fair value hierarchy.
52
53
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
6. SEGMENTAL INFORMATION
Other material non-cash items
Automotive retail - gain on modification of a lease
Automotive retail - impairment provisions
Finance - impairment provisions
Insurance - reverse annuity mortgage interest
Segment assets and liabilities
Assets
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Eliminations
2021
$’000
110,818
351,185
31,151
139,583
190,439
823,176
(104,725)
718,451
2020
$’000
129,496
308,696
38,268
134,236
216,173
826,870
(118,478)
708,392
Acquisition of property, plant & equipment, intangible assets and other non-current assets
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Eliminations
Revenue/(expenses)
2021
$'000
1,132
229
(4,185)
403
Liabilities
2021
$’000
67,552
271,383
5,298
75,022
71,134
490,389
(5,508)
484,881
Other
2021
$’000
12,348
316
161
2,803
3
15,631
(6,990)
8,641
2020
$'000
-
(126)
(5,888)
613
2020
$’000
92,078
241,086
7,585
73,133
91,423
505,305
(19,968)
485,337
2020
$’000
17,085
1,218
197
5,949
236
24,685
(5,440)
19,245
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:
Remarketing (motor vehicles, trucks, heavy machinery and commercial goods) and purchasing goods for sale.
Provides asset based finance to consumers and SME's.
Collection services, credit management and debt recovery services to the corporate and SME sectors. Geographically the
collections services segment business activities are located in New Zealand and Australia.
Marketing and administration of a range of life and consumer insurance products.
Corporate centre.
Insurance:
Corporate & other:
OPERATING SEGMENTS
Revenue
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Total
segment
revenue
2021
$’000
204,991
47,862
12,762
43,175
82
308,872
Inter-
segment
revenue
2021
$’000
(4,080)
-
-
(1262)
(3)
(5,345)
Revenue
from
external
customers
2021
$’000
200,911
47,862
12,762
41,913
79
303,527
Total
segment
revenue
2020
$’000
229,512
45,744
17,939
45,236
6
338,437
Inter-
segment
revenue
2020
$’000
(4,634)
-
-
(1129)
-
(5,763)
Revenue
from
external
customers
2020
$’000
224,878
45,744
17,939
44,107
6
332,674
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.
Operating profit
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Profit/(loss) before taxation
Income tax
Net profit attributable to shareholders
Automotive retail
Finance
Credit management
Insurance
Corporate & other
Eliminations
2021
$’000
15,415
15,816
5,087
9,350
(8,293)
37,375
(10,511)
26,864
2020
$’000
13,829
12,167
6,494
6,215
(9,640)
29,065
(8,112)
20,953
Interest revenue
Interest expense
amortisation expense
Depreciation and
2021
$’000
1,208
40,466
1
1,654
3
43,332
(3)
43,329
2020
$’000
3,904
40,579
5
2,276
6
46,770
(86)
46,684
2021
$’000
(2,144)
(5,503)
(30)
(82)
(3,510)
(11,269)
3
(11,266)
2020
$’000
(3,967)
(6,912)
(39)
(91)
(3,930)
(14,939)
86
(14,853)
2021
$’000
(8,891)
(782)
(289)
(1,286)
(170)
(11,418)
-
(11,418)
2020
$’000
(7,960)
(717)
(249)
(2,783)
(210)
(11,919)
-
(11,919)
54
55
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
7. PROFIT BEFORE TAX
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
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:
Gain on sale of investments
Revaluation gain on investment property
Dividend income
Gain on sale of property, plant and equipment
Fair value gain on contingent consideration
Government wage subsidies
Gain on modification of a lease
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
Insurance
Motor vehicle insurance commissions
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
COVID-19 impairment provision
Collective impairment on reverse annuity mortgages
Finance receivables bad debts written off
Movement
Notes
2021
$’000
2020
$’000
1,272
41,654
403
43,329
143,065
54,237
3,320
37,248
12,198
937
2,178
253,183
296,512
10
300
172
154
-
5,247
1,132
7,015
20,592
-
20,592
143,065
30,624
12,197
84
1,102
9,743
1,523
11,266
557
2,996
400
30
3
3,986
1,743
44,328
613
46,684
167,264
56,111
2,958
39,676
17,709
591
1,181
285,490
332,174
35
-
367
61
37
-
-
500
29,401
1,683
31,084
167,264
23,313
10,021
495
-
13,330
1,523
14,853
2,304
2,630
1,011
30
69
6,044
14
14
14
16
Net operating profit includes the following specific expenses
Depreciation
- Buildings
- Plant, equipment & motor vehicles
- Leasehold improvements, furniture, fittings & office equipment
- Computer equipment
- Signs & flags
Intangible amortisation
Amortisation of software
Amortisation of customer relationships
Amortisation of right-of-use asset
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
Under accrual in prior year
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 (NZ: 28%; Aust: 30%)
Tax impact of income not subject to tax
Tax impact of expenses not deductible for tax purposes
Under provision in prior years
Taxation (expense)/benefit
Comprising:
Current
Deferred
Under provision in prior years
2021
$’000
293
610
1,709
743
231
1,527
520
5,785
-
11,418
201
31
632
1,363
266
434
-
10
3
13
447
2021
$’000
37,375
(10,473)
132
(171)
1
(10,511)
(9,605)
(1,222)
316
(10,511)
2020
$’000
-
681
828
594
184
1,203
557
6,300
1,572
11,919
329
3
665
1,322
71
452
50
7
3
10
512
2020
$’000
29,065
(8,146)
274
(46)
(194)
(8,112)
(9,817)
1,635
70
(8,112)
56
57
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
9. EARNINGS PER SHARE
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Basic earnings per share
The calculation of basic earnings per share at 31 March was based on the profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, as follows:
Profit for the year ($'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 dealer share scheme
Share cancel from the share buy back
2021
26,864
85,551,356
31.40
2020
20,953
86,055,495
24.35
2021
2020
85,554,710
-
(3,354)
85,551,356
86,888,064
23,111
(855,680)
86,055,495
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: 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 exercise of options
Weighted average number of shares (basic)
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
New Zealand dollars
2021
$’000
26,864
255
27,119
2020
$’000
20,953
-
20,953
85,551,356
420,482
85,971,838
86,055,495
-
86,055,495
31.54
24.35
2021
$’000
265
11,602
11,867
2020
$’000
365
32,406
32,771
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 and term deposits, disclosed in financial assets through the profit or loss, 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 2021 were
$0.7m (2020: $1.5m).
Cash and cash equivalents at 31 March 2021 of $3.6m (2020: $5.1m) belong to the Turners Marque Trust 1 and are not available to the Group
(refer note 14).
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 - deposits
New Zealand and overseas property securities
Total
Investments with external investment managers
ANZ New Zealand Investments Limited - Unitised Funds
2021
$’000
8,254
59,211
2,931
70,396
3,688
1,365
1,241
1,960
8,254
2020
$’000
7,197
54,637
3,154
64,988
2,935
1,369
1,333
1,560
7,197
8,254
7,197
The carrying amounts of the financial assets at fair value through profit or loss, excluding investments in unitised funds, are denominated in
NZD.
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 2021 were $59.2m (2020: $54.6m). Investments in unitised funds, disclosed in Financial assets through the profit or loss,
underwrite the Life investment policies and are not available for use by the wider Group.
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.
2021
$’000
6,894
591
8
7,493
(338)
7,155
2020
$’000
7,643
1,130
231
9,004
(395)
8,609
58
59
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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 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
2021
$’000
436
120
-
35
591
395
(8)
(49)
338
The Group recognises lifetime expected credit loss for trade receivables. The expected credit loss rate is 4.5% (2020: 4.4%). 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
661
6,494
7,155
Currency risk
A summarised analysis of the sensitivity of financial assets included in trade receivables to currency risk can be found in note 5.4.
2020
$’000
1,009
73
48
-
1,130
292
221
(118)
395
666
7,943
8,609
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 (included in Cost of goods sold)
Closing balance
2021
$’000
31,876
-
31,876
(1,687)
30,189
2020
$’000
45,975
32
46,007
(1,636)
44,371
1,636
51
1,687
1,562
74
1,636
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
14. FINANCE RECEIVABLES
Commercial loans
Finance leases
Consumer loans
Property development & investment loans
Gross finance receivables
Specific impairment provision
Collective impairment provision
COVID-19 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 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
In default
2021
$’000
48,404
1,654
284,301
3,254
337,613
(2,376)
(13,403)
(1,411)
9,742
330,165
136,931
193,234
330,165
320,368
1,778
15,467
337,613
4,723
1,684
(1,356)
(1,887)
3,164
1,236
143
13
1,988
3,380
2020
$’000
25,674
4,194
274,773
2,857
307,498
(3,706)
(16,988)
(1,011)
7,244
293,037
137,742
155,295
293,037
279,627
5,685
22,186
307,498
2,377
3,168
(317)
(505)
4,723
1,171
935
273
5,191
7,570
60
61
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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.
