DELIVERING
ON OUR
PLAN
ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2024
TIMARU
Located on Meadows Rd, this brand new
branch opened in November with capacity
for up to 150 cars.
2
OUR BUSINESS
4
FY24 AT A GLANCE
6
CHAIR AND CEO’S REPORT
8
OUR AUTO ECO-SYSTEM
10
OUR BUSINESSES
12
FY24 FINANCIAL REVIEW
18
BUILDING A BETTER BUSINESS
21
CELEBRATING OUR PEOPLE
26
OUR EXECUTIVE TEAM
30
OUR BOARD
32
FINANCIAL STATEMENTS
35
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 2024.
Grant Baker
Todd Hunter
Chairman
Group Chief Executive Officer
3
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
We believe if we provide a quality
environment and conditions for
our people, this will give us the
best chance of providing a quality
experience for our customers, and
this should lead to quality outcomes
for our shareholders.
1 Turners ranks in the top 5% of consumer businesses globally using Peakon survey tool.
2 Auto Retail voted New Zealand’s Most Trusted Used Vehicle Dealership in the Readers Digest Trusted Brand awards. 96% of Turners
Cars customers surveyed would recommend Turners to others.
Positive customer
satisfaction
96% of customers would
recommend2
Voted Most Trusted Brand
5 years in a row
Proven growth strategy
Growing shareholder
returns
Network spanning from
Whangarei to Invercargill
More than 700 team
members
Highly engaged team
Top 5% globally1
QUALITY ENVIRONMENT
FOR OUR PEOPLE
QUALITY CUSTOMER
EXPERIENCES
QUALITY OUTCOMES
FOR OUR SHAREHOLDERS
OUR FORMULA FOR SUCCESS
+
=
OUR BUSINESS
Turners is a New Zealand success story, focused on making
it easy for customers to buy, sell, finance and insure their
vehicle through Turners’ trusted brands and businesses.
4
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
AUTOMOTIVE RETAIL
■
New Zealand’s largest buyer and seller of vehicles
■
Bricks and clicks retail model, combing national network with online digital
experience
■
Local sourcing strategy provides competitive advantage and higher margins
■
One car sold every 4 minutes
■
52% of vehicles sold through retail channels
■
Awarded New Zealand’s Most Trusted Used Vehicle Dealership in the Readers
Digest Trusted Brand awards for 5th year in a row
INSURANCE
■
Motor vehicle, loan protection and life insurance solutions
■
Sold through more than 700 licensed car dealers, finance companies and brokers,
and life insurance advisers as well as online
■
5,200 insurance policies sold every month
■
$39.8M in new policies sold in FY24
■
Average 1,154 claims paid out monthly; $21.5M paid out in FY24
FINANCE
■
Targeting high quality consumer and commercial lending – primarily for
automotive customers
■
Loans originated through the Turners Auto Retail network, independent dealers
and brokers
■
Average loan size $15,100
■
56% premium lending in 2H24
■
Circa. 25,000 current consumer loans
■
$430M in receivables in FY24
CREDIT MANAGEMENT
■
A recognised leader in debt collection and credit management for both
corporate and SME customers
■
Provides income diversification for Turners Group
■
$148M in Total Debt loaded in FY24
■
23% increase in SME customers loading debt in FY24; debt collected up 33%
■
$37M collected from debtors in FY24
5
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
OPERATING ENVIRONMENT
■
Tightening economic conditions
throughout FY24
■
Reduction in consumer and business
spending, with shift to lower price points
■
Government regulation (changes to Clean
Car Discount and Clean Car Standard)
increasing import cost of used vehicles
■
Increase in sale of damaged and end of
life vehicles following Auckland floods and
Cyclone Gabrielle
■
Dealer numbers have continued to reduce
over the last five years and are not
expected to recover
■
EVs remain a very small part of the total
New Zealand fleet (around 2%) with
slowing sales momentum
■
Higher interest rates throughout the year
COMMERCIAL HIGHLIGHTS
■
Major milestone achieved with Turners
entering the NZX50 Portfolio Index and
MidCap Index in December 2023
■
Auto Retail: Branch network continues to
expand, growth in locally sourced cars and
improvement in margins
■
Finance: Net interest margin recovered
and expanded in 2H24
■
Insurance: Claims being well managed and
investment returns improved. Policy sales
remain robust
■
Credit management: Debt load recovering
in line with tightening economy,
particularly in SMEs
■
Opened new Turners Auto Retail branches
in Timaru and Napier
■
Introduced two additional funders,
bringing further diversification and
capacity
■
Second year of Employee Share Scheme
with over 50% participation
■
Employee Engagement score continues to
rank in top 5% of businesses globally using
Peakon survey tool
■
Finalist in the 2023 Effie Awards - Global
Best of the Best, for Turners’ marketing
campaign
FY24 AT A GLANCE
Turners delivered a record result despite an economy under
significant pressure, demonstrating resilience and the ability
to pivot to where demand is the strongest.
6
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
FY24
FY23
FY22
58.6
52.1
47.7
FY24
FY23
FY22
49.1
45.4
43.1
FINANCIAL HIGHLIGHTS
REVENUE
$417.0M
7%
EBIT
$58.6M
12.0%
NET PROFIT BEFORE TAX
$49.1M
8.0%
NET PROFIT AFTER TAX
$33.0M
1.5%1
FULL YEAR DIVIDENDS
25.5 cents
11%
EARNINGS PER SHARE
37.7 cents
FY24
FY23
FY22
417
390
344.5
FY24
FY23
FY22
33
32.5
31.3
FY24
FY23
FY22
25.5
23
23
FY24
FY23
FY22
37.7
37.6
36.4
1 The legislative change to remove depreciation on commercial buildings has increased the effective tax rate to 33% for FY24. This is a
one-off non-cash impact in FY24 only. The effective tax rate over the last two years is between 27.5-28.5%. A normalised NPAT using
FY23 tax rate of 28.5% would be $35.1M +8% and EPS would be 40.2 +7%.
7
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
Our record FY24 result
underscores the resilience
of our business, the value
of our diversification
strategy and our ability to
pivot to where the demand
is strongest.
Dear shareholder
We are very pleased to report another record
result for the business for FY24, despite
the challenging economic conditions. This
demonstrates the value of our diversification
strategy, our ability to pivot to where the demand
is strongest, and the resilience we need to grow
through all phases of the economic cycle.
We continue to innovate, gain market share and
improve margins across all segments. Three of our
four businesses reported material profit growth,
with Auto Retail once again being the hero. In
addition to the continued expansion of our activity
businesses (Auto Retail and Credit Management),
our annuity businesses (Finance and Insurance)
have gained momentum.
Our plan for growth is standing up to the
economic and interest rate challenges being
thrown at us. Government regulation has
increased, particularly with the changes to the
Clean Car Discount and Clean Car Standard last
year which restricted the supply of used imports,
interest rates remain high, cost of living pressures
continue to mount, and businesses and consumers
are tightening their belts.
Our high brand recognition, diversified revenue
streams and funding sources, vehicle sourcing
strategy, focus on quality business, and strong
culture are all key ingredients in our pathway to
success this year.
Our domestic sourcing strategy is working well
and our retail optimisation is gaining momentum.
We have pivoted towards lower value cars (under
$15,000) to meet customer demand, continued to
improve the quality of our loan book, increased
the volume of direct lending which provides higher
margins, and tightened our credit policy. The
improvements in the quality of our loan book are
very obvious, and these flow through into interest
margins. Insurance claims and risk pricing are
being managed well and, in credit management,
our business is recovering as consumer arrears
worsen and bad debts are called in.
CHAIR AND CEO’S REPORT
Delivering on our growth plans.
8
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
OUR PEOPLE ARE DRIVING OUR SUCCESS
In particular, we would like to acknowledge and thank our people, who deliver quality experiences
for our customers every day. Our team are totally committed and prepared to go above and beyond
to meet customer expectations. We are very lucky to have such a talented and hardworking group
of people in this business. More than 50% of our team members are now shareholders in our
company, through Turners Employee Share Scheme, which we launched in 2022.
LONGER TERM PERFORMANCE DELIVERS FOR OUR SHAREHOLDERS
We have made great progress in the last five years and our longer term track record continues
to deliver for our shareholders. Given the strong performance in FY24, the Board declared a final
dividend of 7.5 cents per share (cps), taking full year dividends to 25.5 cps. This represents a gross
yield of approximately 9% per annum (based on a share price of $4.10). The Dividend Reinvestment
Plan will be active for the final dividend with a 2% discount for those taking up the DRP.
We remain committed to creating a business that not only delivers sustainable value to our
shareholders, but also supports our people, our communities and our environment. This year, we will
report against the Aotearoa New Zealand Climate Standards for the first time. Our Climate Related
Disclosures will be published as a separate document by 31 July 2024 and will be available at
https://www.turnersautogroup.co.nz/climate-related-disclosure/.
LOOKING AHEAD
There is no doubt that trading conditions got harder in the final
quarter of the FY24 year. Looking ahead, we anticipate a further
deterioration in economic conditions during the first half of our
financial year (HY25) but expect to see the economy start to
recover in the second half. Our near-term focus remains on
exceeding the $50M NPBT goal in FY25, despite the economic
backdrop, however there remains some obvious risks with
the level of interest rates impacting the overall economy and
consumer demand.
Beyond FY25, Turners is well-placed to continue to make strong
progress, thanks to the resilience of our diversified business
model (activity and annuity), strong and committed team and clear
strategy for further growth. Our growth model has been proven and
we will build on this to drive our earnings and achieve our goals.
We have set ourselves a new target of $65M NPBT for FY28. This will deliver
a 10-year NPBT compound annual growth rate (CAGR) of 9.4%. Our roadmap to achieving this
can be viewed on page 17. In summary, this is focused on organic growth from Auto Retail with
an expanded branch network and continued shift from wholesale to retail sales, a recovery in the
Finance and Credit Management businesses, and direct to consumer growth in Insurance.
On behalf of all the team at Turners, we would like to thank our shareholders, customers and
business partners for your continued support.
Grant Baker
Todd Hunter
Chairman
Group Chief Executive Officer
We are
on track to achieve
our goal of $50M
profit before tax this
year and have set
ourselves a new target
of $65M for
FY28.
9
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
OUR AUTO ECO-SYSTEM
Our Auto Retail business continues to go from strength to
strength and creates a halo effect into Finance and Insurance.
It starts with sourcing smarter… the unique combination of consigned and owned stock. We are using
brand awareness, our branch network, data and tools to make better buying decisions and purchase
more highly demanded cars than we ever have before.
The more cars we consign and buy, the more cars we have advertised. This leads to a larger audience
and support for more branches. This scale gives us more reach and more market share and more
retail sales.
More retail sales provide greater opportunity for add-on sales from Oxford Finance and Autosure
Insurance which provide greater transaction margins.
Higher transaction margins make us more competitive at the sourcing end, and enable us to pay “fair”
prices for cars… and so the flywheel starts again.
We have very deliberately been improving our capability in each part of this flywheel over the last
couple of years. The good news is that it is working very effectively and there is still more opportunity
for us to fine tune.
10
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
HIGHER
TRANSACTION
MARGINS
SOURCE
SMARTER
MORE
RETAIL CARS
FOR SALE
DIGITAL AUDIENCE
+ BRANCH
EXPANSION
MORE
RETAIL MARKET
SHARE
MORE F&I
OPPORTUNITY
BRAND AWARENESS +
BRANCH NETWORK + DATA
+ DIAGNOSTIC TOOLS
MORE MARGIN = MORE
COMPETITIVE SOURCING
AND SELLING
HIGHER X-SELL
+ MARGINS
BUILDING ‘RETAIL’
MARKET SHARE
SECURE THE RIGHT
CARS AT THE RIGHT
PRICE
SUPPLY + CUSTOMER DATA
BUILDS REACH
11
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
AUTO RETAIL
Revenue $298.6M 7%
NPBT $31.8M 27%
Strong brand, smarter sourcing, systems
efficiency.
Auto Retail delivered super profit growth of
27% in FY24, as a result of operating leverage.
Total cars sold was up 6% to 40,100 units, with
revenue up 7%.
Our local sourcing strategy BuyNow, which
provides a convenient and easy way to sell
your car, is delivering sales growth and higher
margins. These ‘owned’ cars comprised
around 59% of our total sales in FY24, with the
remainder being consignment sales. We have
pivoted in response to market demand and
continue to target lower priced vehicles.
The ongoing transition from wholesale to retail
sales remains a material opportunity for us,
with retail making up 52% of sales in FY24. For
each additional vehicle sold through retail (not
auction), Turners makes another $1,000 per
vehicle. Key to achieving a higher percentage
of retail sales is the creation of more capacity
through our branch network. We know the
combination of a larger retail presence brings
additional opportunities to source vehicles
which will lead to additional sales.
We were delighted to open a new branch
in Timaru this year and expand our Napier
branch. We are now entering a build phase
for our next growth push. We have a robust
plan in place to continue the growth of our
network and are targeting 32 branches in
FY27 (currently 29 branches). We have seen
more opportunity come to market as interest
rates and holding costs increase and we have
a number of conditional offers in the market
which would add to our list for FY25 - FY28.
The numbers of damaged and written off
vehicles were unusually high in FY24, with
an uplift in units processed and sold in both
FY23 and FY24 due to the weather events. We
expect units to normalise to ~30,000 in FY25.
HIGH PERFORMING BUSINESSES
Turners has a mix of activity and annuity businesses, providing
earnings stability during difficult times. Auto Retail is the largest
business and provided 72% of revenue and 52% of Turners’
profit in FY24.
■ Auto Retail
■ Finance
■ Insurance
■ Credit Management
SEGMENT REVENUE
SEGMENT NPBT
12
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
FINANCE
Revenue $62.4M 6%
NPBT $12.2M 18%
Weathered the interest rate shock,
credit scores continue to improve, back
into growth mode.
Finance continues to be materially impacted
by the tightening cycle in interest rates.
However, we have seen margins start to
expand and expect interest rates to become a
tailwind once the easing cycle begins.
Our loan book is back into growth mode
and we are in a strong position following our
deliberate focus on higher quality lending
over recent years. Average credit scores of
loans originated in the second half of the year
set a new high level and premium borrowers
currently make up 56% of the loan book.
Our controlled lending – directly from Oxford
Finance to consumers and through the Turners
Auto Retail network – was up 23% year on
year. These loans provide more margin and the
arrears perform significantly better on a like
for like basis. The overall finance attach rates
through the Auto Retail business were 33%, in
line with the prior year.
Across the business, arrears remain
significantly below industry benchmarks.
We are maintaining a conservative position
of the impact of any material increase in
unemployment on arrears, and increased the
economic provision overlay to $2.3M (FY23
$2.0M).
INSURANCE
Revenue $46.1M 6%
NPBT $14.3M 15%
Well-tuned business, distribution networks
remain important, building blocks for direct
to consumer offer in place.
The Insurance segment is a well-tuned business
with robust policy sales, well managed claims
and improved investment returns. We have one
of the fastest growing comprehensive motor
insurance books in Suncorp.
Notably, claims cost inflation was offset by less
frequent claims. Risk pricing is an important
part of managing claims ratios and we have
introduced two new layers of risk pricing in
Autosure over the last year to ensure we are
pricing correctly for the risk we are taking.
Insurance is consistently growing and our
distribution networks remain vitally important,
with further opportunities in play. We have
also laid the groundwork for a direct to
consumer offer which will target the 50% of
used cars bought and sold between private
individuals.
CREDIT MANAGEMENT
Revenue $9.8M 6%
NPBT $3.1M 9%
The Credit Management business saw debt
value loaded increase by 20% compared
to FY22. Business recovering, tightening
economy supports growth, payment bank
being rebuilt.
The Credit Management business has
rebounded into recovery mode and reported
9% profit growth off a low base.
The business is building off the back of
improved marketing and a deteriorating
economy. As more customers fall behind on
their payments, debt load grows. The debt
value loaded was up 14% year on year, with
a 23% increase in higher yielding SME client
debt. This has led to an increase in debt
collected and a rebuilding of the payment
bank.
Across New Zealand, credit metrics continue
to deteriorate and are now the worst they
have been in the last seven years. This should
see debt load levels increase over coming
years. We are conscious of the pressure
on household budgets and are supporting
debtors with lower repayment amounts and
extended payment arrangements.
13
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
EXPANDING OUR NETWORK
We’re expanding our auto retail network with new territories
and bigger sites. We have a pipeline of committed sites and
future opportunities. Currently underway is the expansion of
our single location in Christchurch into three separate sites
across the city over the next one to two years.
14
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
TIMARU - LOCATED ON MEADOWS RD, THE BRAND NEW TIMARU BRANCH
OPENED IN NOVEMBER WITH CAPACITY FOR UP TO 150 CARS.
NAPIER - WE HAVE DOUBLED OUR FOOTPRINT BY MOVING FROM A SMALL
LEASEHOLD SITE TO THE NEW PURPOSE-BUILT FACILITIES PICTURED HERE.
NEW TURNERS BRANCHES OPENED IN TIMARU
AND NAPIER
15
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
DRIVING GROWTH
Our growth plan focuses on our core business areas and
continues to deliver. We are well on our way to achieving
our goal of $50 million pre-tax profit in FY25 and have set
ourselves a roadmap to $65M NPBT for FY28.
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
■
Improvement in conversion rates from lead to customer
FINANCE
■
Pricing and margin management
■
Discipline on credit quality
■
Drive further growth out of controlled lending channels
(Turners + Direct)
INSURANCE
■
Expand distribution through partnership strategy
■
Launch direct to consumer offer
■
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
16
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
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. Driving up our lead to sale conversion rates will
unlock further growth.
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 SUPPORTED BY LOWER INTEREST RATES
Finance growth to resume as we exit a tightening cycle and start growing the loan book in
a more material fashion.
INSURANCE: EXECUTE DIRECT TO CONSUMER DISTRIBUTION OPPORUNITIES
Growth from direct and digital distribution.
