WE’RE
READY
ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2022
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 2022.
Grant Baker
Chairman
Todd Hunter
Group Chief Executive Officer
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
OUR VISION
OUR THREE-YEAR PLAN
FY22 AT A GLANCE
CHAIR AND CEO’S REPORT
FY23 PRIORITIES
CREATING A BETTER BUSINESS
OUR PEOPLE
OUR CUSTOMERS
GIVING BACK TO OUR COMMUNITIES
A CLEANER, LOWER EMISSION FUTURE
FY22 FINANCIAL REVIEW
THE BOARD
THE EXECUTIVE TEAM
FINANCIAL STATEMENTS
4
6
8
10
15
17
18
22
24
25
26
28
30
32
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
OUR VISION
IS TO BE NEW ZEALAND’S LEADING
ECOSYSTEM FOR VEHICLE USERS.
AUTOMOTIVE RETAIL
FINANCE
■ New Zealand’s largest buyer and seller
of vehicles
■ One car sold every 6 minutes
■ Branches and sites from Whangarei to
Invercargill
■ Awarded New Zealand’s number 1 Most
Trusted Used Vehicle Dealership in the
Readers Digest Trusted Brands awards
for three years in a row
■
“Bricks and Clicks” retail model,
combining our nationwide network with
market leading online digital experience
■ Targeting high quality consumer and
commercial lending – primarily for
automotive customers
■ Loans originated through the Turners
Auto Retail network and third party
independent dealers and brokers
■ $423m in receivables
■ More than 25,000 current consumer
loans
■ Average loan size $13,500
INSURANCE
CREDIT MANAGEMENT
■ Helping Kiwis with motor vehicle, loan
protection and life insurance solutions,
distributed through 721 licensed car
dealers, finance companies & brokers,
and life insurance advisers as well as
online
■ 5,200+ policies sold every month;
180,000+ active policies
■ $39.9m in new policies sold in FY22
■ A recognised leader in the debt
collection and credit management
sectors, for both corporate and SME
customers
■ $84m in corporate debt load in FY22;
36% average recovery rate
■ $37m-plus collected from debtors in
FY22
■ 2,534 SME customers loading debt in
■ Average 1,400 claims paid out monthly;
FY22
$19.1m in claims paid out in FY22
WE’RE
READY.
With another record year
of results, a stronger
and de-risked business,
a clear strategy and a
near-term economic
outlook that is looking
more uncertain, our
business has never been
in better shape. We
are ready for whatever
comes next.
■ We achieved 15% growth in profit before tax in
FY22…another record year for the business, and 48%
growth in profits since FY19
■ Our business has been strengthened and de-risked
over the last three years. We have found the right
formula and will optimise further:
1. Building out an omni-channel experience in Auto
Retail
2. Growing our retail market share through branch
expansion and retail optimisation
3. De-risking our loan book by growing in the
premium borrower segment
4. Broadening digital distribution in Insurance
■ We are across the challenges in the macro
environment and are working proactively to
minimise their impact.
■ The used car market in NZ performs well through
economic cycles. Consumers are purchasing out of
need, not discretion.
Looking beyond FY23, we remain very confident
about further growth over the medium to longer
term and we have updated our three-year rolling
target to cross over $50m of profit before tax by
FY25.
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5
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
OUR THREE-YEAR PLAN
FOR GROWTH: FY23 TO FY25
Our plan centres
on organic growth,
underpinned by four
key areas. These are a
combination of both
physical and digital
investments.
RETAIL OPTIMISATION AND EXPANSION
Expansion of the physical branch network and
optimisation of people, property and processes,
with a focus on delivering the optimal customer
experience.
VEHICLE PURCHASING DECISION-MAKING
Use of data and tools to help identify new sourcing
opportunities, and leveraging our brand strength to
generate local sourcing leads.
MARGIN MANAGEMENT AND PREMIUM
LENDING
Use of comprehensive credit data to strengthen
our risk pricing strategy and attract higher quality
borrowers, with lower margins more than offset by
much lower impairments and losses.
CONTINUED INVESTMENT IN DIGITAL AND
OMNI-CHANNEL CUSTOMER EXPERIENCE
Continued investment in digital and improvement
of our omni-channel customer experience which
allows customers to engage with us however,
whenever and wherever they want.
We have found the right formula and are
confident our actions will deliver continuing
growth over the next three years.
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7
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
FY22 AT A GLANCE
■ Strong consumer demand despite continued disruption
FY22 FINANCIAL SNAPSHOT
REVENUE
SEGMENT REVENUE
from COVID-19 lockdowns and Omicron outbreak
■ Employee engagement at an all-time high (top 5% of
companies using Peakon tool); continued to increase at
a time where retention and recruitment have been under
significant pressure
■ Record earnings from
divisions operating in
the used car market
(Auto Retail, Finance and
Insurance)
■ Auto Retail: Market share continued to grow in Auto Retail
■ Record NPBT up 15% to
with a good pipeline of new branches
$43.1m
■ Finance: Quality lending strategy resulting in arrears at
■ NPAT up 16% to $31.3m
record lows
■
Insurance: Strong new policy sales with improving claims
ratios
■ Credit Management: Debt load
returning slowly but environment
should be more productive in FY23
■ Macro headwinds (inflation and
interest rates) starting to
impact… speed of change
biggest challenge
■ EBIT up 11% to $47.7m1
■ Underlying NPBT up 29%
to $44.1m2
■ Revenue up 14% to
$344.5m
■ Dividends up 15% to 23.0
cents per share
■ Earnings per share up 16%
to 36.4 cents per share
■ Unrealised property gains
per share 22 cents per
share (measured from
carrying value)
More information on Turners
FY22 financial results can be
read on pages 26 to 27 and in
the financial statements.
400
300
200
100
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FY18 FY19 FY20 FY21 FY22
FY18 FY19 FY20 FY21 FY22
60
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1 Earnings Before Interest and Tax (EBIT) adjusted for interest expense in Finance (non-IFRS measure)
2 Underlying Net Profit Before Tax (NPBT) 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 FY22, these totalled $1.0 million. A reconciliation can be viewed
on page 27.
FY18 FY19 FY20 FY21 FY22
400
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300
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■ 1H ■ 2H
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■ AUTO RETAIL ■ FINANCE ■ INSURANCE
■ CREDIT
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FY18 FY19 FY20 FY21 FY22
FY18 FY19 FY20 FY21 FY22
FY18 FY19 FY20 FY21 FY22
0
EARNINGS BEFORE INTEREST
AND TAX (EBIT)
60
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SEGMENT OPERATING PROFIT
50
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NET PROFIT AFTER TAX
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FY18 FY19 FY20 FY21 FY22
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FY18 FY19 FY20 FY21 FY22
■ AUTO RETAIL ■ FINANCE ■ INSURANCE
■ CREDIT
DIVIDENDS
25.0
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FY18 FY19 FY20 FY21 FY22
8
9
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
CHAIR AND CEO’S REPORT
“Our growth plans are
being realised and the
work we’ve been doing
over the last three years is
delivering serious traction
and positions us well for
an uncertain economic
environment. We are very
pleased with our progress
and proud of our track
record of continuing to
generate value for our
shareholders.”
Dear shareholder
We are very pleased with the FY22 year, which
delivered another record result for our business.
Our focus on quality is paying off and our
team’s engagement levels have never been
higher, at a time in the economy where staff
retention and recruitment is a real challenge.
Our brand value is growing across all our key
business divisions but the investment we have
made in the Turners brand in particular, has
created real tangible value both internally and
externally. Our track record is showing how
robust our business model is and we are ready
for what comes next.
Net profit before tax was up 15% to $43.1m,
despite the continued impact of COVID-19
restrictions and lockdowns. While consumer
demand remained stronger than we anticipated
in FY22, overall used car transaction levels
tracked well below pre-pandemic levels. The
processes put in place in FY21 have stood our
business in good stead and our geographic and
earnings diversification have again proved their
value in this environment.
The initiatives we put in place three years
ago are now paying off. Our retail momentum
continues to gain traction, with increasing
margins and market share. This is driving
growth in our Finance and Insurance business,
with a focus on quality in both these businesses
lifting our returns. Debt load is returning slowly
in the credit management business but we
expect the environment to be more productive
in FY23.
Our growing returns are driving much improved
outcomes for our shareholders, with increasing
Earnings Per Share and Dividends.
RECORD RESULT
Turners not only demonstrated earnings
resilience during FY22 but strong growth
credentials as well. Group revenue was up 14%
to $344.5m and three of the four segments
grew very strongly for a second year in a row,
delivering a record NPBT result of $43.1m, up
15% on the prior comparative period (pcp).
Demonstrating the benefits of the Group’s
resilience and diversified earnings, profit rose
in each of the three largest business units
(representing 94% of divisional operating profit).