Fair value and credit risk
Carrying
amount
2021
$’000
Fair
value
2021
$’000
Carrying
amount
2020
$’000
Fair
value
2020
$’000
31 March 2021
Current
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
In default
31 March 2020
Current
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
In default
Gross
Collective
Expected
finance
impairment
loss rate
%
0.71
receivables
$’000
315,552
provision
$’000
2,244
9.97
22.87
35.09
82.77
0.84
10.03
21.27
31.01
74.97
4,653
984
684
12,360
334,233
269,668
8,788
3,042
1,435
16,995
299,928
464
225
240
10,230
13,403
2,273
881
647
445
12,742
16,988
If the ECL rates on performing financial receivables increased/(decreased) by 1% as at 31 March 2021, the loss allowance on receivables
would be $3.1m higher/($2.2m lower) (2020: $2.7m higher/($2.3m lower)).
If the ECL rates on doubtful or in default financial receivables increased/(decreased) by 1% as at 31 March 2021, the loss allowance on
receivables would be $0.2m higher/(lower) (2020: $0.3m higher/(lower)).
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
Impairment charge/(release) through profit or loss
Amounts written off
COVID-19 impairment provision
Opening balance
Impairment charge/(release) through profit or loss
2021
$’000
3,706
557
(1,887)
2,376
16,988
2,996
(6,581)
13,403
1,011
400
1,411
2020
$’000
1,915
2,304
(513)
3,706
17,680
2,630
(3,322)
16,988
-
1,011
1,011
Finance receivables
330,165
328,675
293,037
293,594
The fair values are based on cash flows discounted using a weighted average interest rate of 12.14% (2020: 13.81%).
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 segment. The facility is for a 416 day term that will be renewed annually. The facility is for $276m.
The Trust is a special purpose entity set up solely for the purpose of purchasing finance receivables from the finance segment 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, and 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 $187.4m finance receivables were sold to the Trust (2020: $149.4m). As at 31 March 2021 the carrying value of
finance receivables in the Trust was $266.8m (2020: $210.2m).
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
2021
$’000
3,126
2,404
2,326
260
8,116
5,789
2,327
8,116
4,146
-
4,146
4,146
2020
$’000
3,203
3,268
1,996
105
8,572
6,153
2,419
8,572
3,390
72
3,318
3,390
Total impairment provision
17,190
21,705
Carrying amount of financial assets included in other receivables
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.
The carrying amounts of the financial assets included in other receivables are denominated in the following currencies:
Australian dollars
New Zealand dollars
Expected credit losses on contract assets and other receivables is 0%.
62
63
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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. FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI
Fair value and credit risk
Reverse annuity mortgages
Carrying
amount
2021
$’000
4,152
Fair
value
2021
$’000
4,948
Carrying
amount
2020
$’000
4,913
Fair
value
2020
$’000
6,021
Investment in Collaborate Corporation Limited
Movements in carrying amounts
Opening balance
Purchase of investment
Net change in fair value recognised in OCI
Closing balance
17. 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
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.
2021
$’000
570
1,000
-
(430)
570
2021
$’000
4,262
(110)
4,152
488
3,664
4,152
80
30
110
2020
$’000
1,000
-
1,327
(327)
1,000
2020
$’000
4,993
(80)
4,913
444
4,469
4,913
50
30
80
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.
18. INVESTMENT IN SUBSIDIARIES
Subsidiary
Buy Right Cars (2016) Limited
Carly NZ 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
Turners Staff Share Plan Trustees Limited
Vehicle trade
Vehicle subscription services
Insurance
Collection services
Collection services
Collection services
Finance
Collection services
Finance
Vehicle and commercial goods trade
Auctions
Property
Trustee
Ownership
Interest Held
2021
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
2020
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
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.
64
65
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
19. PROPERTY, PLANT AND EQUIPMENT
21. INVESTMENT PROPERTY
Leasehold
improvements,
furniture, fittings
& office
equipment
Plant,
equipment &
motor vehicles
Land & buildings
Computer
equipment
Signs & flags
$’000
$’000
$’000
$’000
$’000
28,391
-
28,391
15,961
6,968
7
(293)
51,034
51,347
(313)
51,034
-
5,494
(2,902)
2,592
-
738
(589)
(610)
2,131
4,601
(2,470)
2,131
62
26,413
(5,795)
20,618
(15,961)
1,359
-
(1,709)
4,307
7,544
(3,237)
4,307
13
3,766
(3,067)
699
-
2,321
-
(743)
2,277
4,888
(2,611)
2,277
31
1,205
(717)
488
-
254
(2)
(231)
509
1,085
(576)
509
-
2021
At cost
Accumulated depreciation
Opening carrying amount
Reclassifications *
Additions
Disposals & translation difference
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
WIP included above
* In March 2020 builiding and improvments relating to properties owned by the Group were included in leasehold improvements.
Land
$’000
19,091
-
19,091
-
9,300
-
-
28,391
28,391
-
28,391
-
2020
At cost
Accumulated depreciation
Opening carrying amount
Reclassifications
Additions
Disposals & translation difference
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
WIP included above
20. RIGHT-OF-USE ASSETS
Properties
Equipment
Opening balance
Additions
Derecognition
Depreciation
Closing carrying amount
Buildings,
leasehold
improvements,
furniture, fittings
& office
equipment
Plant,
equipment &
motor vehicles
Computer
equipment
Signs & flags
$’000
$’000
$’000
$’000
4,613
(2,269)
2,344
112
1,493
(676)
(681)
2,592
5,494
(2,902)
2,592
372
20,495
(3,850)
16,645
(406)
5,514
(307)
(828)
20,618
26,413
(5,795)
20,618
1,028
2,467
(1,777)
690
79
534
(10)
(594)
699
3,766
(3,067)
699
38
729
(415)
314
215
285
(142)
(184)
488
1,205
(717)
488
15
2021
$’000
23,492
67
23,559
24,850
8,082
(3,588)
(5,785)
23,559
During the year Group had a gain on modification of a lease of $1.1m (2020: $nil).
Total
$’000
65,269
(12,481)
52,788
-
11,640
(584)
(3,586)
60,258
69,465
(9,207)
60,258
106
Total
$’000
47,395
(8,311)
39,084
-
17,126
(1,135)
(2,287)
52,788
65,269
(12,481)
52,788
1,453
2020
$’000
24,691
159
24,850
28,529
3,037
(416)
(6,300)
24,850
Investment property
Movements in carrying amounts
Opening balance
Net change in fair value
Closing balance
2021
$’000
5,950
5,650
300
5,950
2020
$’000
5,650
5,650
-
5,650
The investment property is 26.8 hectares of residentially zoned land at Sanctuary Hill, 358 Worsleys Road, Christchurch.
The investment property was valued at reporting date by a Property Institute of New Zealand registered valuer, Jones Lang LaSalle Limited,
Valuation & Advisory. Jones Lang LaSalle Limited is an external
independent valuation company with appropriate recognised professional
qualifications and recent experience in the location and category of property being valued. Fair values have been determined using a
comparable sales approach methodology, having regard to current market conditions and comparable sales within the locality. Subjective
adjustments have been applied where necessary to account for variations in location, land, improvements, time adjustment and overall quality.
No income has been earned and no direct operating expenses, other than council rates, have been incurred on the investment property. There
are no restrictions on the disposal or the remittance of proceeds on disposal.
22. 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
Disposals
Amortisation
Closing carrying amount
At cost
Accumulated amortisation
Closing carrying amount
Corporate relationships
At cost
Accumulated amortisation
Opening carrying amount
Amortisation
Closing carrying amount
At cost
Accumulated amortisation and impairment provision
Closing carrying amount
Total intangible assets carrying amount
WIP included in software
The amortisation and impairment charges are recognised in other operating expenses in profit or loss.
2021
$’000
67,100
-
67,100
92,541
(32)
92,509
10,204
(7,028)
3,176
1,460
(190)
(1,527)
2,919
6,857
(3,938)
2,919
6,510
(2,484)
4,026
(520)
3,506
6,510
(3,004)
3,506
2020
$’000
67,100
-
67,100
92,534
7
92,541
8,342
(5,825)
2,517
2,138
(276)
(1,203)
3,176
10,204
(7,028)
3,176
6,510
(1,927)
4,583
(557)
4,026
6,510
(2,484)
4,026
166,034
886
166,843
574
66
67
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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
the cash generating unit.
growth expectations, expected future profitability and the substantial skill and expertise of
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
Brand
Allocated to the insurance CGU/segment
Allocated to the automotive retail CGU/segment
2021
$’000
12,777
23,973
9,272
46,487
92,509
21,500
45,600
67,100
2020
$’000
12,777
24,005
9,272
46,487
92,541
21,500
45,600
67,100
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 the Board covering at least a five-year period. Cash flows beyond the projected period are
extrapolated using the estimated long term growth rates stated below. The cash flows for the Auto retail (2020: free cash flows to equity),
Insurance and Collection services CGUs are free cash flows to the firm, while the Finance CGU is free cash flows to equity. 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:
Key assumptions:
Sales, price and operating cost assumptions where based on the Board's best estimate of the range of economic conditions the CGUs are likely
to experience during the forecast period. The forecasts for each CGU covering a period of a minimum of 5 years. Annual capital expenditure,
the expected cash costs in CGUs, was based on historical experience and planned expenditure.
