WE’RE
GETTING
STRONGER
ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2023
WE ARE NEW ZEALAND’S LEADING ECOSYSTEM
FOR VEHICLE USERS
Turners’ automotive ecosystem makes it easy for our customers, allowing them to buy,
sell, finance and insure their vehicle through our trusted brands and businesses. With
more than 900,000 used cars transacted every year in New Zealand, this provides a
large and highly targeted group of customers. While primarily focused on the automotive
industry, our businesses also offer services outside of the automotive industry, providing
diversification of earnings and consistent growth and yield for our shareholders.
AUTOMOTIVE RETAIL
FINANCE
INSURANCE
■ New Zealand’s largest
■ Targeting high quality
buyer and seller of vehicles
■ One car sold every 5
minutes
■ Branches and sites from
Whangarei to Invercargill
■
“Bricks and Clicks” retail
model, combining our
nationwide network with
market leading online
digital experience
■ Awarded New Zealand’s
number 1 Most Trusted
Used Vehicle Dealership in
the Readers Digest Trusted
Brands awards for fourth
year in a row
consumer and commercial
lending – primarily for
automotive customers
■ Loans originated through
the Turners Auto Retail
network and third party
independent dealers and
brokers
■ $425m in receivables
■ Circa. 25,000 current
consumer loans
■ Average loan size $13,600
■ Helping Kiwis with motor
vehicle, loan protection
and life insurance solutions,
distributed through more
than 700 licensed car
dealers, finance companies
& brokers, and life
insurance advisers as well
as online
■ 5,200+ policies sold every
month; 180,000+ active
policies
■ $39.7m in new policies sold
in FY23
■ Average 1,275 claims paid
out monthly; $21.2m in
claims paid out in FY23
2
WE ARE NEW ZEALAND’S LEADING ECOSYSTEM
FOR VEHICLE USERS
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CREDIT MANAGEMENT
■ A recognised leader in the
debt collection and credit
management sectors, for
both corporate and SME
customers
■ Provides income
diversification for the
Turners’ group
■ $98m in corporate debt
load in FY23; 22% average
recovery rate
■ $34m-plus collected from
debtors in FY23
■ 2,840 SME customers
loading debt in FY23
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 2023.
Grant Baker
Chairman
Todd Hunter
Group Chief Executive Officer
FY23 AT A GLANCE
CHAIR AND CEO’S REPORT
OUR THREE-YEAR PLAN
FY24 PRIORITIES
CREATING A BETTER BUSINESS
THE STORY OF TINA FROM TURNERS
FY23 FINANCIAL REVIEW
OUR BOARD
OUR EXECUTIVE TEAM
FINANCIAL STATEMENTS
4
6
14
15
18
26
28
30
34
37
3
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
FY23 AT A GLANCE
Turners continues to achieve strong results in challenging conditions
and to strengthen its position for the next upcycle.
KEY FINANCIAL HIGHLIGHTS
PECENTAGE INCREASES FY22:FY23
■ Revenue up 13% to $389.6m
■ EBIT1 increased 9% to
$52.2m
■ Net profit before tax up 6%
to $45.5m
■ Net profit after tax
increased 4% to $32.6m
■ Full year dividend 23.0 cps,
equating to a gross yield of
8.5% per annum based on a
share price of $3.75
■ Earnings per share 37.6
cents per share, an increase
of 3% year on year
■ Record earnings demonstrating sustainable earnings
platform and strategic value of diversification and
de-risking strategies over recent years.
■ Strong performance despite challenging economic
trends and changes in market conditions.
■ Auto Retail: Market share gains and margin
improvement driving record earnings. Expecting
further market share gains as branch network
expands.
■
Insurance: Strong policy sales in a declining market
and improved claims ratios. Distribution and market
share gains expected to drive buoyant sales.
■ Finance: Solid revenue growth, however, impacted
by rapid interest rate rises driving a near term drag
on earnings. Well placed to grow again once interest
rates stabilise.
■ Credit management: Debt load increased
albeit from lower quality debt. Well
positioned for the next stage of the
credit cycle.
■ Employee engagement levels remain at
record levels and are a core part of the
competitive advantage of Turners Auto Group.
■ Employee Share Scheme launched with almost
50% take up.
■ Diversified business is well-placed to deliver
further growth as well as offering solid returns to
shareholders.
1 EBIT adjusted for interest expense in Finance (non-IFRS measure,
NPBT $45.5m add interest paid $19.9m less Finance segment
interest $13.2m).
4
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FY19 FY20 FY21 FY22 FY23
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REVENUE
SEGMENT REVENUE
400
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■ 1H ■ 2H
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FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
■ CREDIT
0
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0
EARNINGS BEFORE INTEREST
AND TAX (EBIT)
60
60
SEGMENT OPERATING PROFIT
50
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NET PROFIT AFTER TAX
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■ AUTO RETAIL ■ FINANCE ■ INSURANCE
■ CREDIT
DIVIDENDS
25.0
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5
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Todd Hunter & Grant Baker
6
CHAIR AND CEO’S REPORT
“This year’s strong
performance is
very pleasing and
reflects the success
of our diversification
strategy, our
de-risking initiatives
as well as the quality
of our team.”
Dear shareholder
When we presented our annual report last year,
we said that our business had never been in
better shape and we were ready for whatever
came next.
This sentiment has been proven true over
the FY23 financial year. Despite challenging
economic and market conditions, Turners has
reported record earnings, market share gains
and margin improvements.
This result is particularly pleasing in an
environment where costs are up significantly
due to inflation, interest rates have never
increased faster, there has been more
government regulation in finance and vehicle
markets than ever before, and market demand
is down.…Turners business has continued to
perform.
Our Auto Retail business is without doubt the
hero with 28% profit growth off a strong prior
year, and reflects the investment and effort
put into this part of the business. The used
car market is needs-based and stable through
downturns, as we envisaged. Insurance has also
had a stellar year with just under 10% profit
growth. Our third core business, Finance, is well
positioned as market conditions change.
Perhaps our single biggest challenge and risk
to manage this year has been our exposure to
increasing interest rates. Whilst we led the auto
loan market in price increases, we have not
been able to completely price in all the OCR
movements. Interest expense is up 110% within
the Finance division and, unsurprisingly, this
had a material impact on profitability within this
business.
The used car market has remained relatively
stable through the economic downturn, as
has been proven historically. Overall used car
transaction levels have tracked below pre-
pandemic levels and were down 10% on the
prior year. Government regulation with the
introduction of the Clean Car Program has had
the most material impact on supply during the
last 12 months, resulting in fewer used imports
7
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 coming into New Zealand. With economic conditions becoming more challenging, we are continuing
to see demand shift into the lower price point segments.
The Turners brand grows from strength to strength with evidence of this being that google searches
for Turners Cars has overtaken searches for Used Cars. The combined effect of branch expansion,
improved customer experience, digital marketing and brand investment are helping us reach and
connect with more and more customers. We have also just won for the fourth year in a row the Most
Trusted Used Car Dealership Award.
Having a strong culture and an engaged team is very important to us, particularly at a time when
recruitment and retention is challenging. We continue to invest in training, remuneration and other
benefits, and are particularly proud of the launch of our Employee Share Scheme, which has had just
under 50% take up. We think shareholders should be very pleased that half our team have skin in
the game as owners and employees of the business.
We would like to acknowledge the efforts of our people, who deliver day in day out for our
customers and for our shareholders. We are very lucky to have such a talented and hard working
team, who are totally committed and prepared to go above and beyond.
PROGRESS UNDER OUR THREE YEAR PLAN FOR GROWTH
Every year, we review and refresh our plan for growth, taking into account our progress and
achievements as we look forward to the next three years. You can view our updated growth plan for
the next three years on page 14.
Over the FY23 year, we made excellent progress on the four key areas and the business priorities we
had set for ourselves.
RETAIL OPTIMISATION AND EXPANSION
Our pipeline of branch expansion projects is building really well. We completed new branches in
Rotorua and Nelson and acquired additional sites in Tauranga, Napier and Christchurch. Branch
expansion consists of either upsizing existing operations or developing completely new branches in
new geographies.
Committed Development Pipeline
Location
Timaru
Napier (site expansion)
Christchurch - Hornby
Christchurch – Burnside
(Airport precinct)
Size
Timing
Expected additional
profit contribution
4,000m2
8,000m2
15,500m2
8,000m2
Q4 FY24
Q4 FY24
Q4 FY25
Q4 FY25
$500k
$500k
$400k
$300k
$500k
Christchurch – City Centre
6,000m2
Q1 FY26
8
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 “The Turners brand
grows from strength
to strength with
evidence of this
being that google
searches for Turners
Cars has overtaken
searches for Used
Cars.”
VEHICLE PURCHASING DECISION-MAKING
Through the use of data, our branch network, lead
generation, customer experience and conversion,
we have seen strong growth in both our locally
owned sourcing and consignment sourcing. We
still sell a significant number of consignment
vehicles down our wholesale auction channel and
are focused on moving these to retail. This helps
us achieve a better selling price for the seller
and provides a better margin for our business
as well as the opportunity to attach finance and
insurance. Local sourcing also allows us to move
faster and direct purchasing to those vehicles
which are in high demand.
MARGIN MANAGEMENT AND PREMIUM LENDING
Quality and margin have become even more of
a priority in the past year. As well as the 12 price
increases we have implemented since October
2021 as interest rates have increased, we have
consistently been reviewing and tightening our
credit policy. As a result, the average credit scores
of new customers is increasing, reflecting the
higher proportion of premium borrower business.
We have now had three years of writing new
business at credit scores higher than the market
average. With our focus on bringing better quality
borrowers into the loan book, our arrears level has
outperformed the broader market.
CONTINUED INVESTMENT IN DIGITAL AND
OMNI-CHANNEL CUSTOMER EXPERIENCE
Turners will continue to invest in digital initiatives.
We know that 99% of our customers’ interaction
with Turners starts online. We are continually
improving our online customer experience,
building automated digital marketing follow up
and adding more data into our customer data
platform to help us better meet customer needs.
Turners Subscription broke through the milestone
of 300 live subscriptions in February 2023
taking advantage of the short term summer
demand spike. We now have around 250 vehicles
concurrently on subscription. Pleasingly, the
last four months of the financial year saw the
Subscription service move into profitability.
9
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 RESULTS SUPPORTING STRONG AND SUSTAINABLE SHAREHOLDER VALUE
This year’s record earnings result underscores our well-founded confidence in the resilience of the
used car market through the cycle but also the formula we operate the business to. Great employee
experience gives us the best chance of providing a great customer experience and these two things
combined should deliver great shareholder value.
Group revenue was up 13% year on year, to $389.6m. Auto Retail delivered a $35.6m increase, with
revenue growth also from the Finance and Insurance businesses. Credit Management revenues
dropped slightly as a result of less debt load and lower levels of payment arrangements.
Net profit before tax was a record result at $45.5m, with Auto Retail again leading the way with a
$5.5m profit increase year on year. Insurance profits also grew and were up by 9% to $12.6m. The
impact of increased interest rates as well as our strategy to prioritise credit quality and management
was felt in the Finance business, with profit down $3.0m. Profit for Credit Management was largely
unchanged at $2.9m. However, there are signs of improvement that should support an improved
result for FY24.
Given the strong profit performance over the year, Directors declared a final dividend of 7 cps
(payable in July 2023), taking FY23 dividends to 23.0 cps, matching last year’s strong result. This
reflects the dividend policy payout of 60-70% of net profit after tax (NPAT) and represents a gross
yield of 8.5% per annum based on a $3.75 share price.
A dividend reinvestment plan (DRP) will be a feature of the final dividend with a 2% discount
applied for those taking up the DRP.
Turner’s balance sheet remains strong, with capacity to support growth. We are very comfortable
with debt levels and capacity in the business.
OPERATING PERFORMANCE BY BUSINESS
AUTO RETAIL
Revenue $278.2M 15%
NPBT $25.0M 28%
Turners market share continued to grow throughout FY23. Retail and auction sales grew to around
38,000 units, with Fleet Partners ex-lease consignment vehicles adding a boost to auction sales.
Sales and margins on ‘owned’ vehicles (those purchased by Turners for sale) both rose during the
year.
Improving the time from receiving a car onsite to having it ready for sale and advertised has been
critical to improving our stock turn and making our business more efficient. By measuring the
process more accurately and using the data to re-engineer our vehicle prep process, we have been
able to address a number of operational bottlenecks. These improvements plus upweighting the
proportion of local sourcing has resulted in more sales with less investment in inventory.
Our Nelson and Rotorua branches are now both fully operational and performing above
expectations. Our committed development pipeline for retail expansion in Christchurch, Napier and
Timaru offers additional profit contributions from FY24 to FY26.
10
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Our Tina campaign continues to deliver record levels of sourcing leads. The success of Turners
domestic sourcing strategy is evident in faster stock turn and the business continues to operate
off lower inventory levels. Increasing local sourcing versus used imports has been beneficial. The
government’s clean car program has reduced the number of imported cars coming into the country
which has increased the value of used car units and increased our margins.
The team continues to work on improving overall Finance attachment rates, to realise synergies
from other divisions. For FY23, our Finance attach rates were 31%, a slight fall on FY22’s 32.7%.
Turners Subscription has broken through 300 concurrent subscriptions (in February 2023), and the
service moved into profit in Q4 FY23. Around 80% of subscription owned cars are low emission
vehicles (LEVs).
FINANCE
Revenue $58.6M 13%
NPBT $15.0M 17%
Solid revenue growth during FY23 was set against an additional $7m in interest expense due to
the rapid rise in OCR. While the Finance division proactively reviewed pricing to mitigate OCR
rises, Oxford’s 12 base rate rises, lifting 4.10%, since October 2021, compares to an OCR movement
of 5.0%. This meant that growth moderated as credit quality, regulatory compliance and margin
became higher priorities. That additional $7m in interest expense represents a 110% increase which
has had a material impact on profits.
Credit policy continually tightened throughout FY23 with average credit score continuing to
improve. Premium Tier business accounts for more than 50% of our new business per month. Oxford
loan arrears continue to track at half the levels of the wider market (as per Centrix data).
The quality of Turners Finance book continues to improve and the strategy adopted in FY23 will
ensure it is well placed to grow again once interest rates stabilise.
INSURANCE
Revenue $43.6M 8%
NPBT $12.6M 9%
Further gains in market share were a feature of FY23. Despite challenging market conditions,
Turners Insurance division achieved robust sales growth. Digital distribution arrangements, where
we integrate our insurance products directly into finance company application platforms (for
example, Marac Finance, MTF, Motorcentral), are continuing to work well with further opportunities
in the pipeline.
Inflation in the cost of claims was offset by frequency of claims reducing due to changes in
consumer behaviour, including working from home and cost of living increases impacting mobility
and vehicle use. The pandemic alongside recent weather events have confirmed no catastrophic risk
in the portfolio, and Insurance’s de-risking strategy is working effectively.
11
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 “Our company
continues to
demonstrate
resilience no matter
what the operating
conditions. As
we head into
an economic
environment that
will offer up different
challenges and
opportunities, the
business has already
been significantly
de-risked.”
CREDIT MANAGEMENT
Revenue $9.2M 5%
NPBT $2.9M 6%
The Credit Management business saw debt value
loaded increase by 20% compared to FY22.
However, 80% of this was from harder to contact
and collect second placement debt. Debt value
collected was down 9% due to reduced customer
payment capacity requiring lower repayment
amounts to be accepted. Our “kept rate” of
payment arrangements was stable through the
year at more than 75%.
Positive signs include credit card demand up
20% coupled with Buy Now, Pay Later demand
dropping 15% year on year, flowing through to
increased arrears levels, but still lower than pre-
pandemic levels. By year end and into the start of
the current year there were indications that the
economic downturn was producing conditions
that may support improved results for Credit
Management.
ROADMAP TO $50 MILLION
Our company continues to demonstrate resilience
no matter what the operating conditions. As we
head into an economic environment that will offer
up different challenges and opportunities, the
business has already been significantly
de-risked. The work we have done on local
sourcing of vehicles, building quality into the
finance book, and adding distribution to insurance,
means the business is positioned to withstand
or potentially take advantage of some of these
changing conditions. Also a growing Auto Retail
division has a positive halo effect for Finance and
Insurance.
12
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 We achieved the FY24 profit target of $45m, which we set in FY21, 12 months’ ahead of time and are
now focused on our FY25 target of $50m profit before tax. We remain confident about our growth,
however, are very mindful of the macro challenges still in the market, particularly the headwinds
in Finance. If interest rates start to cycle down by the second half of this calendar year, then our
modelling shows we will remain on track to achieve our target by FY25. If interest rates continue to
rise, then it is likely our timing will push out to FY26.
OUTLOOK
While the impacts of the COVID-19 pandemic have diminished, economic and market uncertainty
continues to rise. We see macro headwinds likely to intensify in the short term.
However, we are focussed on what we can control. In Auto Retail, we expect to see upside from our
new branches in the second half and expect those to follow the success of our branch expansion
strategy over the last couple of years. Domestic supply continues to be an advantage for Turners,
and the transition of wholesale auction units into retail sales channel will underpin further market
share and margin growth.
In our Finance business, quality and margin management remain key priorities in the near term, with
a drag on earnings, especially until peak OCR is reached. After the OCR peak, we will again focus on
growth initiatives and expect net interest margin to start expanding again. We expect sales in our
Insurance division to be buoyant based on our distribution and market share gains, and claims ratios
to be stable. Credit Management is expected to perform better in the coming year as consumer
arrears worsen and bad debts begin to be called in.
Looking beyond FY24 we remain confident that our growth model is broadly on track. On behalf of
the Board and management, we would like to thank shareholders for your continued support.
Grant Baker
Chairman
Todd Hunter
Group Chief Executive Officer
13
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
OUR THREE-YEAR PLAN
FOR GROWTH: FY23 TO FY25
Our growth plan gives
us confidence in higher
earnings growth through
the cycle. Five key areas
underpin our plan. These
centre on our three core
businesses.
AUTO RETAIL: BRANCH NETWORK EXPANSION
Expanding our physical presence in existing markets and new
locations that allow us to offer our services and cars to new
groups of customers, while continuing to invest in digital and
our omni-channel customer experience. This hybrid model
allows customers to engage with us however, whenever and
wherever they want.
AUTO RETAIL: 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.
AUTO RETAIL: OPTIMISATION OF SALES FROM AUCTION TO
RETAIL
Continue to shift sales from auction to retail which delivers
higher margins and opportunity to sell our finance and
insurance products.
FINANCE: GROWTH IN 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.
INSURANCE: EXPANSION OF DIGITAL DISTRIBUTION
NETWORK
Continue to build out integration into other finance company
application systems to broaden our distribution of insurance
products and make it easier for dealers and brokers to sell our
products and easier for consumers to purchase them.
Our leadership position for quality,
technology, national coverage, branding and
customer service has created a robust growth
platform that continues to deliver.
14
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2022
FY24 PRIORITIES
AUTO RETAIL
■ Stock acquisition – keep building domestic
sourcing
■ Retail optimisation and expansion – develop
new sites and build retail volumes
■ Transition wholesale auction transactions to
retail
FINANCE
■ Pricing and margin management
■ Focus on credit quality
■ Growth focus will return when interest rates
stabilise
INSURANCE
■ Expand distribution through partnership
strategy
■ Core insurance system replacement
■ Continue to enhance risk pricing and product
features
CREDIT MANAGEMENT
■ Rebuild payment bank by building on
“resolution” focused collections strategy
■ Continue working closely with corporates to
manage reputational risk
■ Well positioned for the next stage of the NZ
credit cycle.
15
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
16
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CREATING
A BETTER
BUSINESS
17
CREATING A BETTER BUSINESS
OUR SUSTAINABILITY
STRATEGY IS
UNDERPINNED BY TWO
KEY PILLARS:
Our drive is to create a better business that
not only delivers sustainable value to our
shareholders, but also supports our people,
our communities and our environment.
We are acutely aware that the transport sector is a
significant contributor to New Zealand’s overall greenhouse
gas emissions. As the largest reseller of both used and
end-of-life vehicles in New Zealand, we believe we have an
important role and responsibility to support the transition
of the New Zealand light vehicle fleet to a cleaner, lower
emission future.
We believe this is a long term journey, an integral part
of which is to support people moving from older, high
emission vehicles to newer, lower emission vehicles. Over
90% of the vehicles sold by Turners come from the existing
vehicle fleet in NZ and we assist in helping a substantial
number of older vehicles leave the fleet through our
damaged and end-of-life business. A large portion of a car
can be recycled, helping create a circular economy.
EV and Hybrid sales are growing as a percentage of
total cars sold in Turners, and as more corporate and
government fleets transition, we will see these numbers
grow further. 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.
Reflecting on where we can deliver the most impact, our
objective is to ensure that sustainability initiatives are
directed to the most emission heavy part of our end-to-
end operations. We know that in doing so we will not only
deliver better returns to our shareholders but support our
people, our communities and the environment.
Supporting the
transition of the New
Zealand light vehicle
fleet to a cleaner,
lower emission future
Enhancing the
wellbeing of our
staff, customers,
stakeholders and
the communities in
which we operate
18
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 We acknowledge that Turners is at the start of its sustainability reporting journey and we are
working towards increased transparency and measuring of our footprint. Environmental, Social and
Governance principles are important to us and we have a number of initiatives as well as targets in
place for each of these. We are planning for and will report against the mandatory climate-related
disclosures regime from FY24, with significant work already in progress.
The following pages outline our progress towards the targets we have set for our company.
OUR JOURNEY
COMPLETED
2023 INITIATIVES
2024 GOALS
■ Identified Turners Group’s
key sustainability pillars
■ Confirm approach to CRD
and reporting framework
■ Initiated projects to
■ Identify climate related
support Turners long term
sustainability pillars
risks and opportunities for
Turners
■ Centralised management
of ESG issues through an
ESG Steering Committee
■ Ongoing measurement
and reduction of Scope 1
and 2 emissions
■ Developed data
warehouse to measure
and report vehicle related
emissions
■ Implement external
assurance process
■ Report progress towards
emission reduction
targets and other ESG
initiatives
■ Reduction in aggregate
emissions from vehicles
imported and sold by
Turners (10.2% target)
■ Increase proportion of
low emitting vehicles in
Turners Subscription Fleet
to 50%
■ Target 5% reduction in
average CO2 emissions of
vehicles financed (vs prior
year)
■ Achieve a further 5%
reduction in operational
(Scope 1 and 2) emissions
from prior year
19
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 SUPPORTING THE
TRANSITION OF THE NEW
ZEALAND LIGHT VEHICLE
FLEET TO A CLEANER,
LOWER EMISSION FUTURE
1. Reduction in total aggregate emissions from vehicles
imported by Turners.