Profit grew 24% in Insurance, 14% in Finance and
26% in Automotive Retail, contributing to strong
and sustainable yield. Revenue in the Credit
Management business was down on last year’s
result as consumer arrears tracked down and
clients issued “no communication” instructions
to “defaulters” during the lockdown. This
resulted in a 40% year on year profit decrease in
Credit Management.
Earnings Before Interest and Tax (EBIT) was up
11% to $47.7m, with Net profit after tax (NPAT)
of $31.3m, up 16% on pcp. Underlying NPBT was
up 29% to $44.1m. The business has a strong
balance sheet and supportive banking partners
and our funding mix is optimised to support
growth.
Earnings per share for FY22 were 36.4 cents
per share (cps), up 16% on pcp. A further 7.0
cps dividend has been declared for the final
payment of FY22 (payable in July 2022), taking
FY22 dividends to 23.0 cps. This reflects the
dividend policy to pay-out 60-70% of net profit
after tax (NPAT).
OPERATING PERFORMANCE BY DIVISION
AUTO RETAIL
Revenue $242.5m 21%
Operating Profit $19.4m 26%
Auto Retail has been both a margin and market
share growth story. Gross margins on “owned”
fleet have continued to improve (up 8% over
FY21 to $818 per vehicle) due to a number of
buying improvement initiatives, more retail sales
and constrained supply of used cars nationally.
Our market share has grown off the back of our
retail optimisation and expansion strategy with
Retail (BuyNow) sales up 6% over FY21 and
improving retail market share.
We launched a new branch in Rotorua during
the year and are redeveloping this site and
developing a new site in Nelson. We have also
secured new sites in Timaru and Napier and are
working on further opportunities.
Sourcing of vehicles in the local market has
been a top priority and our investment in
the very popular ‘Tina from Turners’ brand
campaign has helped build our inventory of
locally owned cars, with “owned” inventory
sales up 25% on FY21.
Another goal is to increase our finance attach
rate and thus further realise the synergies of
our related businesses. Despite the disruption
caused by the CCCFA changes in Dec-21, we
have improved our finance attach rate to 32.7%
(FY21 30.6%).
FINANCE
Revenue $51.9m 8%
Operating Profit $18.0m 14%
Our risk pricing model and focus on premium
borrowers has been very successful over the
last 12 months with the loan book growing 28%
to $423m. Premium borrower lending now
accounts for well over 50% of monthly lending.
We were pleased with how the business
navigated the Dec-21 CCCFA changes which
generated further market share growth
opportunities as other providers struggled to
cope with the change in process.
Arrears continue to track down at historic low
levels and, at year end, consumer arrears were
2.0% (4.9% Mar-21) and commercial arrears
were 0.5% (1.8% Mar-21). The business is still
retaining a COVID-19 arrears provision buffer to
allow for any unemployment increase in future
months.
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11
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 INSURANCE
Revenue $40.4m 4%
Operating Profit $11.6m 24%
Robust market share gains and distribution
agreements have helped drive strong policy
sales with Gross Written Premium up 6% on
FY21 to $39.9m, despite the impact of lockdown
periods. Our distribution arrangements
are working well (MTF, Marac Finance and
Motorcentral using Autosure API), and there is a
good pipeline of these opportunities ahead.
Claims costs are slightly down on FY21, in part
due to fewer repairs as a result of less vehicle
movement in lockdown periods. Parts price
inflation and labour rate increases are offsetting
the positive benefits of our parts procurement
initiatives.
Operating cost ratios are continuing a
decreasing trend with FY22 down to 22%
compared to 25% in the prior comparative
period.
During the year, AM Best reaffirmed the
Financial Strength Rating at B++ (good).
CREDIT MANAGEMENT
Revenue $9.7m 24%
Operating Profit $3.0m 40%
The Credit Management business continues
to have lower debt load levels due to the
historically low consumer arrears and
corporates working back into recovery action
post pandemic. Debt load in FY22 was down
54% on pre-pandemic levels and debt collected
down 35%. This is a significant hit to revenues.
Although debt load is down, we are seeing
positive signs in debt recovery rates due to the
new resolution collections strategy that was
implemented during the year (FY22 34% vs.
FY19 24%). Payment arrangement commitments
are also being met more often under the new
strategy (FY22 76%, FY21 74%, FY20 70%).
With the economic environment expected
to deteriorate, we expect debt load levels
to increase as a result. A similar pattern was
experienced post GFC, prior to a busy collection
period.
UNRECOGNISED PROPERTY GAINS OF
$18.8M3
We continue to see property ownership as a key
strategy that will ensure the long term resilience
of the business. Over the last seven years we
have continued to build our property portfolio
and have generated unrecognised gains on the
seven developed sites of just under $19m or 22
cents per share over this time, and 5.6 cents per
share in the FY22 year alone. Combining these
seven developed sites with new sites in Rotorua
and Nelson and the three committed sites in
Napier, Timaru and Tauranga (Tauriko), we
have just under $95m worth of property in the
portfolio. We also have offers and negotiations
under way in Tauranga and Christchurch.
GOVERNANCE
Turners has a strong Board who are very active
and passionate about our business. Many of our
directors have worked directly in the sectors
we operate in and have extensive knowledge
and insights which help us develop strategy
and oversee management initiatives. We believe
that having Directors with relevant industry,
commercial and governance skills is essential
for the continuing success of the Turners’ group.
We were pleased to appoint Lauren Quaintance
as an Emerging Director and believe the
addition of this role to our Board is an excellent
way to build board talent, knowledge and
expertise and ensure there is a succession plan
in place when required. Lauren is an award-
winning journalist and media executive turned
entrepreneur and marketer. Most recently,
she has been the co-founder and Managing
Director of Storyation, a leading digital content
marketing agency with offices in Auckland and
Sydney, which was sold to ASX-listed NewsCorp
Australia in late 2019. Lauren was named
3 Unrecognised property gains are generated from group owned properties that are subject to annual independent valuations and the
unrecognised gain is the difference between the valuation as at 31 March 2022 and the original cost of the properties.
Entrepreneur of the Year at the B&T Women
in Media Awards in Australia. Her journalistic
pedigree combined with digital marketing
experience and entrepreneurial skills fit well
with Turners’ direction and culture.
We also farewelled long-standing director,
Paul Byrnes, in February this year. Paul joined
the Board in February 2004 and had a huge
influence on the company during that time,
including acting as CEO for eight years. Paul
is a highly skilled director with broad business
experience, who bought considerable value
to Turners. On behalf of the Board, we would
like to acknowledge and thank Paul for his
considerable contributions.
OUR THREE-YEAR PLAN
Our three-year plan centres on organic growth
and is focused on four key areas, comprising
both physical and digital investments.
1. Retail Optimisation and Expansion across
people, property and processes.
2. Vehicle purchasing decision-making using
data and tools to help identify new sourcing
opportunities, and leveraging our brand
strength to generate local sourcing leads.
3. Margin management and 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.
OUTLOOK
Whilst the near-term economic outlook is
looking much more uncertain, our business has
never been in better shape and we are ready for
whatever comes next.
There are clear New Zealand and global
economic challenges over the next 12 to 24
months but we still see opportunities to grow
our business and market share. As we head
into an economic environment that will offer
up different challenges and opportunities, the
business has already been significantly de-
risked and we are continuing to extend our
competitive moat and build scale.
In Auto Retail, we expect to see upside from
our new branches in the second half of the
financial year. We are still anticipating a supply
constrained market for the next few years
due to the impact of a shortage of semi-
conductors, disruption to material supply and
impact of government regulation. Registered
dealer numbers are at the lowest point in the
last five years and we expect these to track
down further due to sector challenges. One
of the most attractive aspects of the used car
market is that it is a needs-based purchase and
therefore more resilient and less affected by
changing economic conditions.
Our strong supplier relationships, high trust
brand and digital platform position us well
to continue to gain market share and take
advantage of opportunities in the sector.
With the rapidly changing interest rate
environment, our priority in Finance shifts to
margin management and we expect Finance
“We couldn’t be more pleased about the shape the
business is in, the trajectory we’re on and the future
for the Turners business.”
12
13
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2016
Notes
2016
$’000
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
margins will be impacted in the short term as we deal with
the rapidly changing interest rate environment. In Insurance,
we expect new policy sales to be buoyant based on our
Assets
distribution and market share gains, and for claims ratios to
Cash and cash equivalents
stabilise. Lastly, in Credit Management, levels of bad debt
Financial assets at fair value through profit or loss
recovery are slowly starting to build. The business is expected
Trade receivables
to perform better as the economic conditions worsen and the
Inventory
resultant impact on consumer arrears.
Finance receivables
Other receivables and deferred expenses
Looking beyond FY23, we remain very confident about further
Reverse annuity mortgages
growth over the medium to longer term. We have updated
Property, plant and equipment
our three-year rolling target to grow to more than $50m of
Tax receivables
underlying profit before tax by FY25.