2021 Forecast growth rates (%)
Auto retail CGU (weighted average cost of capital)
Insurance CGU (weighted average cost of capital)
Finance CGU (cost of equity)
Collection services CGU (weighted average cost of capital)
2020 Forecast growth rates (%)
Auto retail CGU (cost of equity)
Insurance CGU (weighted average cost of capital)
Finance CGU (cost of equity)
Collection services CGU (weighted average cost of capital)
Long-term growth rate
Pre-tax discount rate
Auto retail CGU (2021: weighted average cost of capital; 2020: cost of equity)
Insurance CGU (weighted average cost of capital)
Finance CGU (cost of equity)
Collection services CGU (weighted average cost of capital)
Year 2
Year 3
Year 4
Year 5
30.5
(15.4)
16.3
12.7
24.6
3.5
5.0
8.2
11.9
1.2
5.0
8.7
Year 2
Year 3
Year 4
Year 5
(16.7)
24.9
(28.3)
74.5
113.5
(8.6)
19.5
(6.3)
21.9
(8.1)
18.0
5.0
2021
1.80%
12.80%
14.10%
18.70%
14.90%
8.6
1.9
5.0
7.3
17.9
3.5
5.0
5.0
2020
1.25%
16.40%
12.80%
17.70%
15.20%
The long term growth rate is the weighted average growth rate used to extrapolate cash flows beyond the forecast period and is based on the
current implied inflation rates and does not exceed the long-term average growth rate for the products, industries, or country or countries in
which the CGUs operate. The discount rates were established by taking into account the specific attributes and size of the CGUs.
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
In assessing the impairment of the goodwill and brand value in the CGUs, a sensitivity analysis for reasonably possible changes in key
assumptions was performed. This included increasing and reducing the terminal growth rate by 0.20% and 0.30% respectively (2020: +/-
0.25%) and increasing and decreasing the discount rate as follows:
Auto retail CGU
Insurance CGU
Finance CGU
Collection services CGU
These reasonably possible changes in rates did not cause any impairment in the CGUs.
23. 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
1.00%
1.00%
1.00%
1.00%
2021
$’000
21,676
3,513
227
12,827
38,243
1.50%
1.10%
1.20%
0.90%
2020
$’000
13,833
4,500
227
9,488
28,048
26,945
19,700
1,181
99
25,665
26,945
734
355
18,611
19,700
Currency risk
A summarised analysis of the sensitivity of financial liabilities included in other payables to currency risk can be found in note 5.4.3.
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.
24. 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
Additions
Charge/(release) to profit or loss
(Charge)/release to profit or loss
(Expense)/income relating to prior years
Motor vehicle insurance rebate liability
Opening balance
Additions
2021
$’000
2,110
203
2,313
1,886
-
224
2,110
(224)
199
4
203
2020
$’000
1,886
199
2,085
2,502
31
(647)
1,886
647
140
59
199
68
69
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
25. DEFERRED TAXATION
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset assets against 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
Translation difference
Charge to profit or loss
Closing balance
The charge to profit or loss is attributable to the following items:
Corporate relationships
Policy in force asset
Loan impairment provision
Insurance deductible reserves
Property, plant and equipment
Lease liability
Right of use asset
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
Lease liability
Provisions and accruals
Total deferred tax asset
Deferred tax liabilities:
Brand
Customer relationships
Right of use asset
Deferred expenses and accruals
Net deferred tax liabilities
Imputation credit memorandum account
Opening balance
Income tax payments/(refunds received)
Imputation credits utilised
Closing balance
2021
$’000
10,080
-
(5)
1,222
11,297
2021
$’000
(146)
-
1,052
(111)
287
1,054
(361)
(553)
1,222
13,053
(1,756)
11,297
5,157
8,049
2,495
15,701
18,788
874
6,597
739
26,998
2020
$’000
13,918
(2,203)
-
(1,635)
10,080
2020
$’000
(146)
(439)
(647)
(242)
(53)
1,194
(1,030)
(272)
(1,635)
11,715
(1,635)
10,080
6,209
9,103
2,323
17,635
18,788
1,019
6,958
950
27,715
11,297
10,080
19,248
8,712
(7,927)
20,033
11,879
11,726
(4,357)
19,248
Policy holder tax losses
The policy holder tax losses carried forward at 31 March 2021 are $5,276,000 (2020: $5,180,000). The policy holder tax losses are only available
to be offset against future policy holder income.
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
26. BORROWINGS
Secured bank borrowings
Deferred borrowing costs
Non-bank borrowings
Motor Trade Finance
Bonds
Deferred issue costs
Total borrowings
Current
Non-current
2021
$’000
311,928
(4)
311,924
2020
$’000
312,320
(116)
312,204
2,761
13,382
25,000 25,000
(222)
24,778
(74)
24,926
339,611
350,364
36,702 213,825
136,539
302,909
350,364
339,611
Secured bank borrowings
In March 2021 the Group has a syndicated funding facility, including a 1 year working capital facility, with the Bank of New Zealand and ASB
Bank, a self liquidating trade finance facility with ASB Bank and a securitisation facility with the Bank of New Zealand.
The bank borrowings, together with trade and lease premise guarantees of $0.6 million (2020: $0.9 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 2.07% (2020: 2.99%). 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.
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, Turners Group NZ Limited, Turners Fleet Limited and
Turners Property Holdings Limited.
Borrowing covenants
The Group has complied with all borrowing covenants in the both the current and prior financial year.
Foreign currency risk
All the Group's borrowings are in NZD.
70
71
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Fair value
Borrowings
Carrying
amount
2021
$’000
339,611
Fair
value
2021
$’000
339,700
Carrying
amount
2020
$’000
350,364
Fair
value
2020
$’000
350,781
The fair values are based on cash flows discounted using a weighted average borrowing rate of 2.38% (2020: 3.26%).
Contractual repricing dates
1 year or less
Over 1 to 2 years
Over 2 to 5 years
2021
$’000
2020
$’000
36,702 321,498
302,987 29,204
-
-
339,689 350,702
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 2019
Financing cash flows (i)
Other - netted off finance receivables
Non-cash changes
Deferred borrowing costs
Balance at 31 March 2020
Financing cash flows (i)
Other - netted off finance receivables
Non-cash changes
Bank
borrowings
Motor Trade
Finance
$’000
251,177
61,038
-
$’000
37,055
-
(23,673)
Bonds
$’000
24,631
-
-
147
312,204 13,382 24,778
(11)
-
(400)
-
-
-
(10,621)
-
148
Deferred borrowing costs
Balance at 31 March 2021
(i) Financing cash flows make up the net amount of proceeds from borrowings and repayments of borrowings in the statement of cash flows.
311,924
2,761
-
120
24,926
27. LEASE LIABILITIES
Lease liabilities
Current
Non-current
2021
$’000
2020
$’000
28,747
32,511
5,560
23,187
28,747
6,810
25,701
32,511
Lease liabilities have incremental borrowing rates of 2.87% to 6.94% (2020: 4.56% to 6.94%), with maturities up to 12 years (2020: up to 13
years). 3 new leases were entered into during the year (2020:3) and 7 leases were modified or cancelled during the year (2020: 4).
During the year the Group received COVID-19 rent concession of $780,000 (2020: nil).
The carrying amounts of the lease liabilities are denominated in the following currencies:
Australian dollars
New Zealand dollars
Interest expense in profit or loss
163
28,584
28,747
251
32,260
32,511
1,640
2,034
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
28. SHARE CAPITAL
Number of ordinary shares
Opening balance
Shares issued for the dealer share scheme
Shares cancel for share buy back
Total issued and authorised capital
Dollar value of ordinary shares
Opening balance
Transfer of share option reserve
Shares issued for the dealer share scheme
Shares purchased and cancelled under share buy back
Share issue costs
Total issued capital
2021
2020
85,554,710
-
(10,462)
85,544,248
86,888,064
40,752
(1,374,106)
85,554,710
2021
$'000
204,327
-
-
(30)
-
204,297
2020
$'000
206,395
1,027
97
(3,188)
(4)
204,327
Ordinary shares are fully paid with no par value. All ordinary shares have equal voting rights and share equally in dividends and surplus on
winding up.