In 2019, Turners imported and sold approximately 7,000
“first time import” (FTI) vehicles from Japan. The carbon
emissions of these vehicles, based on a normal or average
usage pattern (14,000km per annum), are estimated to be
in aggregate 20,127 tonnes per annum.
After significant pandemic related drops in 2020 and 2021,
our target is to reduce the annual aggregate emissions
of Turners FTIs by a further 28% to below 7,000 tonnes
of CO2 in 2025. This represents a 65% reduction on 2019
levels.
2. Increase the proportion of Low Emitting Vehicles
in the Turners Subscription fleet.
In 2020, we launched Turners Subscription, and in
partnership with EECA, we have expanded our subscription
EV fleet. We currently have around 250 vehicles on
subscription of which 44 are EVs or Hybrids. There is
high demand for these subscription cars…helped by the
“try before you buy” philosophy. Used EVs continue to
be difficult to source. Japan is the major source of used
vehicles for New Zealand, and EVs make up less than
1% of the vehicle fleet. Our target is to have 50% of our
Subscription fleet to be low emitting vehicles by 2025.
3. Reduce the emissions from vehicles financed.
Our data warehouse provides us with the ability to
measure and report vehicle related emissions, including
those financed by Turners. By assisting people to buy
newer, lower emitting cars, we are supporting a reduction
in vehicle related emissions. Since 2019, this measure
has reduced year on year. Our target is a 25% emissions
reduction from financed vehicles in 2025 (from 2019 levels).
4. Reducing operational emissions across our business.
Our target is to reduce Scope 1 and 2 emissions by 20%
in 2025 (from 2022 levels). Primarily this will be driven by
transitioning our company vehicle fleet to lower emitting
vehicles and identifying opportunities to transition to
renewable generation at our premises, for example, through
installation of solar power.
20
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 ENHANCING THE
WELLBEING OF OUR
PEOPLE, CUSTOMERS,
STAKEHOLDERS AND
THE COMMUNITIES IN
WHICH WE OPERATE
9.1/10
How likely is it
that you would
recommend
Turners as a place
to work
9.4/10
“I am satisfied
with Turners’ efforts
to support diversity
& inclusion.”
1. Maintain employee engagement ranking in top 5%
category.
Turners’ staff engagement level ranks in the top 5% of
consumer businesses who use the Peakon system and
our goal is to maintain this ranking. It is important to us
that we support our people, both at work through career
development and training opportunities, as well as their
mental and physical wellbeing. In the current tight labour
market, our business success is dependent on staff who are
fully engaged, motivated and eager to contribute. We are
very proud of our high scores during a time when retention
and recruitment has been under pressure in the wider
economy.
2. Promote a diverse and inclusive culture across the
organisation.
Our team of ~700 people encompasses different ethnicities,
gender, age, experiences and ways of thinking. We firmly
believe this diversity adds value to our business, leads to
better decision making and contributes to our collective
success. We actively promote an inclusive environment
where individuals are valued, respected and empowered
to bring their authentic selves to work. We strive to create
a safe space where everyone feels heard, appreciated and
included.
Employee development training hours
15,000-plus
Employee turnover
Employee absentee rate
Number of sessions employees have
accessed through EAP services
Flu vaccinations
Employee notifiable injury/incidents
Employee health and safety reportable
injury incidents
29%
2.8%
90
130
1
42
21
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 SNAPSHOT
DEVELOPING TALENT
Over four months, a group of future stars grabbed the
opportunity with both hands, undertaking a pilot programme
focused on business fundamentals and leadership. Thirty of
the Turners team from all over the network and at all different
levels participated in the two courses over 14 weeks. This
represented a huge commitment from the individuals involved
and was fantastic to see.
At Turners Automotive
Group, we love to
provide people with
opportunities to further
develop skills they
can apply to their
professional and personal
lives. These opportunities
are not spoon-fed to
people…they need to
demonstrate an appetite
and attitude for it.
22
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 HOME GROWN TALENT
SHARON HUTTON
EC CREDIT, RESOLUTIONS SUPPORT MANAGER
EC Credit Control provides an essential business support service
with a focus on debt resolution.
Playing a key role in our resolution-based strategy, Sharon
joined EC Credit Control in 2011 after working in the automotive
sector. Initially working on the phone, Sharon demonstrated
strong leadership qualities and was quickly promoted to
a supervisor position. Less than two years later, a further
promotion elevated Sharon to responsibility in leading the teams
for our largest clients. Fast forward to 2017 and Sharon became
our Collections Support Manager. This role has then transitioned
to our Resolutions Support Manager with responsibility for the
entire Resolutions team of 40 people. Sharon is the champion
of our Voice of Customer survey feedback and takes a keen
interest in maintaining EC Credit’s high score.
Sharon has strong relationships with key clients, great rapport
with people, understands the importance of our customer
experience and how it reflects upon our clients’ brands.
“Our purpose is to improve the financial wellbeing of our
customers. This includes our clients and their customers.
By showing care, respect and understanding we are able to
provide an engaging customer experience facilitating a positive
resolution for all parties.”
WAYNE HYNES
AUTOSURE, NATIONAL CLAIMS MANAGER
It’s often said that the true test of an insurance company is in
how they manage claims. As the National Claims Manager at
Autosure, Wayne Hynes oversees the claims team, ensuring we
provide a high level of aftersales support to our customers.
Wayne has been in the motoring industry for 48 years,
starting as a mechanic, then setting up his own workshop and
automotive assessing company. Joining Autosure in 2006 as the
Technical Claims Specialist, for the next 14 years Wayne looked
after escalated claims and ran the mobile assessing team. He’s
played a core role in establishing many of the great relationships
we have with our agents and repairers.
In 2020 he was promoted to lead our claims team of 18, who
are passionate about settling claims quickly and to customer’s
satisfaction.
“I’m pretty happy to be part of what is arguably the most
experienced Mechanical Breakdown Insurance claims team in
the country. Our dedication to offering a professional service
is one of the things that has helped position us as one of the
leading automotive insurance companies in New Zealand.”
23
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
SHANEEL SHANKAR
OXFORD FINANCE, HEAD OF LENDING & PAYOUTS
With over 17 years with Oxford Finance, Shaneel has tackled
just about every role in the company. Starting part time as
‘jack of all trades’ while studying accounting and finance at
University, Oxford Finance jumped at the chance to offer him
a full time role once he graduated.
Shaneel moved quickly up the ranks, from junior to senior
credit controller and then into scheme lending, building the
HRV consumer lending account into one of the largest in
the company. Consumer and commercial lending portfolios
followed, until in 2017 Shaneel moved into management,
taking on the role of Lending Manager for the Auckland
team. Not long after, he was promoted to Head of Lending &
Payouts for the entire business, a role he has held for the last
five years, working with a team that has grown from eight
people to 33-plus.
Shaneel is a much-liked and collaborative leader with
the ability to lead highly engaged and diverse teams of
professionals to deliver exceptional customer service in a fast
paced environment. Of note, he has successfully overseen the
team during major lending regulation reform (CCCFA) and
systematic digitalisation of Lending and Payouts platforms,
providing a complete online solution for Oxford Finance
customers and leading to significant receivables growth and
market share.
“The tremendous support and mentoring I’ve
received from Oxford Finance, exposure to the wider
group and different management styles, as well as the
training opportunities that have been provided (such
as the recent ‘mini-MBA’), have been instrumental in
my career pathway. This is a fantastic company to
work for and I’m passionate about Oxford Finance
and its future as a market leader.”
24
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
OUR CUSTOMERS
WOOHOO!
We’ve done it
again.... voted
the most
Trusted Brand
in used vehicle
dealerships for
the fourth year
in a row.
CUSTOMERS ARE AT THE HEART OF OUR BUSINESS AND
OUR TEAM IS COMMITTED TO DELIVERING A WORLD CLASS
CUSTOMER EXPERIENCE.
Here at Turners, we understand that good people, good service
and satisfied customers are the mainstays of a successful
business and creating trust. Thank you again, New Zealand for
voting for us in this highly competitive category.
Our hit advertising campaign has also been in the lights. Tina
from Turners scooped big time at the 2022 NZ Marketing
Awards, winning the Supreme Award, Excellence in Brand
Transformation Strategy and Excellence in Consumer Products
& Services Strategy.
The judges said Turners “delivered an outstanding marketing
strategy that touched every aspect of the Turners business
and delivered a truly significant transformation” and the brand
“aligned to the strategy throughout the customer experience
and became a key part of the organisation’s DNA”.
Shortly after, Tina picked up two gold awards at the Advertising
Effectiveness “Effie” Awards for Best Strategic Thinking and
Retail/Etail categories.
Not only that, we also cracked the top 10 favourite ads list in
November with Tina from Turners campaign. There’s a few
legends on the list – fair to say, we’re stoked to be amongst
them.
25
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
THE STORY OF TINA FROM TURNERS
A 2020 lockdown
collaboration between
an entrepreneurial Board,
smart thinking executives
and some expert
outsiders was the origin
of what has become
one of New Zealand’s
most iconic marketing
campaigns.
THE TINA TEAM
GRANT BAKER
Chairman and 42 Below
Vodka fame
JOHN ROBERTS
Director and ex-Saatchi and
Saatchi NZ CEO
KIM THORP
Mate of John Roberts and
previously Saatchi and Saatchi
worldwide creative director
DAVID THOMASON
Strategic planner
DARRYL PARSONS
Creative freelancer
TODD HUNTER
Turners Group CEO
GREG HEDGEPETH
CEO Auto Retail Division
SEAN WIGGANS
GM Marketing Auto Retail
Tina from Turners is now so well known that younger
generations have even confused her with the original Tina
Turner, sending condolences to the company when the real
Tina passed away recently.
In 2020, whilst Turners was known as a place to buy cars, it
wasn’t known as a place to sell cars. The brand didn’t have a
personality or the likeability that connected with Kiwi car buyers
and sellers.
A small working group of innovative thinkers was formed from
board members, management and advisers and they turned
their minds to creating a solution that would capture the hearts
and minds of potential customers and enhance business success.
Turners Cars is like any retail business and the sourcing of used
cars is critical to its long term success. The needs were three-
fold:
■ We needed people to understand they could sell their car to
Turners and how easy and convenient this process was.
■ We needed to connect in a better way with female
customers.
■ We needed the Turners Cars brand to be more likeable, and
take on a slightly cheeky but car loving personality.
Creative whiz, Kim Thorp, was tasked with concept creation.
In late October 2020, he returned with the answer. Tina from
Turners … a car-loving young woman who worked at Turners and
was as passionate about cars as she was about Turners.
Tina from Turners has been an unbelievable success and won a
number of prestigious marketing awards …for most involved it
has been a “unicorn” of a marketing campaign. The cut through
the campaign has achieved has far outweighed the investment
put into it. It has not only galvanised and connected with
customers but it has had a massively positive impact on people
who work at Turners as well, an outcome we had certainly not
anticipated.
Tina has been a phenomenon and a key ingredient in materially
improving the sourcing capability of the Turners Cars business.
The small working group was a great example of how Turners’
management and board work together for the good of the
business. We have always viewed the line between management
and the board as being flexible and directors are welcomed
into the business to contribute where they can add value or
specialist insight.
26
SNAPSHOT
LIAM LAWSON.
WE BELIEVE.
Over the past five years, Turners has been
proud to have supported Liam Lawson as
he has risen to become one of the most
exciting young motor racing stars in the
world.
From the moment he first drove a kart at his local
Mt Wellington kart track in Auckland, Liam has
desired nothing else but to race fast and win. This
winning mentality strikes a chord with us at
Turners.
Right from the start, we felt a strong
alignment to Liam’s down to earth mentality
and his steely drive to succeed. We’re
proud to be supporting a young Kiwi in one
of the most fiercely competitive arenas on
the planet, as he races towards his goal of
being in Formula 1. And we firmly believe in him
and his dream.
27
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 FY23 FINANCIAL REVIEW
MANAGEMENT COMMENTARY
BALANCE SHEET
Turners balance sheet has the capacity
to support growth. Inventory levels have
reduced further as processing times and
overall stock turn metrics improve. Finance
Receivables remain flat year on year due
to prioritising margin and credit quality
over growth in Oxford. Property, plant and
equipment increase due to development of
sites in Rotorua, Nelson, and acquisition of
sites in Tauranga, Napier, and Christchurch.
Borrowings have remained flat despite
investing in $35m of property over FY23.
$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, with capacity to support
lending over the next 12 to 24 months.
Inventory Funding has been broadened to
provide flexibility for local purchasing as well
as imports. In our Securitisation warehouse,
the BNZ now hold Class 1 notes only as
Turners refinanced the Class 2 and 3 notes
during the year. We remain very comfortable
with the debt levels and debt capacity in the
business. Corporate funding capacity is more
than sufficient to support current committed
branch expansion plans in Auto.
This financial commentary should be read in
conjunction with the full financial statements
and Notes to the Financial Statements in the
FY23 Annual Report.
REVENUE
The sector and the economy faced increasing
economic headwinds and the lingering
effects of the COVID-19 pandemic in the first
half. Despite this, Group revenue rose 13%
to $390m with Auto Retail and Insurance
divisions growing strongly for a third year in
succession. Revenue rose strongly in each of
the three largest businesses.
Auto Retail was up 15% to $278.2m, off the
back of increased car and damaged vehicle
unit sales, new branches and more owned
stock flowing through the business which has
helped grow our cars market share. Finance
book revenues of $58.6m, an increase of 13%,
reflect a higher average loan book over FY23
with growth in premium borrower segment.
Insurance revenues were up 8% to $43.6m, off
strong policy sales and improved investment
returns. Credit Management revenues have
dropped as a result of less debt load and lower
levels of payment arrangements.
PROFIT
Net profit before tax of $45.5m, up 6% on
FY22, was a record for the company.
Profit grew 28% in Automotive Retail to
$25.0m, and 9% in Insurance to $12.6m.
Finance Division’s profit was down 17% to
$15m due to rapid OCR increases that saw
credit quality, regulatory compliance and
margin management become the priority
during the year. In H2, we added an additional
$0.5m to our provision buffer. Profit for Credit
Management was largely unchanged at $2.9m.
Net profit after tax (NPAT) of $32.6m was up
4% on the same period last year.
28
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
BALANCE SHEET
$MILLIONS
FY23
FY22
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
FUNDING MIX
12
67
26
425
106
22
164
30
852
412
56
13
56
27
16
580
272
13
70
32
423
68
23
164
32
825
413
50
13
55
28
14
573
252
$MILLIONS
LIMIT
DRAWN
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
316
50
366
110
30
140
295
35
(5)
325
41
75
7
(7)
75
65
29
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
OUR 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
7.44% 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 7.47% 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.
30
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
ALISTAIR PETRIE
Non-executive Director
Appointed February 2016
JOHN ROBERTS
Independent Director
Appointed July 2015
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. 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 12.24% 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 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. 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.
31
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
ANTONY VRIENS
Independent Director
Appointed January 2015
MARTIN BERRY
Independent Director
Appointed August 2018
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. He brings a hands on, practical
and commercial approach, and a strong
technology and sustainability 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 is a seasoned global financial
services executive, having run large
international businesses for the likes of ANZ,
Citibank, Barclays and Standard Chartered.
Martin then left the corporate world to
pursue his desire to build his own company,
going on to found Gong cha Global Ltd,
one of the world’s largest tea brands with
more than 2,000 stores in 25 countries,
where today he still serves as Chairman.
Martin also founded and runs Singapore
based venture studio Launcho Ventures,
focussed on building, scaling and investing
in e-commerce brands globally.
32
LAUREN QUAINTANCE
Independent Director
Appointed April 2023
Lauren has had a highly successful
career in media and marketing and as an
entrepreneur. She was the co-founder and
Managing Director of Storyation, a leading
Australian digital content marketing agency,
which was sold to ASX-listed NewsCorp in
late 2019. Lauren was named Entrepreneur
of the Year at the B&T Women in Media
Awards in Australia and is currently Chief
Media and Data Officer for Sky Television.
As well as Turners and DPL Insurance, she is
an Independent Director for the Crusaders
and ChristchurchNZ. Her journalistic
pedigree combined with digital marketing
experience and entrepreneurial skills fit well
with the Turners direction and culture.
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
NEW INDEPENDENT
DIRECTOR
LAUREN QUAINTANCE
Lauren was appointed to the Board
as an Independent Director from
3 April 2023. She had been working
with the Turners’ Board as an
Emerging Director since October 2021.
Lauren is also a director of Turners’
subsidiary DPL Insurance.
“Lauren’s experience in
the digital and social
marketing sector
combined with her
business acumen has
proven to be a great fit
for our business. Lauren
has brought real value to
our strategic direction and
board discussions and we
know this contribution will
only continue to grow. It
is very exciting to have
someone of Lauren’s
calibre and experience
come on board.”
Grant Baker, Chairman
33
OUR 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
34
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 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. He has
responsibility for Turners Cars, Turners
Subscriptions, 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 and Armstrong Motor Group in
NZ. 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. He 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
Matthew heads up the EC Credit Debt
Resolution and Credit Risk Mitigation business.
Matt celebrates his 20th year with EC Credit
Control this year and has worked in almost all
areas of the business – Debt Resolution, Risk
Mitigation, IT and Operations. Since becoming
CEO in 2021 Matt has led our resolution
focussed approach to debt recovery. He holds
a business degree from Massey University and
has a strong technology focus to drive better
outcomes and improve customer experience
MARYANNE BURNS
Group General Manager People & Culture
Maryanne joined Turners in 2019. She has
20 years’ 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.
35
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
36
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
38 Independent Auditor’s Report
44 Consolidated Statement of Comprehensive Income
45 Consolidated Statement of Changes in Equity
46 Consolidated Statement of Financial Position
47 Consolidated Statement of Cash Flows
48 Notes to the Financial Statements
37
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2023
Level 9, 45 Queen Street, Auckland 1010
PO Box 3899, Auckland 1140
New Zealand
T: +64 9 309 0463
F: +64 9 309 4544
E: auckland@bakertillysr.nz
W: www.bakertillysr.nz
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Turners Automotive Group Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Turners Automotive Group Limited and its subsidiaries
('the Group') on pages 44 to 97, which comprise the consolidated statement of financial position as at 31 March 2023,
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 2023, 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.
38
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2023
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 2023.
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 in
accordance with NZ IAS 36 Impairment of Assets.
Procedures included:
o
o
o
o
o
o
o
o
o
o
Evaluating the logic of the value-in-use calculations supporting
Management’s annual impairment test and testing the
mathematical accuracy of these calculations;
Evaluating Management’s process regarding the preparation and
review of forecasts;
Comparing forecasts to Board approved forecasts;
Evaluating the historical accuracy of the Group’s forecasting to
actual historical performance;
Challenging and evaluating the forecast growth assumptions;
Evaluating the inputs to the calculation of the discount rates
applied;
Engaging our own internal valuation experts to evaluate the logic
of the value-in-use calculation and the inputs to the calculation of
the discount rates applied;
Evaluating the forecasts, inputs and any underlying assumptions
with a view to identifying Management bias;
Evaluating Management’s sensitivity analysis for reasonably
possible changes in key assumptions; and
Performing our own sensitivity analyses for reasonably possible
changes in key assumptions, the two main assumptions being:
the discount rate and forecast growth assumptions.
Evaluating the related disclosures about indefinite life intangible assets
which are included in Note 22 in the Group’s consolidated financial
statements.
39
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2023
Key Audit Matter
How our audit addressed the key audit matter
Valuation of Finance Receivables
Our audit procedures among others included:
As disclosed in Note 14 of the Group’s
consolidated financial statements, the Group
has finance receivable assets of $425m.
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
loss models to complete its assessment of
expected credit losses for the Group’s finance
receivables as at 31 March 2023 (including an
economic overlay of $2.0m).
This assessment involves complex and
subjective estimation and judgement by
Management on credit risk and the future cash
flows of the finance receivables.
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, ongoing administration and
expected credit losses impairment model data and calculations.
Evaluating and challenging the logic, key assumptions, and calculation
of Management’s expected credit losses provision for impairment for
each finance receivable, examining those finance receivables and
forming our own judgements as to whether the expected credit losses
provision for impairment recognised by Management is appropriate.
Procedures included:
o Agreeing a representative sample of finance receivables to the
signed loan agreement and client acceptance documents;
o
Inspecting security documentation to ensure that the Group holds
a valid charge on security;
o Evaluating 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;
o Evaluating the key assumptions and inputs into these discounted
cash flow calculations;
o Evaluating and challenging Management’s sensitivity analysis’ for
reasonably possible changes in key assumptions and inputs into
the discounted cash flow calculations; and
o
Inspecting 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 2023
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.
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 $56.1m.
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.
40
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2023
Key Audit Matter
How our audit addressed the key audit matter
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
2023.
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:
o
o
the work and findings of the Group’s external actuarial expert
engaged by Management; and
the 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 2023 (but does not include the consolidated financial
statements and our auditor’s report thereon).
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated
financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine
is necessary to enable the preparation of the consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the Group for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
41
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2023
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.
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.