Deferred tax asset
Intangible assets
Total assets
$50M UNDERLYING PROFIT BEFORE TAX BY FY254
Liabilities
Other payables
Deferred revenue
60
Tax payables
Derivative financial instruments
Borrowings
50
40
Life investment contract liabilities
s
Insurance contract liabilities
n
o
Total liabilities
M
30
$
Shareholders’ equity
31.1
i
l
l
i
29
>$50m
43.1
37.4
29.1
10
11
12
13
14
15
16
19
20
21
22
23
13,810
18,455
9,575
14,156
167,598
8,505
9,734
11,108
-
4,024
105,338
362,303
22,270
6,049
49
24
32
990
In three years, we
are targeting a profit
174,816
before tax of more
15,629
than $50m. This
12,688
would equate to a
232,491
dividend payout of
26 cents per share.
32
Share capital
20
Other reserves
Retained earnings
10
Total shareholders’ equity
Total shareholders’ equity and liabilities
0
FY18
FY19
FY20
FY21
FY22
FY25
It has been a successful year for our business despite the
For and on behalf of the Board
challenges and we are well positioned and ready for the future.
On behalf of the Board and management, we would like to
thank our shareholders for your continued support.
25
136,127
(52)
(6,263)
129,812
362,303
Grant Baker
G.K. Baker
Chairman
Chairman Director
Authorised for issue on 22 June 2016
Todd Hunter
Group Chief Executive Officer
P.A. Byrnes
Executive Director
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
FY23
PRIORITIES
AUTO RETAIL
■ Stock acquisition – Keep
building domestic sourcing
■
Improve speed to sale –
operational cadence
■ Retail optimisation and
expansion – develop new sites
and build retail volumes
FINANCE
■ Pricing and margin
management
■
Improve credit decision
turnaround timing
■ Early settlement and loan
application conversion
INSURANCE
■ Expand distribution through
partnership strategy
■ Core insurance system
replacement
■ Continue to enhance risk
pricing and product features
CREDIT MANAGEMENT
■ Grow SME lead generation
capability
■ Build on “resolution” focused
collections strategy
■ Continue working closely
with corporates to manage
reputational risk
The accompanying notes from part of these financial statements
4 Underlying NPBT is a non-GAAP measure Reported NPBT ($m). Reconciliations for each of the periods can be found in the
respective Annual Results Presentation.
14
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
CREATING A BETTER BUSINESS
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.
Turners’ sustainability strategy is underpinned by two key
pillars:
■ Enhancing the well-being of our staff and the
communities in which we operate.
■ Supporting and accelerating the transition of the New
Zealand light vehicle fleet to a cleaner, lower emission
future.
We have a number of initiatives already in place which you
can read about on the following pages.
Turners is at the start of its sustainability reporting journey
and we are working towards increased transparency and
measuring of our footprint.
FY22
COMPLETED
■ Formalised Turners’
sustainability committee
■ Appointed sustainability
champions in each
business
■ Identified key
sustainability pillars
■ Initiatives undertaken
to support Turners’ long
term sustainability pillars
FY23
FY24
■ Confirm approach
to Climate Related
Disclosures and develop
reporting framework
■ Identify climate related
risks and opportunities for
Turners
■ Commence measuring
Scope 2 emissions
■ Integrate management of
climate related risks and
opportunities into risk
framework
■ Continue to develop
■ Define Scope 1 and 2
disclosure and reporting
measures
■ Commence measuring
Scope 1 emissions
■ Implement external
assurance process
■ Establish KPIs for
emissions and other
material issues
■ Increase disclosure and
reporting
16
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 OUR PEOPLE
Our ESG strategy in FY22 deliberately focused
on the social aspect, ensuring the health
and wellbeing of our people and customers
during the ongoing pandemic, and creating
a great environment for our people to work
in. We believe in doing the right thing for our
customers and our people and are committed
to ethical and fair conduct.
We are also investing in training and upskilling
staff, with the introduction of a new Learning
Management system during the year. More
than 7,000 development training hours
were undertaken by employees during the
year. During FY22, 64% of our leadership
vacancies were filled with internal candidates,
a testament to our culture of growing and
developing our people.
We also supported our people by providing
access to counselling sessions to discuss
both work and personal issues and offered
flu vaccinations, as well as supporting Mental
Health Awareness Week.
7000+
Employee development training
hours
27%
Employee turnover
221
Number of employees having
to isolate due to COVID-19
2%
Employee absentee rate (excluding
COVID-19 isolation period)
120
Number of employees accessing
EAP services during the period
EMPLOYEE WELLBEING INITIATIVES
653
Mental health awareness week
exercises
118
Flu vaccinations
HEALTH AND SAFETY
0
47
Employee notifiable injury/
incidents
Employee health and safety
reportable incidents (41 minor,
6 serious)
AS AT MARCH 2022, EMPLOYEES
RATED TURNERS AS FOLLOWS:
9.3/10
Turners is
responding
appropriately to
the COVID-19
pandemic
9.3/10
People from all
backgrounds are
treated fairly at
Turners
9/10
Employee Health
& Safety is a priority
at Turners
9/10
How likely is
that you would
recommend Turners
as a place
to work
EMPLOYEE ENGAGEMENT
In the current environment of growing
economic uncertainty, now more than ever
companies need staff who are fully engaged,
motivated and eager to contribute.
Our employee engagement score has
continued to increase at a time where
retention and recruitment has been under
significant pressure in the wider economy
and Turners ranks in the top 5% of consumer
businesses5.
Other stand out results from the Engagement
Survey support our focus on diversity,
inclusion and health and safety, and
demonstrate the focus of the company over
the past year.
PEAKON EMPLOYEE ENGAGEMENT SCORE
9
8.5
8
7.5
Aug-20 Oct-20 Dec-20 Mar-21 Jun-21 Sep-21 Nov-21 Mar-22
Across nearly 700 employees
we are averaging 9 out of 10
to the question “how likely is
it that you would recommend
Turners Auto Group as a place
to work?”.
5 Top 5% of consumer businesses using the Peakon system
18
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
HOME GROWN
TALENT IN ACTION
JEREMY ROOKE, CHIEF DIGITAL OFFICER
Over the last decade, Turners’ online and digital strategy has
developed into an essential platform and customer channel for
the business. Overseeing this evolution for more than 10 years
has been Jeremy Rooke, Turners’ Chief Digital Officer.
Jeremy has worked across dozens of high-value
transformative projects for Turners including the replacement
of Auto Retail’s core system and subsequent enhancements
including mobile apps, the inception and development of
AutoApp, and the development of Generator and partner
integrations to name a few. Of particular note are Jeremy’s
contributions in the innovation space, leading the charge on
Cartopia in 2016 and Turners Subscription in 2020 as exciting
opportunities to explore new consumer business models.
As Chief Digital Officer, Jeremy leads a team of 40, focussed
on empowering customers with innovative products and
experiences.
MARC WELLS, PROPERTY DEVELOPMENT MANAGER
With more than 38 branches and facilities nationwide, Marc
Wells is kept busy managing Turners’ ever expanding property
portfolio.
Joining Turners in 2010, Marc was originally in a commercial
manager role, before stepping into the newly created Property
Development Manager role in 2016. He oversaw the creation of
the Group Property Strategy as the business transitioned from
wholesale (auction) to a retail business and has been involved
in more than 30 property projects in the last six years,
including acquisitions, renovations and relocations.
Marc has strong relationships with landlords, developers,
commercial agents, professionals and consultants and his
understanding and experience managing development
projects has ensured these have come in on budget and on
time. He is responsible for Turners’ owned properties, as well
as negotiating and managing commercial leases for the group.
“The customer is at the centre of everything
for our team – this includes our internal
Turners people, as well as external customers
and partners. We’re focussed on using
technology to make things easier and simpler,
as well as creating innovative products,
services and experiences that make Turners
the number one choice.”
“I love working in such a dynamic
environment with a supportive Executive
team and Board. It’s great to see the
value our property work brings to both
the business, the work environment for
our people and for our customers as we
expand our retail network.”
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
OUR CUSTOMERS
Customers are at the
heart of our business and
our team is committed to
delivering a world class
customer experience.
We have introduced
customer experience
measures across all
parts of the business as
part of “good customer
outcomes” focus.
In Auto Retail, our focus on customer experience
is reflected in winning the Readers Digest Trusted
Brands Award for the Most Trusted Used Vehicle
Dealership for the third year in a row.
Every month a selection of customers are surveyed
across our 19 branches using BuyerScore, an
independent rating and review collection service for
vehicle dealers in New Zealand. In the latest survey,
96% of reviewers said they would recommend Turners
to their friends and family.