CREDIT MANAGEMENT: REBUILD PAYMENT BANK OFF INCREASING DEBT LOAD
Credit Management delivers growth as low pandemic level arrears return to more long term
run rate levels.
70
65
60
55
50
45
40
35
30
25
20
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY28
TARGET
70
49
6
8
2
2
-2
65
65
60
55
50
45
40
35
30
25
20
FY24
Auto Retail
Finance
Credit
Insurance
Corp
FY28
NET PROFIT BEFORE TAX ($M)
NET PROFIT BEFORE TAX BRIDGE ($M)
OUR ROADMAP TO $65 MILLION
PROFIT BEFORE TAX
17
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
This financial commentary
should be read in
conjunction with the full
financial statements and
Notes to the Financial
Statements in the FY24
Annual Report.
FY24 FINANCIAL REVIEW
Management comment
REVENUE
Turners’ mix of activity and annuity businesses
provides earnings stability during difficult times.
Turners’ revenue continued to demonstrate
resilience in times of economic pressure, with a
7% year on year increase to $417.0M. All divisions
reported improving revenue, with particularly
strong growth in Auto Retail (up $20.5M) on the
back of increased car and damaged vehicle unit
sales from weather events, new branches and
more owned stock flowing through the business.
Finance book revenues of $62.4M (up 6%)
reflect a higher average loan book over FY24
with growth in the premium borrower segment.
Insurance revenues were up 6% off strong policy
sales and improved investment returns. Credit
Management revenues also grew by 6% due to
increasing debt load resulting in higher levels of
payment arrangements.
PROFIT
Net profit before tax of $49.1M (up 8%) was
another record for Turners, with three of the four
segments delivering profit growth. Auto Retail
profit growth was 27%, Insurance was up 15%
and Credit Management increased 9%. Finance
profit was down 18% due to increasing interest
rates and the impact on net interest margin,
however, is expected to improved as interest
margins start to expand and as Turners benefits
from its prioritisation of credit quality and margin
management over loan book growth.
Net profit after tax was $33.0M, up 1.5%1 on
prior year.
1 The legislative change to remove depreciation on commercial buildings has increased the effective tax rate to 33% for FY24. This is a
one-off non-cash impact in FY24 only. The effective tax rate over the last two years is between 27.5-28.5%. A normalised NPAT using
FY23 tax rate of 28.5% would be $35.1M +8% and EPS would be 40.2 +7%.
18
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
BALANCE SHEET
Turners’ balance sheet has been tightly
managed and has the capacity to support
the company’s future growth plans. Inventory
value has reduced slightly, with more units
at a lower price point in response to market
demand. Finance Receivables grew slightly
year on year, however the focus remains
on prioritising margin and credit quality
over growth in Oxford Finance. We are
maintaining a conservative position on
possible future credit losses resulting from
higher unemployment. (This economic
provision overlay has been increased to
$2.3M (FY23 $2.0M)). Property, plant
and equipment have increased with the
development of sites in Timaru and Napier.
Borrowings increased $13.0M, reflecting
properties which have been acquired and are
being developed.
FUNDING
Turners has a mix of bank loans and
securitisation facilities to fund its business.
More than 77% of funding relates to finance
receivables in Oxford Finance, with capacity
to support lending over the next 12 to
24 months. Two additional funders were
brought into the funding mix in FY24,
bringing further diversification and capacity.
A new securitisation warehouse of $100M
was created for new investors, with a Fitch
AAA rating achieved as part of the
transaction process.
Corporate funding capacity is more than
sufficient to support the current committed
branch expansion plans in Auto Retail.
The company remains very comfortable
with the debt levels and debt capacity in
the business.
$MILLIONS
FY24
FY23
Cash and cash equivalents
18
12
Financial assets at fair value
70
67
Inventory
25
26
Finance receivables
430
425
Property, plant and equipment
114
106
Right of use assets
21
22
Intangible assets
163
164
Other assets
25
31
Total Assets
866
853
Borrowings
425
412
Other payables
48
56
Deferred Tax
15
12
Insurance contract liabilities
60
59
Lease liabilities
25
27
Other liabilites
15
17
Total Liabilities
588
583
Shareholders Equity
278
270
$MILLIONS
LIMIT
DRAWN
Receivables - Securitisation
(BNZ/ACC)
371
305
Receivables - Banking Syndicate
(ASB/BNZ/Westpac)
50
23
Less Cash
(10)
Net Receivables Funding
421
318
Receivables Funding Capacity
103
Corporate & Property
130
92
Working Capital (ASB & BNZ)
30
5
Less Cash
(8)
Net Corporate Borrowings
160
89
Corporate and Property
Funding Capacity
71
BALANCE SHEET
FUNDING MIX
19
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
20
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
BUILDING A BETTER
BUSINESS
At Turners, we’re driven to be a better business – one
that delivers not only strong and sustainable value to
our shareholders, but also supports our whānau (family/
community), our whenua (land) and our environment.
Our sustainability strategy is built on
two key pillars, where we believe we
can provide the most impact.
We have identified key pathways
and initiatives and are making good
progress on achieving our goals.
Turners Automotive Group Limited is
a climate-reporting entity under the
Financial Markets Conduct Act 2013 and
will report against the Aotearoa New
Zealand Climate Standards for the FY24
reporting period.
During the year our focus has been on
further developing our reporting to
align to these standards by expanding
the boundary of our GHG emissions
inventory and conducting scenario
analysis to identify the climate related
physical and transition risks and
opportunities. This is so we better
understand how climate change is
currently impacting our business and
how it may do so in the future.
Turners intends to publish its first
Climate Related Disclosures at
https://www.turnersautogroup.co.nz/
climate-related-disclosure/
by 31 July 2024.
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.
21
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
At Turners, we recognise the critical
role the transport sector plays in New
Zealand’s greenhouse gas emissions.
As the leader in used and end-of-life
vehicle sales, we are able to support
the transition to a cleaner, lower-
emissions light vehicle fleet for
New Zealand.
We know that becoming a more
sustainable society will take time.
Turners can play a role in helping
people shift from older, high-
polluting vehicles to newer, cleaner
options. Over 90% of the vehicles
we sell come from within New
Zealand’s existing fleet. Through our
damaged and end-of-life services,
we significantly contribute to retiring
older high-emitting vehicles.
The good news? While still small,
sales of electric and hybrid vehicles
are on the rise at Turners. As
more large fleets (companies and
government agencies) transition
to low emitting vehicles, this
trend is only going to accelerate.
We’re also keeping a close eye
on the development of alternative
fuels like hydrogen, anticipating
they’ll become more mainstream
in the future.
Our focus is on targeting the most
emission-intensive parts of our
operations. We believe that by doing
this, we’ll not only deliver value to
our shareholders, but also support
our employees, communities, and the
environment – a win-win-win
for everyone.
SUPPORTING THE TRANSITION OF THE
NEW ZEALAND LIGHT VEHICLE FLEET TO
A CLEANER, LOWER EMISSIONS FUTURE
OUR GOALS
The following goals and targets were
published in our FY23 annual report.
For transparency and consistency, we’ve chosen
to continue reporting our progress against them.
We acknowledge that these targets do not meet
the criteria for the Science Based Targets initiative
standards.
Reduction in total aggregate emissions from
vehicles imported by Turners.1
Our target is to reduce the estimated annual
aggregate emissions of Turners ‘first time import’
(FTI) vehicles to below 7,000 tonnes of CO2 by 2025.
In FY24, the FTI emissions were 3,016 tonnes of CO2.
This represents a 65% reduction from our 2019 levels.
Increase the proportion of Low Emitting Vehicles in
the Turners Subscription fleet. 2
In 2020, we launched Turners Subscription, and
in partnership with EECA, we expanded our
subscription EV fleet. We currently have around
300 vehicles on subscription of which around 180
are EVs or Hybrids. There is high demand for these
subscription cars… helped by the “try before you
buy” philosophy. Our target is to have low emitting
vehicles make up 50% of our Subscription fleet by
2025.
Reduce the average emissions from vehicles
financed.1
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% reduction in estimated
average annual emissions per financed vehicle in
2025 (from 2019 levels).
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 achieved by transitioning our company vehicle
fleet to lower emitting vehicles over time and by
identifying opportunities to increase renewable
electricity generation at our premises.
1 These targets are based solely on CO2 tailpipe emissions, using carbon emissions data provided by the Energy Efficiency and Conservation Authority
(EECA) and assumes an annual average distance travelled of 14,000km per vehicle. As this data set only covers CO2 emissions, it does not include any
additional Scope 2 or 3 CO2e emissions as defined by the Greenhouse Gas Protocol. In particular, the data does not incorporate emissions from other
greenhouse gases such as methane (CH4) or nitrous oxide (N2O) and does not account for emissions from electricity consumption by plug-in hybrid
electric vehicles (PHEVs) and battery electric vehicles (BEVs). Turners has used this data set for a number of years, as it facilitates a direct match to unique
vehicle identification numbers (matching accuracy: First time Imports 99%, Vehicles financed 95%). Turners has elected to continue to report on this basis
in the interests of accuracy, comparability and consistency.
2 Low emitting vehicles include Hybrid Electric Vehicle (HEV), Plug-in Hybrid Electric Vehicle (PHEV) and Battery Electric Vehicle (BEV).
22
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
Reduction in aggregate
emissions from vehicles
imported and sold by Turners
(10.2% target)
Turners achieved a 43% reduction in the annual CO2
emissions (in aggregate) for vehicles inported in FY24 over
those imported in FY23 (refer footnote on page 22)
Increase proportion of low
emitting vehicles in Turners
Subscription Fleet to 50%
The proportion of low emitting vechicles (Hybrids and EV’s)
in Turners Subscription Fleet has increased to 59%
Target 5% reduction in average
CO2 emissions of vehicles
financed (vs prior year)
Turners has achieved a 6% reduction in the average annual
CO2 emissions for vehicles financed in FY24 over those
financed in FY23 (refer footnote on page 22)
Achieve a further 5% reduction
in operational (Scope 1 & 2)
emissions
Turners achieved a 1.4% reduction in absolute operational
Scope 1 and 2 emissions in FY24 from FY23
Turners experienced significant growth in FY24. Using
a revenue-based intensity target takes this growth into
account. Turners achieved a 8% reduction in Scope 1 and 2
emissions per $M of revenue in FY24 compared to FY23
YEAR ON YEAR PROGRESS AGAINST TARGETS
23
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
DEVELOPING LEADERS
Turners offers employees the
opportunity to realise their
potential through a range of
different programmes.
A new cross training programme
was set up for Auto Retail during the
year, delivering over 4,000 training
hours. Leadership capability is a key
focus, with numerous opportunities
being offered. We were particularly
proud of Andrey Dyblenko, who
was the recipient of the Turners’
Leadership Award, and completed a
mini MBA.
■
36 team members were
selected to complete Turners’
Aspiring Leaders and Blue Step
programmes over 14 weeks,
graduating in August 2023.
■
19 new managers attended
BravaTrak (high performance
coaching) training, with 90
managers attending the
BravaTrak refresher training.
■
A specialised health and safety
training programme was
attended by 30 employees.
OUR GOALS
Maintain employee engagement in the
top 5% category
Having a strong culture and an engaged team is
very important to us and a key advantage for our
business. Our people deliver day in day out for
our customers and for our shareholders. They are
totally committed and prepared to go above and
beyond.
The engagement level of the Turners’ team ranks
in the top 5% of consumer businesses who use
the Peakon system and our goal is to maintain
this ranking. An indication of this engagement
is demonstrated by a further reduction in our
employee turnover rate.
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. We provide our team members
with access to EAP services, which helps them to
navigate issues at work or home and to support
their general health and wellbeing. We have
promoted this service heavily this year and are
pleased to see our team take advantage of this
valuable support.
Training and development remains a key focus for
us, with a year on year 25% increase in training
hours in FY24. We were very pleased to fill 58%
of our leadership positions internally and expect
to see this grow further as our talent management
and succession program ramps up.
ENHANCING THE WELLBEING OF OUR
PEOPLE, CUSTOMERS, STAKEHOLDERS AND
THE COMMUNITIES IN WHICH WE OPERATE
24
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
Promote a diverse and inclusive culture across
the organisation
Our team of more than 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. Our purpose is to help our people realise their
potential by fostering a culture where everyone feels they
belong and can be their true self at work.
Using the Peakon system, we were pleased to score in the top
5% globally for Diversity and Inclusion across all our business
divisions, and Turners as a whole.
Turners has also recently been recognised as a finalist for the
‘Respectful Culture Award’ in the 2024 Diversity Awards NZ.
We encourage self identity, the celebration of different cultures
and for people to be themselves at work.
As part of our initiatives this year, we have launched
e-learning modules on different themes, cultures, topics
and days of celebration.
Employee development training hours
20,000-plus
Employee turnover
23%
Number of sessions employees have
accessed through EAP services
174
Employee notifiable injury/incidents
Nil
Employee health and safety reportable
injury incidents
94
Employee
Engagement
9.1/10
Diversity &
Inclusion
9.4/10
Health &
Wellbeing
9.2/10
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CELEBRATING OUR PEOPLE
NEAVE SINES
SALES MANAGER – TURNERS CARS, NORTH SHORE
From vehicle groomer to sales consultant, sales supervisor
and now her latest roles as Sales Manager, Neave has been
on the fast track at Turners Cars North Shore since starting
at the branch in late-2021. In her current role, she trains,
develops and oversees the sales team at the North Shore,
and has overall branch responsibility in the weekends.
Initially planning to study at University, Covid and a change
of life plans set Neave on a journey towards customer
success. While her first employer was reluctant to promote
her at the age of 18, she moved to Turners where her talent
and leadership skills were instantly recognised.
Highlights to date include successfully increasing Buy
Now numbers, improving customer ratings to one of the
highest in the branch network and working hard to create
an enjoyable, positive and supportive environment for
her team. In particular, Neave notes the nomination for
Customer Service branch of the year at the Turners’ annual
awards.
“I love working at Turners for a number of reasons, the
main one being that they have allowed me to progress
with my career at such a young age. Turners looked
purely at my achievements and talents and did not see
my age as a disadvantage. I am very focused on upskilling
and continuing my promising career path at Turners. It’s
amazing to see what I have achieved with Turners in under
three years, I can’t wait to see where I am in another three!”
“I love working at Turners for a number of reasons,
the main one being that they have allowed me to
progress with my career at such a young age. Turners
looked purely at my achievements and talents and
did not see my age as a disadvantage.”
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NIA TUA
LENDING MANAGER – COMMERCIAL
Nia joined Oxford Finance in 2013, initially as a Credit
Controller before joining the Lending team in 2015. She
quickly became a key member of the Oxford Finance team
and was promoted to manage both Commercial and Direct
Lending in 2021, after helping to establish the Direct Lending
team. She has been influential in driving Oxford’s direct
lending strategy over the last 24 months, growing the team
from three to six lenders in response to increasing demand.
Nia is a motivational leader and works closely with her team
to ensure customers’ lending goals are achieved. This can
range from buying their vehicle to debt consolidation and,
in particular, to help better their current financial position.
Treating customers with respect and understanding is at the
heart of Nia’s work ethos.
She has built a high performing team, dedicated to delivering
exceptional results. Nia is passionate about creating better
outcomes for customers and empowering team members to
do so.
“At Oxford Finance, we make lending about people.
What we do can make such a difference in people’s lives
and this drives me and my team to create better outcomes
for our customers.”
“At Oxford Finance, we make lending about people.
What we do can make such a difference in people’s
lives and this drives me and my team to create better
outcomes for our customers.”
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NICK STONE
AUTO RETAIL PRODUCT MANAGER
Nick is one of Turners’ long standing team members, having
been with the company since 2012 – his first ‘real’ job after
University. His first role was part time on the help desk,
before he moved into full time work as a website tester
and trainer, then Business Analyst for six years before his
current role as Product Manager for Auto Retail.
Nick works with the digital team across Turners Auto
Group, helping to develop new ideas and applications,
and steer internal application development so it aligns
with business goals and digital strategy. While a lot of the
successes are behind the scenes, Nick notes the creation
of the completely automated Turners’ Live auction process
used by the Damaged and End of Life Vehicles business,
the development of TRIM – an application that manages
the process of getting vehicles ready for sale, and InfoNow
– a new vendor portal that integrates into Turners’ other
systems.
Nick took a year out in 2023 to travel the world, before
returning to the Turners’ fold in January.
“We have an amazing team, both within TAG Digital as well
as the Auto Retail branch network. Everyone is passionate
about doing the best they can and helping others.”
“We have an amazing team, both within TAG Digital
as well as the Auto Retail branch network.
Everyone is passionate about doing the best they
can and helping others.”
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
MARKET SHARE AND BEYOND
When measuring our success, we go beyond
mere volumes and market share. We actively
seek customer feedback and reviews, taking
great pride in consistently receiving positive
evaluations. This year, our commitment to
exceptional service was further validated by
outstanding results in the Buyerscore awards,
with recognition for both individual salespeople
and branches. By prioritising customer
satisfaction, we cultivate long-term loyalty and
establish ourselves as a trusted leader in the
automotive market.
BUILDING TRUST THROUGH COMMUNICATION
Effective advertising is ingrained in our DNA. It
not only raises brand awareness and helps us to
source high-quality vehicles but also plays a vital
role in attracting customers. Our award-winning
Tina campaign continues to galvanise and
connect with customers and our team, building
the trust that saw Turners named the Most
Trusted Brand in the used car sector for the fifth
year in a row.
INVESTING IN THE CUSTOMER JOURNEY
Our customer-centric strategy focuses on
continuous improvement. We invest heavily
in our people, providing ongoing training and
development to ensure they deliver exceptional
service throughout the entire customer journey.
Additionally, by expanding our network
of branches, we enhance accessibility and
convenience for our customers.