42
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2023
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 2023 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 2023 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 2023
43
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Consolidated statement of comprehensive income for the year ended 31 March 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2023
Notes
2023
$’000
2022
$’000
Revenue
Other income
Cost of goods sold
Interest expense
Impairment provision expense
Subcontracted services expense
Employee benefits
Commission
Advertising expense
Depreciation and amortisation expense
Systems maintenance
Claims
Other expenses
Profit before taxation
Taxation (expense)/benefit
Profit for the year
Other comprehensive income for the year (which may subsequently be reclassified to
profit/loss), net of tax
Cash flow hedges
Revaluation of financial assets at fair value through OCI
Foreign currency translation differences
Total other comprehensive income
Total comprehensive income for the year
Earnings per share (cents per share)
Basic earnings per share
Diluted earnings per share
7
7
7
7
7
8
9
9
389,027
608
342,029
2,487
(173,986)
(153,173)
(19,933)
(3,740)
(11,927)
(60,709)
(12,024)
(4,934)
(11,478)
(5,109)
(21,785)
(18,465)
45,545
(12,979)
32,566
415
(91)
(7)
317
(10,932)
(3,024)
(10,940)
(56,030)
(12,925)
(4,140)
(10,702)
(3,399)
(21,024)
(15,107)
43,120
(11,839)
31,281
5,429
(345)
(6)
5,078
32,883
36,359
37.64
36.39
37.74
36.45
The accompanying notes form part of these financial statements
44
The accompanying notes form part of these financial statements
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Consolidated statement of changes in equity for the year ended 31 March 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2023
Balance at 31 March 2021
Share
capital
$’000
204,297
Notes
Revaluation
of financial
assets at Cash flow
Share Translation
fair value
hedge Retained
options
reserve through OCI
reserve
earnings
$’000
255
$’000
(26)
$’000
(740)
$’000
$’000
48
29,736 233,570
Total
$’000
Transactions with shareholders in their capacity as owners
Employee share based payments
Dividend paid
29
30
1,185
-
Total transactions with shareholders in their capacity as owners
1,185
Comprehensive income
Profit
Other comprehensive income
Total comprehensive income for the year, net of tax
-
-
-
217
-
217
-
-
-
-
-
-
-
(6)
(6)
-
-
-
-
-
-
-
-
(345)
(345)
5,429
5,429
-
1,402
(18,934)
(18,934)
(18,934)
(17,532)
31,281
31,281
-
5,078
31,281
36,359
Balance at 31 March 2022
205,482
472
(32)
(1,085)
5,477
42,083 252,397
Transactions with shareholders in their capacity as
owners
Employee share based payments
Dividend paid/payable
29
30
1,594
(188)
-
-
Total transactions with shareholders in their capacity as owners
1,594
(188)
Comprehensive income
Profit
Other comprehensive income
Total comprehensive income for the year, net of tax
-
-
-
-
-
-
-
-
-
-
(7)
(7)
-
-
-
-
-
-
-
-
(91)
(91)
415
415
296
1,702
(14,732)
(14,732)
(14,436)
(13,030)
32,566
32,566
-
32,566
317
32,883
Balance at 31 March 2023
207,076
284
(39)
(1,176)
5,892
60,213 272,250
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
45
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS LIMITED
Turners Automotive Group Limited
Consolidated statement of financial position for the year ended 31 March 2016
Consolidated statement of financial position as at 31 March 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the year ended 31 March 2023
Notes
Notes
2016
$’000
2023
$’000
2022
$’000
2015
$’000
11,845
13,810
13,373
12,339
66,730
18,455
70,199
17,350
7,800
9,575
7,581
7,394
26,057
14,156
31,980
8,984
424,621
167,598
422,870
142,827
8,271
5,887
8,505
9,734
230
11,108
2,925
-
4,024
105,993
22,226
5,800
105,338
362,303
163,556
9,340
5,946
5,414
225
3,242
67,569
23,497
5,950
13,253
8,319
433
8,532
103,595
328,972
164,453
851,941
825,693
22,270
17,790
56,008
6,049
50,103
7,476
1,562
6,773
990
49
1,848
4,016
71
-
13,077
174,816
13,191
156,995
412,035
15,629
412,761
16,378
27,120
12,688
7,042
232,491
28,209
9,260
8,153
207,970
56,074
579,691
55,015
573,296
136,127
135,294
(52)
207,076
(6,263)
4,961
129,812
60,213
(23)
205,482
(14,269)
4,832
121,002
42,083
362,303
272,250
252,397
328,972
851,941
825,693
Assets
Assets
Cash and cash equivalents
Cash and cash equivalents
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Trade receivables
Trade receivables
Inventories
Inventory
Finance receivables
Finance receivables
Other receivables, deferred expenses and contract assets
Other receivables and deferred expenses
Derivative financial instruments
Reverse annuity mortgages
Financial assets at fair value through OCI
Property, plant and equipment
Reverse annuity mortgages
Tax receivables
Property, plant and equipment
Deferred tax asset
Right-of-use assets
Intangible assets
Investment property
Total assets
Intangible assets
Total assets
Liabilities
Other payables
Liabilities
Deferred revenue
Other payables
Tax payables
Contract liabilities
Tax payables
Deferred tax
Derivative financial instruments
Borrowings
Borrowings
Life investment contract liabilities
Lease liabilities
Insurance contract liabilities
Life investment contract liabilities
Total liabilities
Insurance contract liabilities
Total liabilities
Shareholders’ equity
Share capital
Shareholders’ equity
Other reserves
Share capital
Retained earnings
Other reserves
10
11
12
13
14
15
16
19
20
21
22
23
24
32
32
25
10
11
12
13
14
15
16
17
19
20
21
22
23
24
25
26
27
35
35
28
Total shareholders’ equity
Retained earnings
Total shareholders’ equity and liabilities
Total shareholders’ equity
Total shareholders’ equity and liabilities
For and on behalf of the Board
For and on behalf of the Board
G.K. Baker
G.K. Baker
Chairman Director
Chairman Director
Authorised for issue on 29 June 2023
Authorised for issue on 22 June 2016
J.A. Roberts
P.A. Byrnes
Director
Executive Director
The accompanying notes form part of these financial statements
The accompanying notes from part of these financial statements
46
The accompanying notes form part of these financial statements
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Consolidated statement of cash flows for the year ended 31 March 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2023
Cash flows from operating activities
Interest received
Receipts from customers
Receipt of government subsidies
Interest paid - borrowings
Interest paid - lease liabilities
Payment to suppliers and employees
Income tax paid
Net cash outflow from operating activities before changes in operating assets and
liabilities
Net increase in finance receivables
Net decrease in reverse annuity mortgages
Net (increase)/decrease of financial assets at fair value through profit or loss
Net (withdrawals)/contributions from life investment contracts
Changes in operating assets and liabilities arising from cash flow movements
Notes
2023
$’000
2022
$’000
52,400
333,344
100
(17,653)
(1,284)
(285,522)
(10,394)
44,429
297,032
1,580
(6,676)
(1,774)
(274,022)
(9,326)
70,991
51,243
(6,814)
(93,992)
572
3,872
(304)
1,164
(2,482)
126
(2,674)
(95,184)
Net cash (outflow)/inflow from operating activities
32
68,317
(43,941)
Cash flows from investing activities
Proceeds from sale of property, plant, equipment and intangibles
Purchase of property, plant, equipment and intangibles
Purchase of investments
Sale of investments
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Net bank loan advances/(repayments)
Principal elements of lease payments
Bond repayments
Proceeds from the issue of shares
Dividend paid
Net cash inflow/(outflow) from financing activities
Net movement in cash and cash equivalents
Add opening cash and cash equivalents
Closing cash and cash equivalents
Represented By:
Cash at bank
942
(44,177)
(96)
-
(43,331)
(553)
(7,501)
-
1,436
(19,896)
(26,514)
(1,528)
13,373
11,845
636
(16,121)
-
3,420
(12,065)
100,660
(5,563)
(25,000)
1,185
(13,770)
57,512
1,506
11,867
13,373
10
11,845
13,373
Closing cash and cash equivalents
11,845
13,373
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
47
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
1. REPORTING ENTITY
Turners Automotive Group Limited, ('the Company') is incorporated and domiciled in New Zealand. Turners Automotive Group Limited is
registered under the Companies Act 1993.
Turners Automotive Group Limited is a FMC reporting entity for the purposes of the Financial Markets Conduct Act 2013.
The consolidated financial statements of Turners Automotive Group Limited and its subsidiaries (together ‘the Group’) have been prepared in
accordance with the Companies Act 1993 and the Financial Markets Conduct Act 2013.
The Group is a for profit entity.
The Group's principal activities are:
•
•
•
auto retail (second hand vehicle retailer)
finance and insurance (loans and insurance products); and
credit management (collection services).
The financial statements were authorised for issue by the directors on 29 June 2023.
2. BASIS OF PREPARATION
2.1 Statement of Compliance
These financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP').
They comply with New Zealand Equivalents to International Financial Reporting Standards ('NZ IFRS') and other applicable Financial
Reporting Standards, as appropriate for profit oriented entities. These financial statements also comply with International Financial Reporting
Standards ('IFRS').
2.2 Basis of measurement
The financial report has been prepared under the historical cost convention, as modified by revaluations for certain classes of assets and
liabilities to fair value and life insurance contract liabilities and related assets to net present value as described in the accounting policies
below.
2.3 Functional and Presentation Currency and Rounding
These financial statements are presented in New Zealand Dollars ($) which is the Company's functional currency. All values are rounded to
the nearest thousand ($000), except when otherwise indicated.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been
applied consistently by Group entities.
3.1 Adoption of new and revised Standards and Interpretations
No new standards and amendments and interpretations to existing standards came into effect during the current accounting period beginning
on 1 April 2022 that materially impacted the Group’s financial statements and require retrospective adjustment. The Group has not early
adopted any new standards, amendments or interpretations to existing standards that are not yet effective.
3.2 New standards and amendments and interpretations to existing standards that are not yet effective for the current accounting
period beginning on 1 April 2022
The following relevant standards and interpretations have been issued at the reporting date but are not yet effective.
NZ IFRS 17 Insurance contracts
The Group will apply NZ IFRS 17, ‘Insurance Contracts’, for the first time on 1 April 2023. This standard replaces NZ IFRS 4 ‘Insurance
Contract’ and is effective for annual periods beginning on or after 1 January 2023, with early adoption permitted. The implementation of NZ
IFRS 17 is not expected to have a material impact on the Group’s consolidated financial statements in the period of initial application.
Estimated impact of the adoption of NZ IFRS17
The Group has assessed the estimated impact that the initial application of NZ IFRS 17 will have on its consolidated financial statements.
Based on the assessments undertaken to date, the total adjustment (after tax) to the balance in the Group’s total equity at 1 April 2023 and
at 1 April 2022, is summarised as follows:
Estimated decrease in Group's total equity
Decrease in other receivables, deferred expenses and contract assets
Increase in insurance contract liabilities
Deferred tax impacts
1 April
2023
$’000
(2,051)
407
(1,644)
460
(1,184)
1 April
2022
$’000
(2,081)
310
(1,771)
496
(1,275)
48
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
The assessment above is preliminary as not all of the transition work has been finalised. The actual impact of adopting NZ IFRS 17 on 1 April
2023 and 1 April 2022 may change as the new accounting policies, assumptions and judgements and estimation techniques employed are
subject to change until the Group finalises its first financial statements that include the date of initial application.
Identifying contracts in the scope of NZ IFRS 17
i.
NZ IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts
and investment contracts with direct participation features.
When identifying contracts in the scope of NZ IFRS 17, in some cases the Group will have to assess whether a set or series of contracts
needs to be treated as a single contract and whether embedded derivatives, investment components and goods and services components
have to be separated and accounted for under another standard. For insurance and reinsurance contracts, the Group does not expect
significant changes arising from the application of these requirements.
Level of aggregation
ii.
Under NZ IFRS 17, insurance contracts and investment are aggregated into groups for measurement purposes. Groups of contracts are
determined by first identifying portfolios of contracts, each comprising contracts subject to similar risks and managed together. Contracts in
different product lines are expected to be in different portfolios. Each portfolio is then divided into annual cohorts (i.e. by year of issue) and
each annual cohort into three groups:
•
•
•
any contracts that are onerous on initial recognition;
any contracts that, on initial recognition, have no significant possibility of becoming onerous subsequently; and
any remaining contracts in the annual cohort.
When a contract is recognised, it is added to an existing group of contracts or, if the contract does not qualify for inclusion in an existing group,
it forms a new group to which future contracts may be added. Groups of reinsurance contracts are established such that each group comprises
a single contract.
The level of aggregation requirements of NZ IFRS 17 limit the offsetting of gains on groups of profitable contracts, which are generally deferred
as a Contractual Service Margin (CSM), against losses on groups of onerous contracts, which are recognised immediately. The Group does
not expect significant changes arising from the application of these requirements.
Contract boundaries
iii.
Under NZ IFRS 17, the measurement of a group of contracts includes all of the future cash flows within the boundary of each contract in the
group. The Group does not expect significant changes arising from the application of these requirements.
Insurance contracts
For insurance contracts, cash flows are within the contract boundary if they arise from substantive rights and obligations that exist during the
reporting period in which the Group can compel the policyholder to pay premiums or has a substantive obligation to provide services (including
insurance coverage and investment services). A substantive obligation to provide services ends when:
•
•
the Group has the practical ability to reassess the risks of the particular policyholder and can set a price or level of benefits that fully
reflects those reassessed risks; or
the Group has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of benefits
that fully reflects the risks of that portfolio, and the pricing of the premiums up to the reassessment date does not take into account risks
that relate to periods after the reassessment date.
iv. Measurement
The Group expects to value its Funeral Plan and Annuity Insurance Life contracts using the General Measurement Model and the Premium
Allocation Approach for all other Life contracts and all non-life contracts.
General Measurement Model (GMM)
GMM is a measurement model based on the estimates of the present value of future cash flows that are expected to arise as the Group fulfils
the contracts, an explicit risk adjustment for non-financial risk and a Contractual Service Margin (CSM). The CSM at each reporting date
represents the profit in a group of contracts that has not yet been recognised in profit or loss because it relates to future service.
Premium Allocation Approach (PAA)
PAA is an optional simplified measurement model in NZ IFRS 17 that is available for insurance and reinsurance contracts that meet the
eligibility criteria. Under PAA, the valuation of the unearned portion of the liability (referred to as the liability for remaining coverage (LFRC))
can be seen as being similar to a calculation under current accounting of (a) the unearned premium reserve less (b) deferred acquisition costs
less (c) premium receivables (plus (d) any additional unexpired risk reserve for unprofitable business). The liability for incurred claims (LFIC)
represents the estimate of amounts due to policyholders for claims incurred from earned portions of the liability.
The Group reasonably expects that using PAA would produce a measurement of the liability for remaining coverage that would not differ
materially from the result of applying GMM.
Disclosure
v.
NZ IFRS 17 requires extensive new disclosures about amounts recognised in the financial statements, including detailed reconciliations of
contracts, effects of newly recognised contracts and information on the expected CSM emergence pattern, as well as disclosures about
significant judgements made when applying NZ IFRS 17. There will also be expanded disclosures about the nature and extent of risks from
insurance contracts and reinsurance contracts. Disclosures will generally be made at a more granular level than under NZ IFRS 4, providing
more transparent information for assessing the effects of contracts on the financial statements.
49
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Transition
vi.
Changes in accounting policies resulting from the adoption of NZ IFRS 17 will be applied using the fair value approach as the Group cannot
obtain reasonable and supportable information necessary to apply the full or modified retrospective approach.
Under the fair value approach, the CSM (or the loss component) at 1 April 2022 will be determined as the difference between the fair value of
a group of contracts at that date and the fulfilment cash flows at that date. The Group will measure the fair value of the contracts as the sum
of (a) the present value of the net cash flows expected to be generated by the contracts, determined using a discounted cash flow technique;
and (b) an additional margin, reflecting the reward that an arm's length purchaser of the portfolio would require for the risks to which their
capital would be exposed by acquiring the portfolio. The additional margins unwinds over the term of the portfolio.
3.3 Basis of consolidation
Subsidiaries
Subsidiaries are all entities controlled by the Group. The financial statements of subsidiaries are included in consolidated financial statements
from the date that control commences until the date that control ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
3.4 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currency of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency
at the exchange rate at that date. The foreign currency gains or losses on monetary items is the difference between amortised cost in the
functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign
currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency
at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on
historical costs are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to New
Zealand Dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to New Zealand
Dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve
(translation reserve) in equity.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable
future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and are presented in the translation reserve in equity.
3.5 Revenue and expense recognition
The principal sources of revenue are sales of goods, sales of service, interest income, fees, commissions, and insurance premium income.
3.5.1 Revenue from contracts with customers
Sales of goods
Sales of goods comprise sales of motor vehicle and commercial goods owned by the Group. Sales of goods are recognised when the customer
gains control of the goods. This normally occurs on full payment or approval of financing.
related warranties associated with goods cannot be purchased separately and they serve as an assurance that the products sold comply
upon specifications and cover the standard period established by legislation. There is no material amount of variable consideration
Sales
with agreed
‑
under these contracts nor is there the existence of a significant financing component.
‑
Sales of service
Auction commission is recognised at a point in time in the accounting period in which the service is rendered. Payment for services is normally
deducted from the proceeds from the sale. Other than those provided by legislation no warranties are provided by the Group. There is no
material amount of variable consideration under these contracts nor is there the existence of a significant financing component.
Other sales revenue comprises services rendered preparing the asset for sale and commission earned on the sale of third party products.
Services rendered while preparing the asset for sale are recognised over time in which the service is rendered, and a contract asset is
recognised for amounts relating to services rendered not yet invoiced. Payment for services rendered are either deducted from the proceeds
from the sale or raised as a trade receivable. Other than those provided by legislation no warranties are provided by the Group. There are no
rebates or volume discounts. Commissions earned on the sale of third party products is recognised at a point in time when the sale is made.
Payment is usually received when the sale is made.
Collection income, which is largely fees and commission earned for collecting debt on behalf of third parties and the sale of customised terms
of trade documents, is recognised at a point in time when the service is rendered. Payment is either deducted from the monies collected or
raised as trade receivable. Proceeds received are recognised as a contract liability and therefore a contract liability is recognised over the
period in which the services are performed. If the consideration promised includes a variable amount for rebates, refunds or credit, then the
50
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Group estimates the amount of variable consideration, to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur, and recognises a contract liability. Other than those provided by legislation no warranties are
provided by the Group. Costs to obtain contracts such as commissions are recognised as contract assets and incurred when the related
revenue for the contract is released to profit or loss.
Voucher income
Voucher income is the proceeds from the sale of a voucher that on presentation entitles the holder to either load a debt for collection or register
a security on the Personal Property Securities Register (‘PPSR’). Voucher income is recognised, at a point in time, when the voucher is
redeemed and the debtor’s information is loaded into the collection system or a security is registered on the PPSR. Payment is normally
received when the voucher is sold, and proceeds received from voucher sales are initially recognised as a contract liability. For those vouchers
that are unredeemed, voucher income is recognised after a period of time based on historical non-redemption patterns. Estimates are
readjusted as necessary based on movements in the actual non-redemption patterns. Other than those provided by legislation no warranties
are provided by the Group. There is no material amount of variable consideration under these contracts nor is there the existence of a
significant financing component. Costs to obtain contracts such as commissions are recognised as contract assets and incurred when the
related revenue for the contract is released to profit or loss.
3.5.2 Financial instruments
Interest income and expense
Interest income and expense is recognised in the profit or loss using the effective interest method.
The effective interest method calculates the amortised cost of a financial asset or financial liability and allocates the interest income or interest
expense over the relevant period. The calculation includes all fees paid or received and directly related transaction costs that are an integral
part of the effective interest rate. The interest income or expense is allocated over the life of the instrument and is measured for inclusion in
profit and loss by applying the effective interest rate to the instruments amortised cost.
Lending and funding - fees and commissions
Lending fee income (such as booking and establishment fees) that is integral to the effective yield of a loan held at amortised cost is capitalised
as part of the amortised cost and deferred over the life of the loan using the effective interest method. Lending fees not directly related to the
origination of a loan (account maintenance fee) are recognised over the period of service.
Incremental and directly attributable costs (such as commissions) associated with the origination of a financial asset (such as loans) and
financial liabilities (such as borrowings) are capitalised as part of the amortised cost and deferred over the life of the financial instrument using
the effective interest method.
3.5.3 Insurance contracts
Premium income and acquisition costs
Recurring premiums on life insurance contracts are recognised as revenue when payable by the policyholder. Where policies provide for the
payment of amounts of premiums on specific due dates, such premiums are recognised as revenue when due. Unpaid premiums are only
recognised as revenue during the days of grace and are not recognised where policies are deemed to have lapsed at reporting date.
General insurance premiums comprise the total premiums payable for the whole period of cover provided by contracts entered into during the
reporting period and are recognised on the date on which the policy commences. Premiums include any adjustments arising in the reporting
period for premium receivables written in respect of business written in prior accounting periods. Premiums collected by intermediaries, but
not yet received, are assessed based on known sales and are included in written premium.
Unearned premiums are those proportion of premiums written in a year that relate to periods of risk after the reporting date. Unearned
premiums are calculated on a daily pro rata basis. The proportion attributable to subsequent periods is deferred as a provision for unearned
premiums.
Under life investment contracts deposits are received from policyholders which are then invested on behalf of the policyholders and recognised
as Financial assets at fair value through profit or loss. No premium income is recognised as revenue. Fees deducted from members' accounts
are accounted for as fee income.
Those direct and indirect costs incurred during the financial period arising from the acquiring or renewing of insurance contracts are deferred
to the extent that these costs are recoverable out of future premiums from insurance contracts. All other acquisitions costs are recognised as
an expense when incurred.
Subsequent to initial recognition, the deferred acquisitions cost asset (DAC) for life insurance contracts is amortised over the expected life of
the contracts. DAC for general insurance contracts is amortised over the period in which the revenues are earned.
An impairment review is performed at each reporting date or more frequently when an indication of impairment arises. When the recoverable
amount is less than the carrying value, an impairment loss is recognised in profit or loss. DACs are also considered in the liability adequacy
test for each reporting period.
DACs are derecognised when the related contracts are either settled or disposed of.
Claims expense
Claims expenses represent claim payments adjusted for the movement in the outstanding claims liability.
General insurance claims expenses are recognised when claims are notified with the exception of claims incurred but not reported for which
a provision is estimated. Life insurance contract claims are recognised when a liability has been established. Claims under life investment
contracts represent withdrawals of investment deposits and are recognised as a reduction in the life investment contract liabilities.
51
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
3.5.4 Government grants
Government grants are not recognised as income until there is reasonable assurance that the Group will comply with the conditions attaching
to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in
which the Group recognises as expenses the related costs for which the grants are intended to compensate.
3.5.5 Other
Other income
Dividend income is recorded in the profit or loss when the Group’s right to receive the dividend is established.
Other expense recognition
All other expenses are recognised in profit or loss as incurred.