AUTO RETAIL
APRIL 2022
96%
of reviewers
would recommend
Turners to their
friends and
family
69%
rate the overall
experience as
5 out of 5
BUYERSCORE OVERALL EXPERIENCE
1
2
3
4
5
Improvements in customer satisfaction and feedback
reflect our efforts to promote good customer
outcomes in our insurance business and to achieve
positive resolution of customer hardship situations
in Oxford. Since April 2020, we have dealt with over
2,000 COVID-19 hardship accounts in Oxford Finance
and successfully rehabilitated 99% of these over the
last 24 months. In EC Credit, we have shifted our
collections approach to focus on resolution rather
than consequence.
22
23
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 GIVING BACK
TO OUR COMMUNITIES
A CLEANER
LOWER EMISSION FUTURE
“Turners Auto Group
have been unwavering
in their support over the
years and their people
continue to dig deep and
embrace our efforts.
We are very grateful
to have their support
right throughout the
organisation.”
Liam Willis, Executive
Officer, Gut Cancer
Foundation
GUT CANCER FOUNDATION
The Gut Cancer Foundation is a small not-for-profit
organisation which has made it their mission to improve and
help save the lives of all New Zealanders affected by gut
cancers. They do this through leading research and innovation,
raising awareness and providing education.
Turners have supported the Gut Cancer Foundation over the
last eight years and this year was no different. The wider team
at Turners Automotive Group yet again got in behind this
awesome cause, even at a time when people will be feeling
the pinch from their own normal day-to-day living expenses.
Turners runs a matching program for this fundraising where
Turners’ people and teams across the company run their
fundraising efforts and the company matches the donations
dollar for dollar. This year Turners Automotive Group raised
over $36,000 for the Gut Cancer Foundation.
As New Zealand’s leading used car business,
we recognise the role we can play to help
transition New Zealand’s fleet.
EV and Hybrid sales are growing as a
percentage of total cars sold in Turners.
As more corporate and government fleets
transition, we will see these numbers grow
further.
We have continued to invest in Turners
Subscription and, in partnership with EECA,
we have expanded our subscription EV fleet.
This allows customers to ‘try before you buy’,
as well as providing an alternative form of
vehicle ownership. We currently have more
than 100 vehicles on subscription of which
over 40% are EVs or Hybrids.
Unfortunately, used EVs continue to be
difficult to source. Japan is the major source
of used vehicles for NZ and there are only
303,000 EVs in the Japanese vehicle fleet out
of a total of 78 million cars. New EV sales in
Japan in 2021 were 20,000 against new car
sales of 4.4 million.
We believe that it is a long term journey to
transition New Zealand’s fleet and an integral
part of this is to support people moving from
older, high emission vehicles to newer, lower
emission vehicles. We work with vehicle
vendors, including insurance companies, to
ensure that end of life vehicles are responsibly
managed out of the New Zealand fleet. In
FY22, Turners de-registered over 17,000 old
or damaged vehicles, which were then onsold
to wreckers and recyclers. A large portion of a
car can be recycled, helping create a circulate
economy.
Overtime, as second hand EVs become more
affordable and accessible, we will see more
people switching to these vehicles. In the
meantime, sourcing lower emission vehicles,
particularly hybrids, to replace older vehicles
continues to be a key focus for Turners.
We also expect other alternative fuel vehicles,
such as hydrogen, to become more prevalent
over time and will continue to monitor
international and market trends in this area.
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 installed rainwater retention
systems in another two sites.
We are in the process of establishing and
measuring emissions targets and look
forward to reporting to shareholders as we
move ahead with our sustainability reporting
programme.
EV/HYBRID SALES AS A % OF TOTAL SALES
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0%
CY18
CY19
CY20 CY21
Exercise and an active lifestyle are a great way to help prevent Gut Cancers.
Jason Smith in Oxford Finance Levin took on a Daily Press Up Challenge as part
of the Gut Cancer “Give it Up” Campaign, helping to improve personal health
while raising vital funds for research.
24
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
FY22 FINANCIAL REVIEW
BALANCE SHEET
Turners has a strong balance sheet with
the capacity to support growth. Inventory
levels have remained stable as we improve
processing times and overall turn metrics. The
increase in Finance Receivables reflects the
positive growth in Oxford Finance, as does the
increase in borrowings to support this growth.
Property, plant and equipment has increased
due to acquisition of sites in Rotorua and
Nelson with Turners property portfolio now
valued at $76.5m (on the balance sheet at
$57.7m).
FUNDING MIX
Turners has a mix of bank loans and
securitisation to fund its business. More than
80% of funding relates to finance receivables
in Oxford Finance. During the year, the
Corporate Bond was repaid with a new,
lower cost term loan from ASB. A process
has also been commenced to “term out” the
securitisation warehouse to third party funders
and a transaction is expected in FY23.
This financial commentary should be read in
conjunction with the full financial statements
and Notes to the Financial Statements in the
FY22 Annual Report.
REVENUE
The sector and the economy continued to
be disrupted by COVID-19 with the Delta
lockdowns in Q2 and Omicron in Q4. Despite
this, the Group delivered revenue of $344.5m,
up 14% on pcp. Auto Retail and Insurance
both delivered increased revenues. Auto
Retail revenue grew off increased market
share, new branches and more owned stock
flowing through the business. Finance
book revenues reflected strong loan book
growth from premium borrower segment.
Insurance revenues were marginally down
on FY21, reflecting downward movement in
used car market and CCCFA impact. Credit
Management revenues dropped as a result of
less market arrears and “no communication”
periods with debtors.
PROFIT
Net Profit before Tax was a 15% increase on
the prior year, with profit increases in each
of Turners’ largest business divisions. The
Auto Retail result was underpinned by better
finance penetration, better margins, more
owned stock and new branches. Finance
was driven by loan book growth and taking
market share in premium borrower segment.
The Insurance result reflects improvement in
claims ratios and cost base, while the lower
Credit management profit was due to reduced
commissions from less debt loaded.
The significant 29% year on year uplift in
underlying profit before tax to $44.1m reflects
improved margins, increased market share in
Auto Retail, Finance and Insurance, combined
with improved Group resilience in lockdown
trading conditions.
Net profit after tax rose to $31.3m, up 16% year
on year.
RECONCILIATION NPBT TO UNDERLYING NPBT
$MILLIONS
Reported Profit before tax
Profit on sale of MTF shares
NZ Government COVID-19 Support
COVID-19 restriction profit normalisation
Property exit and lease adjustments
Staff restructuring
Underlying profit before tax
FY22
43.1
(0.5)
(1.6)
3.1
-
-
44.1
FY21
37.4
-
(5.1)
3.5
(1.3)
(0.2)
34.3
VAR
15%
29%
BALANCE SHEET
$MILLIONS
FY22
FY21
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
13
70
32
423
68
23
164
32
825
413
50
13
55
28
14
573
252
12
70
30
330
60
24
166
26
718
340
38
11
53
29
14
485
233
FUNDING MIX
$MILLIONS
Receivables – Securitisation (BNZ)
Receivables – Banking Syndicate (ASB/BNZ)
Less Cash
Net Receivables Funding
Receivables Funding Capacity
Corporate and Property
Working Capital (ASB and BNZ)
Less Cash
Net Corporate Borrowings
Corporate and Property Funding Capacity
LIMIT
DRAWN
320
50
370
90
30
302
39
(5)
336
34
68
4
(8)
64
56
26
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
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 7.49% 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.
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 7.57% 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 11.55% 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 25 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 and a director of Apollo Foods Limited which has launched
the successful Apple Press range of products and Boring Oat Milk. 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,
most notably the Gong Cha Group, where he currently serves as Group
Chairman. Martin also founded venture capital firm Launcho Ventures out
of Singapore investing in and building early stage tech companies, with
more than 100 investments globally.
LAUREN QUAINTANCE
Emerging Director | Appointed October 2021
Lauren Quaintance is an award-winning journalist and media executive
turned entrepreneur and marketer. She has had an extensive career in
media at a senior level in both the United Kingdom and Australasia and
is the co-founder and Managing Director of Storyation, a leading digital
content marketing agency, which was sold to ASX-listed NewsCorp
Australia in late 2019. Lauren was named Entrepreneur of the Year at
the B&T Women in Media Awards in Australia. Her journalistic pedigree
combined with digital marketing experience and entrepreneurial skills fit
well with the Turners direction and culture.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 THE EXECUTIVE TEAM
TODD HUNTER
Group Chief Executive
Officer
AARON SAUNDERS
Group Chief Financial 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
Auctions 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.