SERVING OUR CUSTOMERS
Our team is passionate about exceeding customer
expectations and creating an unparalleled experience.
This commitment to customer excellence is what drives
our success and builds trust.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
OUR EXECUTIVE TEAM
TODD HUNTER
Group Chief Executive
Officer
GREG HEDGEPETH
CEO Turners Automotive
Retail
MATTHEW GANNAWAY
CEO EC Credit Control
AARON SAUNDERS
Group Chief Financial Officer
JAMES SEARLE
Group General Manager
Insurance
MARYANNE BURNS
Group General Manager
People & Culture
JEREMY ROOKE
Group Chief Digital Officer
GUY BRYDEN
COO Oxford Finance
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
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. In 2023
Todd was appointed to the Chair role for
the Financial Services Federation, which
represents the non-bank lending industry in
NZ. 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 30 years, Aaron has
worked across a broad range of company sizes
and industries including vehicle importation
and distribution, broadcasting and the finance
sector. Aaron is a full member of the New
Zealand Institute of Chartered Accountants
and holds a Bachelor of Commerce from
Auckland University.
GREG HEDGEPETH
CEO Turners Automotive Retail
Greg joined Turners in 2017 as CEO of the
Automotive Retail division, with responsibility
for Turners Cars, Trucks & Machinery and the
Damaged & End of Life business. He is an
experienced automotive executive and has
previously held a number of senior roles with
BMW Group NZ and Armstrong Motor Group.
With a Bachelor of Commerce majoring in
marketing from Auckland University he has
successfully completed numerous marketing
roles, followed by a number of years working
for Saatchi & Saatchi in NZ and other
advertising agencies overseas. Greg brings a
strong strategic sales and marketing focus to
his current role.
JAMES SEARLE
Group General Manager Insurance
James is responsible for the sustainable and
profitable growth of DPL Insurance, leading
the company’s focus on delivering outstanding
outcomes for customers.
With over 35 years of experience in the New
Zealand insurance industry, James has held
various roles encompassing all aspects of
insurance, including sales and underwriting,
intermediated distribution management, as
well as managing several portfolio acquisitions.
He 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 technology services
and product functions, as well as leading
the adoption of new technologies, business
models, and channels to transform Turners’
digital capabilities. Jeremy brings almost 25
years of experience, including several large
transformational technology programmes
across NZ and Australia prior to Turners.
Jeremy holds degrees in Law and Arts from
Auckland University.
MATTHEW GANNAWAY
CEO EC Credit Control
Matt joined EC Credit Control in 2003 and has
worked in many different areas of the business
prior to becoming CEO in 2021. He holds a
business degree from Massey University and
has a strong technology focus to drive better
outcomes. With a long career in the credit
management industry, Matt brings a wealth of
experience and expertise.
GUY BRYDEN
CEO Oxford Finance
Guy joined Oxford Finance in 2018 as Finance
Manager, later becoming COO in 2020, and
ultimately CEO in 2024. Guy is a strong finance
professional, with over a decade of banking
and finance experience across the NZ and
UK markets prior to joining Turners. Guy is a
chartered accountant and holds a Bachelor of
Commerce from Otago University.
MARYANNE BURNS
Group General Manager People & Culture
Maryanne joined Turners in 2019. She has 20
years of experience as a Human Resources
Professional in a broad range of industries
in New Zealand. These include automotive,
financial services, insurance, environmental
solutions, importation and distribution.
Maryanne has led multiple transformational
people projects across a number of businesses.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
OUR BOARD
Turners is governed by a Board of Directors who are passionate
about the business and the industry. As at 1 April 2024, the Board
comprised of six directors including a non-executive chairman,
three independent directors and two non-executive directors.
Martin Berry, who was appointed in 2018,
stepped down from the Board on 31 March
2024. We believe that having Directors
with relevant industry, commercial and
governance skills is essential for the
continuing success of the Turners’ group,
along with diversity of thought and broader
commercial acumen. Turners currently has
Directors with hands on experience in the
finance, insurance and debt management
sectors as well as Directors with expertise
in governance and very diverse experience
and entrepreneurial skills in sales, digital
marketing and communications and
business growth.
Profiles on each Director are available
at https://www.turnersautogroup.co.nz/
about/.
GRANT BAKER
Non-executive Chairman
Appointed September 2009
MATTHEW HARRISON
Non-executive Director
Appointed December 2012
32
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
ALISTAIR PETRIE
Non-executive Director
Appointed February 2016
ANTONY VRIENS
Independent Director
Appointed January 2015
JOHN ROBERTS
Independent Director
Appointed July 2015
LAUREN QUAINTANCE
Independent Director
Appointed April 2023
33
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
34
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
36 Independent Auditor’s Report
42 Consolidated Statement of Comprehensive Income
43 Consolidated Statement of Changes in Equity
44 Consolidated Statement of Financial Position
45 Consolidated Statement of Cash Flows
46 Notes to the Financial Statements
35
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
Baker Tilly Staples Rodway Auckland Limited
T: +64 9 309 0463
Level 9, 45 Queen Street, Auckland 1010
E: auckland@bakertillysr.nz
PO Box 3899, Auckland 1140, New Zealand
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 42 to 80, which comprise the consolidated statement of financial position as at 31 March 2024, 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 material
accounting policy information.
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 2024, 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.
36
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2024
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 7 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 2024.
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
Evaluating the logic of the value-in-use calculations supporting Management’s
annual impairment test and testing the mathematical accuracy of these
calculations;
o
Evaluating Management’s process regarding the preparation and review of
forecasts;
o
Comparing forecasts to Board approved forecasts;
o
Evaluating the historical accuracy of the Group’s forecasting to actual historical
performance;
o
Challenging and evaluating the forecast growth assumptions;
o
Evaluating the inputs to the calculation of the discount rates applied;
o
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;
o
Evaluating the forecasts, inputs, and any underlying assumptions with a view to
identifying Management bias;
o
Evaluating Management’s sensitivity analysis for reasonably possible changes in
key assumptions; and
o
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 (including the material accounting policy information
and accounting estimates) about indefinite life intangible assets which are included in
Note 7 in the Group’s consolidated financial statements.
37
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2024
Key Audit Matter
How our audit addressed the key audit matter
Valuation of Finance Receivables
As disclosed in Note 4 of the
Group’s consolidated financial
statements, the Group has
finance receivable assets of
$430.3m.
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 2024 (including an
economic overlay of $2.3m).
This assessment involves
complex and subjective
estimation and judgement by
Management on credit risk and
the future cash flows of the
finance receivables.
Our audit procedures among others included:
•
Understanding and evaluating the Group’s internal controls relevant to the accounting
estimates used to determine the recoverable value of the Group’s finance receivables.
•
Evaluating the design and operating effectiveness of the key controls over finance
receivable origination, 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 2024 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 material accounting policy information
and accounting estimates) about finance receivable assets, and the risks attached to
them, which are included in Note 4 and 12 in the Group’s consolidated financial
statements.
Valuation and completeness of
Insurance Contract Liabilities
As disclosed in Note 9 of the
Group’s consolidated financial
statements the Group has
insurance contract liabilities of
$60.1m.
The Group’s insurance
contract liabilities were
significant to our audit due to
Our audit procedures among others included:
•
Understanding and evaluating the Group’s internal controls relevant to the accounting
estimates used to determine the valuation of the Group’s insurance policyholder
liabilities.
•
Evaluating the design and operating effectiveness of the key controls over insurance
contract origination, ongoing administration, claims management and reporting and
the integrity of the related data.
•
Understanding and evaluating the Group’s adoption and transition to NZ IFRS 17
Insurance Contracts (which includes understanding and evaluating the and its
38
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2024
Key Audit Matter
How our audit addressed the key audit matter
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 2024.
subsidiaries’ implementation process, adequacy of its systems and controls, and the
accuracy and completeness of its insurance contract measurements on adoption).
•
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
the work and findings of the Group’s external actuarial expert engaged by
Management (which includes the Group’s adoption of and transition to NZ IFRS
17 and the accuracy and completeness of insurance contract measurements on
adoption); and
o
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 material accounting policy information
and accounting estimates) about insurance contract liabilities, and the risks attached
to them, which are included in Note 9 in the Group’s consolidated financial statements,
including evaluating disclosures relating to the Group’s adoption of NZ IFRS 17
Insurance Contracts effective 1 April 2022 and the restated comparative financial
information.
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 2024 (but does not include the consolidated financial statements and
our auditor’s report thereon).
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial
statements in accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine is necessary
to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the Group for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
39
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2024
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.
40
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2024
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 2024 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 27 June 2024 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 S N Patel.
BAKER TILLY STAPLES RODWAY AUCKLAND
Auckland, New Zealand
27 June 2024
41
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT cont.
for the year ended 31 March 2024
42
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2024
The accompanying notes form part of these financial statements
Restated
2024
2023
Notes
$’000
$’000
Revenue
3.1
416,145
389,027
Other income
3.1
823
608
Cost of goods sold
(177,175)
(173,986)
Interest expense
3.2
(27,842)
(19,933)
Impairment provision expense
3.2
(4,616)
(3,740)
Subcontracted services expense
(15,466)
(11,927)
Employee benefits
(66,365)
(60,709)
Commission
(11,070)
(12,024)
Advertising expense
(5,650)
(4,934)
Depreciation and amortisation expense
3.2
(11,968)
(11,478)
Systems maintenance
(5,384)
(5,109)
Claims *
(21,901)
(21,827)
Other expenses *
(20,392)
(18,544)
Profit before taxation
49,139
45,424
Taxation expense *
11.1
(16,173)
(12,941)
Profit for the year
32,966
32,483
Other comprehensive income/(loss) for the year (which may subsequently be
reclassified to profit/loss), net of tax
Cash flow hedges
(4,118)
415
Revaluation of financial assets at fair value through OCI
(73)
(91)
Foreign currency translation differences
21
(7)
Total other comprehensive income/(loss)
(4,170)
317
Total comprehensive income for the year
28,796
32,800
Earnings per share (cents per share)
Basic earnings per share
10.5
37.71
37.54
Diluted earnings per share
10.5
37.61
37.65
* Restatements due to the adoption of NZ IFRS 17, 'Insurance Contracts'
43
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2024
The accompanying notes form part of these financial statements
Revaluation
of financial
assets at
Cash
flow
Share
Share Translation
fair value
hedge
Retained
capital
options
reserve
through
OCI
reserve
earnings
Total
Notes
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 31 March 2022
205,482
472
(32)
(1,085)
5,477
42,083
252,397
Adjustments on initial application of NZ IFRS 17,
'Insurance Contracts', net of tax *
-
-
-
-
-
(1,754)
(1,754)
Restated balance at 1 April 2022
205,482
472
(32)
(1,085)
5,477
40,329
250,643
Transactions with shareholders in their capacity as owners
Employee share based payments
10.3
1,594
(188)
-
-
-
296
1,702
Dividend paid
10.4
-
-
-
-
-
(14,732)
(14,732)
Total transactions with shareholders in their capacity as
owners
1,594
(188)
-
-
-
(14,436)
(13,030)
Comprehensive income
Profit
-
-
-
-
-
32,483
32,483
Other comprehensive income/(loss)
-
-
(7)
(91)
415
-
317
Total comprehensive income for the year, net of tax
-
-
(7)
(91)
415
32,483
32,800
Balance at 31 March 2023
207,076
284
(39)
(1,176)
5,892
58,376
270,413
Transactions with shareholders in their capacity as
owners
Dividend reinvestment plan
10.3
5,134
-
-
-
-
-
5,134
Employee share based payments
1,012
(41)
-
-
-
-
971
Dividend paid/payable
10.4
-
-
-
-
-
(27,090)
(27,090)
Total transactions with shareholders in their capacity as
owners
6,146
(41)
-
-
-
(27,090)
(20,985)
Comprehensive income
Profit
-
-
-
-
32,966
32,966
Other comprehensive income/(loss)
-
-
21
(73)
(4,118)
-
(4,170)
Total comprehensive income for the year, net of tax
-
-
21
(73)
(4,118)
32,966
28,796
Balance at 31 March 2024
213,222
243
(18)
(1,249)
1,774
64,252
278,224
* Restatements due to the adoption of NZ IFRS 17, 'Insurance Contracts'
44
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2024
The accompanying notes form part of these financial statements
Restated
Restated
2024
2023
1 April 2022
Notes
$’000
$’000
$’000
Assets
Cash and cash equivalents
11.2
17,523
11,845
13,373
Financial assets at fair value through profit or loss
11.3
69,558
66,730
70,274
Trade receivables
11.4
7,277
7,800
7,506
Inventories
11.5
25,051
26,057
31,980
Finance receivables
4
430,299
424,621
422,870
Other receivables, deferred expenses and contract assets *
11.6
13,782
9,144
9,520
Derivative financial instruments
1,774
5,887
5,414
Financial assets at fair value through OCI
157
230
225
Reverse annuity mortgages
11.7
2,489
2,925
3,242
Property, plant and equipment
5
113,948
105,993
67,569
Right-of-use assets
6
20,716
22,226
23,497
Investment property
11.8
-
5,800
5,950
Intangible assets
7
163,084
163,556
164,453
Total assets
865,658
852,814
825,873
Liabilities
Other payables
11.9
48,352
56,008
50,103
Contract liabilities
11.10
1,297
1,562
1,848
Tax payables
5,183
6,773
4,016
Deferred tax *
11.1
15,037
12,412
12,564
Borrowings
8
425,318
412,035
412,761
Lease liabilities
6
24,924
27,120
28,209
Life investment contract liabilities
12.3.1
7,188
7,042
8,153
Insurance contract liabilities *
9
60,135
59,449
57,576
Total liabilities
587,434
582,401
575,230
Shareholders’ equity
Share capital
10
213,222
207,076
205,482
Other reserves
750
4,961
4,832
Retained earnings *
64,252
58,376
40,329
Total shareholders’ equity
278,224
270,413
250,643
Total shareholders’ equity and liabilities
865,658
852,814
825,873
For and on behalf of the Board
J.A. Roberts
Director
A. Vriens
Director
Authorised for issue on 27 June 2024
* Restatements due to the adoption of NZ IFRS 17, 'Insurance Contracts'
45
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2024
2024
2023
Notes
$’000
$’000
Cash flows from operating activities
Interest received
56,183
51,639
Receipts from customers
359,265
334,105
Receipt of government subsidies
13
100
Interest paid - borrowings
(25,954)
(17,653)
Interest paid - lease liabilities
(1,483)
(1,548)
Payment to suppliers and employees
(330,265)
(286,783)
Income tax paid
(15,259)
(10,394)
Net cash outflow from operating activities before changes in operating assets
and liabilities
42,500
69,466
Net increase in finance receivables
(11,117)
(6,814)
Net decrease in reverse annuity mortgages
673
572
Net (increase)/decrease of financial assets at fair value through profit or loss
(2,293)
3,872
Net (withdrawals)/contributions from life investment contracts
(92)
(304)
Changes in operating assets and liabilities arising from cash flow movements
(12,829)
(2,674)
Net cash (outflow)/inflow from operating activities
11.13
29,671
66,792
Cash flows from investing activities
Proceeds from sale of property, plant, equipment and intangibles
3,180
942
Purchase of property, plant, equipment and intangibles
(18,641)
(44,177)
Purchase of investments
-
(96)
Sale of investments
5,526
-
Net cash inflow/(outflow) from investing activities
(9,935)
(43,331)
Cash flows from financing activities
Net bank loan advances/(repayments)
13,283
(553)
Principal elements of lease payments
(6,303)
(5,976)
Proceeds from the issue of shares
918
1,436
Dividend paid
(21,956)
(19,896)
Net cash inflow/(outflow) from financing activities
(14,058)
(24,989)
Net movement in cash and cash equivalents
5,678
(1,528)
Add opening cash and cash equivalents
11,845
13,373
Closing cash and cash equivalents
17,523
11,845
Represented By:
Cash at bank
11.2
17,523
11,845
Closing cash and cash equivalents
17,523
11,845
The accompanying notes form part of these financial statements
46
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
1.
GENERAL INFORMATION
1.1
Basis of Preparation
Reporting Entity
The consolidated financial statements are for Turners Automotive Group Limited and its subsidiaries (together ‘the Group’).
The Group's principal activities are:
•
Auto retail (second hand vehicle retailer)
•
Finance and insurance (loans and insurance products); and
•
Credit management (collection services).
Statutory Basis and Statement of Compliance
Turners Automotive Group Limited, ('the Company') is incorporated and domiciled in New Zealand. The Company is registered under the
Companies Act 1993 and is a FMC reporting entity for the purposes of the Financial Markets Conduct Act 2013. The Company is listed on the
NZX Main Board (‘NZX’). The consolidated financial statements have been prepared in accordance with the requirements of the NZX and
Part 7 of the Financial Conducts Act 2013.
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 for-profit entities. These financial statements also comply with International Financial Reporting
Standards ('IFRS'). The Group is a Tier 1 for-profit entity in accordance with XRB A1 Application of the Accounting Standards Framework.
The consolidated statement of financial position for the Group is presented on the liquidity basis where the assets and liabilities are presented
in the order of their liquidity. Due to the diverse nature of the Group’s activities presentation on the liquidity basis gives a clearer representation
of the financial position of the Group.
Functional and Presentation Currency
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.
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.
Legislative Changes Impacting the Consolidated Financial Statements
On 26 March 2024, the Government substantively enacted legislation which removes the deductibility of depreciation on commercial and
industrial buildings for tax purposes. Effective from 1 April 2024, the tax depreciation rate will revert to 0%. The change in tax legislation
effective from 1 April 2024 eliminates the tax base for these assets, thereby creating a temporary difference that leads to a deferred tax liability.
The impact of this change has been recognised in the Group’s consolidated financial statements for the year ended 31 March 2024, which
includes a one-off non-cash deferred tax liability of $3.1m with a corresponding tax expense within the statement of comprehensive income.