3.6 Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or
loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or
sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention
in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification
of the financial assets.
Classification of financial assets
Financial assets that meet the following conditions are measured subsequently at amortised cost:
•
the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
•
Financial assets that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):
•
the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the
financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
•
By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).
Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset:
•
the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if
certain criteria are met; and
the Group may irrevocably designate a financial asset that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing
so eliminates or significantly reduces an accounting mismatch.
•
(i) Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period.
For financial assets other than purchased or originated credit
impaired on initial
recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit
losses, through the expected life of the financial asset, or, where appropriate, a shorter period, to the gross carrying amount of the financial
adjusted effective interest rate is calculated
asset on initial recognition. For purchased or originated credit
by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial
recognition.
impaired financial assets (i.e. assets that are credit
impaired financial assets, a credit
‑
‑
‑
‑
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal
repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity
amount, adjusted for any expected credit losses. The gross carrying amount of a financial asset is the amortised cost of a financial asset
before adjusting for any expected credit losses.
Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost and at FVTOCI.
impaired financial assets, interest income is calculated by applying the effective
For financial assets other than purchased or originated credit
‑
52
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit
below).
‑
impaired (see
For financial assets that have subsequently become credit
the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit
so that the financial asset is no longer credit
amount of the financial asset.
impaired, interest income is recognised by applying the effective interest rate to
impaired financial instrument improves
impaired, interest income is recognised by applying the effective interest rate to the gross carrying
‑
‑
‑
Financial assets measured at amortised cost include cash and cash equivalents, trade receivables, finance receivables, reverse annuity
mortgages and other receivables.
(ii) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. Specifically:
•
Investments in equity instruments are classified as at FVTPL, unless the Group designates an equity investment that is neither held for
trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition.
Financial assets that do not meet the amortised cost criteria or the FVTOCI criteria are classified as at FVTPL. In addition, financial
assets that meet either the amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such
designation eliminates or significantly reduces a measurement or recognition inconsistency (so called ‘accounting mismatch’) that would
arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated
any financial assets as at FVTPL.
•
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in
profit or loss to the extent they are not part of a designated hedging relationship (see hedge accounting policy). Fair value is determined in
the manner described in note 5.5.
Financial assets measured at FVTPL include equity securities, unitised funds, fixed interest securities and term deposits.
(iii) Financial assets at FVTOCI
Equity securities which are not held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category.
These are strategic investments and the Group considers this classification to be more relevant.
On disposal of these equity securities, any related balance within the FVTOCI reserve is reclassified to retained earnings.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost and contract assets.
The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective
financial instrument.
The Group recognises lifetime ECL for trade receivables and contract assets. The expected credit losses on these financial assets are
estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date,
including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures
the loss allowance for that financial instrument at an amount equal to 12
month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial
month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial
instrument. In contrast, 12
instrument that are possible within 12 months after the reporting date. Homogeneous loans are assessed on a collective basis (collective
impairment provision) and non-homogeneous loans are assessed individually (specific impairment provision).
‑
‑
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk
of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date
of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and
supportable, including historical experience and forward
looking information that is available without undue cost or effort such as:
•
•
actual or expected changes in economic indicators (i.e. change in employment rates); and
‑
for non-homogeneous loans significant changes in the value of the collateral supporting the loan or changes in the operating results
of the borrower.
The nature of the Group’s finance receivables (second tier retail and commercial lending) means there is little or no updated credit risk
information that is routinely obtained and monitored on an individual instrument until a customer breaches the contractual terms.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly
since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable
information that demonstrates otherwise.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and
revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes
past due.
53
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
(ii) Definition of default
The Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and
supportable information to demonstrate that another default criteria is more appropriate.
‑
impaired financial assets
(iii) Credit
A financial asset is credit
asset have occurred. Evidence that a financial asset is credit
a)
b) a breach of contract, such as a default or past due event (see (ii) above); and
c)
significant financial difficulty of the borrower;
‑
‑
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial
impaired includes observable data about the following events:
off policy
(iv) Write
The Group writes off a financial asset when there is information indicating that the borrower is in severe financial difficulty and there is no
realistic prospect of recovery, e.g. when the borrower has been placed under liquidation or has entered into bankruptcy proceedings. Financial
assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where
appropriate. Any recoveries made are recognised in profit or loss.
‑
v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there
is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted
by forward
looking information as described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date. No further
advances are allowed against financial assets in default.
‑
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in
accordance with the contract and all the cash flows, after collection/realisation costs, that the Group expects to receive, discounted at the
original effective interest rate.
If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period,
but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the loss allowance at
an amount equal to 12
month ECL at the current reporting date, except for assets for which simplified approach was used.
The Group recognises an impairment gains or losses in profit or loss for all financial instruments with a corresponding adjustment to their
carrying amount through a loss allowance account.
‑
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains
substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest
in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the
proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss.
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL. However, financial
liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies
are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination,
(ii) held for trading or (iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if:
•
•
it has been acquired principally for the purpose of repurchasing it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual
pattern of short
it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument.
term profit
taking; or
•
‑
‑
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business combination may be
designated as at FVTPL upon initial recognition if:
•
•
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is
evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information
about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined contract to be
designated as at FVTPL.
•
54
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognised in profit or loss
to the extent that they are not part of a designated hedging relationship (see Hedge accounting policy).
However, for financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of
changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The
remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a financial liability’s
credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred
to retained earnings upon derecognition of the financial liability.
Fair value is determined in the manner described in note 5.5.
Financial liabilities measured at FVTPL include contingent consideration.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held
at FVTPL, are measured subsequently at amortised cost using the effective interest method.
for
trading, or (iii) designated as
‑
‑
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The
difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit
or loss.
When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange
is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group
accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the
recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the
new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 percent different
from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the
difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification
should be recognised in profit or loss as the modification gain or loss within other gains and losses.
Derivative financial instruments
The Group enters into derivative financial instruments (interest rate swaps and foreign exchange contracts) to manage its exposure to interest
rate and foreign exchange rate risks.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair
value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and
effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both legal right and intention to offset.
A derivative is presented as a non
and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
current liability if the remaining maturity of the instrument is more than 12 months
current asset or a non
‑
‑
Hedge accounting
The Group designates certain derivatives as hedging instruments in respect of foreign currency and interest rate risk in cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge
and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in cash flows of the hedged
item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:
•
•
•
there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective
for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the
hedge) so that it meets the qualifying criteria again.
Cash flow hedges
Hedge effectiveness is determined using the critical terms method (‘CTM’) at the origination of the hedging relationship. Under CTM, the
critical terms of the derivative instruments must match or be closely aligned with the critical terms of the hedged item. Quantitative effectiveness
tests are performed at each period end to determine the continuing effectiveness of the relationship. In instances where changes occur to the
hedged item which result in the critical terms no longer matching, the hypothetical derivative method is used to assess effectiveness. This
55
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
method compares the hedging instrument to a hypothetical derivative (in which the fair value is determined by the credit-risk free benchmark
rate) and the ineffective portion is measured by the extent to which the cumulative change in fair value of the hedging instrument exceeds the
change in fair value of the hypothetical derivative (in absolute terms).
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as
cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve, limited to
the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when
the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results
financial liability, the gains and losses previously recognised in other comprehensive income
in the recognition of a non
and accumulated in equity are removed from equity and included in the initial measurement of the cost of the non
financial asset or
financial liability. This transfer does not affect other comprehensive income. Furthermore, if the Group expects that some or all of the loss
non
accumulated in the cash flow hedging reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.
financial asset or a non
‑
‑
‑
‑
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after
rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The
discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in cash flow
hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast
transaction is no longer expected to occur, the gain or loss accumulated in cash flow hedge reserve is reclassified immediately to profit or
loss.
3.7 Right-of-use assets and lease liabilities
A lease is a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group leases various offices, warehouses, retail stores and equipment. Rental contracts are typically made for fixed periods of 3 to 8
years but may have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range of
different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the
Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis consistent with the estimated consumption of
the economic benefits embodied in the underlying asset.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payment that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in
a similar economic environment with similar terms and conditions. Subsequent to initial recognition, lease liabilities are measured at the
present value of the remaining lease payments (the lease payments that are unpaid at the reporting date). Lease liabilities are remeasured to
reflect changes to lease terms, changes to lease payments and any lease modifications not accounted for as separate leases.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Subsequent to initial recognition, lease assets are measured at cost (adjusted for any remeasurement of the associated lease liability), less
accumulated depreciation and any accumulated impairment loss. Right-of-use assets are assessed for impairment whenever events or
circumstances arise that indicate the asset may be impaired. An asset’s carrying amount is written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its estimated recoverable amount
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or
loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office
furniture.
Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to
maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only
by the Group and not by the respective lessor.
A deferred tax asset is raised for the tax impact of the changes in recognised lease related assets and liabilities.
56
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
In the Statement of cash flows, the Group has presented:
•
Short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement of
the lease liability as part of operating activities;
Cash paid for the interest portion of a lease liability as either operating activities or financing activities, as permitted by NZ IAS 7 Statement
of Cash Flows (the Group has opted to include interest paid as part of operating activities, consistent with its presentation of interest paid
on financial liabilities); and
Cash payments for the principal portion for a lease liability, as part of financing activities.
•
•
Insurance contracts
3.8
Insurance contracts are those contracts that transfer significant insurance risk and are accounted for in accordance with the requirements of
NZ IFRS 4 Insurance Contracts. The Group issues the following insurance contracts:
•
Long-term insurance contracts with fixed and guaranteed terms, these contracts insure events associated with human life (for example,
death) over a long duration;
Temporary life insurance contracts covering death disablement, disability and redundancy risks; and
Short term motor vehicle contracts covering mechanical breakdown risks.
•
•
The Group has determined that all assets of the Group’s subsidiary, DPL Insurance Limited, are assets backing policy liabilities and are
managed and reported in accordance with a mandate approved by DPL Insurance Limited’s Board.
The liability for life insurance contracts is determined in accordance with Appendix C of NZ IFRS 4 Insurance Contracts and Professional
Standard No 20 of the New Zealand Society of Actuaries. In terms of these standards, the liability is determined using the methodology
referred to as Margin on Service (MoS). Under MoS the excess premium received over claims and expenses, 'the profit margin', is recognised
over the life of the contract in a manner that reflects the pattern of risk accepted from the policyholder 'the service'. Longer-term lines of
business (annuities, funeral plan) are valued using the projection method, and shorter-term life and longer-term life contracts written on yearly
renewable premiums, are valued using the accumulation method, as provided for in NZ IFRS 4.
General insurance contract liabilities include claims provision and the provision for unearned premium. The outstanding claims provision is
based on the estimated ultimate cost of all claims incurred but not settled at the reporting date, whether reported or not, together with related
claims handling cost and a reduction for the expected value of salvage and other recoveries. Delays can be experienced in the notification
and settlement of claims, therefore the ultimate cost of these cannot be known at reporting date and are estimated based on past experience.
The liability is not discounted for the time value of money and is derecognised when the obligation to pay the claim expires, is discharged or
is cancelled.
The provision for unearned premiums represent the portion of premiums received or receivable that relates to risks that have not yet expired
at the reporting date. The provision is recognised when contracts are entered into and premiums are charged, and is recognised as premium
income over the term of the contract in accordance with the pattern of insurance service provided under the contract.
Liability adequacy testing is performed in terms of NZ IFRS 4 in order to test the adequacy of all insurance liabilities recorded in the statement
of financial position, net of deferred acquisition costs. Liability adequacy testing is performed at a portfolio level of contracts that are subject
to broadly similar risks and are managed together as a single portfolio.
3.9 Life investment contracts
Life investment contracts are those contracts with minimal insurance risk and are accounted for in accordance with NZ IFRS 15 'Revenue
from Contracts with Customers' (refer note 3.5.1) and NZ IFRS 9 'Financial Instruments' (refer note 3.5.2). The life investment contracts are
unit-linked and fair value of a unit linked contract is determined using the current unit values that reflect the fair value of the financial assets
backing the contract, multiplied by the number of units attributable to the contract holder.
3.10 Inventories
Inventories comprise primarily motor vehicles held for sale and are stated at the lower of cost or net realisable value. Cost comprises purchase
price, shipping cost, compliance cost and other sundry related costs. Estimated selling prices are based upon recent observed vehicle sales
prices for comparable vehicles. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale.
3.11 Investment property
Investment property is held for capital appreciation and comprises land that was transferred from finance receivables through the exercise of
the Group’s security interest in a finance receivable that was in default.
Investment property is initially recognised at fair value on date of transfer or purchase and subsequently carried at fair value. The investment
property was valued at reporting date at the purchase price included in a conditional sale and purchase for property, in prior years, the fair
value of investment properties is determined by a qualified independent external valuer.
Any gains or losses arising from a change in fair value of the investment property is recognised in profit or loss. Subsequent expenditure is
charged to the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to profit or loss during the period in
which they are incurred.
3.12 Property, plant and equipment
Property, plant and equipment are recognised in the statement of financial position at cost less accumulated depreciation and impairment
losses. Land is not depreciated. Depreciation is calculated on all other property, plant and equipment on a diminishing value or straight-line
basis to allocate the costs, net of any residual amounts, over their useful lives.
57
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
The rates for the following asset classes are:
Buildings
Leasehold improvements, furniture and
fittings, office equipment
Computer equipment
Motor vehicles and equipment
Signs and flags
Diminishing value
-
Straight line
50 & 33.3 years
7.5 - 60.0%
31.2 - 48.0%
26.0 - 31.2%
-
3 - 15 years
3 - 5 years
3 - 7 years
3 - 12 years
3.13 Intangible assets
Intangible assets comprise goodwill, acquired separable corporate brands, acquired customer relationships and computer software. Goodwill
and corporate brands are indefinite life intangibles subject to annual impairment testing.
Corporate brands and customer relationships acquired as part of a business combination are capitalised separately from goodwill as intangible
assets if their value can be measured reliably on initial recognition and it is probable that the expected future economic benefits that are
attributable to the asset will flow to the Group.
Goodwill and corporate brands are allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill and
corporate brands arose, identified according to operating segment.
Corporate relationship assets are amortised on the straight line basis over the expected life (10 years) of the relationship and are recognised
in the statement of financial position at cost less accumulated amortisation and impairment losses.
Computer software is recognised in the statement of financial position at cost less accumulated amortisation and impairment losses.
Direct costs associated with the purchase and installation of software licences and the development of software for internal use are capitalised
where project success is probable and the capitalisation criteria is met. Cost associated with planning and evaluating computer software and
maintaining a system after implementation are expensed. Computer software costs are amortised on a diminishing value basis (rate of 50%)
or on a straight-line basis (one to five years).
3.14 Taxation
Income tax for the period comprises current and deferred tax. Current and deferred tax are recognised as an expense or income in the profit
or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in
equity), in which case the tax is also recognised outside profit or loss.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at balance date
after taking advantage of all allowable deductions under current taxation legislation and any adjustment to tax liabilities in respect of previous
years.
Deferred tax is provided using the liability method, providing for temporary differences between the amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the amount of assets and liabilities, using tax rates enacted or substantively enacted as at balance date.
Deferred taxation assets arising from temporary differences or income tax losses, are recognised only to the extent that it is probable that a
future taxable profit will be available against which the asset can be utilised. Deferred taxation assets are reduced to the extent that it is no
longer probable that the related tax asset will be realised. Any reduction is recognised in profit or loss.
3.15 Impairment of non-financial assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually or more frequently if
events or changes in circumstances indicate that they might be impaired. Intangible assets not yet available for use are tested for impairment
annually or more frequently if events or changes in circumstances indicate that they might be impaired.
Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. The Group conducts an annual internal review of asset values, which is used as a source of information to assess for any
indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also
monitored for indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is determined by estimating future cash flows
from the use and ultimate disposal of the asset and discounting these to their present value using a pre-tax discount rate that reflects current
market rates and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units). Impairment losses directly reduce the carrying amount of assets and are
recognised in profit or loss.
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
58
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
3.16 Managed funds
DPL Insurance Limited, a wholly owned subsidiary, has saving plans, which are not open to new members, with assets managed by a third
party investment manager. The assets and liabilities of these funds are included in the financial statements.
3.17 Employee benefits
Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave are recognised in respect of employees' services up to the reporting date. They are measured
at the amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured at the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to future wage and salary levels, experience of employee departures and periods of service. Expected future payments
are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Profit sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the profit
attributable to the Company’s shareholders after certain adjustments. The Group recognises an accrual where contractually obliged or where
there is a practice that has created a constructive obligation.
Share based payments
The cost of options issued to employees under the Group’s share option plan is measured by reference to fair value of the options at the date
on which they are granted. Service and non-market performance conditions are not taken into account when determining the grant date fair
value, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that
will ultimately vest. Market conditions are reflected within the grant date fair value.
The cost of equity settled transactions is recognised over the vesting period. If the service condition is not met during the vesting period, the
expense is revised to reflect the best available estimate of the number of equity instruments expected to vest. Where awards include market
and non-vesting conditions, the transactions are treated as vested irrespective of whether the market or non-vesting conditions are satisfied,
provided that all other performance and/or service conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (refer note 9).
When share options are exercised, the option reserve relating to the options exercised is reclassified to share capital.
Superannuation plans
The Group pays contributions to superannuation plans, such as Kiwisaver. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
3.18 Statement of cash flows
The statement of cash flows has been prepared using the direct approach modified by netting certain cash flows in order to provide more
meaningful disclosure to better reflect the activities of the Group's customers or the party providing funding to the Group than those of the
Group. These include reverse annuity mortgages, finance receivables and borrowings.
3.19 Comparatives
Where necessary, comparative information has been reclassified and represented for consistency with current year.
4. USE OF ESTIMATES AND JUDGEMENTS
In preparing the financial statements in accordance with NZ IFRS, the Board and management are required to make judgements, estimates
and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ
from those estimates.
Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
COVID-19
Management have concluded that the COVID-19 overlay provisions relating to the impairment provisions for finance receivables is no longer
appropriate, but due to the uncertain economic environment, have created an economic overlay provision relating to the impairment for finance
receivables.
The COVID-19 overlay provision of $1.7m included in the finance receivables expected credit loss provision as at 31 March 2022 has been
released to profit or loss and an economic overlay provision of $2.0m has been created.
The principal areas of judgement in preparing these financial statements are set out below.
Provision for impairment on finance receivables
Significant increase in credit risk
As explained in note 3.6, ECL are measured as an allowance equal to 12 month ECL for performing assets, or lifetime ECL for those where
there has been a significant deterioration in credit quality since recognition. An asset moves to doubtful when its credit risk has increased
significantly since initial recognition. The Group presumes a significant increase in credit risk subsequent to initial recognition when contractual
59
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
payments are more than 30 days overdue. In assessing whether the credit risk of an asset has significantly increased the Group takes into
account qualitative and quantitative reasonable and supportable forward looking information.
Calculation of loss allowance
When measuring ECL the Group has used reasonable and supportable forward looking information, which is based on estimates for the future
movement of different economic drivers (i.e. unemployment rates and government stimulus) and how these drivers will affect each other.
Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those
that the Group would expect to receive, taking into account cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given
time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
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 current economic environment 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 (2022: $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 considered for the calculation of the
Groups’ lease liabilities.
Valuation of investment properties
The investment property was valued at reporting date at the purchase price included in a conditional sale and purchase for property.
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
60
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in
level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. The fair value of level 3
instruments is determined by using valuation techniques based on a range of unobservable inputs. The Group establishes fair value by using
valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same,
discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. Investments in equity
instruments that do not have a quoted market price in an active market and whose fair values cannot be reliably measured are recognised
and subsequently carried at cost.
Specific valuation techniques used to value financial instruments in each level are detailed in notes 5.5 and 21.
5. RISK MANAGEMENT
The financial condition and operating results of the Group are affected by a number of key financial and non-financial risks. Financial risks
include credit risk, liquidity risk and market risk. The non-financial risks include insurance risk, which is covered in note 35, and fair value risk
relating to the Group’s Investment property (refer note 21).
5.1 Financial instrument by category
Carryi ng val ue
Financial assets
Financial assets at fair value through profit or loss
Cash and cash equivalents
Financial assets at fair value through profit or loss
Amortised cost
Trade receivables
Finance receivables
Other receivables and 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
2023
$’000
2022
$’000
11,845
66,730
13,373
70,199
7,800
424,621
4,815
2,925
5,887
230
524,853
7,581
422,870
5,726
3,242
5,414
225
528,630
7,042
8,153
40,693
412,035
27,120
486,890
32,295
412,761
28,209
481,418
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 transfer 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:
61
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
•
•
•
•
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.
2023
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
40,693
13,099
3,905
57,697
40,693
13,093
3,905
57,691
-
13,099
3,582
16,681
-
13,093
3,582
16,675
-
414,869
6,304
421,173
-
26,187
6,304
32,491
-
-
10,852
10,852
-
78,560
10,852
89,412
-
-
7,444
7,444
-
543,021
7,444
550,465
40,693
441,067
32,087
513,847
40,693
673,954
32,087
746,734
62
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
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
5.4 Market Risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices, will affect the Group's
income or the value of its holdings of financial instruments.
5.4.1 Insurance business
For the life investment policies market risk is transferred to the policy holder. The Group earns fees on investment linked policies that are
based on the amount of assets invested and it may receive lower fees should markets fall. Asset allocation for investment linked policies is
decided by the Policy Holder.
In the other insurance business, market risk arises when there is a mismatch between the insurance policy liabilities and the assets backing
those liabilities. Refer to note 35K for insurance liabilities interest rate sensitivity. The insurance business has no significant currency and
equity risk.
5.4.2 Interest rate risk
Interest rate risk is the risk of loss to the Group arising from adverse changes in interest rates. The Group's financing activities are exposed
to interest rate risk in respect of its interest earning assets and interest bearing liabilities. Changes to interest rates can impact the Group's
financial results by affecting the interest spread earned on these assets and liabilities.
Interest rates are managed by assessing the demand for funds, new lending, expected debt repayments and maintaining a portfolio of financial
assets and liabilities, including derivative financial instruments, with a sufficient spread between the Group's lending and borrowing activities.
Exposure to interest rates is monitored by the Board of Directors on a monthly basis.