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 current role involves leading the
operation of our group IT services and product
functions, as well as leading the adoption
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
transformational 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.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
34 Independent Auditor’s Report
40 Consolidated Statement of Comprehensive Income
41 Consolidated Statement of Changes in Equity
42 Consolidated Statement of Financial Position
43 Consolidated Statement of Cash Flows
44 Notes to the Financial Statements
32
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2022
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2022
34
35
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 34 Level 9, 45 Queen Street, Auckland 1010PO Box 3899, Auckland 1140New Zealand T:+64 9 309 0463F:+64 9 309 4544E:auckland@bakertillysr.nzW:www.bakertillysr.nzINDEPENDENT AUDITOR’S REPORT To the Shareholders of Turners Automotive Group Limited Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Turners Automotive Group Limited and its subsidiaries ('the Group') on pages 40 to 92, which comprise the consolidated statement of financial position as at 31 March 2022, 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 2022, 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 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’ International 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. 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. 35 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 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 2022. 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 and evaluating 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 the expert'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 mathematical accuracy of these calculations; oEvaluating Management’s process regarding the preparation and review of forecasts; oComparing forecasts to Board approved forecasts; oEvaluating the historical accuracy of the Group’s forecasting to actual historical performance; oChallenging and evaluating the forecast growth assumptions; oEvaluating the inputs to the calculation of the discount rates applied; oEngaging our own internal valuation experts to evaluate the logic of the value-in-use calculation and the inputs to the calculation of the discount rates applied; oEvaluating the forecasts, inputs and any underlying assumptions with a view to identifying Management bias; oEvaluating Management’s sensitivity analysis for reasonably possible changes in key assumptions; and oPerforming our own sensitivity analyses for reasonably possible changes in key assumptions, the two main assumptions being: the discount rate and forecast growth assumptions. •Evaluating the related disclosures about indefinite life intangible assets which are included in Note 22 in the Group’s consolidated financial statements. INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2022
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2022
36
37
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 202236 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 $422.9m. 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 2022 (including a COVID-19 related overlay of $1.7m). 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 and evaluating 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 (including changes implemented during the year as result of the changes to the Credit Contracts and Consumer Finance Act 2003 (CCCFA) that came into force from 1 December 2021), ongoing administration and expected credit losses model data and calculations. •Challenging and evaluating 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 Group 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); oEvaluating and challenging Management’s sensitivity analysis for reasonably possible changes in key assumptions and inputs into the discounted cash flow calculations; and oInspecting the borrowers' payment history for indicators of difficulties in the borrowers' ability to meet the loan obligations. •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. •For the collectively assessed finance receivables, challenging and evaluating the logic of Management’s expected credit losses models and the key assumptions used with our own experience. 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 2022 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. 37 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 $55.0m. 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 2022. Our audit procedures among others included: •Understanding and evaluating the Group’s internal controls relevant to the accounting 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 the expert's work as audit evidence for the relevant assertions. •Agreeing the data provided to Management's external actuarial expert to the Group’s records. •Engaging our own actuarial expert to assist in understanding and evaluating: othe work and findings of the Group’s external actuarial expert engaged by Management; and othe Group’s actuarial methods and assumptions to assist us in challenging the appropriateness of actuarial methods and assumptions used by Management. •Evaluating the selection of methods and assumptions with a view to identifying 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 2022 (but does not include the consolidated financial statements and our auditor’s report thereon). Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Consolidated Financial Statements The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2022
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2022
38
39
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 202238 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, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of the use of the going concern basis of accounting by the Directors and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent fairly the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 39 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 2022 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 29 June 2022 to confirm the information included in the audited consolidated financial statements presented on this website. Legislation in New Zealand governing the preparation and dissemination of consolidated financial statements may differ from legislation in other jurisdictions. The engagement partner on the audit resulting in this independent auditor’s report is N S de Frere. BAKER TILLY STAPLES RODWAY AUCKLAND Auckland, New Zealand 29 June 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
40
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
41
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 TURNERS LIMITED
Consolidated statement of financial position for the year ended 31 March 2016
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2022
Notes
2016
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
$’000
2015
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
$’000
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
(cid:7)(cid:182)(cid:19)(cid:19)(cid:19)
Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Trade receivables
Inventory
Finance receivables
Other receivables and deferred expenses
Reverse annuity mortgages
Property, plant and equipment
Tax receivables
Deferred tax asset
Intangible assets
Total assets
Liabilities
Other payables
Deferred revenue
Tax payables
Derivative financial instruments
Borrowings
Life investment contract liabilities
Insurance contract liabilities
Total liabilities
Shareholders’ equity
Share capital
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Other reserves
Retained earnings
Total shareholders’ equity
Total shareholders’ equity and liabilities
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
10
11
12
13
14
15
16
19
20
21
22
23
24
32
32
25
13,810
12,339
18,455
17,350
9,575
14,156
7,394
8,984
167,598
142,827
8,505
9,734
11,108
-
4,024
105,338
362,303
5,946
13,253
8,319
433
8,532
103,595
328,972
22,270
17,790
6,049
990
49
174,816
7,476
71
-
156,995
15,629
16,378
12,688
9,260
232,491
207,970
136,127
(52)
(6,263)
129,812
362,303
135,294
(23)
(14,269)
121,002
328,972
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
For and on behalf of the Board
G.K. Baker
Chairman Director
Authorised for issue on 22 June 2016
P.A. Byrnes
Executive Director
The accompanying notes from part of these financial statements
42
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
43
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
44
45
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
46
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
47
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
48
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
49
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
50
51
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
52
53
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
The COVID-19 overlay provision of $1.4m included in the finance receivables expected credit loss provision as at 31 March 2021 has been
increased to $1.7m as at 31 March 2022.
Impairment of goodwill and corporate brands
The carrying value of goodwill and corporate brands 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 identification of each cash-generating unit, 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).
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
54
55
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2022
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
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 def erred expenses
Reverse annuity mortgages
Financial assets at fair value through OCI
Derivative financial instruments
Financial assets at fair value through OCI
Financial liabilities
Financial liabilities at fair value through profit or loss
Lif e investment contract liabilities
Amortised cost
Other payables
Borrow ings
Lease liabilities
2022
$’000
2021
$’000
13,373
70,199
11,867
70,396
7,581
422,870
5,726
3,242
5,414
225
528,630
7,155
330,165
4,146
4,152
40
570
428,491
8,153
8,116
32,295
412,761
28,209
481,418
26,945
339,611
28,747
403,419
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.
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.
2022
Contractual undiscounted cash flows:
Other payables
Borrow ings
Lease liabilities
Expected undiscounted cash flows:
Other payables
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
32,295
8,741
3,681
44,717
32,295
8,741
3,681
44,717
-
5,023
3,716
8,739
-
5,023
3,716
8,739
-
390,470
6,854
397,324
-
10,040
6,854
16,894
-
20,296
13,392
33,688
-
30,118
13,392
43,510
-
-
10,084
10,084
-
459,233
10,084
469,317
32,295
424,530
37,727
494,552
32,295
513,155
37,727
583,177
56
57
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
58
59
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
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
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
59,211
-
-
59,211
8,254
2,931
-
-
40
11,225
-
-
-
5,950
-
5,950
8,254
2,931
59,211
5,950
40
76,386
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 - 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 static hypothetical subdivision `
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 assets 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
2022
$'000
5,950
-
5,950
2021
$'000
5,650
300
5,950
During the year there were no movements of fair value assets or liabilities between levels of the fair value hierarchy.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
60
61
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
62
63
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
9. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 31 March was based on the profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, as follows:
Profit for the year ($'000)
Weighted average number of ordinary shares at 31 March
Basic earnings per share (cents per share)
Weighted number of shares
Opening balance
Shares issued for staff options
Cancelled from share buy back
2022
31,281
85,968,563
36.39
2021
26,864
85,551,356
31.40
2022
2021
85,544,248
424,315
-
85,968,563
85,554,710
-
(3,354)
85,551,356
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
2022
$’000
31,281
359
31,640
2021
$’000
26,864
255
27,119
85,968,563
841,642
86,810,205
85,551,356
420,482
85,971,838
36.45
31.54
2022
$’000
227
13,146
13,373
2021
$’000
265
11,602
11,867
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 2022 were $1.5m (2021:
$0.7m).
Cash and cash equivalents at 31 March 2022 of $3.4m (2021: $3.6m) belong to the Turners Marque Trust 1 and are not all available to the
Group (refer note 14).
64
65
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
66
67
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
14. FINANCE RECEIVABLES
Commercial loans
Consumer loans
Property development & investment loans
Gross finance receivables
Deferred fee revenue and commission expenses
Specific impairment provision
Collective impairment provision
COVID-19 impairment provision
Current
Non-current
Gross financial receivables are summarised as follows:
Performing
Doubtful
In default
Movement receivables subject to specific impairment assessment
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
2022
$’000
82,688
334,455
3,959
421,102
12,788
(1,632)
(7,706)
(1,682)
422,870
168,329
254,541
422,870
412,482
1,163
7,457
421,102
3,164
1,447
(1,241)
(472)
2,898
1,740
94
-
1,064
2,898
2021
$’000
50,058
284,301
3,254
337,613
9,742
(2,376)
(13,403)
(1,411)
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
31 March 2021
Current
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
In default
Expected
loss rate
%
0.71
9.97
22.87
35.09
82.77
Gross
Collective
finance
impairment
receivables
$’000
315,552
4,653
984
684
12,360
334,233
provision
$’000
2,244
464
225
240
10,230
13,403
the ECL rates on performing financial receivables increased/(decreased) by 1%,
If
higher/($3.1m lower) (2021: $3.1m higher/($2.2m lower)).
the loss allowance on receivables would be $4.1m
If the ECL rates on doubtful or in default financial receivables increased/(decreased) by 1% as at 31 March 2022, the loss allowance on
receivables would be $0.1m higher/(lower) (2021: $0.2m 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
2022
$’000
2,376
(337)
(407)
1,632
13,403
2,264
(7,961)
7,706
1,411
271
1,682
2021
$’000
3,706
557
(1887)
2,376
16,988
2,996
(6,581)
13,403
1,011
400
1,411
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.