Key Accounting Estimates and Judgements
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 underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial statements are described in the following notes:
•
Fair value measurement (note 1.2.1);
•
Provision for impairment of finance receivables (note 4);
•
Right-of-use assets and lease liabilities – determining lease term (note 6);
•
Impairment of goodwill and corporate brands (note 7); and
•
Liabilities arising under insurance contracts (note 9).
New and Amended Accounting Standards and Interpretations
All mandatory new and amended standards and interpretations have been adopted in the current year. The new and amended standards and
interpretations that have had an impact on the Group have been described below. The Group has not early adopted any new standards,
amendments or interpretations to existing standards that are not yet effective.
Insurance Contracts
The Group has adopted NZ IFRS 17, ‘Insurance Contracts’, retrospectively from 1 April 2023 and has restated certain comparative amounts,
the retrospective restatement does not have a material effect on the information in the statement of financial position at the beginning of the
preceding period.
NZ IFRS 17, “Insurance Contracts’, establishes principles for the recognition, measurement, presentation and disclosure of insurance
contracts, reinsurance contracts and investment contracts with discretionary participation features. It introduces a model that measure groups
of contracts based on the Group’s 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).
Under NZ IFRS 17, insurance revenue in each reporting period represents the changes in the liabilities for remaining coverage that relate to
services for which the Group expects to receive consideration and an allocation of premiums that relate to recovering insurance acquisition
cash flows. In addition, investment components are no longer included in insurance revenue and insurance service expenses.
47
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
The Group measures the funeral plan and annuity insurance life contracts based on the Group’s 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).
For all other insurance products the Group uses the Premium Allocation Approach (‘PAA’) to simplify the measurement of groups of contracts
when the Group reasonably expects that such simplification would produce a measurement of the liability for remaining coverage for the group
that would not differ materially from the result of applying the accounting policies described above.
Under NZ IFRS 17, only directly attributable insurance acquisition cash flows that arise before the recognition of the related insurance contracts
are recognised as separate assets and are tested for recoverability. These assets are presented in the carrying amount of the related portfolio
of contracts and are derecognised once the related contracts have been recognised.
The change in accounting policy only relates to the insurance segment and has affected the following items in the Statement of financial
position:
1/04/2022
$'000
Increase in Other receivables, deferred expenses and
contract assets
180
Increase in Insurance contract liabilities
2,561
Decrease in deferred tax impact
627
Decrease in Retained earnings
1,754
Climate-Related Disclosures
The XRB issued its first climate disclosure standards in December 2022. The standards are effective for annual reporting periods beginning
on or after 1 January 2023. These disclosures do not form part of the financial statements but are rather contained in a separate standalone
climate statement. These standards affect entities known as Climate Reporting Entities (‘CREs’), including:
•
Large, listed companies with a market capitalisation of more than $60 million;
•
Listed issuers of quoted debt securities with a combined face value of quoted debt exceeding $60 million;
•
Large, licensed insurers, registered banks, credit unions, building societies and managers of investment schemes with more than $1
billion in assets;
•
Some Crown financial institutions (via letters of expectation).
CREs will be required to prepare an annual climate statement that discloses information about the effects of climate change on their business
or any fund they manage. They will need to obtain independent assurance about the part of the climate statement that relates to the disclosure
of greenhouse gas (GHG) emissions, generally in the second year of reporting.
The new Climate Standards issued are:
•
Aotearoa New Zealand Climate Standard 1: Climate related Disclosures (NZ CS 1)
This standard requires disclosures explaining how the entity manages its climate-related risks and opportunities. The disclosure
requirements cover four key areas (Governance, Strategy, Risk Management and Metrics and Targets). Entities must obtain assurance
over the GHG emissions disclosures.
•
Aotearoa New Zealand Climate Standard 2: Adoption of Aotearoa New Zealand Climate Standards (NZ CS 2)
This standard provides optional disclosure exemptions that entities may apply during the first few periods of climate reporting.
•
Aotearoa New Zealand Climate Standard 3: General Requirements for Climate-related Disclosures (NZ CS 3)
This standard includes the principles for climate-related disclosures (such as relevance, accuracy, and verifiability), general requirements
for how the information is disclosed, and guidance on topics such as materiality and estimation uncertainty.
The Group meets the requirements of a CRE as it is a large, listed company with a market capitalisation of more than $60 million. The Group’s
climate statement as at 31 March 2024 will be released before 31 July 2024. Independent assurance about the part of the climate statement
that relates to the disclosure of GHG emissions will not be obtained in the first year in line with the assurance requirements of NZ CS 1.
Disclosure of Accounting Policies (Amendments to NZ IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2)
Entities are now required to disclose their ‘material’ accounting policies instead of ‘significant’ accounting policies. The Group has adopted
this new standard for the financial reporting period beginning 1 April 2023. The adoption of this new standard did not have a financial impact
on the Group’s financial statements but has resulted in the updating of accounting policies disclosed in the Group’s financial statements.
Definition of Accounting Estimates (Amendments to NZ IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors)
The Group has adopted this new standard for the financial reporting period beginning 1 April 2023. The adoption of this new standard did not
have a financial impact on the Group’s financial statements, or the accounting estimates disclosed in the Group’s financial statements.
1.2
Accounting Policies Information
Material accounting policies which are relevant to understanding the consolidated financial statements are disclosed in each of the applicable
notes. They have been applied on a consistent basis across all periods presented in these consolidated financial statements.
48
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Two other relevant policies are provided as follows:
1.2.1 Fair Value Measurement
Accounting policy information
For financial reporting purposes, 'fair value' is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly
transaction between market participants (under current market conditions) at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique.
When estimating the fair value of an asset or liability, the Group uses valuation techniques that are appropriate in the circumstances and for
which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs. Input to valuation techniques used to measure fair value are categorised into three levels according to the extent to
which the inputs are observable:
Level 1
the fair value is calculated using quoted prices in active markets.
Level 2
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).
Level 3
the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
Further information about assumptions made in measuring fair values is included in note 12.5.
1.2.2 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 initially recognised 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‑current asset or a non‑current liability if the remaining maturity of the instrument is more than 12 months
and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
Hedge accounting
The Group designates certain derivatives as hedging instruments in respect of foreign currency and interest rate risk in cash flow hedges.
Further information about assumptions made in measuring the fair value of financial derivatives is included in note 12.5.
1.3
Climate Change Risk
The Group recognizes that climate change poses potential risks to its operations and financial performance. The Group is committed to
monitoring and reporting on climate related risks and opportunities in its financial statements and other public disclosures. The Group
acknowledges that climate change is an ongoing and evolving issue and will continue to take appropriate steps to identify and manage
potential impacts on its operations, financial performance and assets.
49
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
2.
SEGMENT INFORMATION
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 in New Zealand and Australia.
Five reportable segments have been identified as follows:
•
Auto retail - remarketing (motor vehicles, trucks, heavy machinery and commercial goods) and purchasing goods for sale.
•
Finance - provides asset-based finance to consumers and SME's.
•
Insurance - marketing and administration of a range of life and consumer insurance products.
•
Credit management - 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 & other - corporate centre.
Revenue
Revenue
Revenue
Total
Inter-
from
Total
Inter-
from
segment
segment
external
segment
segment
external
revenue
revenue
customers
revenue
revenue
customers
2024
2024
2024
2023
2023
2023
$’000
$’000
$’000
$’000
$’000
$’000
Auto retail
300,366
(1,750)
298,616
283,354
(5,189)
278,165
Finance
62,416
-
62,416
58,634
-
58,634
Insurance
47,838
(1,765)
46,073
45,282
(1,717)
43,565
Credit management
9,794
(10)
9,784
9,259
(36)
9,223
Corporate & other
79
-
79
48
-
48
420,493
(3,525)
416,968
396,577
(6,942)
389,635
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 arm’s length basis. The Group has no customers representing 10% or more of the Group's
revenues.
Restated
Operating profit
2024
2023
$’000
$’000
Auto retail
31,807
24,985
Finance
12,228
14,956
Insurance
14,287
12,468
Credit management
3,121
2,865
Corporate & other
(12,304)
(9,850)
Profit/(loss) before taxation
49,139
45,424
Income tax
(16,173)
(12,941)
Net profit attributable to shareholders
32,966
32,483
Depreciation and
Interest revenue
Interest expense
amortisation expense
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
Auto retail
687
225
(3,583)
(2,349)
(9,700)
(9,141)
Finance
54,551
51,508
(18,399)
(13,281)
(775)
(725)
Insurance
3,505
2,138
(50)
(61)
(1,173)
(1,211)
Credit management
5
4
(9)
(11)
(162)
(258)
Corporate & other
31
20
(6,174)
(4,261)
(158)
(143)
58,779
53,895
(28,215)
(19,963)
(11,968)
(11,478)
Eliminations
(373)
(30)
373
30
-
-
58,406
53,865
(27,842)
(19,933)
(11,968)
(11,478)
50
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Other material non-cash items
2024
2023
$'000
$'000
Finance - impairment provisions
(4,562)
(3,741)
Segment assets and liabilities
Assets
Liabilities
Restated
Restated
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Auto retail
163,917
155,850
96,478
73,689
Finance
457,041
453,869
340,080
344,786
Insurance
151,002
136,896
78,511
79,576
Credit management
35,432
34,035
2,927
3,943
Corporate & other
255,178
238,577
100,174
84,618
1,062,570
1,019,227
618,170
586,612
Eliminations
(196,912)
(166,413)
(30,736)
(4,211)
865,658
852,814
587,434
582,401
Acquisition of property, plant & equipment, intangible assets and other non-current assets
Other
2024
2023
$’000
$’000
Auto retail
17,884
42,927
Finance
579
862
Insurance
84
227
Credit management
50
21
Corporate & other
2
140
18,599
44,177
Eliminations
-
-
18,599
44,177
51
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
3.
OPERATING PERFORMANCE
3.1
Revenue
Accounting policy information
(i) Revenue from contracts with customers
Sales of goods
Sales of goods comprise sales of motor vehicles and commercial goods owned by the Group. Sales of goods are recognised when the
customer gains control of the goods and the sole performance obligation is met. This normally occurs on full payment or approval of financing.
Sales‑related warranties associated with goods cannot be purchased separately and they serve as an assurance that the products sold comply
with agreed‑upon specifications and cover the standard period established by legislation. There is no material amount of variable consideration
under these contracts nor is there the existence of a significant financing component.
Sales of service
Auction commission is recognised at a point in time in the accounting period in which the service is rendered. Payment for services is normally
deducted from the proceeds from the sale. Other than those provided by legislation no warranties are provided by the Group. There is no
material amount of variable consideration under these contracts nor is there the existence of a significant financing component.
Other sales revenue comprises services rendered preparing the assets for sale and commission earned on the sale of third-party products.
Services rendered while preparing the assets 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 is 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 are recognised at a point in time when the sale is made.
Payment is usually received when the sale is made.
(ii) Finance Receivables
Interest income and expense
Interest income and expense is recognised in the profit or loss using the effective interest method.
(iii) Insurance Contracts
Premium income and acquisition costs
Revenue on funeral plan and annuity insurance life contracts for each year includes the changes in the liabilities for remaining coverage that
relate to services for which the Group expects to receive consideration and an allocation of premiums that relate to recovering insurance
acquisition cash flows.
Other insurance contracts revenue is recognised based on an allocation of expected premium receipts to each period of coverage, which is
based on the passage of time.
2024
2023
$’000
$’000
Revenue from continuing operations includes:
Interest income
Bank accounts, short term deposits and investments
3,891
2,026
Finance receivables
54,224
51,552
Reverse annuity mortgages
291
287
Total interest income
58,406
53,865
Operating revenue
Sales of goods
215,054
205,916
Commission and other sales revenue
87,549
74,980
Loan fee income
2,669
2,988
Insurance and life investment contract income
39,181
38,514
Collection income
9,810
9,204
Bad debts recovered
1,879
1,832
Other revenue
1,597
1,728
Total operating revenue
357,739
335,162
Revenue from continuing operations
416,145
389,027
52
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
2024
2023
$’000
$’000
Other income comprises:
Gain on sale of property, plant and equipment
233
378
Rental income
386
-
Other
204
230
823
608
Revenue from contracts with customers
Over time
Auto retail
Commission and other sales revenue
21,874
16,425
Finance
Other sales revenue
3,306
2,434
At a point in time
Auto retail
Sales of goods
215,054
205,916
Auction commissions
60,640
54,922
Credit management
Collection income
9,510
8,704
Voucher income
300
500
Insurance
Motor vehicle insurance commissions
1,729
1,199
3.2
Expenses
2024
2023
Note
$’000
$’000
Interest expense
Bank borrowings and other
27,842
19,933
Movement in impairment provisions
Provisions for:
Specific impaired finance receivables
4
1,333
446
Collective impairment provision for finance receivables
4
2,699
2,784
Movement in COVID-19 overlay
4
-
(1682)
Movement in economic overlay provision
4
345
1,965
Collective impairment on reverse annuity mortgages
11.7
57
32
Finance receivables bad debts written off
182
195
Movement
4,616
3,740
Net operating profit includes the following specific expenses
Depreciation
- Buildings
380
299
- Plant, equipment & motor vehicles
1,456
1,118
- Leasehold improvements, furniture, fittings & office equipment
1,027
1,075
- Computer equipment
1,427
1,274
- Signs & flags
145
198
Amortisation of right-of-use asset
6,179
5,895
Intangible amortisation
- Amortisation of software
834
1,099
- Amortisation of customer relationships
520
520
11,968
11,478
53
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
2024
2023
$’000
$’000
Tax advisory fees
415
223
Donations
93
10
Directors’ fees
920
632
Post-employment benefits
1,765
1,612
Loss on sale of property, plant and equipment
29
75
Fees paid to auditor
Baker Tilly Staples Rodway Auckland (auditor of the Group)
Audit of financial statements
Audit of annual financial statements
551
479
Other services
Other assurance services
- Audit of DPL Insurance Limited solvency return
12
11
- Agreed Upon Procedures in relation to the EC Credit Control Limited trust account
7
7
Total other services
19
18
Total fees paid to Baker Tilly Staples Rodway Auckland
570
497
4.
FINANCE RECEIVABLES
4.1
Accounting policy information
Finance receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method.
The company assesses impairment at each reporting date. Finance receivables are derecognized when the contractual rights to cash flows
expire or the receivables are transferred along with substantially all the risks and rewards of ownership. Finance receivables are generally
secured over the assets they finance.
Impairment of finance receivables
The Group assesses finance receivables for impairment using a forward-looking expected credit loss (ECL) model. Finance receivables are
classified into three categories to determine the allowance for credit losses:
•
Performing finance receivables with 12-month ECL.
•
Finance Receivables with a significant increase in credit risk, recognizing lifetime ECL.
•
Credit-impaired receivables with lifetime ECL
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a finance receivable.
12‑month ECL represents the portion of lifetime ECL that is expected to result from default events on a finance receivable that are possible
within 12 months after the reporting date. Homogeneous finance receivables are assessed on a collective basis (collective impairment
provision) and non-homogeneous finance receivables are assessed individually (specific impairment provision).
(i) Significant increase in credit risk
The Group assesses whether a significant increase in credit risk has occurred for finance receivables at each reporting date. This assessment
is based on quantitative and qualitative indicators:
•
Quantitative Criteria: for non-homogenous loans significant changes in the value of collateral supporting the loan and for all finance
receivables when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information
that demonstrates otherwise, such as outstanding insurance payments for damaged collateral.
•
Qualitative Criteria: factors such as significant adverse changes in the borrower’s operating results and industry-specific economic
conditions.
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 can identify significant increase in credit risk before the amount becomes past due.
(ii) Definition of default
The Group considers that default has occurred when a finance receivable is more than 90 days past due unless the Group has reasonable
and supportable information to demonstrate that another default criteria is more appropriate, such as borrower bankruptcy.
(iii) Credit‑impaired finance receivables
Credit-impaired finance receivables are identified based on a combination of quantitative and qualitative criteria, including significant financial
difficulty of the borrower, default or delinquency in payments, loss of security and observable market indicators of credit risk deterioration.
(iv) Write‑off policy
The Group writes off a finance receivable when they are 180+ days in arrears or have not made a payment for 180 days and earlier if 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 bankruptcy proceedings. Finance receivables written off may still be subject to enforcement
activities under the Group’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognised in profit
or loss.
54
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
v) Measurement and recognition of ECL
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.
The exposure at default is the finance receivable’s gross carrying amount at the reporting date. No further advances are allowed against
finance receivables in default.
The expected credit loss for a finance receivable 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 finance receivable 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.
The Group recognises an impairment gains or losses in profit or loss for all finance receivables with a corresponding adjustment to their
carrying amount through an impairment provision account.
4.2
Key Accounting Estimates and Judgements
When measuring ECL the Group uses reasonable and supportable forward-looking information, which is based on forecasts of economic
conditions employment and their expected impacts on the ability of borrowers to service their debt. The probability of default calculations, a
key input in measuring ECL, includes historical data, assumptions and expectations of future conditions. The estimate of the expected loss
arising on default, is based on the difference between the contractual cash flows due and those that the Group expects to receive, taking into
account cash flows from collateral and integral credit enhancements.
Economic overlay provision
Due to the uncertain economic environment, management have retained the economic overlay provision relating to the impairment for finance
receivables. The provision has increased from $2.0m to $2.3m.