The interest rates earned on finance receivables are fixed over the term of the contract. When approving interest rates for individual loan
advances, interest rate risk is measured in accordance with the approved lending policy. The Group uses interest rate swap contracts to
convert a portion of its variable rate debt to fixed rate debt. No exchange of principal takes place. The notional principal amount of interest
rate swaps at 31 March 2023 was $200m (2022: $150m) and weighted average interest was 2.64% (2022: 1.57%). There was no hedge
ineffectiveness recognised in profit or loss during the period (2022: $nil).
The table below summarises the sensitivity of the Group’s financial assets and liabilities to interest rate risk.
Carrying amount
$’000
-1% Profit
$’000
-1% Equity +1% Prof it +1% Equity
$’000
$’000
$’000
2023
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Finance receivables
Derivative financial instruments
Reverse annuity mortgages
Financial Liabilities
Borrow ings
Total increase/(decrease)
11,845
66,730
424,621
5,887
2,925
412,035
(118)
(667)
(4,246)
(33)
(29)
(85)
(480)
(3,057)
(2,595)
(21)
118
667
4,246
33
29
85
480
3,057
2,562
21
4,120
(973)
2,966
(3,272)
(4,120)
973
(2,966)
3,239
63
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Carrying amount
$’000
-1% Profit
$’000
-1% Equity +1% Prof it +1% Equity
$’000
$’000
$’000
2022
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Finance receivables
Derivative financial instruments
Reverse annuity mortgages
Financial Liabilities
Borrow ings
Total increase/(decrease)
13,373
70,199
422,870
5,414
3,242
(134)
(702)
(4,229)
(47)
(32)
(96)
(505)
(3,045)
(2,311)
(23)
134
702
4,229
48
32
96
505
3,045
2,259
23
412,761
4,128
(1,016)
2,972
(3,008)
(4,128)
1,017
(2,972)
2,956
5.4.3 Currency risk
The Group is exposed to currency risk arising from various currency exposures, primarily with respect to the Australian Dollars (‘AUD’) and
Japanese Yen (‘JPY’). Currency risk arises from the future commercial transactions, recognised assets and liabilities and net investment in
foreign operations.
To ensure the net exposure to EC Credit Control (Aust) Pty Ltd, which has AUD as its functional currency, is kept to an acceptable level, the
Group has a comprehensive transfer pricing policy and converts the AUD unredeemed voucher liability (refer note 24) into a NZD liability by
selling the AUD liability to the New Zealand entity that will be providing the relevant services to settle the liability when the voucher is redeemed.
To limit its exposure to JPY, the Group hedges the anticipated cash flows (mainly purchased inventory) when the commitment is made. All
projected purchases qualify as ‘highly probable’ forecast transactions for hedge accounting purposes.
The table below summarises the Group’s financial exposure to currency risk.
in NZD'000
Net exposure to AUD
Net exposure to JPY
The table below summaries the Group’s sensitivity to +/- 10% foreign exchange fluctuations.
2023
NZ$'000
997
867
2022
NZ$'000
934
-
In NZD'000
2023
AUD
JPY
2022
AUD
-10% Prof it -10% Equity +10% Profit +10% Equity
-
206
111
149
-
(169)
(91)
(178)
-
104
-
(85)
5.5 Assets and liabilities carried at fair value:
The fair value of assets and liabilities carried at fair value as well as the methods used to calculate fair value are summarised in the table
below.
Level 1
Level 2
Level 3
the fair value is calculated using quoted prices in active markets.
the fair value is estimated using inputs other than quoted prices in level 1 that are observable for the assets or liabilities, either
directly (as prices) or indirectly (derived from prices).
the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
2023
Fair value assets:
Financial assets at fair value through profit or loss - insurance
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
-
59,425
-
-
59,425
7,305
-
-
5,887
13,192
-
-
5,800
-
5,800
7,305
59,425
5,800
5,887
78,417
64
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
2022
Fair value assets:
Financial assets at fair value through profit or loss - insurance
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
-
61,940
-
-
61,940
8,259
-
-
5,414
13,673
-
-
5,950
-
5,950
8,259
61,940
5,950
5,414
81,563
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 investment property was valued at reporting date at the purchase price included in a conditional sale and purchase for property.
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
2023
$'000
5,950
(150)
5,800
2022
$'000
5,950
-
5,950
During the year there were no movements of fair value assets or liabilities between levels of the fair value hierarchy.
65
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
6. SEGMENTAL INFORMATION
6.1 Description of segments
Management has determined the operating segments based on the components of Turners Automotive Group Limited and its subsidiaries (the
Group) that engage in business activities, which have discrete financial information available and whose operating results are regularly reviewed by
the Group's chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors. The Board of
Directors makes decisions about how resources are allocated to the segments and assesses their performance. Geographically the Group's
business activities are located in New Zealand and Australia.
Five reportable segments have been identified as follows:
Auto retail:
Finance:
Insurance:
Credit management:
remarketing (motor vehicles, trucks, heavy machinery and commercial goods) and purchasing goods for sale.
provides asset based finance to consumers and SME's.
marketing and administration of a range of life and consumer insurance products.
collection services, credit management and debt recovery services to the corporate and SME sectors. Geographically the
collections services segment business activities are located in New Zealand and Australia.
corporate centre.
Corporate & other:
6.2 Operating segments
Revenue
Auto retail
Finance
Insurance
Credit management
Corporate & other
Total
segment
revenue
2023
$’000
283,354
58,634
45,282
9,259
48
396,577
Inter-
segment
revenue
2023
$’000
(5,189)
-
(1,717)
(36)
-
(6,942)
Revenue
from
external
customers
2023
$’000
278,165
58,634
43,565
9,223
48
389,635
Total
segment
revenue
2022
$’000
249,236
51,898
43,269
9,671
46
354,120
Inter-
segment
revenue
2022
$’000
(6,707)
-
(2,897)
-
-
(9,604)
Revenue
from
external
customers
2022
$’000
242,529
51,898
40,372
9,671
46
344,516
Revenue from external customers reported to the Board of Directors is measured on the same basis as revenue reported in the profit or loss. Inter-
segment transactions are done on an arms length basis. The Group has no customers representing 10% or more of the Group's revenues.
Operating profit
Auto retail
Finance
Insurance
Credit management
Corporate & other
Profit/(loss) before taxation
Income tax
Net profit attributable to shareholders
2023
$’000
24,985
14,956
12,588
2,865
(9,850)
45,545
(12,979)
32,566
2022
$’000
19,447
17,987
11,580
3,033
(8,927)
43,120
(11,839)
31,281
66
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Interest revenue
Interest expense
amortisation expense
Depreciation and
2023
$’000
225
51,508
2,138
4
20
53,895
(30)
53,865
2022
$’000
199
44,782
1,020
1
1
46,003
(8)
45,995
2023
$’000
(2,349)
(13,281)
(61)
(11)
(4,261)
(19,963)
30
(19,933)
2022
$’000
(1,531)
(6,322)
(72)
(21)
(2,994)
(10,940)
8
(10,932)
2023
$’000
(9,141)
(725)
(1,211)
(258)
(143)
(11,478)
-
(11,478)
2022
$’000
(8,126)
(842)
(1,240)
(330)
(164)
(10,702)
-
(10,702)
Auto retail
Finance
Insurance
Credit management
Corporate & other
Eliminations
Other material non-cash items
Auto retail - gain on modification of a lease
Auto retail - impairment provisions
Finance - impairment provisions
Insurance - reverse annuity mortgage interest
Segment assets and liabilities
Assets
Auto retail
Finance
Insurance
Credit management
Corporate & other
Eliminations
2023
$’000
155,850
453,869
136,023
34,035
238,577
1,018,354
(166,414)
851,940
2022
$’000
116,438
451,504
139,091
31,514
187,749
926,296
(100,603)
825,693
Acquisition of property, plant & equipment, intangible assets and other non-current assets
Auto retail
Finance
Insurance
Credit management
Corporate & other
Eliminations
Revenue/(expenses)
2023
$'000
-
33
(3,741)
287
Liabilities
2023
$’000
73,689
344,786
76,866
3,943
84,618
583,902
(4,211)
579,691
Other
2023
$’000
42,927
862
227
21
140
44,177
-
44,177
2022
$'000
60
151
(3,135)
294
2022
$’000
66,679
353,313
75,544
3,476
76,181
575,193
(1,897)
573,296
2022
$’000
15,173
469
394
83
2
16,121
-
16,121
67
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
7. PROFIT BEFORE TAX
Revenue from continuing operations includes:
Interest income
Bank accounts, short term deposits and investments
Finance receivables
Reverse annuity mortgages
Total interest income
Operating revenue
Sales of goods
Commission and other sales revenue
Loan fee income
Insurance and life investment contract income
Collection income
Bad debts recovered
Other revenue
Total operating revenue
Revenue from continuing operations
Other income comprises:
Gain on sale of investments
Dividend income
Gain on sale of property, plant and equipment
Gain on modification of a lease
Government wage subsidies
Other
Revenue from contracts with customers
Over time
Auto retail
Commission and other sales revenue
At a point in time
Auto retail
Sales of goods
Auction commissions
Credit management
Collection income
Voucher income
Insurance
Motor vehicle insurance commissions
Interest expense
Bank borrowings and other
Bonds
Total interest expense
Movement in impairment provisions
Provisions for:
Specific impaired finance receivables
Collective impairment provision for finance receivables
Movement in COVID-19 overlay
Movement in economic overlay provision
Collective impairment on reverse annuity mortgages
Finance receivables bad debts written off
Movement
68
Notes
2023
$’000
2022
$’000
2,026
51,552
287
53,865
205,916
74,980
2,988
38,514
9,204
1,832
1,728
335,162
389,027
-
5
378
-
100
125
608
761
44,940
294
45,995
182,435
58,962
3,659
38,149
9,519
1,147
2,163
296,034
342,029
502
45
270
60
1,580
30
2,487
29,110
24,700
205,916
41,168
182,435
31,116
8,741
500
1,199
19,933
-
19,933
(446)
2,784
(1,682)
1,965
32
1,087
3,740
9,424
95
1,012
10,171
761
10,932
(337)
2,264
271
-
40
786
3,024
14
14
14
14
17
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Net operating profit includes the following specific expenses
Depreciation
- Buildings
- Plant, equipment & motor vehicles
- Leasehold improvements, furniture, fittings & office equipment
- Computer equipment
- Signs & flags
Intangible amortisation
Amortisation of software
Amortisation of customer relationships
Amortisation of right-of-use asset
Tax advisory fees
Donations
Directors’ fees
Post-employment benefits
Loss on sale of property, plant and equipment
Fees paid to auditor
Baker Tilly Staples Rodway Auckland (auditor of the Group)
Audit of financial statements
Audit of annual financial statements
Other services
Other assurance services
- Audit of DPL Insurance Limited solvency return
- Agreed Upon Procedures in relation to the EC Credit Control Limited trust account
Total other services
Total fees paid to Baker Tilly Staples Rodway Auckland
8. TAXATION
Net operating profit before taxation
Income tax expense at prevailing rates (NZ: 28%; Aust: 30%)
Tax impact of income not subject to tax
Tax impact of expenses not deductible for tax purposes
(Over)/under provision in prior years
Taxation (expense)/benefit
Comprising:
Current
Deferred
Under provision in prior years
2023
$’000
299
1,118
1,075
1,274
198
1,099
520
5,895
11,478
223
10
632
1,612
75
479
11
7
18
497
2023
$’000
45,545
(12,758)
284
(502)
(3)
(12,979)
(12,939)
120
(160)
(12,979)
2022
$’000
225
757
1,132
1,068
153
1,536
520
5,311
10,702
217
27
679
1,359
240
467
11
7
18
485
2022
$’000
43,120
(12,074)
492
(174)
(83)
(11,839)
(10,534)
(1,888)
583
(11,839)
69
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
9. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 31 March was based on the profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, as follows:
Profit for the year ($'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
Shares issued for employee share scheme
2023
32,566
2022
31,281
86,518,327
85,968,563
37.64
2023
36.39
2022
86,069,248
385,479
63,599
86,518,327
85,544,248
424,315
-
85,968,563
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 related 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 (diluted)
Diluted earnings per share (cents per share)
10. CASH AND CASH EQUIVALENTS
The carrying value of cash and cash equivalents are denominated in the following currencies:
Australian dollars
New Zealand dollars
2023
$’000
32,566
265
32,831
2022
$’000
31,281
359
31,640
86,518,327
467,052
86,985,379
85,968,563
841,642
86,810,205
37.74
36.45
2023
$’000
136
11,709
11,845
2022
$’000
227
13,146
13,373
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 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 2023 were
$2.0m (2022: $1.5m).
Cash and cash equivalents at 31 March 2023 of $4.3m (2022: $3.4m) belong to the Turners Marque Warehouse Trust 1 and are not all
available to the Group (refer note 14).
70
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Insurance:
Investments in unitised funds
Term deposits
Other:
Deposits
Total
Investments in unitised funds comprise:
New Zealand and overseas equities
Fixed Interest securities
Cash - deposits
New Zealand and overseas property securities
Total
Investments with external investment managers
ANZ New Zealand Investments Limited - Unitised Funds
2023
$’000
7,305
59,350
75
66,730
3,102
1,678
933
1,592
7,305
2022
$’000
8,259
61,865
75
70,199
3,539
1,391
1,278
2,051
8,259
7,305
8,259
The carrying amounts of the financial assets at fair value through profit or loss are denominated in NZD.
All term deposits held in the insurance business may not be available for use by the wider Group (refer note 10). DPL Insurance's term
deposits at 31 March 2023 were $59.4m (2022: $61.9m). Investments in unitised funds, disclosed in Financial assets through profit or loss,
underwrite the Life investment policies and are not available for use by the wider Group.
Interest rate and currency risk
A summarised analysis of the sensitivity of financial assets at fair value through profit or loss, excluding investments in unitised funds (as
market risk on unitised funds is transferred to the policy holder), to interest rate risk and currency risk can be found in note 5.4.
Credit risk
The maximum exposure to credit risk from financial assets at fair value through profit or loss at reporting date, excluding investments in
unitised funds, is the carrying value. The financial assets in this category, excluding equity investments, are invested in term deposits with
banks. For Life investment linked contracts (investment in unitised funds) the investments credit risk is borne by the policy holder, there is no
significant credit risk assumed by the Group.
Refer to note 5 for more information on the risk management policies of the Group.
12. TRADE RECEIVABLES
Performing
Doubtful
In default
Impairment provision
Net trade receivables
Trade receivables are a current asset, with terms of trade usually 30 days or less.
2023
$’000
5,691
2,471
47
8,209
(409)
7,800
2022
$’000
6,920
1,032
107
8,059
(478)
7,581
71
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Impaired receivables
If a trade receivable falls overdue and the Group is unable to enter into an arrangement to recover the amount owed then the receivable is
classified as impaired.
The age of doubtful trade receivables is as follows:
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due 90+ days
Movement in the impairment provision:
Opening balance
Impairment charge/(release) included in other operating expenses
Amounts written off
2023
$’000
2,016
335
100
20
2,471
478
(57)
(12)
409
2022
$’000
854
75
1
102
1,032
338
140
-
478
The Group recognises lifetime expected credit loss for trade receivables. The expected credit loss rate is 5.0% (2022: 5.9%). Amounts
charged to the impairment provision are generally written off when there is no expectation of recovering additional cash.
The carrying amounts of the Group's trade receivables are denominated in the following currencies:
Australian dollars
New Zealand dollars
318
7,482
7,800
321
7,260
7,581
Currency risk
A summarised analysis of the sensitivity of financial assets included in trade receivables to currency risk can be found in note 5.4.
Fair value and credit risk
Due to the short-term nature of trade receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to
credit risk from trade receivables at the reporting date is the carrying amount of trade receivables. Credit risk is concentrated predominantly in
New Zealand within the motor trade sector and private household sector, there is no concentration of credit risk on any individual customer.
Refer to note 5 for more information on the risk management policies of the Group.
13. INVENTORY
Motor vehicles
Less provision for stock obsolescence
Inventories are a current asset.
Movement in provisions for stock obsolescence
Opening balance
Movement (included in Cost of goods sold)
Closing balance
2023
$’000
27,726
(1,669)
26,057
2022
$’000
33,658
(1,678)
31,980
1,678
(9)
1,669
1,687
(9)
1,678
72
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
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
Economic overlay provision
Current
Non-current
Gross financial receivables are summarised as follows:
Performing
Doubtful
In default
Movement in 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
2023
$’000
84,126
335,037
2,851
422,014
11,276
(774)
(5,930)
-
(1,965)
424,621
137,142
287,479
424,621
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
416,694
412,482
2,562
2,758
1,163
7,457
422,014
421,102
2,898
1,545
(1,309)
(1,305)
1,829
1,034
156
89
550
1,829
3,164
1,447
(1,241)
(472)
2,898
1,740
94
-
1,064
2,898
The following table details the risk profile of the Group's provision matrix for finance receivables collectively assessed for impairment. As the
Group's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for
loss allowance based on past due status is not further distinguished between the Group's different customer base.
31 March 2023
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
%
0.85
receivables
$’000
409,949
provision
$’000
3,503
6.88
14.29
27.63
74.09
5,712
1,813
503
2,208
420,185
393
259
139
1,636
5,930
73
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
31 March 2022
Current
Past due up to 30 days
Past due 30 – 60 days
Past due 60 – 90 days
In default
Expected
loss rate
%
0.76
7.53
20.08
32.61
88.86
Gross
finance
Collective
impairment
receivables
$’000
409,031
3,453
787
371
4,562
418,204
provision
$’000
3,113
260
158
121
4,054
7,706
If the ECL rates on performing financial receivables increased/(decreased) by 1%, the loss allowance on receivables would be $4.2m
higher/($3.6m lower) (2022: $4.1m higher/($3.1m 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
Economic overlay provision
Impairment charge/(release) through profit or loss
2023
$’000
1,632
446
(1,304)
774
7,706
2,784
(4,560)
5,930
1,682
(1,682)
-
1,965
1,965
2022
$’000
2,376
(337)
(407)
1,632
13,403
2,264
(7,961)
7,706
1,411
271
1,682
-
-
Total impairment provision
8,669
11,020
Interest rate and foreign exchange risk
A summarised analysis of the sensitivity of finance receivables to interest rate risk can be found in note 5.4.2.
The Group's finance receivables are all denominated in NZD.
Fair value and credit risk
Carrying
amount
2023
$’000
Fair
value
2023
$’000
Carrying
amount
2022
$’000
Fair
value
2022
$’000
Finance receivables
424,621
425,900
422,870
421,403
The fair values are based on cash flows discounted using a weighted average interest rate of 11.81% (2022: 11.23%).
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.
74
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
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 $316m.
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 85% (2022: 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 $215.5m finance receivables were sold to the Trust (2022: $247.1m). As at 31 March 2023 the carrying value of
finance receivables in the Trust was $314.4m (2022: $329.9m).
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%.
2023
$’000
2,809
2,051
3,239
172
8,271
6,587
1,684
8,271
4,815
2022
$’000
4,088
2,081
3,072
99
9,340
7,988
1,352
9,340
5,726
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 Carly Holdings Limited (formerly Collaborate Corporation Limited)
Movements in carrying amounts
Opening balance
Additions
Net change in fair value recognised in OCI
Closing balance
2023
$’000
230
225
96
(91)
230
2022
$’000
225
570
-
(345)
225
75
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
17. REVERSE ANNUITY MORTGAGES
Reverse annuity mortgages
Provision for impairment
Current
Non-current
Movement in provisions for impairment
Opening balance
Impairment charge/(release) through profit or loss
Closing balance
Interest rate
2023
$’000
3,107
(182)
2,925
350
2,575
2,925
150
32
182
A summarised analysis of the sensitivity of reverse annuity mortgages to interest rate risk can be found in note 5.4.2.
The Group's reverse mortgage annuities are all denominated in NZD.
Fair value and credit risk
Reverse annuity mortgages
Carrying
amount
2023
$’000
2,925
Fair
value
2023
$’000
3,289
Carrying
amount
2022
$’000
3,242
2022
$’000
3,392
(150)
3,242
332
2,910
3,242
110
40
150
Fair
value
2022
$’000
3,885
The fair value of reverse annuity mortgages is estimated using a discounted cash flow model based on a current market interest rate for
similar products after making allowances for impairment.
The maximum exposure to credit risk is represented by the carrying amount of reverse annuity mortgages which is net of any provision for
impairment. The reported credit risk exposure does not take into account the fair value of any collateral, in event of the counterparties failing
to meet their contractual obligation. All reverse annuity mortgages are secured by residential property in New Zealand.
18. INVESTMENT IN SUBSIDIARIES
Subsidiary
Carly NZ Limited
DPL Insurance Limited
EC Credit Control (Aust) Pty Limited
EC Credit Control (NZ) Limited
Estate Management Services Limited
Oxford Finance Limited
Payment Management Services Limited
Turners Finance Limited
Turners Fleet Limited
Turners Group NZ Limited
Turners Property Holdings Limited
Turners Staff Share Plan Trustees Limited
Vehicle subscription services
Insurance
Collection services
Collection services
Collection services
Finance
Collection services
Finance
Vehicle and commercial goods trade
Auctions
Property
Trustee
Ownership
Interest Held
2023
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
2022
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
All subsidiaries have a balance date of 31 March and, with the exception of EC Credit Control (Aust) Pty Limited (incorporated in Australia), all
subsidiaries are incorporated in New Zealand.
The Group has a wholesale funding facility with the Bank of New Zealand (BNZ) under which it securitises finance receivables through The
Turners Marque Warehouse Trust 1 (the Trust). The Group has the power over the Trust, exposure, or rights, to variable returns from its
involvement with the Trust and the ability to use its power over the Trust to affect the amount of the Group's returns from the Trust.
Consequently the Group controls the Trust and has consolidated the Trusts into the Group financial statements.