Total impairment provision
11,020
17,190
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.
31 March 2022
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
%
0.76
receivables
$’000
409,031
provision
$’000
3,113
7.53
20.08
32.61
88.86
3,453
787
371
4,562
418,204
260
158
121
4,054
7,706
The Group's finance receivables are all denominated in NZD.
Fair value and credit risk
Carrying
amount
2022
$’000
Fair
value
2022
$’000
Carrying
amount
2021
$’000
Fair
value
2021
$’000
Finance receivables
422,870
421,403
330,165
328,675
The fair values are based on cash flows discounted using a weighted average interest rate of 11.23% (2021: 12.14%).
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.
68
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
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 1 year term that will be renewed annually. The facility is for $320m.
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 $247.1m finance receivables were sold to the Trust (2021: $187.4m). As at 31 March 2022 the carrying value of finance
receivables in the Trust was $329.9m (2021: $266.8m).
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
Carrying amount of financial assets included in other receivables
Expected credit losses on contract assets and other receivables is 0%.
2022
$’000
4,088
2,081
3,072
99
9,340
7,988
1,352
9,340
5,726
2021
$’000
3,126
2,404
2,326
260
8,116
5,789
2,327
8,116
4,146
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 OTHER COMPREHENSIVE INCOME (OCI)
Investment in Collaborate Corporation Limited
Movements in carrying amounts
Opening balance
Net change in fair value recognised in OCI
Closing balance
2022
$’000
225
570
(345)
225
2021
$’000
570
1,000
(430)
570
70
71
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
21. INVESTMENT PROPERTY
Investment property
Movements in carrying amounts
Opening balance
Net change in fair value
Closing balance
2022
$’000
5,950
5,950
-
5,950
2021
$’000
5,950
5,650
300
5,950
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 the static hypothetical subdivision approach. This approach considers comparable sales within the
locality, the cost of undertaking the development of the property, and interest incurred on the capital outlay over the development and realisation
period. A further deduction is taken for the developers profit and risk to arrive at a residual value that a potential purchaser would be prepared to
pay. Subjective adjustments have been applied where necessary to account for variations in comparable data.
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
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
2022
$’000
2021
$’000
67,100
67,100
92,509
8
92,517
6,857
(3,938)
2,919
701
(234)
(1,536)
1,850
6,430
(4,580)
1,850
92,541
(32)
92,509
10,204
(7,028)
3,176
1,460
(190)
(1,527)
2,919
6,857
(3,938)
2,919
72
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
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
2022
$’000
6,510
(3,004)
3,506
(520)
2,986
6,510
(3,524)
2,986
2021
$’000
6,510
(2,484)
4,026
(520)
3,506
6,510
(3,004)
3,506
164,453
186
166,034
886
Long-term growth rate
Pre-tax discount rate
Auto retail CGU (weighted average cost of capital)
Insurance CGU (2022: cost of equity; 2021: weighted average cost of capital)
Finance CGU (cost of equity)
Collection services CGU (weighted average cost of capital)
2022
2.25%
13.10%
13.80%
18.70%
15.60%
2021
1.80%
12.80%
14.10%
18.70%
14.90%
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.
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 0.25% (2021: 0.20% and 0.30% respectively) and
increasing and decreasing the discount rate as follows:
The amortisation and impairment charges are recognised in other operating expenses in profit or loss.
Impairment testing for cash-generating units (CGU) containing brands and goodwill
The aggregate carrying amounts of brands and goodwill allocated to the cash generating units are outlined below. Goodwill primarily relates to
growth expectations, expected future profitability and the substantial skill and expertise of the work force of the cash generating unit. Management
have assessed that there is no foreseeable limit to the period of time over which the goodwill and brand is expected to generate net cash inflows
for the Group, and as such goodwill and brand have been assessed as having an indefinite useful life.
Auto retail CGU
Insurance CGU
Finance CGU
Collection services CGU
2022
1.10%
1.10%
1.20%
1.10%
2022
$’000
23,559
5,408
348
5,192
15,596
50,103
2021
1.00%
1.00%
1.00%
1.00%
2021
$’000
21,676
3,513
227
-
12,827
38,243
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)
Dividend payable
Other payables and accruals
Carrying value of financial liabilities in other payables
32,295
26,945
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
1,644
61
30,590
32,295
1,181
99
25,665
26,945
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.
Goodwill
Allocated to the insurance CGU/segment
Allocated to collection services CGU/segment
Allocated to the finance CGU/segment
Allocated to the auto retail CGU/segment
Brand
Allocated to the insurance CGU/segment
Allocated to the auto retail CGU/segment
2022
$’000
12,777
23,981
9,272
46,487
92,517
21,500
45,600
67,100
2021
$’000
12,777
23,973
9,272
46,487
92,509
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 and Collection services CGUs are free
cash flows to the firm, while the Insurance (2021: free cash flow to the firm) and 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.
2022 Forecast cash flow growth rates (%)
Auto retail CGU (weighted average cost of capital)
Insurance CGU (cost of equity)
Finance CGU (cost of equity)
Collection services CGU (weighted average cost of capital)
2021 Forecast cash flow 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)
Year 2
Year 3
Year 4
Year 5
12.8
(4.5)
(30.4)
32.0
10.0
5.8
11.7
21.3
9.2
14.7
5.1
14.8
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
8.8
24.8
3.3
11.9
8.6
1.9
5.0
7.3
74
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
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
2022
$’000
18,788
837
6,580
1,345
27,550
13,191
20,033
9,472
(7,858)
21,647
2021
$’000
18,788
874
6,597
739
26,998
11,297
19,248
8,712
(7,927)
20,033
Policy holder tax losses
The policy holder tax losses carried forward at 31 March 2022 are $4,723,000 (2021: $5,276,000). The policy holder tax losses are only available
to be offset against future policy holder income.
26. BORROWINGS
Secured bank borrowings
Deferred borrowing costs
Non-bank borrowings
Motor Trade Finance
Bonds
Deferred issue costs
Total borrowings
Current
Non-current
2022
$’000
412,588
-
412,588
2021
$’000
311,928
(4)
311,924
173
2,761
- 25,000
(74)
24,926
-
-
412,761
339,611
3,724 36,702
302,909
409,037
339,611
412,761
Secured bank borrowings
In March 2022 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 and three year term facility with ASB Bank and a securitisation facility with the Bank of New Zealand.
The bank borrowings (2021:bank borrowings and a lease premise guarantee of $0.6 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 2.74% (2021: 2.07%). The Group's securitisation financing
arrangement with the Bank of New Zealand as described in note 14.
Motor Trade Finance
Motor Trade Finance Limited (MTF) provides the services of a finance company, including funding, on a full recourse basis to Turners Finance
Limited. 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
was fixed at 5.5% and paid quarterly in arrears in equal amounts. The bonds were repaid on maturity date.
76
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Borrowing covenants
The Group has complied with all borrowing covenants in the both the current and prior financial year.
Foreign currency risk
All the Group's borrowings are in NZD.
Fair value
Borrowings
Carrying
amount
2022
$’000
412,761
Fair
value
2022
$’000
407,347
Carrying
amount
2021
$’000
339,611
Fair
value
2021
$’000
339,700
The fair values are based on cash flows discounted using a weighted average borrowing rate of 2.74% (2021: 2.38%). The fair value of
borrowings considers the impact of interest rate swaps as referred to in note 5.4.2.
Contractual repricing dates
1 year or less
Over 1 to 2 years
Over 2 to 5 years
27. LEASE LIABILITIES
Lease liabilities
Current
Non-current
2022
$’000
2021
$’000
3,724
36,702
389,037
302,987
20,000
-
412,761
339,689
2022
$’000
2021
$’000
28,209
28,747
2,358
25,851
28,209
5,560
23,187
28,747
Lease liabilities have incremental borrowing rates of 2.87% to 7.07% (2021: 2.87% to 6.94%), with maturities up to 11 years (2021: up to 12
years). 3 new leases were entered into during the year (2021:3) and 4 leases were modified or cancelled during the year (2021: 7).
During the year the Group received COVID-19 rent concession of $92,000 (2021: $780,000).