4.3
Finance Receivables
2024
2023
$’000
$’000
Commercial loans
66,746
84,126
Consumer loans
359,978
335,037
Property development & investment loans
2,676
2,851
Gross finance receivables
429,400
422,014
Deferred fee revenue and commission expenses
10,111
11,276
Specific impairment provision
(1,639)
(774)
Collective impairment provision
(5,263)
(5,930)
Economic overlay provision
(2,310)
(1,965)
430,299
424,621
Current
144,489
137,142
Non-current
285,810
287,479
430,299
424,621
Gross financial receivables are summarised as follows:
Performing
423,130
416,694
Doubtful
2,748
2,562
In default
3,522
2,758
429,400
422,014
Movement in receivables subject to specific impairment assessment
Opening balance
1,829
2,898
Additions
2,151
1,545
Amounts recovered
(677)
(1,309)
Amounts written off
(454)
(1,305)
2,849
1,829
55
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
The aging of loans specifically assessed are as follows:
2024
2023
$’000
$’000
The aging of loans specifically assessed are as follows:
Past due up to 30 days
1,332
1,034
Past due 30 – 60 days
288
156
Past due 60 – 90 days
106
89
In default
1,123
550
2,849
1,829
The following table shows the Group's provision matrix for finance receivables collectively assessed for impairment. The provision for loss
allowance based on past due status is not presented by customer segments as the Group's historical credit loss experience does not show
significantly different loss patterns for different customer segments.
31 March 2024
Gross
Collective
Expected
finance
impairment
loss rate
receivables
provision
%
$’000
$’000
Current
0.53
414,102
2,182
Past due up to 30 days
7.55
7,697
581
Past due 30 – 60 days
15.59
1,796
280
Past due 60 – 90 days
25.09
558
140
In default
86.74
2,398
2,080
426,551
5,263
31 March 2023
Gross
Collective
Expected
finance
impairment
loss rate
receivables
provision
%
$’000
$’000
Current
0.85
409,949
3,503
Past due up to 30 days
6.88
5,712
393
Past due 30 – 60 days
14.29
1,813
259
Past due 60 – 90 days
27.63
503
139
In default
74.09
2,208
1,636
420,185
5,930
If the ECL rates on performing financial receivables increased/(decreased) by 1%, the loss allowance on receivables would be $4.1m
higher/($2.2m lower) (2023: $4.1m higher/($3.5m lower)).
2024
2023
$’000
$’000
Movement in the impairment provisions:
Specific impairment provision
Opening balance
774
1,632
Impairment charge/(release) through profit or loss
1,333
446
Amounts written off
(468)
(1304)
1,639
774
Collective impairment provision
Opening balance
5,930
7,706
Impairment charge/(release) through profit or loss
2,699
2,784
Amounts written off
(3,366)
(4,560)
5,263
5,930
56
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
2024
2023
$’000
$’000
Economic overlay provision
Opening balance
1,965
-
Impairment charge/(release) through profit or loss
345
1,965
2,310
1,965
Total impairment provision
9,212
8,669
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
Fair
Carrying
Fair
amount
value
amount
value
2024
2024
2023
2023
$’000
$’000
$’000
$’000
Finance receivables
430,299
432,065
424,621
425,900
The fair values are based on cash flows discounted using a weighted average interest rate of 13.07% (2023: 11.81%).
The maximum exposure to credit risk is represented by the carrying amount of finance receivable which is net of any provision for impairment.
The reported credit risk exposure does not consider the fair value of any collateral, in event of the counterparties failing to meet their contractual
obligation.
Refer to note 12 for more information on the risk management policies of the Group.
Securitisation
The Group has two Trusts under which it securitises finance receivables. The Trusts are special purpose entities set up solely for the purpose
of purchasing finance receivables originated by the finance sector. The New Zealand Guardian Trust Company Limited has been appointed
Trustee and NZGT Security Trustee Limited as the security trustee for both Trusts. The Company is the sole beneficiary of both Trusts.
The Group has power over the Trusts, exposure, or rights, to variable returns from its involvement with the Trusts and the ability to use its
power over the Trusts to affect the amount of the Group's returns from the Trusts. Consequently, the Group controls the Trusts and has
consolidated the Trusts into the Group's 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.
Turners Marque Warehouse Trust 1 (the Trust)
The Trust has a wholesale funding facility with the Bank of New Zealand (BNZ) which is secured by finance receivables sold to the Trust. The
facility is $355m and with a 1-year term that will be renewed annually. BNZ fund up to 90% (31 March 2023: 85%) of the purchase price of the
finance receivables with the balance funded by sub-ordinated notes from the Group.
During the reporting period $202.4m finance receivables were sold to the Trust (31 March 2023: $215.5m) and the Trust sold $100.0m finance
receivables to the Turners Marque ABS 2023-1 Trust. As at 31 March 2024 the carrying value of finance receivables in the Trust was $281.2m
(31 March 2023: $314.4m).
Turners Marque ABS 2023-1 Trust (the 2023-1 Trust)
During the current financial year, the Group created the 2023-1 Trust. The 2023-1 Trust is a closed pool trust and issued $100m notes
comprising $70m Class A1 notes and $20.7m Class A2 notes both rated AAAsf (Fitch) and $9.3m unrated Class B notes, the Class A2 notes,
and B notes are held by the Group. The 2023-1 Trust purchased $100.0m finance receivables from the Trust. As at the 31 March 2024 the
carrying value of finance receivables in the 2023-1 Trust was $72.9m.
5.
PROPERTY, PLANT AND EQUIPMENT
5.1
Accounting policy information
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 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
The rates for the following asset classes are:
Diminishing value
Straight line
Buildings
-
50 & 33.3 years
Leasehold improvements, furniture and
fittings, office equipment
7.5 - 60.0%
3 - 15 years
Computer equipment
31.2 - 48.0%
3 - 5 years
Motor vehicles and equipment
26.0 - 31.2%
3 - 7 years
Signs and flags
-
3 - 12 years
5.2
Property, plant and equipment
Land &
buildings
Plant,
equipment &
motor
vehicles
Leasehold
improvements,
furniture,
fittings & office
equipment
Computer
equipment
Signs &
flags
Total
$’000
$’000
$’000
$’000
$’000
$’000
2024
At cost
92,948
9,454
8,670
5,808
995
117,875
Accumulated
depreciation
(837)
(2,902)
(4,158)
(3,448)
(537)
(11,882)
Opening carrying
amount
92,111
6,552
4,512
2,360
458
105,993
Additions
8,014
5,527
1,079
451
312
15,383
Disposals
(8)
(2,973)
(9)
(3)
-
(2,993)
Depreciation
(380)
(1,456)
(1,027)
(1,427)
(145)
(4,435)
Closing carrying amount
99,737
7,650
4,555
1,381
625
113,948
At cost
100,954
11,152
9,720
6,181
1,307
129,314
Accumulated
depreciation
(1,217)
(3,502)
(5,165)
(4,800)
(682)
(15,366)
Closing carrying amount
99,737
7,650
4,555
1,381
625
113,948
WIP included above
6,678
8
180
190
36
7,092
2023
At cost
58,283
5,635
7,387
4,935
983
77,223
Accumulated
depreciation
(538)
(2,545)
(3,560)
(2,522)
(489)
(9,654)
Opening carrying
amount
57,745
3,090
3,827
2,413
494
67,569
Additions
34,676
5,424
1,836
1,245
165
43,346
Disposals
(11)
(844)
(76)
(24)
(3)
(958)
Depreciation
(299)
(1,118)
(1,075)
(1,274)
(198)
(3,964)
Closing carrying amount
92,111
6,552
4,512
2,360
458
105,993
At cost
92,948
9,454
8,670
5,808
995
117,875
Accumulated
depreciation
(837)
(2,902)
(4,158)
(3,448)
(537)
(11,882)
Closing carrying amount
92,111
6,552
4,512
2,360
458
105,993
WIP included above
739
-
1
480
28
1,248
6.
LEASES
6.1
Accounting policy information
Right-of-use Assets
Right-of-use 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 depreciated over the shorter of the lease term and the estimated useful life of the underlying asset, consistent with
the estimated consumption of the economic benefits embodied in the underlying asset.
Lease Liabilities
Lease liabilities are initially recognised at the present value of the future lease payments (i.e., the lease payments that are unpaid at the
commencement date of the lease). These lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily
determined, or otherwise using the Group's incremental borrowing rate.
58
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Subsequent to initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. Interest expense
on lease liabilities is recognised in profit or loss (as a component of finance costs). Lease liabilities are remeasured to reflect changes to lease
terms, changes to lease payments and any lease modifications not accounted for as separate leases.
Variable lease payments not included in the measurement of lease liabilities are recognised as an expense when incurred.
Leases of 12 Months or less and leases of low value assets
Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a lease asset and a lease liability
has not been recognised) are recognised as an expense on a straight-line basis over the lease term.
6.2
Key accounting estimates and judgements
Extension and termination options are included in several leases across the Group. These terms are used to maximise the operational flexibility
of contracts. Most of the extension and termination options are exercisable only by the Group and not by the respective lessor. The Group
has 23 lease extension options covering 14 sites which have been assessed as more likely than not, but not reasonably certain, to be renewed.
The Group applied incremental borrowing rates of 3.91% to 8.28% (2023: 4.16% to 7.07%), with maturities up to 10 years (2023: up to 10
years). 1 new lease was entered into during the year (2023:4) and 7 leases were modified or cancelled during the year (2023: 6).
6.3
Right-of-use assets
2024
2023
$’000
$’000
Properties
20,679
22,154
Equipment
37
72
20,716
22,226
Opening balance
22,226
23,497
Additions
78
2,344
Modifications and
reassessments
4,591
2,280
Depreciation
(6,179)
(5,895)
Closing carrying amount
20,716
22,226
6.4
Lease Liabilities
2024
2023
$’000
$’000
Lease liabilities
24,924
27,120
Current
6,823
6,130
Non-current
18,101
20,990
24,924
27,120
The carrying amounts of the lease liabilities are denominated in the following currencies:
Australian dollars
60
30
New Zealand dollars
24,864
27,090
24,924
27,120
Interest expense in profit or loss
1,484
1,548
7.
INTANGIBLE ASSETS
7.1
Accounting policy information
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.
59
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
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).
7.2
Key accounting estimates and judgements
Goodwill and brand are allocated to four cash-generating units (‘CGU’) as follows:
2024
2023
$’000
$’000
Goodwill
Allocated to the insurance CGU/segment
12,777
12,777
Allocated to collection services CGU/segment
23,973
23,983
Allocated to the finance CGU/segment
9,272
9,272
Allocated to the auto retail CGU/segment
46,487
46,487
92,509
92,519
Brand
Allocated to the insurance CGU/segment
21,500
21,500
Allocated to the auto retail CGU/segment
45,600
45,600
67,100
67,100
The recoverable amount of all CGUs has been determined based on value-in-use calculations. These calculations use five-year pre-tax cash
flow projections based on budgets approved by the Board for year one and forecast for subsequent years. 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 cover 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.
2024 Forecast cash flow growth rates (%)
Year 2
Year 3
Year 4
Year 5
Auto retail CGU (weighted average cost of capital)
22.3
4.7
4.1
2.4
Insurance CGU (cost of equity)
3.9
10.1
11.1
10.5
Finance CGU (cost of equity)
31.5
26.5
14.9
4.4
Collection services CGU (weighted average cost of capital)
39.8
27.9
23.0
21.1
2023 Forecast cash flow growth rates (%)
Year 2
Year 3
Year 4
Year 5
Auto retail CGU (weighted average cost of capital)
50.7
3.3
7.0
3.0
Insurance CGU (cost of equity)
(12.5)
4.0
7.9
8.9
Finance CGU (cost of equity)
307.9
23.4
37.8
17.6
Collection services CGU (weighted average cost of capital)
32.1
29.1
24.6
24.0
Long-term growth rate
2.05%
2.05%
Pre-tax discount rate
Auto retail CGU (weighted average cost of capital)
12.20%
12.60%
Insurance CGU (cost of equity)
12.30%
12.80%
Finance CGU (cost of equity)
15.50%
17.60%
Collection services CGU (weighted average cost of capital)
17.50%
17.60%
60
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
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 considering 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% (2023: 0.25%) and increasing and
decreasing the discount rate by 1% (2023: 1%).
These reasonably possible changes in rates did not cause any impairment in the CGUs.
7.3
Intangible assets
2024
2023
$’000
$’000
Brand
Carrying amount
67,100
67,100
Goodwill
Opening carrying amount at cost
92,519
92,517
Foreign exchange adjustment
(10)
2
Closing carrying amount
92,509
92,519
Software
At cost
6,992
6,430
Accumulated amortisation
(5,521)
(4,580)
Opening carrying amount
1,471
1,850
Additions
893
731
Disposals
(1)
(11)
Amortisation
(834)
(1,099)
Closing carrying amount
1,529
1,471
At cost
7,457
6,992
Accumulated amortisation
(5,928)
(5,521)
Closing carrying amount
1,529
1,471
Corporate relationships
At cost
6,510
6,510
Accumulated amortisation
(4,044)
(3,524)
Opening carrying amount
2,466
2,986
Amortisation
(520)
(520)
Closing carrying amount
1,946
2,466
At cost
6,510
6,510
Accumulated amortisation and impairment provision
(4,564)
(4,044)
Closing carrying amount
1,946
2,466
Total intangible assets carrying amount
163,084
163,556
WIP included in software
-
252
The amortisation and impairment charges are recognised in other operating expenses in profit or loss.
8.
BORROWINGS
8.1
Accounting policy information
Borrowings are initially measured at fair value and subsequently at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in profit or loss over the period of the borrowing, using the effective interest method.
61
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
8.2
Borrowings
2024
2023
$’000
$’000
Secured bank borrowings
373,710
412,035
Deferred borrowing costs
-
-
373,710
412,035
Non-bank borrowings
Turners Marque ABS 2023-1 Trust - Class A notes
51,608
-
Total borrowings
425,318
412,035
Current
39,627
-
Non-current
385,691
412,035
425,318
412,035
Secured bank borrowings
At March 2024 the Group has a syndicated funding facility, including an 18 month working capital facility, with the Bank of New Zealand, ASB
Bank and Westpac New Zealand, 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. The bank funded securitisation financing arrangement is
described under finance receivables.
Borrowing covenants
The Group has complied with all borrowing covenants in both the current and prior financial year.
Non-bank borrowings
The Group's non-bank securitisation arrangement with the Accident Compensation Corporation is described under finance receivables.
Foreign currency risk
All the Group's borrowings are in NZD.
Fair value
Carrying
Fair
Carrying
Fair
amount
value
amount
value
2024
2024
2023
2023
$’000
$’000
$’000
$’000
Borrowings
425,318
423,539
412,035
406,127
The fair values are based on cash flows discounted using a weighted average borrowing rate of 5.58% (2023: 4.97%). The fair value of
borrowings considers the impact of interest rate swaps as referred to in note 12.3.2.
Contractual repricing dates
2024
2023
$’000
$’000
1 year or less
20,000
-
Over 1 to 2 years
258,710
322,035
Over 2 to 5 years
95,000
90,000
Over 5 years
51,608
-
425,318
412,035
62
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
9.
INSURANCE CONTRACT LIABILITIES
Audited financial statements for DPL Insurance Limited are available on the Companies Office website. The financial statements for the year
ended 31 March 2024 will be lodged by 31 July 2024.
9.1
Accounting policy information
Insurance contracts are those contracts that transfer significant insurance risk and are accounted for in accordance with the requirements of
NZ IFRS 17 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 classifies insurance contracts into the following categories:
•
Life - not measured under PAA (funeral plans, annuity products and participation fund)
•
Life - measured under PAA (all other life products)
•
Consumer – measured under PAA (mechanical breakdown and GAP products)
Insurance contracts are initially recognised at the earliest of the beginning of the coverage period of the contract, the date when the first
payment from the policyholder becomes due, or on the date the contract is onerous. At initial recognition, the Group identifies and recognises
homogeneous groups of insurance policies and determines the contractual service margin (‘CSM’), which represents the unearned profit the
Group will recognise as it provides services. Contracts are onerous if the total fulfillment cash flows exceed the carrying amount on the liability
for remaining coverage.
Measurement – Contracts not measured under the Premium Allocation Approach (PAA)
Subsequent to initial recognition, the Group will adjust the CSM for changes in estimates of future cash flows related to future service, time
value of money and risk adjustments. Insurance revenue is recognised for the insurance services provided during the period and a loss
recognised immediately in profit or loss if a group of contracts are considered onerous. This approach is applied to funeral plans and annuity
insurance products.
Measurement – Contracts measured under the PAA
PAA is a simplified model that recognizes insurance revenue of the coverage period in a way that reflects the insurance services provided.
The Group uses PAA for the measurement of groups of contracts when the Group reasonably expects the measurement of the liability for
remaining coverage for the group of contracts does not differ materially from the result of applying the accounting policies described under
Measurement – Contracts not measured under PAA.
Derecognition
The Group derecognises a contract when the specified obligations in the contract expire, are discharged or cancelled.
Presentation
Portfolios of insurance contracts that are assets and those that are liabilities, and portfolios of reinsurance contracts that are assets and those
that are liabilities, are presented separately in the statement of financial position. All rights and obligations arising from a portfolio of contracts
are presented on a net basis; therefore, balances such as insurance receivables and payables are no longer presented separately. Any assets
or liabilities recognised for cash flows arising before the recognition of the related group of contracts (including any assets for insurance
acquisition cash flows) are also presented in the same line item as the related portfolios of contracts.
9.2
Key accounting estimates and judgements
The Group makes several key estimates and judgments due to the inherent uncertainty and complexity of insurance contracts. These
estimates and judgments significantly impact the measurement, recognition, and disclosure of insurance contract liabilities and revenue. The
Group engages an independent actuary to calculate the insurance contract liabilities.
Contracts not measured under PAA
Key estimates and judgements, include but are not limited to, estimation of future cash flows, selection of appropriate discount rates,
selection of appropriate models and techniques to quantifying risk adjustment for non-financial risk, determining CSM, determining onerous
contracts, determining the quantity of benefits provided under a contract which affect the allocation of CSM over the coverage period,
estimating the impact of reinsurance contracts and changes in assumptions, including but not limited to, mortality rates, morbidity rates
lapse rates, expense levels, inflation rates and policyholder behaviour.