76
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
19. PROPERTY, PLANT AND EQUIPMENT
Land & buildings
Plant, equipment
& motor vehicles
Leasehold
improvements,
furniture, fittings
& office
equipment
Computer
equipment
Signs & flags
$’000
$’000
$’000
$’000
$’000
2023
At cost
Accumulated depreciation
Opening carrying amount
Additions
Disposals
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
WIP included above
2022
At cost
Accumulated depreciation
Opening carrying amount
Additions
Disposals
Depreciation
Closing carrying amount
At cost
Accumulated depreciation
Closing carrying amount
WIP included above
20. RIGHT-OF-USE ASSETS
Properties
Equipment
Opening balance
Additions
Modifications and reassessments
Depreciation
Closing carrying amount
58,283
(538)
57,745
34,676
(11)
(299)
92,111
92,948
(837)
92,111
739
51,347
(313)
51,034
6,917
19
(225)
57,745
58,283
(538)
57,745
432
5,635
(2,545)
3,090
5,424
(844)
(1,118)
6,552
9,454
(2,902)
6,552
-
4,601
(2,470)
2,131
1,928
(212)
(757)
3,090
5,635
(2,545)
3,090
51
7,387
(3,560)
3,827
1,836
(76)
(1,075)
4,512
8,670
(4,158)
4,512
1
7,544
(3,237)
4,307
822
(170)
(1,132)
3,827
7,387
(3,560)
3,827
244
4,935
(2,522)
2,413
1,245
(24)
(1,274)
2,360
5,808
(3,448)
2,360
480
4,888
(2,611)
2,277
1,383
(179)
(1,068)
2,413
4,935
(2,522)
2,413
386
983
(489)
494
165
(3)
(198)
458
995
(537)
458
28
1,085
(576)
509
156
(18)
(153)
494
983
(489)
494
-
2023
$’000
22,184
42
22,226
23,497
2,344
2,280
(5,895)
22,226
During the year the Group had no gains from modification of leases (2022: $0.06m).
Total
$’000
77,223
(9,654)
67,569
43,346
(958)
(3,964)
105,993
117,875
(11,882)
105,993
1,248
69,465
(9,207)
60,258
11,206
(560)
(3,335)
67,569
77,223
(9,654)
67,569
1,113
2022
$’000
23,492
5
23,497
23,559
3,706
1,543
(5,311)
23,497
77
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
21. INVESTMENT PROPERTY
Investment property
Movements in carrying amounts
Opening balance
Net change in fair value
Closing balance
2023
$’000
5,800
5,950
(150)
5,800
2022
$’000
5,950
5,950
-
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 at the purchase price included in a conditional sale and purchase for property.
2023
$’000
2022
$’000
67,100
67,100
92,517
2
92,519
6,430
(4,580)
1,850
731
(11)
(1,099)
1,471
6,992
(5,521)
1,471
92,509
8
92,517
6,857
(3,938)
2,919
701
(234)
(1,536)
1,850
6,430
(4,580)
1,850
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
78
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
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
2023
$’000
6,510
(3,524)
2,986
(520)
2,466
6,510
(4,044)
2,466
2022
$’000
6,510
(3,004)
3,506
(520)
2,986
6,510
(3,524)
2,986
163,556
252
164,453
186
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.
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
2023
$’000
12,777
23,983
9,272
46,487
92,519
21,500
45,600
67,100
2022
$’000
12,777
23,981
9,272
46,487
92,517
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 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.
2023 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)
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)
Year 2
Year 3
Year 4
Year 5
50.7
(12.5)
307.9
32.1
3.3
4.0
23.4
29.1
7.0
7.9
37.8
24.6
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
3.0
8.9
17.6
24.0
8.8
24.8
3.3
11.9
79
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Long-term growth rate
Pre-tax discount rate
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)
2023
2.05%
12.60%
12.80%
17.60%
17.60%
2022
2.25%
13.10%
13.80%
18.70%
15.60%
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% (2022: 0.25%) and increasing and
decreasing the discount rate as follows:
Auto retail CGU
Insurance CGU
Finance CGU
Collection services CGU
These reasonably possible changes in rates did not cause any impairment in the CGUs.
23. OTHER PAYABLES
Accounts payable
Employee entitlements (short term)
Employee entitlements (long term)
Dividend payable
Other payables and accruals
2023
1.00%
1.00%
1.00%
1.00%
2023
$’000
24,743
5,485
376
-
25,404
56,008
2022
1.10%
1.10%
1.20%
1.10%
2022
$’000
23,559
5,408
348
5,192
15,596
50,103
Carrying value of financial liabilities in other payables
40,693
32,295
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
867
166
39,660
40,693
1,644
61
30,590
32,295
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.
80
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
24. CONTRACT LIABILITIES
Unredeemed debt and PPSR voucher liability
Motor vehicle insurance rebate liability
Movement in contract liabilities
Unredeemed debt and PPSR voucher liability
Opening balance
Charge/(release) to profit or loss
Motor vehicle insurance rebate liability
Opening balance
Additions
25. DEFERRED TAXATION
2023
$’000
1,339
223
1,562
1,635
(296)
1,339
213
10
223
2022
$’000
1,635
213
1,848
2,110
(475)
1,635
203
10
213
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset assets against liabilities and when the
deferred income taxes relate to the same fiscal authority. The movement on the deferred tax account is as follows:
Opening balance
Translation difference
Charge to profit or loss
Closing balance
The charge to profit or loss is attributable to the following items:
Corporate relationships
Loan impairment provision
Insurance deductible reserves
Property, plant and equipment
Lease liability
Right of use asset
Provisions and accruals
Deferred tax (assets)/liabilities to be recovered after more than 12 months
Deferred tax (assets)/liabilities to be recovered within 12 months
Closing balance
The deferred tax asset/liabilities have been recognised at 28%, the tax rate at which it is expected to reverse.
Deferred tax relates to the following:
Deferred tax assets:
Loan impairment provision
Lease liability
Provisions and accruals
Insurance reserves
Total deferred tax asset
2023
$’000
13,191
6
(120)
13,077
2023
$’000
(146)
634
168
(15)
305
(356)
(710)
(120)
14,681
(1,604)
13,077
3,008
7,593
3,077
272
13,950
2022
$’000
11,297
6
1,888
13,191
2022
$’000
(37)
1,515
73
555
151
(17)
(352)
1,888
14,665
(1,474)
13,191
3,642
7,898
2,379
440
14,359
81
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
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
2023
$’000
18,788
691
6,224
1,324
27,027
13,077
21,647
16,380
(5,049)
32,978
2022
$’000
18,788
837
6,580
1,345
27,550
13,191
20,033
9,472
(7,858)
21,647
Policy holder tax losses
The policy holder tax losses carried forward at 31 March 2023 are $4,692,000 (2022: $4,723,000). 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
Total borrowings
Current
Non-current
2023
$’000
412,035
-
412,035
2022
$’000
412,588
-
412,588
-
173
412,035
412,761
- 3,724
409,037
412,035
412,761
412,035
Secured bank borrowings
In March 2023 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, 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 6.71% (2022: 2.74%). The Group's securitisation financing arrangement with the Bank of New Zealand as described in note 14.
82
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Borrowing covenants
The Group has complied with all borrowing covenants in both the current and prior financial year.
Foreign currency risk
All the Group's borrowings are in NZD.
Fair value
Borrowings
Carrying
amount
2023
$’000
412,035
Fair
value
2023
$’000
406,127
Carrying
amount
2022
$’000
412,761
Fair
value
2022
$’000
407,347
The fair values are based on cash flows discounted using a weighted average borrowing rate of 4.97% (2022: 2.31%). 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
2023
$’000
2022
$’000
- 3,724
322,035 389,037
90,000 20,000
412,035 412,761
2023
$’000
2022
$’000
27,120
28,209
6,130
20,990
27,120
2,358
25,851
28,209
Lease liabilities have incremental borrowing rates of 4.16% to 7.07% (2022: 2.87% to 7.07%), with maturities up to 10 years (2022: up to 11 years).
4 new leases were entered into during the year (2022:3) and 6 leases were modified or cancelled during the year (2022: 4).
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
Shares issued for employee share scheme
Total issued and authorised capital
2023
$’000
30
27,090
27,120
1,284
2022
$’000
95
28,114
28,209
1,774
2023
2022
86,069,248
525,000
105,999
86,700,247
85,544,248
525,000
-
86,069,248
83
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Dollar value of ordinary shares
Opening balance
Shares issued for staff options
Shares issued for employee share scheme
Share issue costs
Total issued capital
2023
$'000
205,482
1,208
401
(15)
207,076
2022
$'000
204,297
1,192
-
(7)
205,482
Ordinary shares are fully paid with no par value. All ordinary shares have equal voting rights and share equally in dividends and surplus on winding
up.
Capital management
The Group’s capital consists of share capital, share option reserve, translation reserve, cash flow reserve and retained earnings. The Board seeks
to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security afforded
by a sound capital position. The allocation of capital between its specific business operations and activities is, to a large extent, driven by
optimisation of
to specific operations and activities is undertaken
independently of those responsible for the operation. The Group’s strategies in respect of capital management and allocation are reviewed
regularly by the Board of Directors.
the return on the capital allocated. The process of allocating capital
The Group's funding covenants include minimum equity ratios. There have been no breaches of covenants. In addition to the above, the life
insurance company is required to retain equity for solvency purposes, refer note 35G.
29. SHARE OPTIONS
In July 2020, the Board approved the grant of 2,300,000 options to Senior Executives of the Group at an exercise price of $2.00 under the Group's
Share Option Plan. The grant is split into four tranches of 575,000 options with the following vesting dates; 1 June 2021, 1 June 2022, 1 June 2023
and 1 June 2024. Each tranche expires two year after the vesting date. During the year ended 31 March 2021, 200,000 options were cancelled. In
June 2022, 525,000 (June 2021: 525,000) options were exercised.
The weighted average fair value of the options granted, using the Binomial Tree option pricing model, is $0.31 per option. The significant inputs in
the model were, the share price at grant date of $2.19, the exercise price of $2.00, volatility of 27.5%, an expected exercise date for all tranches of,
80% at vesting date and 20% at expiration date and an annual risk free rate between 0.24% - 0.63%. Volatility is measured as the standard
deviation of changes in the Company's share price over a 12 month period.
During the financial year 1,390,000 options granted to Senior Executives of the Group at an exercise price of $4.20 under the Group's Share
Option Plan in December 2021 were cancelled. The grant was split into four tranches of 347,500 options with the following vesting dates; 30
November 2022, 30 November 2023, 30 November 2024 and 30 November 2025. Each tranche expires two year after the vesting date.
The weighted average fair value of the options granted, using the Binomial Tree option pricing model, is $0.67 per option. The significant inputs in
the model were, the share price at grant date of $4.44, the exercise price of $4.20, volatility of 30.0%, an expected exercise date for all tranches of,
80% at vesting date and 20% at expiration date and an annual risk free rate between 1.06% - 1.72%. Volatility is measured as the standard
deviation of changes in the Company's share price over a 12 month period.
If a participant in the Group Share Option Plan leaves (by any means and for any reason) the employment of the Company or any applicable
subsidiary, the participant’s options which have reached their vesting date, together with any other options as may be nominated at the discretion
of the Board of Directors of the Company in extraordinary circumstances (such as the redundancy, permanent disablement or death of a
participant), may be exercised within a period of 60 days (following which they will lapse) and the participant's other Options will lapse immediately.
The share based payment for the current financial year is $265,000 (2022: $359,000).
84
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Movement in the number of share options outstanding and their related weighted average exercise prices are as follows:
Opening balance
Granted
Exercised
Cancelled
Closing balance
Weighted
average
exercise
price
2023
$
2.00
-
2.00
4.20
2.00
Weighted
average
exercise
price
2022
$
2.00
4.20
2.00
-
3.03
Options
2023
000's
2,965
-
(525)
(1,390)
1,050
Options
2022
000's
2,100
1,390
(525)
-
2,965
The weighted-average share price at the date of exercise for share options exercised in the year ending 31 March 2023 was $3.73 (2022: $4.14).
Share options outstanding at balance sheet have the following expiry dates and exercise prices:
Expiry date
31 May 2024
30 November 2024
31 May 2025
30 November 2025
31 May 2026
30 November 2026
30 November 2027
30. DIVIDENDS
Exercise
price
$
2.00
4.20
2.00
4.20
2.00
4.20
4.20
Options
2023
000's
525.0
525.0
Options
2022
000's
525.0
347.5
525.0
347.5
525.0
347.5
347.5
Final dividend for the year ended 31 March 2022 of $0.07 (31 March 2021: $0.06) per fully paid ordinary share, imputed paid on 28 July
2022 (2021: 24 July 2021).
Quarterly dividend for the year ended 31 March 2023 of $0.05 (31 March 2022: $0.05) per fully paid ordinary share, imputed, paid on 27
October 2022 (2022: 28 October 2021).
Quarterly dividend for the year ended 31 March 2023 of $0.05 (31 March 2022: $0.05) per fully paid ordinary share, imputed, paid on 26
January 2023 (2022: 27 January 2022).
Quarterly dividend for the year ended 31 March 2022: $0.06 per fully paid ordinary share, imputed, paid on 20 April 2022.
2023
$’000
2022
$’000
6,062
5,164
4,335
4,303
4,335
4,303
-
14,732
5,164
18,934
Dividends not recognised at year end
In addition to the above dividends, after year end the directors recommended the payment of the following dividend:
Quarterly dividend for the year ended 31 March 2023 of $0.06 per fully paid ordinary share, imputed, paid on 27 April 2023 .
5,202
-
Final dividend of $0.07 (31 March 2022: $0.07) per fully paid ordinary share, imputed, payable on 28 July 2023 (2022: 28 July 2022).
6,069
6,062
85
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
31. TRANSACTIONS WITH RELATED PARTIES
Major shareholders, directors and closely related persons to them are considered related parties of the Group.
Key management personnel compensation
The key management personnel are all the Directors of the Company and the Leadership team. Compensation paid to the Leadership team in the
years ended 31 March 2023 and 31 March 2022 were as follows:
($'000)
Year ended 31 March 2023
Year ended 31 March 2022
Short-
term
benefits
$'000
3,686
2,628
Other long-
term
benefits
$'000
Share-based
payments
$'000
Total
$'000
110
81
72 3,868
241 2,950
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 98 to 101. 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 loss 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 in payables
Net decrease in contract liabilities
Net increase in finance receivables
Net decrease in reverse annuity mortgages
Net (decrease)/increase of insurance assets at fair value through profit or loss
Net (withdrawals)/contributions from life investment contracts
Net (decrease)/increase in deferred tax liability
Net increase in tax payable
Cash flows from operating activities
2023
$’000
32,566
3,659
(290)
11,478
(287)
628
(444)
(807)
(3)
1,135
150
-
-
937
5,923
14,105
(345)
(6,814)
572
3,872
(304)
(174)
2,760
68,317
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)
86
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Reconciliation of cash flows arising from financing activities
The table below details changes in the Group's cash flows 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 2021
Borrowings Lease liabilities
$'000
28,747
$'000
339,611
Share capital
$'000
204,297
Retained
earnings
$'000
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
Balance at 31 March 2022
412,761
28,209
205,482
42,083
Changes from financing cash flows
Other changes
Profit
Dividend payable
Employee share based
Netted off finance receivables
Interest paid
Interest expense (excl. accrued interest)
Non-cash lease movements
(553)
-
-
-
(173)
(17,653)
17,653
-
(173)
-
-
-
-
-
(1,284)
1,284
(1,089)
(1,089)
1,436
(19,896)
32,566
5,164
296
-
-
-
-
38,026
158
-
-
-
-
158
Balance at 31 March 2023
412,035
27,120
207,076
60,213
33. COMMITMENTS AND CONTINGENT LIABILITIES
Capital Expenditure:
At balance date, the Group has committed to the development of one existing site. This has resulted in capital commitments of $4,400,000 (2022:
$18,900,000).
Future Lease Commitments:
The Group has no lease commitments commencing after balance date (2022: 1).
Loan Commitments:
The Group has no material undrawn credit commitments at reporting date (2022: nil).
Contingent Liabilities:
The Group has no other material contingent liabilities at reporting date (2022: nil).
34. SUBSEQUENT EVENTS AFTER BALANCE DATE
The Group announced the adoption of a Dividend Reinvestment Plan on 23 May 2023.
The Group had no dividend accrued at balance date (2022: $5,164,000 (refer note 30)).
87
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
35. INSURANCE RELATED DISCLOSURES
A. Actuarial policies and the methods
The actuarial report on insurance contract liabilities and prudential reserves for the current reporting period was prepared as at 31 March 2023
by Peter Davies, a Fellow of the New Zealand Society of Actuaries.
Life insurance contract liabilities
The value of life insurance contract liabilities has been determined in accordance with Professional Standard No. 20 of the New Zealand
Society of Actuaries. After making appropriate checks, the actuary was satisfied as to the accuracy of the data from which the amount of policy
liabilities has been determined.
The key assumptions used in determining policy liabilities are as follows:
a) Discount Rates
Discount rates used to determine the life insurance contract liabilities are based on an appropriate risk-free rate of return, taking account of
the term of the insurance contracts.
Tax was deducted at the rate of 28% on investment earnings net of investment expenses (2022: 28%). The net discount rates assumed were
as follows:
Whole of Life and Endowment Policies (including Funeral Plan)*
Quick Cover term life plan*
Term Insurance Policies
Caring Plan Funeral Benefit Policies
Annuity Policies
Consumer Credit and Key Person Loan Protection
2023
Treasury risk-free rates
Treasury risk-free rates
Not applicable
Not applicable
Treasury risk-free rates
Not applicable
2022
Treasury risk-free rates
Treasury risk-free rates
Not applicable
Not applicable
Treasury risk-free rates
Not applicable
* These rates are provided by Treasury as at 31 January, and are then adjusted to 31 March based on the movement in swap rates, as quoted
by the Reserve Bank, between January and March. Illustrative forward rates for the respective valuations are as follows:
Cash-flows in year 10:
March 2022:
March 2023:
2.42% per annum net of tax
3.38% per annum net of tax
b) Inflation Rates
In determining the future expected rate of return, general inflation was assumed to continue into the future at 2.0% per annum (2022: 2.0%).
c) Mortality Rates
Rates of mortality were assumed as follows:
For underwritten whole of life, endowment and term insurance policies: NZ97 (2022: NZ97).
For guaranteed issue regular premium funeral plans: NZ97 (DPL plans), NZ04 (ex-Greenwich plans) multiplied by a factor to reflect higher
mortality at younger ages, and the impact of guaranteed issue anti-selection (no change from 2022).
QuickCover plans - NZ04 with additional loadings reflecting the impact of guaranteed issue anti-selection (no change from 2022).
For annuities the assumed mortality table is 90% of the NZ12-14 population tables. For the Cook Islands Annuity Pension Plan the assumed
mortality table is the PA(90) table without adjustment (2022: no change).
d) Profit Carriers
The policies were divided into major product groups with profit carriers as follows:
Major Product Groups
Participating Whole of Life and Endowment Policies
Non Participating Whole of Life and Endowment Policies
Lump Sum Funeral Benefit Policies (Caring Plan)
Term Insurance Policies
Funeral Plan Policies (Regular premium guaranteed issue)
Quick Cover term life plan
Annuities
Consumer Credit / Lifestyle
Motor business
Accidental death & redundancy – Stop Gap
Accidental death regular & single premium
Carrier
Premiums
Premiums
Not Applicable
Premiums
Gross claims
Gross claims
Annuity payments
Not Applicable
Not Applicable
Not Applicable
Not Applicable
e) Investment and Maintenance Expenses
The maintenance expense and general growth and development expense allowances assumed for the main classes of business were as
follows:
Endowments
Funeral plan DPL
$400 per policy per annum (2022: $158)
$100 per policy per annum (2022: $40.05)
88
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Funeral plan Greenwich
Term life plans
Consumer credit plans (for loss recognition):
Annuity plans
$28 per policy per annum (2022: $9.55)
$25 per policy per annum (2022: $9.55)
$25 per policy per annum (2022: $9.55)
$400 per policy per annum (2022: $158)
Investment management expenses were assumed to be 1.0% (2022: 1.0%) of policy liabilities.
f) Inflation and Automatic Indexation of Benefits
Maintenance expenses are assumed to increase 2.0% per annum (2022: 2.0%). Investment management expenses are assumed to remain
a constant percentage of funds under management.
g) Taxation
The assumed future tax rates reflect the corporate tax rate applying in New Zealand with effect from 1 April 2011. The calculations have been
carried out on the basis of current life insurance income tax legislation.
h) Rates of Discontinuance
Rates of discontinuance are assumed to be 5.0% for whole of life, endowment and term insurance business (2022: 5.0%), and nil for annuity
pension plan business (2022: nil).
For the DPL Funeral plan the rates of discontinuance are based on company experience, beginning at 15% in year 1 and reducing ultimately
to 3% per annum (2022: no change).
For the Funeral plan (ex Greenwich) product the rates of discontinuance are based on the pricing assumption for this product, beginning at
20% in year 1, and reducing ultimately to 3% per annum (2022: no change).
For Quick Cover the rates of discontinuance are based on the pricing assumption for this product, beginning at 15% in year 1, and reducing
ultimately to 10% per annum (2022: no change).
i) Surrender Values
The Company's current basis of calculating surrender values is assumed to continue in the future.
j) Rates of Future Supportable Participating Benefits
Rates of bonus supported by the participating fund are simple annual bonuses of $0.00 (2022: $0.00) per $1,000 of sum assured on
endowment policies, the reduction arising because of persistently low interest rates.
k) Impact of changes in assumptions
The impact of the change in the discount rate is a reduction in policy liabilities of $385,000 (2022: reduction of $614,000).
The policy liabilities increase by $50,000 as a result of the revised expense assumptions, due to some products having no future profit margin
under IFRS 4 with which to absorb changes (2022: no change to liabilities).
l) Crediting Policy Adopted for Future Supportable Participating Benefits
For participating business, the Company's policy is to distribute profits arising such that over long periods the returns to policy holders are
commensurate with the investment returns achieved on relevant assets, together with other sources of profit arising from this business. In
applying the policyholders' share of distributions to provide bonuses, consideration is given to achieving equity between generations of
policyholders and equity between the various classes and sizes of policies in force. Assumed future bonus rates included in policyholder
liabilities were set such that the present value of policyholder liabilities, allowing for the shareholders' right to participate in distributions, equals
the value of assets supporting the business. The supportable future bonus rate on this basis is zero.
Non-life insurance liabilities
The value of non-life outstanding claims and the Liability Adequacy Test of the non-life business, have been carried out in accordance with
Professional Standard no. 30. After making appropriate checks, the actuary was satisfied as to the accuracy of the data from which the
amount of policy liabilities has been determined.