The carrying amounts of the lease liabilities are denominated in the following currencies:
Australian dollars
New Zealand dollars
Interest expense in profit or loss
28. SHARE CAPITAL
Number of ordinary shares
Opening balance
Shares issued for staff options
Cancelled from share buy back
Total issued and authorised capital
2022
$’000
95
28,114
28,209
1,774
2021
$’000
163
28,584
28,747
1,640
2022
2021
85,544,248
525,000
-
86,069,248
85,554,710
-
(10,462)
85,544,248
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
78
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
31. TRANSACTIONS WITH RELATED PARTIES
Major shareholders, directors and closely related persons to them are considered related parties of the Group.
Key management personnel compensation
The key management personnel are all the Directors of the Company and the Leadership team. Compensation paid to the Leadership team in
the years ended 31 March 2022 and 31 March 2021 were as follows:
($'000)
Year ended 31 March 2022
Year ended 31 March 2021
Short-
term
benefits
$'000
Other long-
term
benefits
$'000
Share-based
payments
$'000
Total
$'000
2,628
81
241
2,950
3,453
102
255
3,810
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 93 to 96. 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. CASH FLOW RECONCILIATIONS
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 loss/(profit) on sale fixed assets
Depreciation and amortisation
Capitalised reverse annuity mortgage interest
Deferred revenues
Fair value adjustments on assets/liabilities at fair value through profit and loss
Net annuity and premium change to policyholders accounts
Non-cash adjustments to finance receivables effective interest rates
Deferred expenses
Revaluation gain on investment property
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
2022
$’000
31,281
3,108
(306)
10,702
(294)
1,500
(297)
(89)
(14)
(4,136)
-
(60)
(92)
(1,506)
(1,792)
11,190
(465)
(93,992)
1,164
(2,482)
126
1,952
561
(43,941)
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
80
81
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Reconciliation of liabilities 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 as at 31 March 2020
Borrowings Lease liabilities
$'000
32,511
$'000
350,364
Share capital
$'000
204,327
Retained
earnings
$'000
20,072
Changes from financing cash flows
(392)
(6,346)
-
(17,200)
Other changes
Capital buy-back
Profit
Amortisation of deferred issue costs
Netted off finance receivables
Interest paid
Interest expense (excl. accrued interest)
Non-cash lease movements
-
-
260
(10,621)
(9,193)
9,193
-
(10,361)
-
-
-
-
(1,641)
1,640
2,583
2,582
(30)
-
-
-
-
-
-
(30)
-
26,864
-
-
-
-
-
26,864
Balance at 31 March 2021
339,611
28,747
204,297
29,736
Changes from financing cash flows
75,660
(5,563)
1,185
(13,770)
Other changes
Profit
Dividend payable
Amortisation of deferred issue costs
Netted off finance receivables
Interest paid
Interest expense (excl. accrued interest)
Non-cash lease movements
-
-
78
(2,588)
(6,676)
6,676
-
(2,510)
-
-
-
-
(1,774)
1,774
5,025
5,025
-
-
-
-
-
-
-
-
31,281
(5,164)
-
-
-
-
-
26,117
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
Balance at 31 March 2022
412,761
28,209
205,482
42,083
33. COMMITMENTS AND CONTINGENT LIABILITIES
Capital Expenditure:
At balance date, the Group has committed to the purchase of three properties along with developments for two existing sites. This has resulted
in capital commitments of $18,900,000 (2021: $nil).
Future Lease Commitments:
The Group has committed to one property lease with a commencement date of 1 September 2022 (2021: nil).
Loan Commitments:
The Group has no material undrawn credit commitments at reporting date (2021: nil).
Contingent Liabilities:
The Group has no other material contingent liabilities at reporting date(2021: nil).
34. SUBSEQUENT EVENTS AFTER BALANCE DATE
The Group paid the dividend accrued at balance date of $5,164,000 on 20 April 2022 (refer note 30). There were no other material events
subsequent to balance date.
31 March 2021
The first tranche of options in the Group's Share Option Plan vested on 1 June 2021, 525,000 options were exercised and the Group committed
to purchase an Auto retail site in Rotorua for $5.5m.
82
83
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
84
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
85
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
86
87
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
88
89
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
90
91
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
92
STATUTORY INFORMATION
STATUTORY INFORMATION
Directors’ remuneration and other benefits for the financial year ended 31 March 2022
Grant Baker
Paul Byrnes (resigned 18 February 2022)
Martin Berry
Matthew Harrison (1)
Alistair Petrie
John Roberts (2)
Antony Vriens (3)
Directors’ fees
$
150,000
68,750
75,000
75,000
75,000
75,000
75,000
1. During the year ended 31 March 2022 Mr Harrison received an additional $15,000 (2021: $14,250) in fees for services as chairman of
the Credit and Lending Committee.
2. During the year ended 31 March 2022 Mr Roberts received an additional $15,000 (2021: $14,250) in fees for his services as chairman
of the Audit and Risk Management Committee.
3. During the year ended 31 March 2022 Mr Vriens received an additional $35,000 (2021: $33,250) 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 2022.
Dealings in Turners Automotive Group Limited shares by Directors
Date of transaction
Paul Byrnes
05/07/ – 15/07/2021
Shares
(disposed)/acquired
(273,649)
Consideration
(received)/ paid $
Nature of relevant interest
(1,220,249)
Registered holder and beneficial interest
Paul Byrnes
Alistair Petrie
08/12/2021
08/12/2021
(390,000)
390,000
(1,654,769)
Registered holder and beneficial interest
1,654,769
Controller of shares held by Bartel
Holdings Limited. Alistair Petrie is the
legal owner of 100% of the shares in
Bartel Holdings Limited in a trustee
capacity, so does not have beneficial
ownership of those shares.
Directors’ relevant interest in quoted shares as at 31 March 2022
Grant Baker
Martin Berry
Matthew Harrison
Alistair Petrie*
John Roberts
Antony Vriens
Shares
6,450,000
500,000
5,179,294
9,967,653
71,900
-
* Mr Petrie controls 9,942,642 shares held by Bartel Holdings Limited in a trustee capacity (so does not have beneficial ownership of those
shares) and 25,011 shares as beneficial owner.
Other Directorships
Mr Baker 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)
The Home Bakery Limited
93
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STATUTORY INFORMATION
94
STATUTORY INFORMATION
95
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
STATUTORY INFORMATION
CORPORATE GOVERNANCE REPORT
FY22 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 2022 are generally in line with
the NZX Corporate Governance Code, except as stated below:
Recommendation 2.8: A majority of the Board should be independent directors. Following the retirement of Paul Byrnes as an
independent director in February 2022, the Board consists of three independent and three non-independent, non-executive
directors. The non-executive directors are not involved in the day to day operations of the company and do not have significant
influence over operational decisions. The Board has determined that each director provides considerable value to Turners through
their individual skills and expertise. The company is in compliance with the relevant NZX Listing Rules regarding Board
composition.
• 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 7.49% 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 29 June 2022 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 was last reviewed 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 made to any political parties in FY22.
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 2022 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 93 of the 2022
Financial Statements.
96
97
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
CORPORATE GOVERNANCE REPORT cont.
CORPORATE GOVERNANCE REPORT cont.
PRINCIPLE 2 – BOARD COMPOSITION AND PERFORMANCE
To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and
perspectives.
The Turners Board is responsible for setting the strategic direction of the Company, overseeing the financial and operational
controls of the business, putting in place appropriate risk management strategies and policies and enhancing its value for
shareholders in accordance with good corporate governance principles.
In addition to the Turners Corporate Governance Code, the Turners Board also operates under a written charter which sets out:
• the structure of the Board;
• 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. At the Annual Shareholders’ Meeting on 9 September 2021, Martin Berry and Antony Vriens were re-
elected as directors and Paul Byrnes was re-elected as a director until 18 February 2022.
When a director is newly appointed, Turners will enter into a written agreement with them setting out the terms of their employment.
The Company has arranged policies of directors’ and officers’ liability insurance which, with a Deed of Indemnity entered into with
all directors, ensure that generally directors will incur no monetary loss as a result of actions undertaken by them as directors.
Certain actions are specifically excluded, for example, the incurring of penalties and fines which may be imposed in respect of
breaches of the law.
The Board currently comprises of six directors: a non-executive chairman, three 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 2022, Board members were:
• 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 28 and 29 of the 2022 Annual Report.
Director’s interests are disclosed on pages 93 to 96 of the 2022 Financial Statements.
The table below summarises the current key skills and experience of the Board.