Contacts measured under PAA
Key estimates and judgements include assessing eligibility for the PAA, estimating future cash flows and incurred claims, selecting discount
rates, identifying onerous contracts, and determining the pattern of revenue recognition.
63
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
9.3
Analysis insurance revenue and expenses by segment.
Life
Life
Consumer
2024
Not
measured
Measured
Measured
In $'000
under PAA
under PAA
under PAA
Total
Insurance revenue
1,380
5,363
32,994
39,737
Claims expense
(531)
(3,068)
(18,297)
(21,896)
Other insurance expenses
(528)
(1,186)
(9,537)
(11,251)
Insurance result
321
1,109
5,160
6,590
Insurance finance result
(175)
-
-
(175)
Reinsurance expense
(260)
(354)
-
(614)
Reinsurance recovery
142
1,215
-
1,357
(118)
861
-
743
Net underwriting result
28
1,970
5,160
7,158
Other income
6,856
Profit before taxation
14,014
Life
Life
Consumer
2023 - restated
Not
measured
Measured
Measured
In $'000
under PAA
under PAA
under PAA
Total
Insurance revenue
1,579
5,449
32,280
39,308
Claims expense
(491)
(3,031)
(18,927)
(22,449)
Other insurance expenses
(587)
(1,065)
(8,592)
(10,244)
Insurance result
501
1,353
4,761
6,615
Insurance finance result
(175)
-
-
(175)
Reinsurance expense
(252)
(350)
-
(602)
Reinsurance recovery
78
1,332
-
1,410
(174)
982
-
808
Net underwriting result
152
2,335
4,761
7,248
Other income
5,100
Profit before taxation
12,348
Reconciliation of Profit before tax to Operating Profit (note 2)
Restated
2024
2023
$’000
$’000
Profit before tax
14,014
12,348
Revaluation adjustment of investment property disclosed as property,
plant and equipment in the Group financial statement at cost
413
260
Depreciation on investment property disclosed as property, plant and
equipment
(140)
(140)
14,287
12,468
64
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
9.4
Insurance contract liabilities and assets
Insurance contract assets
Insurance contact liabilities
Restated
Restated
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Asset/(liability) for remaining coverage
Life risk - not measured under PAA
903
964
5,526
5,973
Life risk - measured under PAA
-
-
5,668
5,705
Consumer - measured under PAA
-
-
41,263
40,585
Asset/liability for incurred claims
Life risk - not measured under PAA
217
223
448
395
Life risk - measured under PAA
1,733
1,737
3,429
3,199
Consumer - measured under PAA
-
-
3,801
3,592
2,853
2,924
60,135
59,449
Analysis by measurement component - asset/liability for remaining coverage not measured under the PAA
Value of fulfilment cash-flows
124
290
1,738
1,960
Risk adjustment
189
166
2,635
2,803
CSM
590
508
1,153
1,210
903
964
5,526
5,973
Movement in asset/liability for remaining coverage not measured under the PAA
Opening balance
964
1,050
5,973
6,329
Expected revenue in year
197
200
747
798
Expected expense in year
(99)
(92)
(997)
(765)
Release of CSM
(46)
(50)
(149)
(209)
Insurance finance result
41
39
216
214
Expected closing balance
1,057
1,147
5,790
6,367
Experience movement
(87)
(12)
48
378
Change in assumptions
(60)
(153)
(309)
(764)
New business contracts recognised
(7)
(18)
(3)
(8)
Closing balance
903
964
5,526
5,973
Expected recognition of CSM (number of years expected until recognised)
Insurance contract assets
Insurance contact liabilities
2024
2023
2024
2023
1
35
30
104
109
2
35
30
92
97
3
35
30
92
97
4
30
25
81
85
5
30
25
69
73
6 - 9
112
97
231
242
10+
313
271
484
507
590
508
1,153
1,210
65
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
9.5
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 'Positive' by A.M. Best. The rating was issued by A.M. Best on 18 August 2023
Financial Strength Rating scale:
A++, A+ Superior
B, B- Fair
D Poor
A, A- Excellent
C++, C+ Marginal
E Under Regular Supervision
B++,B+ Good
C, C- Weak
F In liquidation
S Suspended
Issuer Credit rating scale:
Investment Grade
Non-Investment Grade
aaa (Exceptional)
bb (Fair)
aa (Superior)
b (Marginal)
a (Excellent)
ccc, cc (Weak)
bbb (Good)
c (Poor)
rs (Regulatory Supervision/Liquidation)
10.
SHAREHOLDER EQUITY
10.1
Share capital
2024
2023
Number of ordinary shares
Opening balance
86,700,247
86,069,248
Shares issued for staff options
300,000
525,000
Shares issued for employee share scheme
95,305
105,999
Shares issued under DRP
1,258,137
-
Total issued and authorised capital
88,353,689
86,700,247
2024
2023
$'000
$'000
Dollar value of ordinary shares
Opening balance
207,076
205,482
Shares issued for staff options
696
1,208
Shares issued for employee share scheme
340
401
Shares issued under DRP
5,134
-
Share issue costs
(24)
(15)
Total issued capital
213,222
207,076
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 primarily driven by
optimisation of the return on the capital allocated. The process of allocating capital to specific operations and activities is undertaken
independently of those responsible for the operation. The Group’s strategies in respect of capital management and allocation are reviewed
regularly by the Board of Directors.
10.2
DPL Insurance Limited
In terms of the Insurance (Prudential Supervision) Act 2010, effective from 1 April 2023, DPL Insurance Limited is required to maintain a
solvency margin, in accordance with the “Interim Solvency Standard 2023” issued 1 October 2022 (as updated from time to time) of at least
$0. Effective from 1 April 2023, DPL Insurance Limited is required to maintain a solvency margin in respect of every Statutory Fund, in
accordance with the “Interim Solvency Standard 2023” issued 1 October 2022 (as updated from time to time) of at least $0.
Restated*
2024
2023
$’000
$’000
Solvency capital
80,234
82,571
Adjusted prescribed capital requirement
51,395
54,632
Adjusted solvency margin
28,839
27,939
Adjusted solvency ratio
1.56
1.51
66
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Restated*
2024
2023
$’000
$’000
Non-life insurance
Solvency capital
70,311
69,052
Adjusted prescribed capital requirement
45,577
45,577
Adjusted solvency margin
24,734
23,475
Adjusted solvency ratio
1.54
1.52
Life insurance
Solvency capital
9,923
13,519
Adjusted prescribed capital requirement
5,818
9,055
Adjusted solvency margin
4,105
4,464
Adjusted solvency ratio
1.71
1.49
* Restatements due to the adoption of NZ IFRS 17, 'Insurance Contracts' and the introduction of the new ‘Interim Solvency Standard 2023
Restriction on access to capital
The Group’s access to the capital and retained profits in the statutory fund, held for the benefit of policyholders, is restricted by the Insurance
(Prudential Supervision) Act 2010.
10.3
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 years after the vesting date. During the year ended 31 March 2021, 200,000 options
were cancelled. During the year ended 31 March 2024 300,000 options (2023: 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.
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 $55,000 (2023: $265,000).
Movement in the number of share options outstanding and their related weighted average exercise prices are as follows:
Weighted
average
Weighted
average
exercise
exercise
price
Options
price
Options
2024
2024
2023
2023
$
000's
$
000's
Opening balance
2.00
1,050
2.00
2,965
Granted
-
-
-
Exercised
2.00
(300)
2.00
(525)
Cancelled
-
4.20
(1,390)
Closing balance
2.00
750
3.03
1,050
The weighted-average share price at the date of exercise for share options exercised in the year ending 31 March 2024 was $3.66 for 245,000
options and $3.65 for 55,000 options (2023: $3.73).
67
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Share options outstanding at balance sheet have the following expiry dates and exercise prices:
Exercise
Options
Options
price
2024
2023
Expiry date
$
000's
000's
31 May 2025
2.00
225
525
31 May 2026
2.00
525
525
10.4
Dividends
2024
2023
$’000
$’000
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 for the year ended 31 March 2023 of $0.07 (31 March 2022: $0.07) per fully paid
ordinary share, imputed paid on 28 July 2023 (2023: 28 July 2022).
6,085
6,062
Quarterly dividend for the year ended 31 March 2024 of $0.06 (31 March 2023: $0.05) per fully paid
ordinary share, imputed, paid on 27 October 2024 (2023: 28 October 2022).
5,251
4,335
Quarterly dividend for the year ended 31 March 2024 of $0.06 (31 March 2023: $0.05) per fully paid
ordinary share, imputed, paid on 26 January 2024 (2023: 26 January 2023).
5,267
4,335
Quarterly dividend for the year ended 31 March 2024: $0.06 per fully paid ordinary share, imputed,
paid on 27 March 2024.
5,285
-
27,090
14,732
Dividend 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 $0.075 (31 March 2023: $0.07) per fully paid ordinary share, imputed, payable on 26
July 2024 (2022: 28 July 2023).
6,627
6,085
10.5
Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 March was based on the profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, as follows:
Restated
2024
2023
Profit for the year ($'000)
32,966
32,483
Weighted average number of ordinary shares at 31 March
87,423,304
86,518,327
Basic earnings per share (cents per share)
37.71
37.54
2024
2023
Weighted number of shares
Opening balance
86,700,247
86,069,248
Shares issued for staff options
211,858
385,479
Shares issued for employee share scheme
56,246
63,599
Shares issued under DRP
454,954
-
87,423,304
86,518,327
68
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
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:
Restated
2024
2023
$’000
$’000
Continuing operations
32,966
32,483
Add: Long term incentive expense related to options
55
265
Profit for the year
33,021
32,748
Weighted number of ordinary shares (diluted)
Weighted average number of shares (basic)
87,423,304
86,518,327
Effect of the exercise of options
376,944
467,052
Weighted average number of shares (diluted)
87,800,249
86,985,379
Diluted earnings per share (cents per share)
37.61
37.65
11.
OTHER DISCLOSURES
11.1
Income tax
Restated
2024
2023
$’000
$’000
Net operating profit before taxation
49,139
45,424
Income tax expense at prevailing rates (NZ: 28%; Aust: 30%)
(13,761)
(12,720)
Tax impact of income not subject to tax
193
284
Tax impact of expenses not deductible for tax purposes
(2,610)
(502)
(Over)/under provision in prior years
5
(3)
Taxation (expense)/benefit
(16,173)
(12,941)
Comprising:
Current
(13,909)
(12,939)
Deferred
(2,626)
158
Under provision in prior years
362
(160)
(16,173)
(12,941)
Deferred taxation
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset assets against liabilities and when the
deferred income taxes relate to the same fiscal authority. The movement on the deferred tax account is as follows:
Restated
2024
2023
$’000
$’000
Opening balance
12,412
12,564
Translation difference
(1)
6
Charge to profit or loss
2,626
(158)
Closing balance
15,037
12,412
The charge to profit or loss is attributable to the following items:
Corporate relationships
(146)
(146)
Loan impairment provision
(237)
634
Insurance deductible reserves
122
122
Property, plant and equipment
3,171
(15)
Lease liability
614
305
Right of use asset
(424)
(356)
Provisions and accruals
(474)
(702)
2,626
(158)
69
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Restated
2024
2023
$’000
$’000
Deferred tax (assets)/liabilities to be recovered after more than 12 months
18,067
14,016
Deferred tax (assets)/liabilities to be recovered within 12 months
(3,030)
(1,604)
Closing balance
15,037
12,412
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
3,245
3,008
Lease liability
6,979
7,593
Provisions and accruals
3,294
3,077
Insurance reserves
241
363
Total deferred tax asset
13,759
14,041
Deferred tax liabilities:
Brand
18,788
18,788
Corporate relationships
545
691
Right of use asset
5,800
6,224
Deferred expenses and accruals
3,663
750
28,796
26,453
Net deferred tax liabilities
15,037
12,412
Deferred tax impact from reversal of depreciation on buildings
On 26 March 2024, the Government substantively enacted legislation which removes the deductibility of depreciation on commercial and
industrial buildings for tax purposes. Effective from 1 April 2024, the tax depreciation rate will revert to 0%. The change in tax legislation
effective from 1 April 2024 eliminates the tax base for these assets, thereby creating a temporary difference that leads to a deferred tax liability
(DTL). As part of recognising the DTL, a one-off tax expense of $3.1m has been recognised within the year ended 31 March 2024.
Deferred tax assets are recognised for deductible temporary differences as Management considers that it is probable that future taxable profits
will be available to utilise those temporary differences.
Imputation credit memorandum account
2024
2023
$’000
$’000
Opening balance
32,978
21,647
Income tax payments/(refunds received)
8,209
16,380
Imputation credits utilised
(7,321)
(5,049)
Closing balance
33,866
32,978
11.2
CASH AND CASH EQUIVALENTS
2024
2023
$’000
$’000
The carrying value of cash and cash equivalents are denominated in the following currencies:
Australian dollars
158
136
New Zealand dollars
17,365
11,709
17,523
11,845
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 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 2024 were $2.1m (2023:
$2.0m).
Cash and cash equivalents at 31 March 2024 of $6.7m (2023: $4.3m) belongs to the Turners Marque Warehouse Trust 1 and the Turners
Marque ABS 2023-1 Trust and may not all be available to the Group.
70
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
11.3
FINANCIAL ASSETS THROUGH PROFIT AND LOSS
2024
2023
$’000
$’000
Insurance:
Investments in unitised funds
7,508
7,305
Term deposits
61,975
59,350
Other:
Deposits
75
75
Total
69,558
66,730
Investments in unitised funds comprise:
New Zealand and overseas equities
3,067
3,102
Fixed Interest securities
1,679
1,678
Cash - deposits
1,083
933
New Zealand and overseas property securities
1,679
1,592
Total
7,508
7,305
Investments with external investment managers
ANZ New Zealand Investments Limited - Unitised Funds
7,508
7,305
The carrying amounts of the financial assets 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 11.2). DPL Insurance's term
deposits at 31 March 2024 were $62.0m (2023: $59.4m). 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 12.3.
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 12 for more information on the risk management policies of the Group.
11.4
TRADE RECEIVABLES
2024
2023
$’000
$’000
Performing
6,567
5,691
Doubtful
1,156
2,471
In default
16
47
7,739
8,209
Impairment provision
(462)
(409)
Net trade receivables
7,277
7,800
Trade receivables are a current asset, with terms of trade usually 30 days or less.
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.
2024
2023
$’000
$’000
The age of doubtful trade receivables is as follows:
Past due up to 30 days
895
2,016
Past due 30 – 60 days
174
335
Past due 60 – 90 days
29
100
Past due 90+ days
58
20
1,156
2,471
71
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
2024
2023
$’000
$’000
Movement in the impairment provision:
Opening balance
409
478
Impairment charge/(release) included in other operating expenses
56
(57)
Amounts written off
(3)
(12)
462
409
The Group recognises lifetime expected credit loss for trade receivables. The expected credit loss rate is 6.0% (2023: 5.0%). 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
453
321
New Zealand dollars
6,824
7,260
7,277
7,800
Currency risk
A summarised analysis of the sensitivity of financial assets included in trade receivables to currency risk can be found in note 12.3.
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 12 for more information on the risk management policies of the Group.
11.5
INVENTORY
2024
2023
$’000
$’000
Motor vehicles
27,161
27,726
Less provision for stock obsolescence
(2,110)
(1,669)
25,051
26,057
Inventories are a current asset.
Movement in provisions for stock obsolescence
Opening balance
1,669
1,678
Movement (included in Cost of goods sold)
441
(9)
Closing balance
2,110
1,669
11.6
OTHER RECEIVABLES, DEFERRED EXPENSES AND CONTRACT ASSETS
Restated
2024
2023
$’000
$’000
Other receivables and prepayments
4,305
1,581
Insurance contract assets*
2,853
2,924
Accrued interest
2,882
1,228
Contract assets
- Amount relating to services rendered not yet invoiced
3,535
3,239
- Contract fulfilment costs
207
172
13,782
9,144
Current
10,318
8,670
Non-current
3,464
474
13,782
9,144
Carrying amount of financial assets included in other receivables
10,350
7,739
* Restatements due to the adoption of NZ IFRS 17, 'Insurance Contracts'
Expected credit losses on contract assets and other receivables is 0%.
72
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
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 12 for more information on the risk management policies of the Group.
11.7
REVERSE ANNUITY MORTGAGES
2024
2023
$’000
$’000
Reverse annuity mortgages
2,728
3,107
Provision for impairment
(239)
(182)
2,489
2,925
Current
-
350
Non-current
2,489
2,575
2,489
2,925
Movement in provisions for impairment
Opening balance
182
150
Impairment charge/(release) through profit or loss
57
32
Closing balance
239
182
Interest rate
A summarised analysis of the sensitivity of reverse annuity mortgages to interest rate risk can be found in note 12.3.2.
The Group's reverse mortgage annuities are all denominated in NZD.
Fair value and credit risk
Restated
Restated
Carrying
Fair
Carrying
Fair
amount
value
amount
value
2024
2024
2023
2023
$’000
$’000
$’000
$’000
Reverse annuity mortgages
2,489
2,835
2,925
3,289
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 consider 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.
11.8
INVESTMENT PROPERTY
2024
2023
$’000
$’000
Investment property
-
5,800
Movements in carrying amounts
Opening balance
5,800
5,950
Net change in fair value
-
(150)
Proceed from sale of property
(5,526)
-
Loss on sale
(274)
-
Closing balance
-
5,800
The investment property at 358 Worsleys Road, Christchurch was sold during the financial year.
At 31 March 2023, the investment property was valued at the purchase price included in a conditional sale and purchase agreement for
property.