Capital management
The Group’s capital consists of share capital, share option reserve, translation reserve, cash flow reserve and retained earnings. The Board
seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security
afforded by a sound capital position. The allocation of capital between its specific business operations and activities is, to a large extent, driven
by optimisation of the return on the capital allocated. The process of allocating capital to specific operations and activities is undertaken
independently of those responsible for the operation. The Group’s strategies in respect of capital management and allocation are reviewed
regularly by the Board of Directors.
The Group's funding covenants include minimum equity ratios. There have been no breaches of covenants. In addition to the above, the life
insurance company is required to retain equity for solvency purposes, refer note 35G.
29. SHARE OPTIONS
In July 2020, the Board approved the grant of 2,300,000 options to Senior Executives of the Group at an exercise price of $2.00 under the
Group's Share Option Plan. The grant is split into four tranches of 575,000 options with the following vesting dates; 1 June 2021, 1 June 2022, 1
June 2023 and 1 June 2024. 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) and the participant's other Options will lapse
immediately.
The weighted average fair value of the options granted, using the Binomial Tree option pricing model, is $0.31 per option. The significant inputs
in the model were, the share price at grant date of $2.19, the exercise price of $2.00, volatility of 27.5%, an expected exercise date for all
tranches of, 80% at vesting date and 20% at expiration date and an annual risk free rate between 0.24% - 0.63%. 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
$255,000 (2020: $nil).
72
73
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Movement in the number of share options outstanding and their related weighted average exercise prices are as follows:
31. TRANSACTIONS WITH RELATED PARTIES
Opening balance
Granted
Cancelled
Closing balance
Exercise
price
2021
$
-
2.00000
2.00000
2.00000
Share options outstanding at balance sheet have the following expiry dates and exercise prices:
Expiry date
31 May 2023
31 May 2024
31 May 2025
31 May 2026
30. DIVIDENDS
Quarterly dividend for the year ended 31 March 2019: $0.04 per fully paid ordinary share,
imputed, paid on 30 April 2019.
Final dividend for the year ended 31 March 2020 of $0.06 (31 March 2019: $0.05) per fully
paid ordinary share, imputed paid on 24 July 2020 (2019: 18 July 2019)
Quarterly dividend for the year ended 31 March 2021 of $0.04 (31 March 2020: $0.04) per
fully paid ordinary share, imputed, paid on 22 October 2020 (2020: 22 October 2019).
Quarterly dividend for the year ended 31 March 2021 of $0.04 (31 March 2020: $0.04) per
fully paid ordinary share, imputed, paid on 28 January 2021 (2020: 30 January 2020).
Quarterly dividend for the year ended 31 March 2021 of $0.06 per fully paid ordinary share,
imputed, paid on 30 March 2021
Options
2021
000's
-
2,300
(200)
2,100
Exercise
price
$
2.00000
2.00000
2.00000
2.00000
Exercise
price
2020
$
3.32316
-
Options
2020
000's
2,203
-
3.32316
(2,203)
-
-
Options
2021
000's
525
525
525
525
Options
2020
000's
-
-
-
-
2021
$’000
2020
$’000
-
3,489
5,162
4,366
3,440
3,441
3,438
3,446
5,160
17,200
-
14,742
Dividends not recognised at year end
In addition to the above dividends, after year end the directors recommended the payment of the following dividend:
Final dividend of $0.06 (31 March 2020: $0.06) per fully paid ordinary share, imputed, payable
on 28 July 2021 (2020: 24 July 2020).
5,133
5,162
Major shareholders, directors and closely related persons to them are considered related parties of the Group.
Key management personnel compensation
The key management personnel are all the Directors of the Company and the Leadership team. Compensation of Leadership team for the years
ended 31 March 2021 and 31 March 2020 was as follows:
($'000)
Year ended 31 March 2021
Year ended 31 March 2020
Short-
term
benefits
$'000
Other long-
term
benefits
$'000
Share-based
payments
$'000
Total
$'000
3,453 102 255 3,810
2,595
73
- 2,668
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 87 to 90. 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.
32. RECONCILIATION OF NET SURPLUS WITH CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustment for non-cash and other items
Impairment charge on finance receivables, reverse annuity mortgages and other receivables
Net profit on sale of property, plant and equipment
Depreciation and amortisation
Capitalised reverse annuity mortgage interest
Deferred revenue
Financial assets at fair value through profit and loss
Net annuity and premium change to policyholder accounts
Non-cash adjustment to finance receivables effective interest rates
Deferred expenses
Fair value adjustment on investment property
Fair value adjustment to contingent consideration
Gain on modification of a lease
COVID-19 rent concessions
Adjustment for movements in working capital
Net decrease/(increase) receivables and pre-payments
Net decrease/(increase) in inventories
Net increase/(decrease) in payables
Net increase/(decrease) in contract 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 contributions/(withdrawals) from life investment contracts
Net increase/(decrease) in deferred tax liability
Net increase/(decrease) in tax payable
Cash flows from operating activities
2021
$’000
26,864
3,986
(689)
11,418
(403)
52
(1,582)
1,194
(86)
(1,850)
(300)
-
(1,132)
(780)
1,515
14,182
6,955
1,365
(48,654)
1,134
(4,090)
(150)
1,248
681
10,878
2020
$’000
20,953
6,044
(33)
11,919
(613)
(2,892)
77
(500)
(226)
(2,652)
-
(116)
-
-
5,251
(5,512)
(3,544)
(1,694)
(27,826)
3,964
704
88
(1,618)
(1,806)
(32)
74
75
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
33. COMMITMENTS AND CONTINGENT LIABILITIES
Capital Expenditure:
At reporting date the Group has capital commitments of $nil (2020: $1.5m to purchase computer equipment).
Future Lease Commitments:
The Group has no future lease commitments.
31 March 2020
The Group has committed to two property leases, the commencement date of both leases is dependant on the date the Landlord obtain a Code
Compliance Certificate or Certificate of Public Use for agreed works included in the lease agreements.
It is anticipated the leases will
commence during the financial year ending 31 March 2021.
Loan Commitments:
The Group has no material undrawn credit commitments at reporting date (2020: nil).
Contingent Liabilities:
Buy Right Cars
The trial for the dispute concluded in September 2020 and judgement is still outstanding. The directors consider that on balance of probabilities
no payment will be made to the vendor.
31 March 2020
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 10 August 2020 with both parties seeking payment. The directors consider that on balance of probabilities no payment will be made to the
vendor.
The Group has no other material contingent liabilities at reporting date.
34. SUBSEQUENT EVENTS AFTER BALANCE DATE
The first tranche of options in the Group's Share Option Plan vested on 1 June 2021, 525,000 options were exercised.
The Group has committed to purchase an Auto Retail site in Rotorua for $5.5m.
31 March 2020
In July 2020, the Board approved the grant of 2,300,000 options to Senior Executives of the Group at an exercise price of $2.00 under the
Group's Share Option Plan. The grant is split into four tranches of 575,000 options with the following vesting dates; 1 June 2021, 1 June 2022, 1
June 2023 and 1 June 2024. Each tranche expires two year after the vesting date.
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
35. 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 2021
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 (2020: 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
2021
Treasury risk-free rates
Treasury risk-free rates
Not applicable
Not applicable
Treasury risk-free rates
Not applicable
2020
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 2020:
March 2021:
1.11% per annum net of tax
1.98% 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 (2020: 2.0%).
c) Mortality Rates
Rates of mortality were assumed as follows:
For underwritten whole of life, endowment and term insurance policies: NZ97 (2020: NZ97).
For guaranteed issue regular premium funeral plans: NZ97 (DPL plans), NZ04 (ex-Greenwich plans) multiplied by a factor to reflect higher
mortality at younger ages, and the impact of guaranteed issue anti-selection (DPL - no change from 2020).
QuickCover plans - NZ04 with additional loadings reflecting the impact of guaranteed issue anti-selection.
For annuities the assumed mortality table is 90% of the NZ12-14 population tables. For the Cook Islands Annuity Pension Plan the assumed
mortality table is the PA(90) table without adjustment (2020: 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)
Quick Cover term life plan
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
$155 per policy per annum (2020: $152)
76
77
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Funeral plans
Term life plans (for loss recognition)
Consumer credit plans (for loss recognition):
Annuity plans
$9.38 per policy per annum (2020: $9.20)
$9.38 per policy per annum (2020: $9.20)
$9.38 per policy per annum (2020: $9.20)
$155 per policy per annum (2020: $152)
Investment management expenses were assumed to be 1.0% (2020: 1.0%) of policy liabilities.
f) Inflation and Automatic Indexation of Benefits
Maintenance expenses are assumed to increase 2.0% per annum (2020: 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 (2020: 5.0%), and nil for annuity
pension plan business (2020: 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 3% per annum (2020: 15% reducing to 8%).
For the Funeral plan (ex Greenwich) product the rates of discontinuance are based on the pricing assumption for this product, beginning at
20% in year 1, and reducing ultimately to 3% per annum (2020: 40% to 3%).