Auto retail
Finance
Insurance
Credit management
Industry knowledge/experience
Industry & sector knowledge
-
-
-
-
Technology/digital
Entrepreneurial growth and transformation
Sales, marketing and brand experience
People, culture and employee relations
Finance and capital markets
Risk management and regulatory
Governance
ESG
Emerging Director
Highly skilled
Moderately skilled
⬤⬤⬤
⬤⬤⬤⬤
⬤⬤
⬤⬤
⬤⬤⬤
⬤⬤⬤⬤⬤
⬤⬤⬤⬤⬤
⬤⬤⬤⬤⬤⬤
⬤⬤⬤⬤
⬤⬤⬤⬤⬤
⬤⬤⬤⬤⬤
⬤⬤⬤
◯◯◯
◯◯
◯◯◯◯
◯◯◯◯
◯◯◯
◯
◯
◯◯
◯
◯
◯◯◯
Turners’ supports the Emerging Directors programme and views it as an excellent way of building board talent, knowledge and
expertise and ensuring there is a succession plan in place when required. The Board appointed Lauren Quaintance as an
Emerging Director in October 2021.
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 a self-evaluation was
conducted in FY22.
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 9.3 out of 10.
As at 31 March 2022 the gender balance of Turners directors and people was as follows:
Directors
Emerging Director
Senior Leadership
Management
Other Employees
31 March 2022
31 March 2021
Female
-
1
7
42
250
Male
6
-
31
50
288
Female
-
-
7
38
223
Male
7
-
26
54
274
98
99
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
CORPORATE GOVERNANCE REPORT cont.
CORPORATE GOVERNANCE REPORT cont.
Board Meetings and Attendance
The Board has 11 scheduled meetings a year. The table below sets out Directors’ attendance at Board and Committee meetings
during FY22. In total, there were 14 Board meetings; 3 Audit, Risk Management & Sustainability Committee meetings; and 11
Lending and Credit Committee meetings.
Board
Audit, Risk Management &
Sustainability committee
Lending & Credit committee
Total Number of Meetings
Held
Grant Baker
Paul Byrnes 1
Martin Berry
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
Lauren Quaintance2
14
13
12
12
14
14
13
11
5
3
3
3
2
11
11
11
11
The Lending and Credit Committee members as at 31 March 2022 were Matthew Harrison (Chair), Alistair Petrie and John
Roberts. It met 11 times during the financial year.
Takeovers
Turners is 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.
PRINCIPLE 3 – COMMITTEES
Copies of other key governance documents are also available on Turners’ website.
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.
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 relating to the company’s risk
management and internal control framework, the integrity of its financial reporting, and the company’s internal and external
auditing processes and activities. 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. In addition the Committee oversees the strategies, activities and
performance regarding sustainability, corporate social responsibility and the environment.
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.
Members as at 31 March 2022 were John Roberts (Chair), Antony Vriens and Alistair Petrie. It met three times during the financial
year.
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.
1 Paul Byrnes retired from the Board on 18 February 2022
2 The Board appointed Lauren Quaintance as an Emerging Director in October 2021
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 2022, 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.
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 detail on pages 17 to 25 are underway which support Turners’ focus in these areas.
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.
PRINCIPLE 5 – REMUNERATION
The remuneration of directors and executives should be transparent, fair and reasonable.
The Board promotes the alignment of the interests of the directors, the CEO and management with the long term interests of
shareholders. Remuneration policies and structure are reviewed regularly to ensure remuneration of management and directors
is fair and reasonable in a competitive market for the skills, knowledge and experience required by 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.
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CORPORATE GOVERNANCE REPORT cont.
CORPORATE GOVERNANCE REPORT cont.
Details of directors and executives’ remuneration and entitlements for the 2022 financial year are detailed on pages 81 and 93 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.
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.
Director Remuneration
PRINCIPLE 6 – RISK MANAGEMENT
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 93 of the 2022 Financial Statements.
Board Remuneration
• Chairman $150,000
• Non-executive Director $75,000
• Chair of DPL Insurance Limited $35,000
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 day 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 2022 Financial Statements. 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.
• Chair of DPL Insurance Limited for duties as a non-executive director for TRA $75,000
Health and Safety
• 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 93 of the 2022 Annual Report. Turners does not pay fees upon
retirement of directors.
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 81 and
Remuneration of Employees information on page 94 of the 2022 Financial Statements. Details of the Group’s Share Option Plan
are detailed on page 79 and 80 of the 2022 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 incentive 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:
FY22
FY21
Salary
Benefits
Subtotal
Cash STI
Share LTI
659,000
539,117
50,325
56,434
709,325
595,552
375,0003
300,0005
535,0004
-
Pay for Performance
Total
Remuneration
1,619,325
895,552
Short term incentive: A short term bonus is paid against profit targets agreed at the commencement of the year.
Long term incentive: 750,000 options, with an exercise price of $2.00, granted under the Group’s Share Option Plan. The grant
is split into 3 tranches of 250,000 options with the following vesting dates; 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
3 STI for FY22, paid in FY23, 100% of target achieved
4 Taxable value of 250,000 options, with an exercise price of $2.00, exercised in FY22
5 STI for FY21, paid in FY21, 100% of target achieved
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.
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 2022, 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 2021 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 64 of the 2022 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.
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.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
CORPORATE GOVERNANCE REPORT cont.
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.
Turners’ Board is committed to open dialogue and to facilitating engagement with shareholders.
Turners has a calendar of communications and events for shareholders, including but not limited to:
• Annual and Interim Reports
• Market announcements
• Annual Shareholder Meeting
• Financial results calls
• Other ad hoc investor presentations
• Easy access to information through the Turners website www.turnersautogroup.co.nz
• Access to management and the Board via email info@turnersautogroup.co.nz
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 2021, due to COVID-related disruption, the
meeting was changed to be online only.
In accordance with the NZX Corporate Governance Code, the Board ensured that the notice of the 2021 Annual Shareholder
Meeting was posted to Turners’ website as soon as possible, and at least 20 working days prior to that meeting.
Shareholders have the ultimate control in corporate governance by voting directors on or off the Board. Voting is by poll, upholding
the ‘one share, one vote’ philosophy. In accordance with the Companies Act 1993, Turners’ constitution and the NZX 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 all
audiences, including shareholders, brokers and the investing community, as well as staff, suppliers and customers.
DIRECTORY
DIRECTORY
CORPORATE DIRECTORY
REGISTERED OFFICE
DIRECTORS
TURNERS LIMITED
Level 5, 70 Shortland Street, Auckland, New Zealand
Grant Baker
PO Box 1232, Shortland Street, Auckland, 1140, New Zealand
Chairman
Consolidated statement of financial position for the year ended 31 March 2016
Freephone: 0800 100 601
Appointed 10 September 2009
Email enquiries: info@turnersautogroup.co.nz
Web: www.turnersautogroup.co.nz
Martin Berry
Independent Director
Appointed 17 August 2018
Matthew Harrison
Non-executive director
Appointed 12 December 2012
Assets
AUDITOR
Baker Tilly Staples Rodway
Notes
2016
$’000
2015
$’000
Financial assets at fair value through profit or loss
Cash and cash equivalents
Alistair Petrie
Non-executive director
Appointed 24 February 2016
Trade receivables
BANKERS
Bank of New Zealand and ASB Bank
11
10
Inventory
John Roberts
Finance receivables
Independent Director
Appointed 1 July 2015
Reverse annuity mortgages
Other receivables and deferred expenses
LAWYERS
Chapman Tripp
Property, plant and equipment
Antony Vriens
Independent Director
Appointed 12 January 2015
Tax receivables
Deferred tax asset
Intangible assets
Total assets
SHAREHOLDER INFORMATION
Liabilities
Other payables
COMPANY PUBLICATIONS
The Company informs investors of the Company’s business
and operations by issuing an Annual Report, an Interim Report
and releasing announcements on the NZX’s website.
Deferred revenue
Tax payables
Insurance contract liabilities
Financial calendar
Derivative financial instruments
First quarterly dividend
Borrowings
Annual meeting
Life investment contract liabilities
Half year results announced
Second quarterly dividend
Third quarterly dividend
End of financial year
Annual results announced
Shareholders’ equity
Annual report
Final dividend
Total liabilities
Share capital
Other reserves
Retained earnings
Total shareholders’ equity
October
August
November
January
April
31 March
May
June
July
13,810
18,455
9,575
14,156
167,598
8,505
9,734
11,108
-
4,024
105,338
362,303
22,270
12
13
14
15
16
19
20
21
22
32
32
25
15,629
12,688
232,491
136,127
(52)
(6,263)
129,812
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
23
SHARE REGISTER
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna, Auckland
Private Bag 92119, Auckland 1142, New Zealand
Telephone: +64 9 488 8777
174,816
6,049
990
24
49
Total shareholders’ equity and liabilities
ENQUIRIES
Shareholders with enquiries about transactions, change of address or dividend payments should contact Computershare Investor Services
on +64 9 488 8777. Other questions should be directed to the Company at the registered address.
362,303
328,972
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.
This annual report is dated 29 June 2022 and is signed on behalf of the board by:
G.K. Baker
G.K. Baker
Chairman
Chairman Director
Authorised for issue on 22 June 2016
J.A Roberts
P.A. Byrnes
Director
Executive Director
The accompanying notes from part of these financial statements
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
Notes
Notes
106
107
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022 108
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
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022