73
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
11.9
OTHER PAYABLES
2024
2023
$’000
$’000
Accounts payable
20,963
24,743
Employee entitlements (short term)
4,674
5,485
Employee entitlements (long term)
1,459
376
Other payables and accruals
21,256
25,404
48,352
56,008
Carrying value of financial liabilities in other payables
31,443
40,693
The carrying amounts of the Group's financial liabilities in other payables are denominated in the following currencies:
Japanese Yen
116
867
Australian dollars
81
166
New Zealand dollars
31,246
39,660
31,443
40,693
Currency risk
A summarised analysis of the sensitivity of financial liabilities included in other payables to currency risk can be found in note 12.3.3.
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.
11.10 CONTRACT LIABILITIES
2024
2023
$’000
$’000
Unredeemed debt and PPSR voucher liability
1,036
1,339
Motor vehicle insurance rebate liability
261
223
1,297
1,562
Movement in contract liabilities
Unredeemed debt and PPSR voucher liability
Opening balance
1,339
1,635
Charge/(release) to profit or loss
(303)
(296)
1,036
1,339
Motor vehicle insurance rebate liability
Opening balance
223
213
Additions
38
10
261
223
11.11 INVESTMENT IN SUBSIDIARIES
Ownership
Interest Held
2024
2023
Subsidiary
Carly NZ Limited
Vehicle subscription services
100.0%
100.0%
DPL Insurance Limited
Insurance
100.0%
100.0%
EC Credit Control (Aust) Pty Limited
Collection services
100.0%
100.0%
EC Credit Control (NZ) Limited
Collection services
100.0%
100.0%
Estate Management Services Limited
Collection services
100.0%
100.0%
Oxford Finance Limited
Finance
100.0%
100.0%
Payment Management Services Limited
Collection services
100.0%
100.0%
Turners Finance Limited
Finance
100.0%
100.0%
Turners Fleet Limited
Vehicle and commercial goods trade
100.0%
100.0%
Turners Group NZ Limited
Auctions
100.0%
100.0%
Turners Property Holdings Limited
Property
100.0%
100.0%
Turners Staff Share Plan Trustees Limited
Trustee
100.0%
100.0%
74
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
All subsidiaries have a balance date of 31 March and, all subsidiaries are incorporated in New Zealand, except for EC Credit Control (Aust)
Pty Limited which is incorporated in Australia.
The Group securitises finance receivables through The Turners Marque Warehouse Trust 1 and the Turners Marque ABS 2023-1 Trust (the
Trusts). The Group has power over the Trust, exposure or rights to variable returns from its involvement with the Trusts and the ability to affect
the amount of the Group's returns from the Trusts. Consequently, the Group controls the Trusts and has consolidated the Trusts into the
Group financial statements.
11.12 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 2024 and 31 March 2023 were as follows:
($'000)
Short term
Long term
Share based
benefits
benefits
payments
Total
$'000
$'000
$'000
$'000
Year ended 31 March 2024
3,780
113
55
3,948
Year ended 31 March 2023
3,686
110
72
3,868
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 81 to 84. Directors’ fees are detailed in note 3 and in the shareholder and statutory information section. The
details of the director’s share purchases are included in the statutory and shareholder information section.
11.13 CASH FLOW RECONCILIATIONS
Restated
Reconciliation of net surplus with cash flows from operating activities
2024
2023
$’000
$’000
Profit for the year *
32,966
32,483
Adjustment for non-cash and other items
Impairment charge on finance receivables, reverse annuity mortgages and other receivables
4,627
3,659
Net loss/(profit) on sale fixed assets
(204)
(290)
Depreciation and amortisation
11,968
11,478
Capitalised reverse annuity mortgage interest
(291)
(287)
Deferred revenues
713
628
Fair value adjustments on assets/liabilities at fair value through profit and loss
(573)
(444)
Net annuity and premium change to policyholder’s accounts *
394
(656)
Non-cash adjustments to finance receivables effective interest rates
-
(3)
Deferred expenses *
765
1,105
Revaluation loss on investment property
-
150
Adjustment for movements in working capital
Net (increase)/decrease receivables and pre-payments
(1,870)
937
Net decrease in inventories
389
5,923
Net (decrease)/increase in payables
(7,033)
12,580
Net decrease in contract liabilities
(265)
(345)
Net increase in finance receivables
(11,117)
(6,814)
Net decrease in reverse annuity mortgages
673
572
Net (increase)/decrease of insurance assets at fair value through profit or loss
(2,293)
3,872
Net withdrawals from life investment contracts
(92)
(304)
Net increase/(decrease) in deferred tax liability *
2,327
(212)
Net (decrease)/ increase in tax payable
(1,413)
2,760
Cash flows from operating activities
29,671
66,792
* Restatements due to the adoption of NZ IFRS 17, 'Insurance Contracts'
75
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
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.
Borrowings
Lease
liabilities
$'000
$'000
Balance as at 31 March 2022 - restated
412,761
28,209
Changes from financing cash flows
(553)
-
Other changes
Netted off finance receivables
(173)
-
Interest paid
(17,653)
(1,548)
Interest expense (excl. accrued interest)
17,653
1,548
Non-cash lease movements
-
(1,089)
(173)
(1,089)
Balance at 31 March 2023
412,588
27,120
Borrowings
Lease
liabilities
$'000
$'000
Balance at 31 March 2023
412,035
27,120
Changes from financing cash flows
13,283
Other changes
Interest paid
(25,954)
(1,483)
Interest expense (excl. accrued interest)
25,954
1,483
Non-cash lease movements
-
(2,196)
-
(2,196)
Balance at 31 March 2024
425,318
24,924
12.
RISK MANAGEMENT
The financial condition and operating results of the Group are affected by key financial and non-financial risks. Financial risks include credit
risk, liquidity risk and market risk and the non-financial risk insurance risk.
Financial instruments by category and insurance assets and liabilities subject to interest rate risk
Restated
Carrying value
2024
2023
$’000
$’000
Financial assets
Financial assets at fair value through profit or loss
Cash and cash equivalents
17,523
11,845
Financial assets at fair value through profit or loss
69,558
66,730
Amortised cost
Trade receivables
7,277
7,800
Finance receivables
430,299
424,621
Other receivables and deferred expenses
10,350
7,739
Reverse annuity mortgages
2,489
2,925
Financial assets at fair value through OCI
Derivative financial instruments
1,774
5,887
Financial assets at fair value through OCI
157
230
539,427
527,777
Insurance assets
Insurance contract assets *
903
964
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
76
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Restated
Carrying value
2024
2023
$’000
$’000
Financial liabilities
Financial liabilities at fair value through profit or loss
Life investment contract liabilities
7,188
7,042
Amortised cost
Other payables
31,443
40,693
Borrowings
425,318
412,035
Lease liabilities
24,924
27,120
488,873
486,890
Insurance liabilities
Insurance contract liabilities *
5,526
5,973
* Restatements due to the adoption of NZ IFRS 17, 'Insurance Contracts'
12.1
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.
To manage the credit risk on trade receivables management assesses the credit quality of trade customers, considering 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 focus management on the attendant risks. The current
risk grading framework consists of four grades reflecting varying degrees of risk of default and the availability of collateral or other credit risk
mitigation. They are as follows:
•
performing – the counterparty has a low risk of default and does not have any past due amounts greater than 30 days;
•
doubtful – amount is > 30 days past due or there has been a significant increase in credit risk since initial recognition;
•
in default - amount is > 90 days past due or evidence indicating the asset is credit impaired; and
•
write-off – there is evidence indicating the debtor is in severe financial difficulty and the Group has no realistic prospect of recovery.
The Group implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for
finance receivables are:
•
mortgages over properties, with the maximum loan to value rate being 75%;
•
mortgages over residential property 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 product and the risk is borne by the policy holder and
there is no significant risk assumed by the Group.
12.2
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 endeavors 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
77
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
exposure to liquidity risk is minimised. The exposure is reviewed on an on-going basis from daily procedures to monthly reporting as part of
the Group's liquidity management process.
The liquidity risk for cash flows payable on the life investment contracts liabilities that are unit linked contracts is managed by holding a pool
of readily tradable investment assets (included in financial assets at fair value through profit or loss) and deposits on call. The liability and
supporting assets have been excluded from the maturity analysis below because there is no contractual or expected maturity date for the life
investment contracts and the readily tradable investment assets offset any liquidity risk. The liquidity risk on other insurance cash flows is
managed by holding designated percentages of insurance reserves in liquid assets such as cash and cash equivalents.
The table below analyses the Group’s financial liabilities and net settled derivative financial instruments into relevant maturity groupings based
on the remaining period at reporting date to contractual maturity date. The amounts disclosed in the tables are the contractual and the expected
undiscounted cash flows. Contractual and expected amounts agree, except for borrowing where expected maturity is the facility maturity date.
0-6
months
7-12
months
13-24
months
25-60
months
60+
months
Total
$’000
$’000
$’000
$’000
$’000
$’000
2024
Contractual undiscounted cash flows:
Other payables
31,443
-
-
-
-
31,443
Borrowings
48,180
25,671
290,169
101,608
-
465,628
Lease liabilities
3,923
3,827
5,847
9,920
5,126
28,643
83,546
29,498
296,016
111,528
5,126
525,714
Expected undiscounted cash flows:
Other payables
31,443
-
-
-
-
31,443
Borrowings
49,685
27,356
48,324
74,453
477,799
677,617
Lease liabilities
3,923
3,827
5,847
9,920
5,126
28,643
85,051
31,183
54,171
84,373
482,925
737,703
2023
Contractual undiscounted cash flows:
Other payables
40,693
-
-
-
-
40,693
Borrowings
13,099
13,099
414,869
-
-
441,067
Lease liabilities
3,905
3,582
6,304
10,852
7,444
32,087
57,697
16,681
421,173
10,852
7,444
513,847
Expected undiscounted cash flows:
Other payables
40,693
-
-
-
-
40,693
Borrowings
13,093
13,093
26,187
78,560
543,021
673,954
Lease liabilities
3,905
3,582
6,304
10,852
7,444
32,087
57,691
16,675
32,491
89,412
550,465
746,734
12.3
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.
12.3.1 Life investment liabilities
The market risk on life investment liabilities 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. The asset allocation for investment linked policies
is decided by the Policy Holder. Refer to note 11.3 for information on the investments in unitised funds that back the life investment liabilities.
12.3.2 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 on the Group's
financial results by affecting the interest earned on these assets and liabilities. Discount rates are used to determine the Group’s life insurance
contacts assets and liabilities not measured under PAA and changes to these rates can impact the value of the insurance contract liabilities.
Interest rates are managed by assessing the demand for funds, new lending, expected debt repayments and maintaining a portfolio of finance
receivables 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 monthly.
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 2024 was $256.9m (2023: $200.0m) and weighted average interest was 3.87% (2023: 2.64%). There was no hedge
ineffectiveness recognised in profit or loss during the period (2023: $nil).
78
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
The table below summarises the sensitivity of the Group’s financial assets and liabilities to interest rate risk.
Carrying
amount
-1% Profit
-1%
Equity
+1%
Profit
+1%
Equity
$’000
$’000
$’000
$’000
$’000
2024
Financial Assets
Cash and cash equivalents
17,523
(175)
(126)
175
126
Financial assets at fair value through profit or loss
69,558
(696)
(501)
696
501
Finance receivables
430,299
(4,303)
(3,098)
4,303
3,098
Derivative financial instruments
1,774
19
(2,568)
(19)
2,511
Reverse annuity mortgages
2,489
(25)
(18)
25
18
Insurance assets
Insurance contract assets
903
(143)
(103)
135
97
Financial Liabilities
Borrowings
425,318
4,253
3,062
(4,253)
(3,062)
Insurance liabilities
Insurance contract liabilities
5,526
445
320
(420)
(303)
Total increase/(decrease)
(625)
(3,032)
642
2,986
2023
Cash and cash equivalents
11,845
(118)
(85)
118
85
Financial assets at fair value through profit or loss
66,730
(667)
(480)
667
480
Finance receivables
424,621
(4,246)
(3,057)
4,246
3,057
Derivative financial instruments
5,887
(47)
(2,595)
33
2,562
Reverse annuity mortgages
2,925
(29)
(21)
29
21
Insurance assets
Insurance contract assets
964
(209)
(151)
198
142
Financial Liabilities
Borrowings
412,035
4,120
2,966
(4,120)
(2,966)
Insurance liabilities
Insurance contract liabilities
5,973
495
356
(468)
(337)
Total increase/(decrease)
(701)
(3,067)
703
3,044
12.3.3 Currency risk
Currency risk is the risk of financial loss to the Group arising from fluctuations in exchange rates between different currencies. The Group has
exposure to the Australian Dollar (‘AUD’) through EC Credit Control (Aust) Pty Limited and Japanese Yen (‘JPY’) from the purchase of motor
vehicle inventory.
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 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.
The Group limits its exposure to JPY by hedging 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.
2024
2023
in NZD'000
NZ$'000
NZ$'000
Net exposure to AUD
671
997
Net exposure to JPY
116
867
In NZD'000
-10%
Profit
-10%
Equity
+10%
Profit
+10%
Equity
2024
AUD
-
75
-
(61)
JPY
(171)
(123)
204
147
2023
AUD
-
111
-
(91)
JPY
206
149
(169)
(178)
79
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
12.4
Insurance risk
Insurance risk is the risk of financial loss in the insurance business due to the uncertainty of future events and claims. The Group manages this
risk through various strategies to ensure the Group can meet its obligations to policyholders while maintaining financial stability and profitability.
Life insurance
Life risk management activities involve managing risks concerned with the pricing, acceptance and management of the mortality, and longevity
risks accepted from policyholders. These risks are controlled using 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.
Non-life insurance
Non-life 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 events, such as epidemics.
Insurance risk is controlled by ensuring underwriting standards adequately identify potential risk, retaining the right to amend premiums on
risk policies where appropriate and purchasing reinsurance. The experience of the Group's life insurance business is reviewed regularly.
The table below illustrates how changes in key assumptions would impact the reported profit and liabilities of the Group:
Effect on life
risk
Effect on life
risk
Effect on
Change in key assumptions ($'000)
contract assets
contract
liabilities
future profit
2024
Increase in expenses of 10%
-
13
(13)
Decrease in expenses of 10%
-
(13)
13
Increase in mortality by 10%
(5)
(27)
22
Decrease in mortality by 10%
5
27
(22)
Increase in cancellation rates by 10%
(12)
(25)
13
Decrease in cancellation rates by 10%
12
25
(13)
2023
Increase in expenses of 10%
-
25
(25)
Decrease in expenses of 10%
-
(25)
25
Increase in mortality by 10%
50
(29)
79
Decrease in mortality by 10%
(49)
29
(78)
Increase in cancellation rates by 10%
6
(21)
27
Decrease in cancellation rates by 10%
(6)
21
(27)
12.5
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
the fair value is calculated using quoted prices in active markets.
Level 2
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).
Level 3
the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
Level 1
Level 2
Level 3
Total
$’000
$’000
$’000
$’000
2024
Fair value assets:
Financial assets at fair value through profit or loss - insurance
-
7,508
-
7,508
Financial assets at fair value through profit or loss - term deposits
61,975
-
-
61,975
Derivative financial instruments
-
1,774
-
1,774
61,975
9,282
-
71,257
80
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
Level 1
Level 2
Level 3
Total
$’000
$’000
$’000
$’000
2023
Fair value assets:
Financial assets at fair value through profit or loss - insurance
-
7,305
-
7,305
Financial assets at fair value through profit or loss - term deposits
59,425
-
-
59,425
Investment property
-
-
5,800
5,800
Derivative financial instruments
-
5,887
-
5,887
59,425
13,192
5,800
78,417
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 12.3.1).
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 12.3.2).
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.
During the year there were no movements of fair value assets or liabilities between levels of the fair value hierarchy.
13.
COMMITMENTS AND CONTINGENT LIABILITIES
Capital Expenditure:
At the reporting date the Group had commitment for $15,457,000 for the purchase of two sites (2023: $4,400,000 capital commitment for the
development of one site).
Future Lease Commitments:
The Group has 2 lease commitments commencing after the balance date (2023: nil).
The Group has other material commitments or contingent liabilities at the reporting date.
14.
EVENTS SUBSEQUENT TO REPORTING DATE
The Group had no reportable events subsequent to reporting date (2023: the Group announced the adoption of a Dividend Reinvestment
Plan on 23 May 2023).
81
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
STATUTORY INFORMATION
Directors’ remuneration and other benefits for the financial year ended 31 March 2024.
Directors’ fees
$
DPL1
$
ARMS2
$
LCC3
$
Grant Baker
190,000
Martin Berry
95,000
Matthew Harrison
95,000
20,000
Lauren Quaintance
95,000
20,000
Alistair Petrie
95,000
10,000
10,000
John Roberts
95,000
20,000
20,000
10,000
Antony Vriens
95,000
40,000
10,000
1.
Directors’ fees for DPL Insurance Limited
2.
Fees for serving on the Audit, Risk Management and Sustainability Committee
3.
Fees for serving on the Lending and Credit Committee
Specific disclosure of interest
Grant Baker disclosed that he had a potential conflict of interest in relation to sponsorship arrangements between Turners and Liam Lawson
Management Limited, due to his directorship of that company.
Dealings in Turners Automotive Group Limited shares by Directors
Date of
transaction
Shares
(disposed)/acquired
Consideration
(received)/ paid $
Nature of relevant interest
Alistair Petrie
16/06/2023
470,000
1,214,500
Note 1
John Roberts
28/07/2023
1,838
6,507
Registered holder and beneficial owner
Alistair Petrie
28/07/2023
195,281
691,295
Note 1
John Roberts
27/10/2023
1,389
5,681
Registered holder and beneficial owner
Alistair Petrie
27/10/2023
147,541
603,443
Note 1
Grant Baker
14 & 15/12/2023
(450,000)
(2,107.514)
Note 2
Matthew Harrison
15/12/20223
(207,000)
(968,760)
Note 3
Alistair Petrie
26/01/2024
137,765
611,677
Note 1
John Roberts
26/01/2024
1,296
5,754
Registered holder and beneficial owner
Martin Berry
1 – 14/03/2024
(95,209)
(449,650)
Registered holder and beneficial owner
Alistair Petrie
27/03/24
134,646
619,372
Note 1
John Roberts
27/03/2024
1,268
5,833
Registered holder and beneficial owner
Martin Berry
15 – 28/03/2024
(126,124)
(583,855)
Registered holder and beneficial owner
Notes:
1.