B. Financial strength rating
The Insurance (Prudential Supervision) Act 2010 requires all licensed insurers to have a current Financial Strength Rating, given by an
approved rating entity. DPL Insurance Limited has been issued a Financial Strength Rating of B++ (Good) and an Issuer Credit Rating of bbb
(Good), with the outlook assigned to both ratings as 'Stable' by A.M. Best. The rating was issued by A.M. Best on 18 August 2022.
Financial Strength Rating scale:
A++, A+ Superior
A, A- Excellent
B++,B+ Good
B, B- Fair
C++, C+ Marginal
C, C- Weak
D Poor
E Under Regular Supervision
F In liquidation
S Suspended
Issuer Credit rating scale:
Investment Grade
aaa (Exceptional)
aa (Superior)
a (Excellent)
bbb (Good)
Non-Investment Grade
bb (Fair)
b (Marginal)
ccc, cc (Weak)
c (Poor)
rs (Regulatory Supervision/Liquidation)
89
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
C. Surplus after taxation from insurance activities arose from:
Insurance Contracts
Planned margin of revenues over expenses
Change in discount rate: Treasury yield curve shift
Change in demographic, expense assumption
Difference between actual and assumed experience
Life investments contracts
Difference between actual and assumed experience
Investment returns on assets in excess of insurance
contract and investment contract liabilities
Surplus after taxation attributable to insurance activities
2023
$’000
517
385
(50)
6,749
299
988
8,888
2022
$’000
581
614
-
10,130
311
427
12,063
The disclosure of the components of operating profit after tax expense are required to be separated between policyholders’ and shareholders’
interests. We have included only one column, as policyholder profits arise only in respect of a small number of participating policies, and the
profits arising on these policies over the year were effectively zero. Accordingly all of the profits earned over the year are shareholder profits.
It is not currently possible to identify all experience variances separately for life investment contracts. The difference between actual and
assumed experience for life insurance contracts therefore includes some variances relating to life investment contracts.
D. Insurance and investment contract income
Insurance contract premiums
Investment (loss)/revenue
Investment revenue received from/(paid to) life insurance investment contracts
Other Revenues
Total insurance and investment contract income
Investment (loss)/revenue
Equity securities
Fixed interest securities
Property investments
2022
$’000
38,150
295
(171)
187
38,813 38,461
2023
$’000
38,514
(444)
567
176
(44)
(381)
(19)
(444)
104
(44)
235
295
Included within equity securities is dividend income of $Nil (2022: $Nil) and included within fixed interest securities is interest income of $Nil
(2022: $Nil). A net realised and unrealised loss on securities at fair value through profit or loss of $444,000 (2022: gain of $295,000) is included in
total Investment Income.
90
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
E. Insurance related expenses
Insurance contract claims
Reinsurance expenses
Insurance contracts
Policy acquisition expenses - commission costs
Deferred acquisition cost amortisation
Total insurance contract related expenses
Life investment contracts
Investment management expenses
Movement in life insurance liabilities
Net operating profit includes the following specific expenses
Audit fees for the audit of financial statements
Amortisation of customer relationships
Amortisation of other intangible assets
Depreciation
Employee benefits
F. Taxation
Net operating profit before taxation
Income tax expense at prevailing rates
Tax impact of expenses not deductible for tax purposes
Prior year adjustment
Taxation expense
Comprising:
Current
Deferred
Prior year adjustment
Deferred tax
Opening balance
Charge to profit or loss
Closing balance
The charge to profit or loss is attributable to the following items:
Insurance deductible reserves
Provisions and accruals
Prior year adjustment
Income tax losses on policyholder base
The policy holder tax losses carried forward at 31 March 2023 are $4,692,000 (2022: $4,723,000).
Imputation credit memorandum account
The policyholder imputation credit account has a closing balance at 31 March 2023 of $Nil (2022: $Nil).
2023
$’000
21,765
602
1,920
30
1,950
41
(619)
129
520
206
348
4,949
12,466
3,490
87
1
3,578
3,598
69
(89)
3,578
6,419
69
6,488
(167)
188
(90)
(69)
2022
$’000
20,980
565
2,158
324
2,482
45
(583)
125
520
264
366
4,824
15,325
4,291
(1,026)
(3)
3,262
3,529
(248)
(19)
3,262
6,667
(248)
6,419
73
(269)
(52)
(248)
91
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
G. DPL Insurance Limited solvency calculation
In terms of the Insurance (Prudential Supervision) Act 2010, DPL Insurance Limited must comply with the Solvency Standard for Life Insurance
Business 2014 and the Solvency Standard for Non-life Business 2014. DPL Insurance Limited is required to hold minimum solvency capital of
$5.0 million and have a solvency margin of at least $0.
2023
$’000
41,844
21,565
1.94
21,565
20,279
1.94
34,653
18,254
16,399
7,191
3,311
3,880
2023
$’000
55,015
1,058
2
56,075
59,947
6,462
4,686
(19,936)
4,916
-
56,075
211
6,596
2022
$’000
36,738
20,199
1.82
20,199
16,539
1.82
32,234
17,759
14,475
4,504
2,440
2,064
2022
$’000
53,101
1,897
17
55,015
59,177
6,265
5,997
(21,760)
5,338
(2)
55,015
199
6,668
(631)
8,153 8,116
98
1,177 1,279
(1,153)
(187)
7,042 8,153
(1,481)
(176)
Actual solvency capital
Calculated minimum solvency capital
Coverage ratio on calculated margin (times)
Overall minimum capital requirement
Solvency margin on overall minimum requirement
Coverage ratio on overall minimum requirement (times)
Non-life insurance
Actual solvency capital
Calculated minimum solvency capital
Solvency margin on calculated minimum requirement
Life insurance
Actual solvency capital
Calculated minimum solvency capital
Solvency margin on calculated minimum requirement
H. Policyholder liabilities
Insurance contract liabilities
Opening insurance contract liabilities
Increase in insurance contract liabilities
Increase in deferred acquisition costs
Closing insurance contract liabilities
Policyholder liabilities contain the following components:
Future policy benefits
Future expenses
Future profit margins
Balance of future premiums
Re-insurance
Life deferred acquisition costs
Life insurance contracts with a discretionary participation feature - the amount of the liabilities that relates
to guarantees
Other contracts with a fixed or guaranteed termination value - current termination value
Life investment contracts at fair value through profit or loss
Opening life investment contracts at fair value through profit or loss
Increase / (decrease) in life investment contract liabilities recognised through profit or loss
Deposit premium
Withdrawals
Activity, plan, and establishment fees
Closing life investment contract liabilities
92
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
The benefits offered under the Group's unit-linked investment contracts are based on the returns of selected equities and debt securities. This
investment mix is unique, and it cannot be associated to an individual benchmark index with a sufficiently high correlation. All financial liabilities at
fair value through profit and loss are designated by the Group to be in this measurement category. The liabilities originated from unit-linked
contracts are measured with reference to their respective underlying assets of these contracts. Changes in the credit risk of the underlying assets
do not impact the measurement of the unit-linked liabilities. The maturity value of these financial liabilities is determined by the fair value of the
linked assets, at maturity date.
Policyholder liabilities comprise
Annuities
Endowment
Whole of life, provision for bonus and future margins
Consumer Credit Protection & key person loan protection
Accidental death/redundancy
Term Life
General
Claims provisions
Saving plans
Deferred acquisition costs - life
Life investment contract liabilities
Insurance contract liabilities
General outstandings claim provision
Gross claims
IBNR provision
2023
$’000
965
206
3,828
5,479
5
53
40,585
4,954
7,042
-
63,117
7,042
56,075
63,117
118
3,475
3,593
2022
$’000
1,011
198
4,433
5,501
6
54
39,314
4,500
8,153
(2)
63,168
8,153
55,015
63,168
118
3,257
3,375
Reconciliation of movement in general outstanding claim provision
Opening Balance
Movement
Payments
Closing Balance
3,375
17,002
(16,784)
3,593
2,874
16,662
(16,161)
3,375
The policy liabilities in respect of annuities, endowment, whole of life, term life, super life and life bond have been established in accordance with
the policy conditions and maintained at a level equivalent to obligations due to policy holders as maturity or partial benefits.
93
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
I. Disaggregated information
DPL Insurance Limited has one statutory life fund. The disaggregated income statement and balance sheet between the statutory and
shareholder funds is as follows:
Statutory
$’000
6,234
(602)
1,411
299
7,342
(3,516)
619
(196)
(1,334)
2,915
68
749
3,732
(1,045)
2,687
Statutory
$’000
19,489
7,305
26,794
7,042
11,897
-
664
19,603
7,191
3,311
3,880
Statutory
$’000
6,532
(565)
1,067
311
7,345
(3,115)
583
(477)
(714)
3,622
-
443
4,065
(1,138)
2,927
Shareholder
$’000
32,280
-
1
1,441
33,722
(18,249)
-
(1,724)
(7,553)
6,196
(328)
2,866
8,734
(2,533)
6,201
Shareholder
$’000
85,374
35,479
120,853
-
44,178
6,488
6,543
57,209
34,653
18,254
16,399
Shareholder
$’000
31,617
-
3
1,222
32,842
(17,865)
-
(1,681)
(7,613)
5,683
3,603
1,974
11,260
(2,124)
9,136
Total
$’000
38,514
(602)
1,412
1,740
41,064
(21,765)
619
(1,920)
(8,887)
9,111
(260)
3,615
12,466
(3,578)
8,888
Total
$’000
104,863
42,784
147,647
7,042
56,075
6,488
7,207
76,812
41,844
21,565
20,279
Total
$’000
38,149
(565)
1,070
1,533
40,187
(20,980)
583
(2,158)
(8,327)
9,305
3,603
2,417
15,325
(3,262)
12,063
Statement of income for the year ended 31 March 2023
Insurance contract premiums
Outward reinsurance premium
Recoveries
Other insurance revenue
Insurance revenue
Claims expense
Movement in life insurance liabilities
Commission expense
Other expenses
Underwriting (loss)/profit
Fair value gain on revaluation of investment properties
Investment income
Profit before taxation
Taxation
Profit after taxation
Statement of financial position as 31 March 2023
Assets
Investments backing insurance policy liabilities
Other assets
Total assets
Liabilities
Life investment contract liabilities
Insurance contract liabilities
Deferred taxation
Other liabilities
Total liabilities
Solvency
Actual Solvency capital
Minimum solvency capital
Solvency Margin
Statement of income for the year ended 31 March 2022
Insurance contract premiums
Outward reinsurance premium
Recoveries
Other insurance revenue
Insurance revenue
Claims expense
Movement in life insurance liabilities
Commission expense
Other expenses
Underwriting (loss)/profit
Fair value gain on revaluation of investment properties
Investment income
Profit before taxation
Taxation
Profit after taxation
94
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 Turners Automotive Group Limited
Notes to the financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Statement of financial position as 31 March 2022
Assets
Investments backing insurance policy liabilities
Other assets
Total assets
Statutory
$’000
28,710
-
28,710
Shareholder
$’000
85,888
36,128
122,016
Liabilities
Life investment contract liabilities
Insurance contract liabilities
Deferred taxation
Other liabilities
Total liabilities
Solvency
Actual Solvency capital
Minimum solvency capital
Solvency Margin
Reconciliation of Profit before tax to Operating profit (note 6)
Profit before tax
Less: revaluation of investment property disclosed as property, plant and equipment
in the Group financial statements at cost
Less: depreciation on investment property disclosed as property, plant and
equipment
Operating profit (note 6)
8,153
12,326
-
727
21,206
4,504
2,440
2,064
-
42,689
6,419
4,965
54,073
32,234
17,759
14,475
2023
$’000
12,466
260
(138)
12,588
Total
$’000
114,598
36,128
150,726
8,153
55,015
6,419
5,692
75,279
36,738
20,199
16,539
2022
$’000
15,325
(3,603)
(142)
11,580
Restriction on assets
Access to the retained profits and capital in the statutory fund held for policyholders is restricted by the Insurance (Prudential Supervision) Act
2010.
The business undertaken and policies accepted by DPL Insurance Limited are a combination of investment linked and non-investment linked.
Investment linked business is business for which the life insurer issues a contract where the benefit amount is directly linked to the market value
of the investments held in the particular investment linked fund. Non-investment linked business is life insurance business other than investment
linked business.
2023
Premium income
Investment income
Claims expense
Other operating revenue
Other operating expenses
Investment revenues allocated to policyholders
Net profit before taxation
Net profit after taxation
Policy liabilities
Investment assets
Other assets
Other liabilities
Retained earnings
Investment linked
$’000
Non – investment
linked
$’000
-
-
-
(509)
-
37,912
3,355
(21,765)
3,661
(10,819)
631
122
88
-
12,344
8,800
Total
$’000
37,912
3,355
(21,765)
3,152
(10,819)
631
12,466
8,888
7,042 56,075 63,117
7,305 97,558 104,863
- 42,784 42,784
- 13,695 13,695
1,506 22,979 24,485
95
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Investment linked
$’000
Non – investment
linked
$’000
Total
$’000
2022
Premium income
Investment income
Claims expense
Other operating revenue
Other operating expenses
Investment revenues allocated to policyholders
Net profit before taxation
Net profit after taxation
Policy liabilities
Investment assets
Other assets
Other liabilities
Retained earnings
-
-
-
222
-
(98)
124
89
(20,980)
37,585 37,585
6,019 6,019
- 20,980
2,480 2,702
- 9,903
- - 98
15,201 15,325
11,973 12,062
(9,903)
8,153 55,015 63,168
8,259 106,340 114,599
- 36,128 36,128
- 12,111 12,111
1,418 27,679 29,097
The above information is disclosed prior to the elimination of any related party transactions or balances as the insurance contract disclosures
relate to DPL Insurance Limited.
J. Managed Funds and other Fiduciary Activities
DPL Insurance Limited acted as a promoter for a number of superannuation funds with assets managed by a third party investment manager.
The assets and liabilities of these funds are not included in the financial statements. Arrangements exist to ensure the activities of the
superannuation funds are managed independently from the other activities of the company.
Insurance Risk
K.
The insurance business of the Group involves a number of financial and non-financial risks. The financial risks are covered in note 5. Key
objectives in managing insurance risk are:
(i) To ensure sound business practices are in place for underwriting risks and claims management;
(ii) To achieve a target return on capital that is invested in order to take on insurance risk; and
(iii) To ensure solvency and capital requirements are met.
Life insurance
The life insurance business of the Group involves a number of non-financial risks concerned with the pricing, acceptance and management
of the mortality, and longevity risks accepted from policyholders. These risks are controlled through the use of underwriting procedures and
adequate premium rates and policy charges, all of which are approved by the Actuary. Tight controls are also maintained over claims
management practices to ensure the correct and timely payment of insurance claims.
Terms and conditions of life insurance contracts
The nature of the terms of the insurance contracts written by the Group is such that certain external variables can be identified on which
related cash flows for claim payments depend. The tables below provide an overview of the key variables upon which the amount of related
cash flows are dependent.
Type of contract
Non-participating life
insurance contracts
with fixed and
guaranteed terms
Life insurance
contracts with
discretionary
participating benefits
(endowment and
whole of life)
Life Annuity
Contracts
Details of the contract workings
Benefits paid on death or maturity are
fixed and guaranteed and not at the
discretion of the issuer
initial guaranteed
include a clearly
These policies
defined
sum
assured which is payable on death.
The guaranteed amount is a multiple
of the amount that is increased
throughout the duration of the policy
by the addition of regular bonuses
annually which, once added, are not
removed. Regular bonuses are also
added retrospectively
These policies provide guaranteed
regular payments to the life assured
Nature of compensation for claims
Benefits, defined by the insurance
contract, are determined by
the
contract and are not directly affected
by the performance of underlying
assets or the performance of the
contracts as whole
Benefits
the
arising
discretionary participation feature are
based on the performance of a
specified pool of contracts or a
specified type of contract
from
Key variables affecting cash
flows
Mortality, lapses, expenses and
market earnings on assets
backing the liabilities
Mortality, lapses, expenses and
market earnings on assets
backing the liabilities
The amount of the payment is set at
inception of the policy
Longevity, expenses and market
earnings on assets backing the
liabilities
96
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
TURNERS AUTOMOTIVE GROUP LIMITED
Notes to financial statements for the year ended 31 March 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Non-life insurance
The risk management activities include prudent underwriting, pricing, and management of risk, together with claims management, reserving
and investment management. The objective of these disciplines is to enhance the financial performance of the insurance operations and to
ensure sound business practices are in place for underwriting risks and claims management.
Claims
Variations in claim levels will affect reported profit and equity. The impact may be magnified if the variation leads to a change in actuarial
assumptions which cannot be absorbed within the present value of planned margins for a group of related products. Insurance risk may arise
through the reassessment of the incidence of claims, the trend of future claims and the effect of unforeseen diseases or epidemics. Insurance
risk is controlled by ensuring underwriting standards adequately identify potential risk, retaining the right to amend premiums on risk policies
where appropriate. The experience of the Group's life insurance business is reviewed regularly.
Concentration of insurance risk
The Group does not believe it has any major geographic concentration of insurance risk. The Group's policies aim to reduce concentration
risk by maintaining a portfolio of policyholders with a broad spread of insurance risk types, ages, sexes, occupation classes and geographic
locations. The group uses reinsurance to limit the insurance risk exposure for any one individual.
Sensitivity Analysis
The liabilities included in the reported results are calculated using certain assumptions about key variables as disclosed above. Sensitivity
analysis is conducted to assess the impact of actual experience being different to that assumed in the calculation of liabilities. Movements in
any variable will impact the profit and net assets of the Group. The tables below describe how a change in actual experience relative to that
expected will affect next financial year's expected shareholder profit.
Variable
Expense risk
Impact of movement in underlying variable
An increase in the level or inflationary growth of expenses over assumed levels will decrease profit and shareholders’
equity
Mortality rates
Interest rate risk Depending on the profile of the investment portfolio, the investment income of the Group will decrease as interest rates
decrease. This may be offset to an extent by changes in the market value of fixed interest investments. The impact on
profit and shareholder equity depends on the relative profiles of assets and liabilities, to the extent that these are not
matched
For insurance contracts providing death benefits, greater mortality rates would lead to higher levels of claims,
increasing associated claims cost and therefore reducing profit and shareholder equity
The impact of discontinuance rate assumption depends on a range of factors including the type of contract, the
surrender value basis (where applicable) and the duration in force. For example, an increase in discontinuance rates
at earlier durations of life insurance contracts usually has a negative effect on profit and shareholder equity. However,
due to the interplay between the factors, there is not always an adverse outcome from an increase in discontinuance
rates
For benefits which are not contractually linked to the underlying assets, the Group is exposed to Market Risk
Discontinuance
Market Risk
The table below illustrates how changes in key assumptions would impact the reported profit and liabilities of the Group.
Change in key assum ptions ($'000)
2023
Market risks
Increase in interest rates of 1%
Decrease in interest rates of 1%
Insurance risks
Increase in expenses of 10%
Decrease in expenses of 10%
Decrease in mortality by 10%
Increase in mortality by 10%
Worsening of discontinuance rate by 10%
Improvement in discontinuance rate by 10%
2022
Market risks
Increase in interest rates of 1%
Decrease in interest rates of 1%
Insurance risks
Increase in expenses of 10%
Decrease in expenses of 10%
Decrease in mortality by 10%
Increase in mortality by 10%
Worsening of discontinuance rate by 10%
Improvement in discontinuance rate by 10%
Ef fect on policy
liabilities
Ef fect on
f uture prof it
(255)
289
1
(1)
(4)
5
-
-
(294)
334
1
(1)
(4)
5
-
-
(261)
289
(41)
41
(420)
438
(148)
152
(300)
333
(57)
57
(554)
585
(104)
104
97
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
STATUTORY INFORMATION
STATUTORY INFORMATION
Directors’ remuneration and other benefits for the financial year ended 31 March 2023
Grant Baker
Martin Berry
Matthew Harrison (1)
Alistair Petrie
John Roberts (2)
Antony Vriens (3)
Directors’ fees
$
150,000
75,000
75,000
75,000
75,000
75,000
1. During the year ended 31 March 2023 Mr Harrison received an additional $15,000 (2022: $15,000) in fees for services as chairman of
the Credit and Lending Committee.
2. During the year ended 31 March 2023 Mr Roberts received an additional $15,000 (2022: $15,000) in fees for his services as chairman
of the Audit and Risk Management Committee.
3. During the year ended 31 March 2023 Mr Vriens received an additional $35,000 (2022: $35,000) in fees for his services as chairman of
DPL Insurance Limited.
Disclosure of interests recorded in the interest’s register
There were no new specific disclosures of interests entered in the interests’ register in the accounting period ending 31 March 2023.
Dealings in Turners Automotive Group Limited shares by Directors
Date of transaction
Antony Vriens
30 & 31/08/2022
John Roberts
22 & 23/11/2022
Alistair Petrie
Alistair Petrie
27/01/2023
28/11/2022
Shares
(disposed)/acquired
7,800
28,000
15,000
200,000
Consideration
(received)/ paid $
29,085
100,227
48,750
700,000
Directors’ relevant interest in quoted shares as at 31 March 2023
Grant Baker
Martin Berry
Matthew Harrison
Alistair Petrie*
John Roberts
Antony Vriens
Nature of relevant interest
Registered holder and beneficial interest
Registered holder and beneficial interest
Beneficial interest
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.