For Quick Cover the rates of discontinuance are based on the pricing assumption for this product, beginning at 15% in year 1, and reducing
ultimately to 10% per annum (2020: 20% reducing to 10%).
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 $0.00 (2020: $0.00) per $1,000 of sum assured on
endowment policies.
k) Impact of changes in assumptions
The impact of the change in the discount rate is a reduction in policy liabilities of $223,000 (2020: increase of $331,000).
The policy liabilities are not affected by the revised expense assumptions (2020: no change).
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 value of non-life outstanding claims and the Liability Adequacy Test of the non-life business, have been carried out in accordance with
Professional Standard no. 30. 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.
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 14 August 2020.
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)
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
C. Surplus after taxation from insurance activities arose from:
Insurance Contracts
Planned margin of revenues over expenses
Change in discount rate: 1.11% to 1.98% (2020:1.83 to 1.11%)
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
2021
$’000
435
185
10,720
211
733
12,284
2020
$’000
339
(331)
3,711
240
982
4,941
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
2020
$’000
39,277
(77)
189
287
37,248 39,676
2021
$’000
36,898
1,582
(1,473)
241
1,126
(30)
5 127
(174)
(77)
451
1,582
Included within equity securities is dividend income of $Nil (2020: $Nil) and included within fixed interest securities is interest income of $Nil
(2020: $Nil). Included within total Investment Income is net realised and unrealised gains/(losses) on securities at fair value through profit or loss
of $1,582,000 (2020: ($77,000)).
78
79
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
E. Insurance related expenses
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
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
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 2021 are $5,276,000 (2020: $5,180,000).
Imputation credit memorandum account
The policyholder imputation credit account has a closing balance at 31 March 2021 of $Nil (2020: $Nil).
2021
$’000
21,566
570
2,256
989
3,245
43
143
122
-
520
252
346
5,322
14,943
4,184
(1,524)
(1)
2,659
3,264
(514)
(91)
2,659
7,181
(514)
-
-
6,667
(111)
(503)
100
(514)
2020
$’000
23,890
587
2,067
701
2,768
42
836
126
1,566
558
218
442
5,934
6,712
1,879
(106)
1
1,774
2,949
(1,176)
1
1,774
8,369
(1,184)
(4)
-
7,181
(681)
(487)
(16)
(1,184)
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
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
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
2021
$’000
41,382
19,151
2.16
19,151
22,231
2.16
34,805
16,315
18,490
6,577
2,836
3,741
2021
$’000
51,420
1,434
-
247
53,101
57,927
5,748
5,066
(21,537)
5,916
(19)
53,101
218
7,377
2020
$’000
32,321
16,598
1.95
16,598
15,723
1.95
24,324
14,244
10,080
7,997
2,354
5,643
2020
$’000
51,785
1,032
(1,566)
169
51,420
55,586
6,475
5,880
(22,541)
6,286
(266)
51,420
221
7,175
1,405
7,072 7,484
(260)
1,410 1,529
(1,441)
(240)
8,116 7,072
(1,560)
(211)
80
81
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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
IBNR provision
Reconciliation of movement in general gross claims liability
Opening Balance
Movement
Payments
Closing Balance
2021
$’000
1,150
201
4,800
5,866
6
77
37,193
3,827
8,116
(19)
61,217
8,116
53,101
61,217
118
2,756
2,874
2020
$’000
1,280
232
4,504
5,669
7
53
36,718
3,223
7,072
(266)
58,492
7,072
51,420
58,492
118
2,473
2,591
2,591
16,613
(16,330)
2,874
3,133
20,277
(20,819)
2,591
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.
Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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 2021
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
Fair value gain on revaluation of investment properties
Investment income
Profit before taxation
Taxation
Profit after taxation
Statement of financial position as 31 March 2021
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 2020
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
Fair value gain on revaluation of investment properties
Profit before taxation
Taxation
Profit after taxation
Statutory
$’000
6,555
(570)
1,515
352
7,852
(3,924)
(143)
(592)
(1,195)
1,998
-
753
2,751
(770)
1,981
Statutory
$’000
28,571
-
28,571
8,116
13,034
-
844
21,994
6,577
2,836
3,741
Statutory
$’000
6,447
(587)
419
404
6,683
(2,529)
(836)
(598)
(1,747)
973
751
-
1,724
(455)
1,269
Shareholder
$’000
30,343
-
12
1,664
32,019
(17,642)
-
(1,664)
(7,931)
4,782
5,425
1,985
12,192
(1,889)
10,303
Shareholder
$’000
80,987
36,670
117,657
-
40,067
6,667
6,115
52,849
34,805
16,315
18,490
Shareholder
$’000
32,830
-
11
1,865
34,706
(21,361)
-
(1,469)
(9,896)
1,980
2,511
500
4,991
(1,319)
3,672
Total
$’000
36,898
(570)
1,527
2,016
39,871
(21,566)
(143)
(2,256)
(9,126)
6,780
5,425
2,738
14,943
(2,659)
12,284
Total
$’000
109,558
36,670
146,228
8,116
53,101
6,667
6,959
74,843
41,382
19,151
22,231
Total
$’000
39,277
(587)
430
2,269
41,389
(23,890)
(836)
(2,067)
(11,643)
2,953
3,262
500
6,715
(1,774)
4,941
82
83
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021 Turners Automotive Group Limited
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Statement of financial position as 31 March 2020
Assets
Investments backing insurance policy liabilities
Other assets
Total assets
Statutory
$’000
27,557
-
27,557
Shareholder
$’000
70,679
37,361
108,040
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
Less: depreciation on investment property disclosed as property, plant and
equipment
Operating profit (note 6)
7,072
12,111
-
378
19,561
7,997
2,354
5,643
-
39,309
7,181
7,046
53,536
24,324
14,244
10,080
2021
$’000
14,943
(5,425)
(168)
9,350
Total
$’000
98,236
37,361
135,597
7,072
51,420
7,181
7,424
73,097
32,321
16,598
15,723
2020
$’000
6,715
(500)
-
6,215
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.
2021
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
-
-
-
1,514
-
36,328
8,163
(21,566)
3,434
(11,525)
(1,405)
109
79
-
14,834
12,205
Total
$’000
36,328
8,163
(21,566)
4,948
(11,525)
(1,405)
14,943
12,284
8,116 53,101 61,217
8,254 101,304 109,558
- 36,670 36,670
- 13,627 13,627
1,329 23,705 25,034
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
Investment linked
$’000
Non – investment
linked
$’000
Total
$’000
2020
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
-
-
-
(150)
-
261
111
80
(23,890)
38,690 38,690
3,762 3,762
- 23,890
2,588 2,438
- 14,546
- 261
6,604 6,715
4,861 4,941
(14,546)
7,072 51,420 58,492
7,197 91,039 98,236
- 37,361 37,361
- 14,605 14,605
1,250 14,900 16,150
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 fixed and
guaranteed terms
Life insurance
contracts with
discretionary
participating benefits
(endowment and
whole of life)
Life Annuity
Contracts
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
Nature of compensation for 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
Benefits
the
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
84
85
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2021
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2021
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
Impact of movement in underlying variable
An increase in the level or inflationary growth of expenses over assumed levels will decrease profit and shareholders’
equity
Mortality rates
Interest rate risk Depending on the profile of the investment portfolio, the investment income of the Group will decrease as interest rates
decrease. This may be offset to an extent by changes in the market value of fixed interest investments. The impact on
profit and shareholder equity depends on the relative profiles of assets and liabilities, to the extent that these are not
matched
For insurance contracts providing death benefits, greater mortality rates would lead to higher levels of claims,
increasing associated claims cost and therefore reducing profit and shareholder equity
The impact of discontinuance rate assumption depends on a range of factors including the type of contract, the
surrender value basis (where applicable) and the duration in force. For example, an increase in discontinuance rates
at earlier durations of life insurance contracts usually has a negative effect on profit and shareholder equity. However,
due to the interplay between the factors, there is not always an adverse outcome from an increase in discontinuance
rates
For benefits which are not contractually linked to the underlying assets, the Group is exposed to Market Risk
Discontinuance
Market Risk
The table below illustrates how changes in key assumptions would impact the reported profit and liabilities of the Group.
STATUTORY INFORMATION
STATUTORY INFORMATION
Directors’ remuneration and other benefits for the financial year ended 31 March 2021
Grant Baker
Paul Byrnes
Martin Berry
Matthew Harrison (1)
Alistair Petrie
John Roberts (2)
Antony Vriens (3)
Directors’ fees
$
142,500
71,250
71,250
71,250
71,250
71,250
71,250
1. During the year ended 31 March 2021 Mr Harrison received an additional $14,250 (2020: $15,000) in fees for services as chairman of
the Credit and Lending Committee.
2. During the year ended 31 March 2021 Mr Roberts received an additional $14,250 (2020: $15,000) in fees for his services as chairman
of the Audit and Risk Management Committee.
3. During the year ended 31 March 2021 Mr Vriens received an additional $33,250 (2020: $35,000) in fees for his services as chairman of
DPL Insurance Limited.