Controller of shares held by Bartel Holdings Limited. Alistair Petrie is the legal owner of 100% of the shares in Bartel Holdings Limited.
2.
Grant Baker as a joint trustee of the Baker Investment Trust No. 2 holds 20% or more of the shares in Montezemolo Holdings Limited
and has the power to control dealings and, where applicable, voting of the shares held by Montezemolo Holdings Limited.
3.
Beneficial owner of shares held by Harrigens Investments Limited.
Directors’ relevant interest in quoted shares as at 31 March 2024
Shares
Grant Baker
6,000,000
Martin Berry
278,667
Matthew Harrison
4,972,294
Alistair Petrie
11,267,886
John Roberts
105,691
Antony Vriens
7,800
Mr Petrie controls 11,227,875 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.
82
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
STATUTORY INFORMATION
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
The Home Bakery Limited
Montezemolo Holdings Limited
The Good Brand Company Limited
Velocity Capital GP Limited
Baker Consultants Limited
King Honey Limited
Me Today Limited
Stoneleigh Forestry Limited
MTL Securities Limited
Liam Lawson Supporters GP Limited
Liam Lawson Supporters GP Number 2 Limited
Liam Lawson Management Limited
Matthew Harrison
HDK Construction Limited
Harrigens Investments Limited
JHFT Trustees Limited
Northco Housing Group Limited
HDK Property Company Limited
HD Property Company Limited
Farne Investments Limited
MJH Consultants Limited
Harrigens Trustees Limited
Hawke's Bay Legal trustees (Harrison Trusts) Limited
Alistair Petrie
Jellicoe Enterprises Limited
Smiling Cabbage Limited
Puketapu Properties Limited
Bartel Holdings Limited
Darling Group Holdings Limited
26 Seasons Limited
Lauren Quaintance
Crusaders (GP) Limited
Christchurchnz Limited
Christchurchnz Holdings Limited
John Roberts
Global Strategic Services Limited
Centrix Group Limited
Apollo Foods Limited
Anton Vriens
Me Today Limited
Cropt Apparel Limited
Gut Cancer Foundation Limited
Employee remuneration
During the financial year ended 31 March 2024, the number of employees or former employees of the Group, not being directors of Turners
Automotive Group Limited, who received remuneration and other benefits in their capacity as employees, the value of which exceeded
$100,000 for the year was as follows:
Remuneration range
2024
2023
Remuneration range
2024
2023
100,000 - 109,999
42
38
270,000 - 279,999
-
2
110,000 - 119,999
20
16
280,000 - 289,999
1
1
120,000 - 129,999
33
20
290,000 - 299,999
3
2
130,000 - 139,999
19
16
300,000 - 309,999
-
1
140,000 - 149,999
14
10
310,000 – 319,999
-
1
150,000 - 159,999
10
7
330,000 – 339,999
2
-
160,000 - 169,999
11
8
340,000 - 349,999
1
1
170,000 - 179,999
3
3
360,000 – 369,999
2
-
180,000 - 189,999
7
5
370,000 - 379,999
-
1
190,000 - 199,999
5
2
420,000 – 429,999
-
1
200,000 - 209,999
2
1
480,000 - 489,999
-
1
210,000 - 219 999
1
2
500,000 - 509,999
-
1
220,000 - 229,999
-
2
510,000 - 519,999
1
-
230,000 - 239,999
2
-
830,000 - 839,999
1
1
240,000 - 249,999
1
3
1,300,000 – 1,309,999
1
-
250,000 - 259,999
-
1
1,530,000 – 1,539,999
-
1
260,000 – 269,999
2
1
83
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
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 2024
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
2024.
Rank
Name
Shares
% of Issued
shares
1
Bartel Holdings Limited
11,227,875
12.71
2
Custodial Services Limited
7,112,466
8.05
3
Montezemolo Holdings Limited
6,000,000
6.79
4
Harrigens Trustees Limited
4,972,294
5.63
5
National Nominees Limited - NZCSD
3,749,448
4.24
6
BNP Paribas Nominees (NZ) Limited - NZCSD
2,567,257
2.91
7
FNZ Custodians Limited
2,454,656
2.78
8
HSBC Nominees (New Zealand) Limited - NZCSD
2,271,996
2.57
9
Stephen John Sinclair & Jacqueline Margaret Sinclair & Roger Frederick Wallis
2,021,461
2.29
10
Glenn Arthur Duncraft
1,269,565
1.44
11
Accident Compensation Corporation - NZCSD
1,269,218
1.44
12
John Jeffers Harrison
1,253,782
1.42
13
Forsyth Barr Custodians Limited <1-CUSTODY>
1,223,222
1.38
14
JBWere (NZ) Nominees Limited
1,189,850
1.35
15
Paul Anthony Byrnes
1,100,000
1.24
16
MMC - Queen Street Nominees Ltd ACF Salt Funds Management
1,036,730
1.17
17
PT (Booster Investments) Nominees Limited
891,243
1.01
18
TEA Custodians Limited Client Property Trust Account - NZCSD
807,911
0.91
19
Ace Finance Limited
604,966
0.68
20
Cushla Mary Smithies
542,841
0.61
SPREAD OF ORDINARY SHAREHOLDERS AS AT 31 MAY 2024
Range
Total Holders
Shares
% of Issued
capital
1 – 999
1,642
719,018
0.81
1,000 - 1,999
772
1,040,201
1.18
2,000 - 4,999
928
2,828,445
3.20
5,000 - 9,999
504
3,335,702
3.78
10,000 - 49,999
673
13,109,270
14.84
50,000 - 99,999
68
4,432,579
5.02
100,000 - 499,999
47
8,801,939
9.96
100,000 - 499,999
5
3,366,715
3.81
1,000,000 plus
16
50,719,820
57.40
4,655
88,353,689
100.00
84
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
STATUTORY INFORMATION
DOMICILE OF ORDINARY SHAREHOLDERS AS AT 31 MAY 2024
Shareholders
number
%
Shares number
%
New Zealand
4,462
95.85
84,830,679
96.01
Australia
102
2.20
3,100,030
3.51
Other
91
1.95
422,980
0.48
Total
4,655
100.00
88,353,689
100.00
SUBSTANTIAL PRODUCT HOLDERS
The following information is given under section 293 of the Financial Markets Conduct Act 2013.
As at 31 March 2024 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.
Range
Shares
% of Issued
capital
Bartel Holdings Limited
11,227,875
12.71
Montezemolo Holdings Limited
6,000,000
6.79
Harrigens Trustees Limited
4,972,294
5.63
The total number of quoted voting products of the company on issue at 31 March 2024 was 88,353,689 paid ordinary shares.
85
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT
FY24 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 2024 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 three days from 31 March 2023 to 3
April 2023, 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. Independent director, Martin Berry,
stepped down from the Board from 31 March 2024. At the current time, there are an equal number of independent and non-
independent directors. Turners remains in compliance with the NZX Listing Rules regarding Board composition, in that there
are at least two independent directors.
•
Recommendation 2.9: An issuer should have an independent chair of the Board. The chair of the Board is Grant Baker, who
has been deemed to be a non-independent Director due to his 6.79% shareholding in Turners. This is the only reason the
Board considers Grant to be non-independent, having considered 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 Chief Executive
Officer (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 27 June 2024 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/corporate-governance/
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 July 2023.
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. 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 2024 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
86
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
Restricted Persons including Directors and certain employees. Details of Directors’ share dealings are on page 81 of the 2024
Annual Report.
No donations were made to any political parties in FY24.
PRINCIPLE 2 – BOARD COMPOSITION AND PERFORMANCE
To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and
perspectives.
The Turner’ ‘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;
•
procedures to ensure that the Board meets regularly, conducts its meetings in an efficient and effective manner; and
•
procedures to ensure 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 Chair 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 23 August 2023, John Roberts and Matthew Harrison were re-elected
as Directors and Lauren Quaintance was elected as a director.
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 with all Directors, ensure that generally Directors will incur no monetary loss because 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.
87
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
Board composition and Director information
Information on Board members attendance at Board meetings and independence, is disclosed annually in the Turners’ Annual
Report.
For the FY24 year, the Board comprised of seven Directors, four independent Directors and three non-executive Directors
including a non-executive Chair.
•
Grant Baker, non-executive Chair: Appointed 10 September 2009.
•
Martin Berry, independent Director: Appointed 17 August 2018; resigned 31 March 2024.
•
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, independent Director: Appointed 3 April 2023.
Information on each Director is available on the Turners’ website https://www.turnersautogroup.co.nz/about/
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
⬤⬤⬤
◯◯◯
Climate
⬤⬤⬤
◯◯◯
Director independence
For the FY24 year the majority of Turners’ Board were independent Directors. 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 2024 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
feels that these investments further align directors’ interests with those of shareholders. Arrangements are in place to ensure
possible conflicts of interest are mitigated.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
Independent director, Martin Berry, stepped down from the Board from 31 March 2024. At the current time, there are an equal
number of independent and non-independent directors on the Board. Turners is in compliance with the NZX Listing Rules
regarding Board composition, in that there are at least two independent 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.
Director’s interests are disclosed on pages 81 to 84 of the 2024 Annual Report.
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 FY24. In total, there were 12 Board meetings; 10 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
12
10
5
Grant Baker
12
Martin Berry
7
Matthew Harrison
12
5
Alistair Petrie
12
9
4
John Roberts
12
10
5
Antony Vriens
12
10
Lauren Quaintance
10
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.
89
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
As at 31 March 2024, the gender balance of Turners Directors and people was as follows:
31 March 2024
31 March 2023
Female
Male
Gender-
diverse
Female
Male
Gender-
diverse
Directors
1
6
-
-
6
-
Emerging Director
-
-
-
1
-
-
Senior Leadership
7
33
-
7
35
-
Management
48
52
38
47
Other Employees
274
304
223
270
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
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. A self-evaluation was conducted by the Chair in FY24.
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 is 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.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
Members as at 31 March 2024 were John Roberts (Chair), Antony Vriens and Alistair Petrie. Their qualifications and experience
can be found on the Turners; website https://www.turnersautogroup.co.nz/about/ .
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 2024 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 if 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.
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 is reporting against
the
mandatory
climate-related
disclosures
regime
for
the
first
time
in
FY24.
This
will
be
available
on
https://www.turnersautogroup.co.nz/climate-related-disclosure/ by 31 July 2024. 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.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
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 2024 financial year are detailed on pages 74 and 81
of the Annual Report.
The Remuneration Policy is included in section 10 of Turners Corporate Governance Code. Turners does not have a remuneration
committee and matters pertaining to remuneration are dealt with by the full Board.
Director Remuneration
The total remuneration pool available for Directors is fixed by shareholders. The Board determines the level of remuneration paid
to Directors from the approved collective pool. Directors also receive reimbursement for reasonable travelling, accommodation
and other expenses incurred while performing their duties. The annual fee pool limit is $920,000 and was approved by
shareholders at the annual meeting in August 2023. 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, most 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 81 of 2024 Annual Report.
Board Remuneration
•
Chair $190,000
•
Non-executive Director $95,000
•
Chair of DPL Insurance Limited $40,000
•
Directors of DPL Insurance $20,000
•
Committee Chair $20,000
•
Committee Member $10,000
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 Chair of the DPL Insurance Board and is also a non-executive Director of Turners.
Details of individual Directors’ remuneration are detailed on page 81 of the 2024 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. The short-term bonus is measured against a profit incentive target which is based on an annual profit
budget for the relevant business including a stretch target. These targets are approved by the board.
Details of executives’ remuneration and entitlements are detailed under Key Management Compensation on page 74 and
Remuneration of Employees information on page 82 of the 2024 Annual Report. Details of the Group’s Share Option Plan are
detailed on page 66 and 67 of the 2024 Annual Report.
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.
92
TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
The CEO’s remuneration can be summarised as follows:
Salary
Benefits
Subtotal
Pay for Performance
Total
Remuneration
Cash STI
Share LTI
FY24
746,724
66,554
813,278
390,0001
207,5002
1,410,778
FY23
722,576
64,435
787,011
350,0003
432,5002
1,569,511
1.
STI for FY24, paid in FY25, 109% of target achieved.
2.
Taxable value of 250,000 and 125,000 options, with an exercise price of $2.00, exercised in FY23 and FY24 respectively.
3.
3.STI for FY23, paid in FY24, 105% of target achieved.
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
level of 95% of the incentive target, 50% of the bonus is paid, increasing to a maximum of 150% at the achievement level of 105%
or more.
Long term incentive (Group Share Option Plan): In July 2020, the CEO was granted 1,000,000 options at an exercise price of
$2.00 under the Group’s Share Option Plan. The grant is split into 4 tranches of 250,000 options with the following vesting dates:
1 June 2021, 1 June 2022, 1 June 2023 and 1 June 2024. Each tranche expires two years after the vesting date. Options are
granted at the discretion of the Board and vesting is dependent on being employed by Turners on vesting date.
PRINCIPLE 6 – RISK MANAGEMENT
Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The
Board should regularly verify that the issuer has appropriate processes that identify and manage potential and material
risks.
Risk management framework
Turners is committed to proactively and consistently managing risk. While this is the responsibility of the entire Board, the ARMS
Committee assists the Board and provides additional oversight in regard to the risk management framework and monitoring
compliance with that framework.
The Board’s approach to risk management is incorporated in the ARMS Committee Charter which is included as Appendix B in
Turners Corporate Governance Code. The Charter ensures that opportunities are pursued in an informed way and aligned with
the Board’s appetite for risk.
The Board delegates day to day management of the risk to the CEO. The executive team and senior management are required
to regularly identify the major risks affecting the business and develop structures, practices and processes to manage and monitor
these risks. Key risks and challenges, identified by the executive team and management, are included in the CEO’s monthly
board report. Ultimately, the responsibility for risk management and internal controls lies with the Board.
Key financial risks are set out on pages 75 to 80 of the 2024 Annual Report. More information on Climate related risks is included
in Turners’ Climate Related Disclosures which will published at https://www.turnersautogroup.co.nz/climate-related-disclosure/
by 31 July 2024
Turners maintains insurance policies that it considers adequate to meet its insurable risks.
Health and Safety
The Board recognises that effective management of health and safety is essential for the operation of a successful business, and
its intent is to prevent harm and promote wellbeing for employees, contractors and customers.
The Board is responsible for ensuring that the systems used to identify and manage health and safety risks are fit for purpose,
being effectively implemented, regularly reviewed and continuously improved.
Turners has a Health and Safety Policy which is monitored by a Health and Safety Manager. Health and Safety reports for all
business units are included in the compliance section of Board papers.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
PRINCIPLE 7 – AUDITORS
The Board should ensure the quality and independence of the external audit process.
The Board’s approach to the appointment and oversight of the external auditor is outlined in Turners’ External Audit Policy (section
9 of the Turners’ Corporate Governance Code) and ensures that audit independence is maintained, both in fact and appearance,
such that Turners external financial reporting is viewed as being highly reliable and credible.
The ARMS Committee provides additional oversight of the external auditor, reviews the quality and cost of the audit undertaken
by the Turners’ external auditors and provides a formal channel of communication between the Board, senior management and
external auditors. The Committee also assesses the auditor’s independence on an annual basis. Procedures are detailed in the
ARMS Committee Charter (Appendix B of the Turners Corporate Governance Code).
For the financial year ended 31 March 2024, Baker Tilly Staples Rodway was the external auditor for Turners Automotive Group
Limited. Baker Tilly Staples Rodway were first appointed as external auditor in 1999 and were automatically re-appointed under
the Companies Act 1993 at the 2023 Annual Shareholder Meeting. Turners requires the lead audit partner to be rotated at least
every five years, with the last audit partner rotation in the 2023 calendar year.
All audit work at Turners is fully separated from non-audit services, to ensure that appropriate independence is maintained. The
amount of fees paid to Baker Tilly Staples Rodway for audit and other services is identified on page 53 of the 2024 Annual Report.
Baker Tilly Staples Rodway has provided the Turners’ Board with written confirmation that, in their view, they were able to operate
independently during the year.
Baker Tilly Staples Rodway attends the Annual Shareholder Meeting, and the lead audit partner is available to answer questions
from shareholders at that meeting.
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 2023, 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
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
CORPORATE GOVERNANCE REPORT cont.
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 2023 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 issued 1,258,137 shares via the Dividend Reinvestment Plan during the period.
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
DIRECTORY
CORPORATE DIRECTORY
DIRECTORS
Grant Baker
Chairman
Appointed 10 September 2009
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
Independent Director
Appointed 3 April 2023
SHAREHOLDER INFORMATION
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.
Financial calendar
First quarterly dividend
October
Annual meeting
September
Half year results announced
November
Second quarterly dividend
January
Third quarterly dividend
April
End of financial year
31 March
Annual results announced
May
Annual report
June
Final dividend
July
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
AUDITOR
Baker Tilly Staples Rodway
BANKERS
Bank of New Zealand, ASB Bank and Westpac Banking
Corporation
LAWYERS
Chapman Tripp
SHARE REGISTER
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna, Auckland
Private Bag 92119, Auckland 1142, New Zealand
Telephone: +64 9 488 8777
ENQUIRIES
Shareholders with enquiries about transactions, change of address or dividend payments should contact Computershare Investor Services
on +64 9 488 8777. Other questions should be directed to the Company at the registered address.
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 on
the ASX operated by ASX Limited.
This annual report is dated 27 June 2024 and is signed on behalf of the board by:
J.A. Roberts
A, Vriens
Director
Director
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
NOTES
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TURNERS AUTOMOTIVE GROUP ANNUAL REPORT 2024
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