Shares
6,450,000
500,000
5,179,294
10,182,653
99,900
7,800
* Mr Petrie controls 10,142,642 shares held by Bartel Holdings Limited in a trustee capacity (so does not have beneficial ownership of those
shares) and 40,011 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
98
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
STATUTORY INFORMATION
STATUTORY INFORMATION
Martin Berry
Launcho Ventures Pte. Ltd
Gong Cha Global Ltd
Matthew Harrison
Harrigens Trustees Limited
JHFT Trustees Limited
GJG Trustees No.2 Limited
GJG Trustees Limited
MJH Consultants Limited
HD Property Company Ltd
Farne Investments Ltd
Hawkes Bay Legal Trustees (Harrison Trusts) Ltd
Northco Housing Group Limited
Antony Vriens
Me Today Limited
Institute for Strategic Leadership Pty Limited
John Roberts
Apollo Foods Limited
Centrix Group Limited
Alistair Petrie
RH Investment Trust
Trustee of Dossor Trust
Bartel Holdings Ltd
Darling Group Holdings
Jellicoe St Enterprises Ltd
Zeafruit Limited
Employee remuneration
During the financial year ended 31 March 2023, the number of employees or former employees of the Group, not being directors of Turners
Automotive Group Limited, who received remuneration and other benefits in their capacity as employees, the value of which exceeded
$100,000 for the year was as follows:
Number of employees
Remuneration range
100,000 - 109,999
110,000 - 119,999
120,000 - 129,999
130,000 - 139,999
140,000 - 149,999
150,000 - 159,999
160,000 - 169,999
170,000 - 179,999
180,000 - 189,999
190,000 - 199,999
200,000 - 209,999
210,000 - 219 999
220,000 - 229,999
230,000 - 239,999
240,000 - 249,999
250,000 - 259,999
260,000 - 269,999
270,000 - 279,999
280,000 - 289,000
290,000 – 299,999
300,000 - 309,999
310,000 - 319,999
340,000 - 349,999
370,000 - 379,999
420,000 - 429,999
480,000 - 489,999
500.000 – 509,999
510,000 - 519,999
670,000 - 679,000
830,000 - 839,999
1,120,000 - 1 129,999
1,530,000 – 1,539,999
2023
38
16
20
16
10
7
8
3
5
2
1
2
2
-
3
1
1
2
1
2
1
1
1
1
1
1
1
-
-
1
-
1
2022
19
21
13
11
11
7
6
3
1
4
3
-
3
3
1
1
-
1
-
-
1
-
-
1
-
1
-
1
1
-
1
-
99
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
STATUTORY INFORMATION
STATUTORY INFORMATION
LISTINGS
The Company's shares are listed on the NZX Main Board operated by NZX Limited (NZX) and as a foreign exempt entity on the Australian
Securities Exchange operated by ASX Limited (ASX).
TOP 20 ORDINARY SHAREHOLDERS AS AT 31 MAY 2023
The following table shows the names and holdings of the 20 largest holdings of quoted ordinary shares (TRA) of the Company as at 31 May 2023.
Shares
% of Issued
Capital
10,142,642
11.70
6,942,660
6,450,000
5,179,294
4,204,377
2,424,980
8.01
7.44
5.97
4.85
2.80
2.50
2.09
1.49
1.47
1.40
1.38
1.35
1.05
0.95
0.91
0.88
0.63
0.60
0.59
Rank Name
Bartel Holdings Limited
Custodial Services Limited
Montezemolo Holdings Limited
Harrigens Trustees Limited
FNZ Custodians Limited
National Nominees Limited - NZCSD
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Stephen John Sinclair & Jacqueline Margaret Sinclair & Roger Frederick Wallis 2,171,461
JBWere (NZ) Nominees Limited
1,815,694
John Jeffers Harrison
Accident Compensation Corporation - NZCSD
New Zealand Depository Nominee Limited
Glenn Arthur Duncraft
HSBC Nominees (New Zealand) Limited - NZCSD
BNP Paribas Nominees (NZ) Limited - NZCSD
Paul Anthony Byrnes
Todd William Hunter & Elizabeth Hunter & Graham Rodney Leaming
Public Trust - NZCSD
Cushla Mary Smithies
John Tomson
BNP Paribas Nominees (NZ) Limited - NZCSD
1,293,782
1,271,023
1,216,329
1,200,000
1,171,152
906,958
821,211
791,819
765,000
542,841
519,754
510,140
SPREAD OF ORDINARY SHAREHOLDERS AS AT 31 MAY 2023
Range
1 – 999
1,000 - 1,999
2,000 - 4,999
5,000 - 9,999
10,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 - 999,000
1,000,000 plus
Total
Total Holders
Shares
% of Issued
Capital
1,710
799
952
519
723
62
54
7
13
4,839
753,910
1,080,891
2,935,081
3,436,210
14,090,543
3,868,206
10,194,289
4,857,723
0.87
1.25
3.39
3.96
16.25
4.46
11.76
5.60
45,483,394
86,700,247 100.00
52.46
DOMICILE OF ORDINARY SHAREHOLDERS AS AT 31 MAY 2023
Number
%
Number
%
Shareholders
Shares
New Zealand
Australia
Other
Total
100
4,647
101
91
4,839
96.03
2.09
1.88
100.00
84,616,782
1,656,307
427,158
86,700,247
97.60
1.91
0.49
100.00
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
STATUTORY INFORMATION
STATUTORY INFORMATION
SUBSTANTIAL PRODUCT HOLDERS
The following information is given under section 293 of the Financial Markets Conduct Act 2013.
As at 31 March 2023 the following shareholders are registered by the company as Substantial Product Holders in the Company, having
disclosed a relevant interest in quoted voting products under the Financial Markets Conduct Act 2013.
Bartel Holdings Limited
Montezemolo Holdings Limited
Harrigens Trustees Limited
Number of Shares
%
11.70
7.44
5.97
10,142,642
6,450,000
5,179,294
The total number of quoted voting products of the company on issue at 31 March 2023 was 86,700,247 paid ordinary shares.
101
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT
FY23 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 framework has been guided by the principles and recommendations set out in the NZX Corporate Governance Code (1 April
2023) (NZX Code) and the requirements set out in the NZX Listing Rules. The Board considers that this framework and
governance practices for the year ended 31 March 2023 are generally in line with the NZX Code, except as stated below:
•
•
•
Recommendation 2.5: An issuer should have a written diversity policy which includes requirements for the Board or relevant
committee of the Board to set measurable objectives for achieving diversity: Turners has a diversity policy which encourages
a culture of diversity and inclusiveness at Turners. While no measurable objectives are in place, the Board requires
management to provide regular reporting and monitoring on diversity within the Turners workforce. The Board also uses
tools such as the quarterly staff engagement survey to measure diversity and how the business is recognising, valuing and
respecting differences to establish benchmark measures and progress.
Recommendation 2.8: A majority of the Board should be independent Directors. For FY23, the Board consisted of three
independent and three non-independent, non-executive Directors. An additional independent Director was appointed from
3 April 2023. The non-executive Directors are not involved in the day to day operations of Turners 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. Turners 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, who has been deemed to be a non-independent Director due to his 7.44% shareholding in Turners. This is
the only reason the Board considers Grant to be non-independent, having given consideration to a range of other factors
including tenure and related party relationships. As such, his interests are directly aligned with all shareholder interests.
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 Turners’ Board, these matters are dealt with by the full Board.
Turners 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 2023 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 – ETHICAL STANDARDS
Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for
these standards being followed throughout the organisation.
Code of Ethics
The Board recognises that high ethical standards and behaviours are central to good corporate governance, and it is committed
to the observance of Turners’ Code of Ethics. 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 and is currently under review.
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, brand value and investor confidence. In particular, it covers conflicts of
interest, gifts, confidentiality, corporate opportunities, behaviour, proper use of assets and information and compliance with laws
and policies.
The Board believes that all Directors conformed to the Code of Ethics during the 2023 financial year.
A copy of the Code of Ethics is provided to all new employees at the start of the employment, is available on internal Group
intranet, and on the Turners’ website. Employees also receive an annual reminder to familiarise themselves with the policy.
Turners will include ethics training for all employees in its Learning Management System by the end of FY24, and then once
every three years or in any year the Code of Ethics is materially amended. Employees are expected to report any breaches, in
line with the processes outlined in the Code of Ethics. Any breach will be dealt with in a consistent and even handed manner,
and are reported to the Board. Turners has a Whistle Blower Policy to allow employees to raise the alarm on concerns they may
have over serious wrong doings without fear of retribution from their colleagues or employer.
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
102
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT cont.
Restricted Persons including Directors and certain employees. Details of Directors’ share dealings are on page 98 of the 2023
Financial Statements.
No donations were made to any political parties in FY23.
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 Turners, 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.
Board Charter
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.
Nomination and appointment of Directors
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,
independence, 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 17 August 2022, Grant Baker and Alistair Petrie were re-elected
as Directors.
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. In line with this, Lauren Quaintance, who was selected
as an Emerging Director in October 2021, was appointed to the Board as an independent Director from 3 April 2023.
Written agreements with newly appointed Directors
When a Director is newly appointed, Turners will enter into a written agreement with them setting out the terms of their
employment/appointment. Turners 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.
103
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT cont.
Board composition and Director information
Information on Board members, including their profiles, attendance at Board meetings and independence, is disclosed annually
in Turners Annual Report. Profiles on each Director are also on the Turners’ website.
The Board currently comprises of seven Directors: a non-executive chairman, four independent Directors and three 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 2023, 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
Lauren Quaintance was involved with the Board as an Emerging Director during FY23 and was appointed as an independent
Director from 3 April 2023.
Information on each Director is available on the Turners website and on page 30 to 33 of the 2023 Annual Report.
The table below summarises the current key skills and experience of the Board.
Industry knowledge/experience
Highly skilled
Moderately skilled
Industry & sector knowledge
-
-
-
-
Auto retail
Finance
Insurance
Credit management
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
Director independence
⬤⬤⬤
⬤⬤⬤⬤
⬤⬤⬤
⬤⬤
⬤⬤⬤⬤
⬤⬤⬤⬤⬤⬤
⬤⬤⬤⬤⬤⬤
⬤⬤⬤⬤⬤⬤⬤
⬤⬤⬤⬤
⬤⬤⬤⬤⬤
⬤⬤⬤⬤⬤⬤
⬤⬤⬤⬤
◯◯◯◯
◯◯◯
◯◯◯◯
◯◯◯◯◯
◯◯◯
◯
◯
◯◯◯
◯◯
◯
◯◯◯
The majority of Turners’ Board are independent Directors. 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 Code. In particular, the Board takes into consideration shareholdings in Turners, tenure
and other relationships and assesses whether a Director’s interest, position, association or relationship might interfere, or might
reasonably be seen to interfere, with that Director’s capacity to bring an independent judgment to bear on issues before the Board,
to act in the best interests of Turners and to represent its shareholders generally. The Board assesses the independence of
Directors’ on their appointment and at least annually thereafter.
The Board has determined, based on information provided by directors regarding their interests, which has been evaluated
against the criteria in the Board Charter, that as at 31 March 2023 and the date of this Annual Report, Grant Baker, Matthew
Harrison and Alistair Petrie are not independent directors, owing to their personal or related shareholdings in Turners. The Board
104
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT cont.
feels that these investments further align directors’ interests with those of shareholders. Arrangements are in place to ensure
possible conflicts of interest are mitigated.
Director’s interests are disclosed on pages 98 to 101 of the 2023 Financial Statements.
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.
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 FY23. In total, there were 11 Board meetings; 4 Audit, Risk Management & Sustainability Committee meetings; and 5
Lending and Credit Committee meetings.
Board
Audit, Risk Management &
Sustainability committee
Lending & Credit
committee
Total Number of Meetings
Held
Grant Baker
Martin Berry
Matthew Harrison
Alistair Petrie
John Roberts
Antony Vriens
Lauren Quaintance1
11
11
10
11
10
11
11
10
4
4
4
4
5
5
5
5
1.
Lauren Quaintance held the role of an Emerging Director during FY23
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. While no measurable objectives are in place, the Board
requires management to provide regular reporting and monitoring on diversity within the Turners workforce. The Board also uses
tools such as the quarterly staff engagement survey to measure diversity and how the business is recognising, valuing and
respecting differences to establish benchmark measures and progress. The regular staff survey includes questions on equality
with respondents rating Turners 9.4 out of 10 for diversity and inclusion (D&I).
As part of its ESG goals, Turners is working to promote a diverse and inclusive culture across the business. A Diversity and
Inclusion Committee was established in September 2022 and D&I training has been undertaken by the Leadership team and will
be rolled out across the business this year. Turners is also looking to rollout remuneration benchmarking to enable better
measurement of gender pay equality.
As at 31 March 2023, the gender balance of Turners Directors and people was as follows:
31 March 2023
31 March 2022
Female
Male
Female
-
1
7
38
223
6
-
35
47
270
-
1
7
42
250
Male
6
31
50
288
Directors
Emerging Director
Senior Leadership
Management
Other Employees
Board Training and Performance
Turners 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
105
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT cont.
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 FY23.
PRINCIPLE 3 – BOARD COMMITTEES
The Board should use committees where this will enhance its effectiveness in key areas, while still retaining Board
responsibility.
The Board has constituted two standing Committees being the Audit, Risk Management and Sustainability Committee and the
Lending and Credit Committee. Due to the size of the Turners’ Board, remuneration and director nomination and appointment
matters are dealt with by the full Board.
Committees allow issues requiring detailed consideration to be dealt with separately by members of the Board with specialist
knowledge and experience, thereby enhancing the efficiency and effectiveness of the Board. However, the Board retains ultimate
responsibility for the functions of its Committees and determines their responsibilities.
The Committees meet as required and have terms of reference (Charters), which are approved and reviewed by the Board.
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. Committee performance is
reviewed on a regular basis.
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 Turners’ risk management
and internal control framework, the integrity of its financial reporting, and Turners’ 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 2023 were John Roberts (Chair), Antony Vriens and Alistair Petrie. Their qualifications and experience
are set out in the Annual Report.
Lending and Credit Committee
The Lending and Credit Committee assists the Board in fulfilling its responsibilities by providing oversight of the credit risk
management of Oxford Finance, Turners’ finance subsidiary, including reviewing internal credit risk policies and recommending
portfolio limits for Board approval. It is also responsible for reviewing the quality and performance of the finance business’ portfolio.
The Lending and Credit Committee is governed by a charter which is available on the Group’s website.
The Lending and Credit Committee members as at 31 March 2023 were Matthew Harrison (Chair), Alistair Petrie and John
Roberts.
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
engaging expert legal and financial advisors to provide advice on procedure.
106
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT cont.
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.
Continuous Disclosure Policy
Turners’ Directors are committed to keeping investors and the market informed of all material information about Turners and its
performance, and ensuring compliance with applicable legislative and the NZX Listing Rules. The release of material information
is guided by the Reporting and Disclosure section in Turners Corporate Governance Code, and the Turners Continuous
Disclosure Policy, which are available to view on Turners’ website.
Copies of other key governance documents are also available on Turners’ website.
In addition to all information required by law, Turners also seeks to provide sufficiently meaningful information to ensure
stakeholders and investors are well informed, including financial and non-financial information.
Reporting
The Board demands integrity in reporting, and in the timeliness and balance of disclosures. Turners seeks to provide clear,
concise financial statements and recognises the value of providing shareholders with financial and non-financial information,
including information on environmental, social and governance (ESG) matters
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 Board requires that, prior to its approval of financial statements, the CEO and CFO certify that, in their opinion Turners’
financial records have been properly maintained and the financial statements comply with the appropriate accounting standards
and give a true and fair view of the financial position and performance of Turners, and that their opinion has been formed on the
basis of a sound system of risk management and internal control, which is operating effectively.
Turners has not adopted a formal ESG framework but has instead selected key matters to report on. Turners will report against
the mandatory climate-related disclosures regime from FY24. Turners has an ESG Policy in section 14 of Turners Corporate
Governance Code.
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 encourages diversity and adheres to its Modern Day Slavery Statement, 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 remuneration (including executive Directors) should include an element
dependent upon the performance of both Turners and the individual, and should be clearly differentiated from non-executive
Director’s remuneration.
Details of Directors and executives’ remuneration and entitlements for the 2023 financial year are detailed on pages 86 and 98
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.
107
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT cont.
Director Remuneration
The total remuneration pool available for Directors is fixed by shareholders. The Board determines the level of remuneration paid
to Directors from the approved collective pool. Directors also receive reimbursement for reasonable travelling, accommodation
and other expenses incurred in the course of performing their duties. The annual fee pool limit is $665,000 and was approved by
shareholders at the annual meeting in September 2018. Any proposed increases in non-executive Director’s 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 Turners. The Directors do
not receive any performance- or equity-based remuneration. Details of shareholdings are on page 98 of the 2023 Financial
Statements.
Board Remuneration
• Chairman $150,000
• Non-executive Director $75,000
• Chair of DPL Insurance Limited $35,000
• Chair of DPL Insurance Limited for duties as a non-executive Director for TRA $75,000
• Chair of ARMS Committee $15,000
• Chair of Lending and Credit and 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 98 of the 2023 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 a mix of profit and specific project completion objectives. The profit objective
is based on the annual budget for the relevant business unit including a stretch target. The maximum bonus paid to an executive,
excluding the CEO and CFO, is 25% of base salary. The bonus paid to the CFO is measured against an incentive target, based
on a dollar value, approved by the Board. The incentive target is based on a projected profit before tax. At the minimum
achievement level of 95% of the incentive target, 50% of the bonus is paid, increasing to a maximum of 150% at the achievement
of level of 105% or more. Options are granted at the discretion of the Board and vesting is dependent on being employed by
Turners on vesting date.
Details of executives’ remuneration and entitlements are detailed under Key Management Compensation on page 86 and
Remuneration of Employees information on page 99 of the 2023 Financial Statements. Details of the Group’s Share Option Plan
are detailed on page 84 and 85 of the 2023 Financial Statements.
CEO Remuneration
The review and approval of the CEO’s remuneration is the responsibility of the Board. The CEO’s remuneration comprises a fixed
base salary, a variable short term bonus payable annually and a long term incentive, being participation in the Group’s Share
Option Plan. Benefits include KiwiSaver contributions and any direct cash or non-cash benefits, for example, car park.
The CEO’s remuneration can be summarised as follows:
Salary
Benefits
Subtotal
Pay for Performance
FY23
FY22
722,576
659,000
64,435
50,325
812,011
709,325
Cash STI
Share LTI
350,0001
375,0003
432,5002
535,0002
1.
2.
STI for FY23, paid in FY24, 104% of target achieved
Taxable value of 250,000 options, with an exercise price of $2.00, exercised in FY22 and FY23
3. STI for FY22, paid in FY23, 105% of more of target achieved
Total
Remuneration
1,594,511
1,619,325
Short term bonus: A short term bonus scheme is in place which rewards achievement against an incentive target, based on a
dollar value, approved by the Board. The incentive target is based on projected profit before tax. At the minimum achievement
108
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
CORPORATE GOVERNANCE REPORT cont.
109
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 CORPORATE GOVERNANCE REPORT cont.
Baker Tilly Staples Rodway attends the Annual Shareholder Meeting, and the lead audit partner is available to answer questions
from shareholders at that meeting.
Internal Audit
While Turners does not have a dedicated Internal Auditor role, it does have a number of internal controls overseen by the 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.
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. The aim of Turners’ investor
relations programme is to provide shareholders with information about Turners and to enable them to actively engage with Turners
and exercise their rights as shareholders in an informed manner.
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
Investor website
Turners maintains a comprehensive investor relations website which provides access to key corporate governance documents,
copies of all major announcements, company reports and presentations.
Shareholder engagement
All shareholders are given the option to elect to receive shareholder communications in electronic form (by email) and this is
actively encouraged.
Shareholders are encouraged to attend the Annual Shareholders’ Meeting and may raise matters for discussion at this event.
Turners live streams the annual meeting, which is accessible worldwide. In 2022, an in-person meeting was held, alongside a
live webcast. Given the small size of Turners and the low participation rates, Turners opted for the meeting format above, believing
this balances shareholders’ needs with costs. Online shareholders have the opportunity to present questions and vote by proxy
prior to the meeting.
In accordance with the NZX Corporate Governance Code, the Board ensured that the notice of the 2022 Annual Shareholder
Meeting was available to shareholders at least 20 working days prior to that meeting.
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.
Shareholder voting
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.
Capital raising
Turners did not raise any capital during the period.
110
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
DIRECTORY
DIRECTORY
CORPORATE DIRECTORY
DIRECTORS
Grant Baker
Chairman
Appointed 10 September 2009
REGISTERED OFFICE
Level 5, 70 Shortland Street, Auckland, New Zealand
PO Box 1232, Shortland Street, Auckland, 1140, New Zealand
Freephone: 0800 100 601
Email enquiries: info@turnersautogroup.co.nz
Web: www.turnersautogroup.co.nz
TURNERS LIMITED
Martin Berry
Independent Director
Consolidated statement of financial position for the year ended 31 March 2016
Appointed 17 August 2018
Matthew Harrison
Non-executive director
Appointed 12 December 2012
Alistair Petrie
Non-executive director
Appointed 24 February 2016
Assets
AUDITOR
Baker Tilly Staples Rodway
BANKERS
Bank of New Zealand and ASB Bank
Notes
2016
$’000
2015
$’000
Financial assets at fair value through profit or loss
Cash and cash equivalents
John Roberts
Independent Director
Appointed 1 July 2015
Trade receivables
Inventory
Antony Vriens
Finance receivables
Independent Director
Appointed 12 January 2015
Other receivables and deferred expenses
Reverse annuity mortgages
Lauren Quaintance
Property, plant and equipment
Independent Director
Appointed 3 April 2023
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
LAWYERS
Chapman Tripp
10
11
12
13
14
15
16
19
20
21
13,810
18,455
9,575
14,156
167,598
8,505
9,734
11,108
-
4,024
105,338
362,303
SHARE REGISTER
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna, Auckland
23
Private Bag 92119, Auckland 1142, New Zealand
Telephone: +64 9 488 8777
22,270
6,049
990
22
Insurance contract liabilities
Life investment contract liabilities
Financial calendar
Derivative financial instruments
First quarterly dividend
Borrowings
Annual meeting
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
October
August
November
January
April
31 March
May
June
July
24
32
32
25
49
174,816
15,629
12,688
232,491
136,127
(52)
(6,263)
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)
Total shareholders’ equity
ENQUIRIES
Total shareholders’ equity and liabilities
Shareholders with enquiries about transactions, change of address or dividend payments should contact Computershare Investor Services
on +64 9 488 8777. Other questions should be directed to the Company at the registered address.
328,972
129,812
362,303
121,002
STOCK EXCHANGE
The Company’s shares trade on the NZX Main Board operated by the NZX Limited under the code TRA and as an exempt foreign entity
For and on behalf of the Board
on the ASX operated by ASX Limited.
This annual report is dated 29 June 2023 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
111
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023
NOTES
112
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 NOTES
113
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 NOTES
114
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 NOTES
115
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2023 116
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 2023