Disclosure of interests recorded in the interest’s register
There were no new specific disclosures of interests entered in the interests’ register in the accounting period ending 31 March 2021.
Dealings in Turners Automotive Group Limited shares by Directors
Date of transaction
Shares acquired
Consideration paid
$
Grant Baker
17/03/2021
350,000
1,160,785
Nature of relevant interest
Joint Trustee of the Baker Family Trust,
with deemed control over shares held by
Montzemolo Holding Limited
John Roberts
20/01/2021
5,900
19,804
Registered holder and beneficial interest
Effect on policy
liabilities
Effect on
future profit
Directors’ relevant interest in quoted shares as at 31 March 2021
Change in ke y assumptions ($'000)
2021
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%
2020
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%
(239)
265
1
(1)
(5)
6
-
-
(238)
265
1
(1)
(5)
6
-
-
(20)
22
(13)
13
(103)
113
32
(36)
(48)
52
(28)
28
(241)
265
76
(86)
Grant Baker
Paul Byrnes
Martin Berry
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
Shares
6,450,000
2,484,860
500,000
5,179,294
25,011
71,900
-
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
Me Today Limited (Chairman)
Velocity Capital LP
Liam Lawson Supporters Partnership LP (Chairman)
Paul Byrnes
Vic Road Restaurant Group Limited
Ship to Shore Restaurant Group Limited
John Roberts
Apollo Foods Limited
Centrix Group Limited
86
87
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
STATUTORY INFORMATION
STATUTORY INFORMATION
Matthew Harrison
Harrigens Trustees Limited
JHFT Trustees Limited
GJG Trustees No.2 Limited
GJG Trustees Limited
MJH Consultants Limited
HD Property Company Ltd
Farne Investments Ltd
Hawkes Bay Legal Trustees (Harrison Trusts) Ltd
Antony Vriens
Me Today Limited
Alistair Petrie
RH Investment Trust
Trustee of Dossor Trust
Bartel Holdings Ltd
Darling Group Holdings
Jellicoe St Enterprises Ltd
Zeafruit Limited
Melita Honey Limited Advisory Board
Martin Berry
Launcho Ventures Pte. Ltd
Gong Cha Global Ltd
Employee remuneration
During the financial year ended 31 March 2021, 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
2021
16
13
13
2020
21
16
14
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
290,000 – 299,000
300,000 – 309,999
310,000 – 319,999
340,000 – 349,999
360,000 – 369,999
370,000 – 379,999
420,000 – 420,999
430,000 – 439,999
460,000 – 469,999
510,000 – 519,999
640,000 – 645,000
830,000 – 839,999
8
4
8
3
6
6
2
2
-
2
1
2
2
1
1
1
-
-
1
1
1
-
-
1
1
1
-
1
4
8
4
4
8
3
2
-
2
-
1
-
-
-
-
-
3
1
-
-
-
1
1
-
-
-
1
-
STATUTORY INFORMATION
STATUTORY INFORMATION
STOCK EXCHANGE LISTINGS
The Company's shares are listed on the NZX Main Board (equity and securities markets) operated by NZX Limited (NZX) and as a foreign exempt
entity on the Australian Securities Exchange (equity securities market) operated by ASX Limited (ASX).
PRINCIPAL ORDINARY SHAREHOLDERS AS AT 31 MAY 2021
The following table shows the names and holdings of the 20 largest holdings of quoted ordinary shares (TRA) of the Company as at 31 May 2021.
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
Montezemolo Holdings Limited
Harrigens Trustees Limited
FNZ Custodians Limited
JBWere (NZ) Nominees Limited
HSBC Nominees (New Zealand) Limited - NZCSD
National Nominees Limited - NCSD
Stephen John Sinclair & Jacqueline Margaret Sinclair & Roger Frederick Wallis
Custodial Services Limited
Paul Bernard Mora
BNP Paribas Nominees (NZ) Limited - NZCSD
Paul Anthony Byrnes
Accident Compensation Corporation - NZCSD
John Jeffers Harrison
Glenn Arthur Duncraft
New Zealand Depository Nominee Limited
Custodial Services Limited
Forsyth Barr Custodians Limited
Public Trust - NZCSD
Cushla Mary Smithies
SPREAD OF ORDINARY SHAREHOLDERS AS AT 31 MAY 2021
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
6,450,000
5,179,294
4,257,955
2,517,168
2,242,711
2,230,366
2,171,461
2,132,611
1,950,312
1,698,334
1,484,860
1,442,175
1,363,782
1,100,000
1,097,549
930,686
767,700
749,758
542,841
11.17
7.54
6.05
4.98
2.94
2.62
2.61
2.54
2.49
2.28
1.99
1.74
1.69
1.59
1.29
1.28
1.09
0.90
0.88
0.63
Total Holders
Shares
% of Issued
Capital
1,765
840
863
491
635
57
52
4
13
4,720
792,635
1,143,283
2,643,181
3,246,034
12,493,472
3,722,750
9,772,912
2,760,981
0.94
1.34
3.09
3.79
14.60
4.35
11.42
3.23
48,969,000
85,544,248 100.00
57.24
DOMICILE OF ORDINARY SHAREHOLDERS AS AT 31 MAY 2021
Number
%
Number
%
Shareholders
Shares
New Zealand
Australia
Other
Total
4,559
71
90
4,720
96.59
1.50
1.91
100.00
84,667,200
374,031
503,017
85,544,248
98.97
0.44
0.59
100.00
88
89
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
STATUTORY INFORMATION
STATUTORY INFORMATION
SUBSTANTIAL PRODUCT HOLDERS
The following information is given under section 293 of the Financial Markets Conduct Act 2013.
As at 31 March 2021 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
Montezemolo Holdings Limited
Harrigens Trustees Limited
Salt Funds Managers Limited
Number of Shares
%
11.17
7.54
6.05
6.00
9,552,642
6,450,000
5,179,294
5,135,773
The total number of quoted voting products of the company on issue at 31 March 2021 was 85,544,248 paid ordinary shares.
CORPORATE GOVERNANCE REPORT
CORPORATE GOVERNANCE REPORT
Turners’ Board of Directors has adopted a corporate governance framework which encourages the highest standards of ethical
conduct and provides accountability and control systems commensurate with the risks involved.
The Board considers that this framework and governance practices for the year ended 31 March 2021 are generally in line with
the 10 December 2020 NZX Corporate Governance Code, except as stated below:
• Recommendation 2.5: An issuer should have a written diversity policy which includes requirements for the board or
relevant committee of the board to set measurable objectives for achieving diversity: Turners has a diversity policy which
encourages a culture of diversity and inclusiveness at Turners. While no measurable objectives are in place, the board requires
management to provide regular reporting and monitoring on diversity within the Turners workforce. The Board also uses tools
such as the quarterly staff engagement survey to measure diversity and how the business is recognising, valuing and respecting
differences to establish benchmark measures and progress.
• Recommendation 2.9: An issuer should have an independent chairperson of the board. The chairperson of the board is
Grant Baker, a non-executive director. Grant has a 7.54% shareholding in Turners and therefore the Board has determined that
he is not an independent director. The chair is not the CEO of Turners, is not involved in the day to day running of the business
and does not have significant influence over operational decisions.
• Recommendation 3.3 and 3.4: An issuer should have a remuneration committee and a nomination committee.
Due to the size of the Company's Board, matters normally dealt with by a remuneration committee or nominations committee are
dealt with by the full Board.
The Company will continue to monitor best practice in the governance area and update its policies to ensure it maintains the most
appropriate standards.
The information in this report is current as at 24 June 2021 and has been approved by the Board of Turners.
The Turners’ Corporate Governance Code and other key policies are available on the Turners Automotive Group Limited website:
https://www.turnersautogroup.co.nz/About+Us/Corporate+Governance.html.
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 Turners.
The Code of Ethics is the framework of standards by which directors, employees, contractors for personal services and advisers
to Turners and its related companies are expected to conduct their professional lives. It has been approved by the Board in April
2021.
The Code of Ethics is intended to facilitate decisions that are consistent with Turners values, business goals and legal and policy
obligations, thereby enhancing performance outcomes. In particular, it covers conflicts of interest, gifts, confidentiality, corporate
opportunities, behaviour, proper use of assets and information and compliance with laws and policies. No donations have been
to any political parties in FY21.
The Code of Ethics is available on the Company’s website. Employees are expected to report any breaches in line with the
processes outlined in the Code of Ethics. Turners has a Whistle Blower Policy to allow employees to raise the alarm on concerns
they may have over malpractice without fear of retribution from their colleagues or employer.
The Board believes that all directors conformed to the Code of Ethics during the 2021 financial year.
Turners has a Quoted Financial Product Trading Code of Conduct to mitigate the risk of insider trading in Turners financial
products by employees and directors. A copy of this is available on Turners’ website. Additional trading restrictions apply to
Restricted Persons including directors and certain employees. Details of directors’ share dealings are on page 87 of the 2021
Financial Statements.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
CORPORATE GOVERNANCE REPORT cont.
CORPORATE GOVERNANCE REPORT cont.
PRINCIPLE 2 – BOARD COMPOSITION AND PERFORMANCE
Director’s interests are disclosed on pages 87 to 90 of the 2021 Financial Statements.
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;
the role and responsibilities of directors;
procedures for the nomination, resignation and removal of directors;
identifies procedures to ensure that the Board meets regularly, conducts its meetings in an efficient and effective
manner; and
ensures that each Director is fully empowered to perform his or her duties as a director of Turners and to fully participate
in meetings of the Board.
Day to day management of Turners is undertaken by the executive team 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.
Newly elected directors are expected to familiarise themselves with their obligations under the constitution, Board Charter,
Turners Corporate Governance Code and the NZX Listing Rules. Training is also provided to new and existing Directors where
required to enable directors to understand their obligations.
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 Turners Constitution.
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.
Directors will retire and may stand for re-election by shareholders every three years, in accordance with the NZX Listing Rules.
A Director appointed since the previous annual meeting holds office only until the next annual meeting, but is eligible for re-
election at that meeting.
When a director is newly appointed, Turners will enter into a written agreement with them setting out the terms of their
employment.
The Board currently comprises of seven directors: a non-executive chairman, four independent directors and two non-executive
directors. While the Board is very active, non-executive directors are not involved in the day to day running of the business and
have no influence over operational decisions. Directors are all elected based on the value they bring to the Board and against
set criteria detailed in Turners Corporate Governance Code. The Board believes that the current directors provide valuable
expertise and experience and offer complementary skill sets. The mix of long-standing and newer directors ensures that continuity
of knowledge and organisational memory is balanced with fresh perspectives.
As at 31 March 2021, Board members were:
Paul Byrnes, Deputy chairman and Independent Director: Appointed 2 February 2004
• Grant Baker, Non-executive Chairman: Appointed 10 September 2009
•
• Martin Berry, Independent Director: Appointed 17 August 2018
• Matthew Harrison, Non-executive director: Appointed 12 December 2012
•
Alistair Petrie, Non-executive director: Appointed 24 February 2016
•
John Roberts, Independent Director: Appointed 1 July 2015
•
Antony Vriens, Independent Director: Appointed 12 January 2015
In order for a Director to be an independent director, the Board has determined that the relevant director must not be an executive
of Turners and must have no disqualifying relationships. The Board follows the guidelines of the NZX Corporate Governance
Code.
Information on each director is available on the Turners website and on page 20 and 21 of the 2021 Annual Report.
Board Training and Performance
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. An external review was conducted in FY20, and recommendations
regarding the quality and frequency of communication between management and the Board have been implemented.
Diversity
Turners believes that diversity and inclusion of background, experiences, thoughts and ways of working lead to greater creative
and innovative solutions which ultimately lead to a superior outcome for its stakeholders socially, economically and
environmentally.
Diversity in Turners includes (but is not limited to) the following: gender, race, ethnicity and cultural background, thinking, physical
capability, age, sexual orientation, and religious or political belief.
Turners Diversity and Inclusion Policy is available on the Turners website. The Board requires management to provide regular
reporting and monitoring on diversity and wellbeing within the Turners workforce.
The quarterly staff survey includes questions on equality with respondents rating Turners 8.2 out of 10 and higher.
As at 31 March 2021 the gender balance of Turners directors and people was as follows:
Directors
Senior Leadership
Management
Other Employees
Board Meetings and Attendance
31 March 2021
31 March 2020
Female
-
7
38
223
Male
7
26
54
274
Female
-
6
37
268
Male
7
26
57
377
The Board has 11 scheduled meetings a year. The table below sets out Directors’ attendance at Board and Committee meetings
during FY21. In total, there were 15 Board meetings; 3 Audit, Risk Management & Sustainability Committee meetings; and 18
Lending and Credit Committee meetings.
Board
15
15
14
12
15
15
14
15
Audit, Risk Management &
Sustainability committee
3
3
3
3
Lending & Credit committee
18
18
18
18
Total Number of Meetings Held
Grant Baker
Paul Byrnes
Martin Berry
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
PRINCIPLE 3 – COMMITTEES
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, Risk Management and Sustainability Committee and the
Lending and Credit Committee. Turners will continue to monitor best practice in the governance area and update its policies to
ensure it maintains the most appropriate standards.
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.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
CORPORATE GOVERNANCE REPORT cont.
CORPORATE GOVERNANCE REPORT cont.
The Committees meet as required and have terms of reference (Charters), which are approved and reviewed by the Board.
Minutes of each Committee meeting are forwarded to all members of the Board, who are all entitled to attend any Committee
meeting. Management may only attend committee meetings at the invitation of the Committee.
Each Committee is empowered to seek any information it requires from employees in pursuing its duties and to obtain
independent legal or other professional advice. The membership and performance of each Committee is reviewed annually. From
time to time, special purpose committees may be formed to review and monitor specific projects with senior management.
Audit, Risk Management & Sustainability Committee (ARMS Committee)
The role of the ARMS 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 Turner’s financial position and
make appropriate enquiry into the audits of the Turner’s financial statements. This responsibility includes providing the Board
with additional assurance about the quality and reliability of the financial information issued publicly by Turners. All matters
required to be addressed and for which the Committee has responsibility were addressed during the reporting period.
The Committee is comprised solely of non-executive Directors of Turners, has three members, has a majority of independent
Directors and has at least one director with an accounting or financial background. The Chair of the committee is not the Chair
of the Board and does not have a long-standing association with Turners’ external audit firm as a current, or retired, audit partner
or senior manager at that firm. 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. The
Committee Charter is available as Appendix B in the Turners Corporate Governance Code.
Turners’ full financial statements and half year results are available on Turners’ website.
Non-financial information
The Board recognises the importance of non-financial disclosure and in particular, environmental, social and governance (ESG)
matters. Turners has an Environmental, Social and Governance Policy in section 14 of Turners Corporate Governance Code. A
number of initiatives underway which supports Turners’ focus in these areas. The company is also in the process of establishing
and measuring emissions targets.
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. Turners 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.
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.
Members as at 31 March 2021 were John Roberts (Chair), Antony Vriens and Alistair Petrie. It met three times during the financial
year.
PRINCIPLE 5 – REMUNERATION
Lending and Credit Committee
The Lending and Credit Committee reviews the lending and credit policies of Turners’ Finance subsidiary company. 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 2021 were Matthew Harrison (Chair), Alistair Petrie and John
Roberts. It met eighteen times during the financial year.
Takeovers
Turners prepared in the event of a takeover. The Board has adopted a written Takeover Response Policy (contained within the
Turners 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’ directors are committed to keeping investors and the market informed of all material information about Turners and its
performance, and ensuring compliance with applicable legislative and the NZX Listing Rules. The release of material information
is guided by the Reporting and Disclosure section in Turners Corporate Governance Code, and the Turners Continuous
Disclosure Policy, which are available to view on Turners’ website.
Copies of other key governance documents are also available on Turners’ website.
In addition to all information required by law, Turners also seeks to provide sufficiently 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 Turners
and have been prepared using appropriate accounting policies, consistently applied and supported by reasonable judgements,
estimates and for ensuring all relevant financial reporting and accounting standards have been followed.
The Group Financial Controller holds the role of Company Secretary. In all accounting and secretarial matters, the Board ensures
that the Secretary’s reports are objective and that the Secretary has unfettered access to the chair and the ARMS committee,
without reference to the CEO.
For the financial year ended 31 March 2021, the directors believe that proper accounting records have been kept which enable,
with reasonable accuracy, the determination of the financial position of Turners and facilitate compliance with Part 7 of the
Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013. 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.
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 Turners.
The Board recognises that it is desirable that executive (including executive director) remuneration should include an element
dependent upon the performance of both Turners and the individual, and should be clearly differentiated from non-executive
director remuneration.
Details of directors and executives’ remuneration and entitlements for the 2021 financial year are detailed on pages 75 and 87 of
the Annual Report.
The Remuneration Policy is included in section 10 of Turners Corporate Governance Code. Turners does not have a
Remuneration Committee and matters pertaining to remuneration are dealt with by the full Board.
Director Remuneration
The total remuneration pool available for Directors is fixed by shareholders. The Board determines the level of remuneration paid
to Directors from the approved collective pool. Directors also receive reimbursement for reasonable travelling, accommodation
and other expenses incurred in the course of performing their duties. The annual fee pool limit is $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 policy is that no sum is paid to a director upon retirement or cessation of office.
While there is no formal requirement, all of Turners’ directors either directly or indirectly own shares in the company. Details of
shareholdings are on page 87 of the 2021 Financial Statements.
Board Remuneration
• Chairman $150,000
• Non-executive Director $75,000
• Chair of DPL Insurance Limited $35,000
• Chair of DPL Insurance Limited for duties as a non-executive director for TRA $75,000
• Chair of ARMS Committee $15,000
• Chair of Credit and Lending Committee $15,000
DPL Insurance is legally required to operate a separate board because it holds an insurance license with the Reserve Bank of
New Zealand. Antony Vriens is the current chairman of the DPL Insurance board and is also a non-executive director of Turners.
Details of individual Directors’ remuneration are detailed on page 87 of the 2021 Annual Report.
Turners does not pay fees upon retirement of directors.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
CORPORATE GOVERNANCE REPORT cont.
CORPORATE GOVERNANCE REPORT cont.
Executive Remuneration
Executive remuneration consists of a fixed base salary, a variable short term bonus paid annually and a long term incentive,
being 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 88 of the 2021 Financial Statements.
Details of the Group’s Share Option Plan are detailed on page 73 and 74 of the 2021 Financial Statements.
CEO Remuneration
The review and approval of the CEO’s remuneration is the responsibility of the Board. The CEO’s remuneration comprises a fixed
base salary, a variable short term bonus payable annually and a long term incentive, being participation in the Group’s Share
Option Plan.
The CEO’s remuneration can be summarised as follows:
Salary
Benefits
Subtotal
Pay for Performance
FY21
FY20
539,117
543,761
56,434
50,224
595,552
593,985
300,000
-
100%
-
Total
Remuneration
895,552
593,985
Short term incentive: A short term bonus is paid against profit targets agreed at the commencement of the year.
In July 2020, the CEO was granted 1,000,000 options at an exercise price of $2.00 under the Group’s Share Option Plan. The
grant is split into 4 tranches of 250,000 options with the following vesting dates; 1 June 2021, 1 June 2022, 1 June 2023 and 1
June 2024. Each tranche expires two years after the vesting date.
The weighted average fair value of the options granted, using the Binomial Tree option pricing model, was $0.31 per option.
If a participant in the Group Share Option Plan leaves (by any means and for any reason) the employment of the Company or
any applicable subsidiary, the participant’s options which have reached their vesting date, together with any other options as may
be nominated at the discretion of the Board of Directors of the Company in extraordinary circumstances (such as the redundancy,
permanent disablement or death of a Participant), may be exercised within a period of 60 days (following which they will lapse)and
the participant's other Options will lapse immediately.
PRINCIPLE 6 – RISK MANAGEMENT
Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The
Board should regularly verify that the issuer has appropriate processes that identify and manage potential and material
risks.
Turners is committed to proactively managing risk. While this is the responsibility of the entire Board, the ARMS 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 ARMS Committee Charter which is included as Appendix B in
Turners Corporate Governance Code. 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. Individual risks are discussed with the Board in detail as
required.
Key financial and non-financial risks are included in note 5 of the 2021 Financial Statements.
Turners has a Health and Safety Policy which is monitored by a Health and Safety Committee assisted by Health and Safety
coordinators in each business unit. Health and Safety reports for all business units are included in the compliance section of
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 Corporate Governance Code) and ensures that audit independence is maintained, both in fact and
appearance, such that Turners external financial reporting is viewed as being highly reliable and credible.
The ARMS 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 ARMS Committee Charter (Appendix B of the Turners Corporate Governance Code).
For the financial year ended 31 March 2021, Baker Tilly Staples Rodway was the external auditor for Turners Automotive Group
Limited. Baker Tilly Staples Rodway were first appointed as external auditor in 1999 and were automatically re-appointed under
the Companies Act 1993 at the 2020 Annual Shareholder Meeting. The last audit partner rotation was in the 2020 calendar year.
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 Baker Tilly Staples Rodway for audit and other services is identified on page 57 of the 2021 Annual Report.
Baker Tilly Staples Rodway has provided the Turners’ Board with written confirmation that, in their view, they were able to operate
independently during the year.
Baker Tilly Staples Rodway attends the Annual Shareholder Meeting, and the lead audit partner is available to answer questions
from shareholders at that meeting. Baker Tilly Staples Rodway attended the 2020 Annual Shareholder Meeting.
Turners has a number of internal controls overseen by ARMS Committee, including controls for computerised information system,
security, business continuity management, insurance, health and safety, conflicts of interest, and prevention and identification of
fraud. Turners does not have a dedicated 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
Annual Shareholder Meeting
Financial results calls
•
• Market announcements
•
•
• 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
Turners maintains a comprehensive investor relations 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 Shareholders’ Meeting and may raise matters for discussion at this event.
The company live streams the annual meeting, which is accessible worldwide. In 2020, due to COVID-related disruption, the
meeting was held online only.
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.
In accordance with the NZX Corporate Governance Code, the Board ensured that the notice of the 2020 Annual Shareholder
Meeting was posted to Turners’ website as soon as possible, and at least 20 working days prior to that meeting.
Health and Safety
The 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.
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 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 shareholder communications in electronic form (by email).
In addition to shareholders, Turners has a wide range of stakeholders and maintains open channels of communication for al
audiences, including shareholders, brokers and the investing community, as well as staff, suppliers and customers.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
DIRECTORY
CORPORATE DIRECTORY
CORPORATE DIRECTORY
DIRECTORS
Grant Baker
Chairman
Appointed 10 September 2009
REGISTERED OFFICE
Level 5, 70 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
Consolidated statement of financial position for the year ended 31 March 2016
Paul Byrnes
Deputy chairman
TURNERS LIMITED
Appointed 2 February 2004
Consolidated statement of financial position for the year ended 31 March 2016
Martin Berry
Independent Director
Appointed 17 August 2018
AUDITOR
Baker Tilly Staples Rodway
Deferred tax asset
Deferred tax asset
20
20
4,024
4,024
Matthew Harrison
Non-executive director
Appointed 12 December 2012
Assets
Cash and cash equivalents
Assets
Alistair Petrie
Non-executive director
Cash and cash equivalents
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
Inventory
John Roberts
Inventory
Independent Director
Finance receivables
Appointed 1 July 2015
Finance receivables
Other receivables and deferred expenses
Other receivables and deferred expenses
Reverse annuity mortgages
Reverse annuity mortgages
Antony Vriens
Property, plant and equipment
Independent Director
Property, plant and equipment
Appointed 12 January 2015
Tax receivables
Tax receivables
Intangible assets
Intangible assets
SHAREHOLDER INFORMATION
Total assets
Total assets
Liabilities
Liabilities
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
Other payables
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
Insurance contract liabilities
Second quarterly dividend
Third quarterly dividend
End of financial year
Annual results announced
Shareholders’ equity
Annual report
Share capital
Final dividend
Other reserves
Shareholders’ equity
Total liabilities
Total liabilities
Share capital
Other reserves
Retained earnings
Retained earnings
October
August
November
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
11
12
13
14
15
16
19
10
11
12
13
14
15
16
19
21
105,338
21
SHARE REGISTER
362,303
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna, Auckland
Private Bag 92119, Auckland 1142, New Zealand
Telephone: +64 9 488 8777
22
105,338
362,303
22,270
22,270
22
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
142,827
142,827
8,505
8,505
9,734
9,734
11,108
11,108
-
-
5,946
5,946
13,253
13,253
8,319
8,319
433
433
8,532
8,532
103,595
103,595
328,972
328,972
17,790
17,790
23
23
6,049
6,049
7,476
7,476
24
32
32
24
32
32
990
990
49
49
71
71
-
-
174,816
174,816
156,995
156,995
15,629
15,629
16,378
16,378
12,688
12,688
9,260
9,260
232,491
232,491
207,970
207,970
25
25
136,127
136,127
135,294
135,294
(52)
(52)
(6,263)
(6,263)
(23)
(23)
(14,269)
(14,269)
Total shareholders’ equity
Total shareholders’ equity and liabilities
Total shareholders’ equity
ENQUIRIES
Total shareholders’ equity and liabilities
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
129,812
362,303
328,972
121,002
129,812
121,002
STOCK EXCHANGE
The Company’s shares trade on the NZX Main Board operated by the NZX Limited under the code TRA and as an exempt foreign entity
For and on behalf of the Board
on the ASX operated by ASX Limited.
For and on behalf of the Board
This annual report is dated 24 June 2021 and is signed on behalf of the board by:
G.K. Baker
G.K. Baker
G.K. Baker
Chairman
Chairman Director
Chairman Director
P.A. Byrnes
P.A. Byrnes
P.A. Byrnes
Deputy chairman
Executive Director
Executive Director
Authorised for issue on 22 June 2016
Authorised for issue on 22 June 2016
The accompanying notes from part of these financial statements
The accompanying notes from part of these financial statements
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2021
Turners Automotive Group Limited
Level 5, 70 Shortland Street
PO Box 1232, Auckland 1140
T: 0800 100 601
E: info@turnersautogroup.co.nz
www.turnersautogroup.co.nz