- AHG Limited

Annual Report 2007
Contents
1
Who is AHG and What Do We Do?
2
Corporate Financial Highlights 6
Financial Highlights
8
Chairman’s Message
10
Managing Director’s Review
12
Finance Director’s Review
14
AHG Growth Initiatives
18
Safety, Health and Environment
22
AHG Community Involvement
24
AHG’s Industry Excellence
26
AHG Employees
30
Statement of Corporate Governance Practices
32
Annual Financial Report - 39
Directors’ Report
41
Auditor’s Independence Declaration
59
Income Statements
60
Balance Sheets
61
Statements of Changes in Equity
62
Cash Flow Statements
63
Notes to the Financial Statements
64
Directors’ Declaration
118
CEO/CFO Declaration
119
Independent Audit Report
120
Shareholder and Optionholder Information
122
Operations Contacts
124
Corporate Directory
125
2
Who is AHG and What Do We Do?
...
3
Automotive Holdings Group Limited (AHG or Group) is a leading automotive retailing and
logistics group. The Group was founded in 1952 and is now Australia’s largest automotive
retailer with a growing presence in New Zealand. AHG has built its logistics division over
30 years and now has operations in every mainland state of Australia.
Automotive Retailing
AHG has 100 high profile passenger and
commercial dealership franchise sites in
Australia and New Zealand and represents
the following manufacturers:
Passenger
Bentley, Chrysler, Dodge, Ford, Holden,
HSV, Hyundai, Jeep, Kia, Lotus, Mazda*,
Mitsubishi*, Nissan*, Peugeot, Porsche,
Saab, Subaru*, Suzuki, Toyota*,
Volkswagen*.
* AHG represents 9 of the top 10 selling
manufacturers in Australia. The top 10 sells
85% of all new vehicles. Source: VFACTS
ACT Report August 2007
Trucks and Commercial Vehicles
Fuso, Hino, Iveco, International,
Volkswagen Commercial, UD Nissan.
The AHG automotive retailing business
model comprises the development of
multiple income streams at each dealership
which includes the sales of new and used
vehicles, and related finance, insurance,
service and parts.
The integrated nature of the revenue
streams, the spread of major brands and
the geographical reach of its dealerships
provides AHG with a level of protection
against fluctuations in consumer preference,
sentiment and economic forces.
AHG continues to assess opportunities for
beach head businesses in all major states
of Australia, identify bolt on acquisitions
and establish greenfield sites.
It also assists AHG to capitalise on the
integrated model whereby, over time,
dealerships can generate revenue from
customers in these five product and service
areas. Typically, customer margins should
improve with time as customers seek
out products and services beyond the
vehicle purchase.
AHG operates five businesses in warehousing,
transport and distribution:
AHG’s portfolio of brands and vehicle types
also provides the Group with an inherent
hedge against fluctuations in any single
market segment or location, and shifts
in consumer sentiment that can quickly
emerge in automotive retailing.
AHG’s automotive retail operation has
experienced significant growth over the last
12 months, with beach head businesses
acquired in New South Wales and Queensland.
Logistics
AMCAP - warehousing and distribution
business dealing in automotive parts
and associated products, principally in
Western Australia;
RAND TRANSPORT - national refrigerated
transport, cold storage and distribution
services provider;
KTM SPORTMOTORCYCLES - exclusive
Australian and New Zealand distributor
of the prestigious Austrian off-road and
on-road motorcycle;
VMOTO SCOOTERS - exclusive Australian
distribution of Vmoto branded scooters
and related merchandise; and
VSE - provider of vehicle storage and
engineering services based in Victoria.
AUTOMOTIVE
RAND
AMCAP
VSE
KTM
4
Logistics
AMCAP
AMCAP has been a distributor of
automotive and truck parts in Western
Australia for over 30 years. It is one of
the state’s leading warehousing and
distribution businesses and operates
from a modern purpose-built facility in
Welshpool, Western Australia. AMCAP
is equipped with state-of-the-art,
radio frequency picking equipment,
computerised materials handling,
storage and retrieval systems. AMCAP
provides third and fourth party logistics
services for manufacturers.
Third Party
Logistics Services
AMCAP provides supply chain services
for goods owned by third parties. It holds
contracts in Western Australia for Subaru
and Hyundai.
Fourth Party
Logistics Services
Under fourth party logistics, AMCAP and
Group companies owns the stock and
provides marketing services in addition
to warehousing, IT and logistics services.
Manufacturers’ products handled include
Holden, Mitsubishi, Iveco, Fuso, Navistar
(ITEC), PPG, HSV, ACDelco, 3M and
Bridgestone.
AMCAP’s warehouse is being expanded
by 3,800m2 to cater for an increased
demand in its range of products and to
offer existing and new clients purpose-built
facilities, including sales and administration
support for supplier representation, large
item and dangerous goods storage and
a comprehensive freight network. On
completion of the expansion, AMCAP’s
warehouse will cover an area of more than
16,400m2 on a site spanning 43,000m2.
AMCAP
VSE
AHG has recently established a new business in vehicle storage
and engineering in Dandenong, Victoria. VSE provides truck storage
and distribution logistics as well as an engineering division providing
modification services such as chassis modification, lazy axle, turntable
and accessory fitment. Although a new business, its growth has already
lead to a requirement for it to lease an additional 30,000m2 at the
Dandenong Industrial Estate providing storage for up to 400 trucks.
VSE
Vmoto Scooters
A recent addition to the Group’s logistics
division, AHG now distributes Vmoto
scooters and all terrain vehicles through
the existing Vmoto retail network
around Australia. AHG has established
a dedicated operation within its logistics
division to manage the new distribution
business and this division should be a
sound contributor to the logistics
divisions’ earnings in the years ahead.
AHG will apply its logistics systems,
experience in distribution and draw
on its established motorcycle dealer
network to build the Vmoto brand
in Australia.
...
KTM
KTM Sportmotorcycles
KTM is a prestigious Austrian off-road and on-road motorcycle manufacturer founded
in 1934 that has enjoyed considerable success in motor sport. The bikes have a distinctive
branding strategy that resonates well in the Australian and New Zealand markets. Based
in Welshpool, Western Australia and now Auckland, New Zealand*, AHG’s KTM distribution
centres service 80 dealers in both countries. Since its appointment as exclusive importer
and distributor in Australia 13 years ago, AHG has driven significant sales growth. Strong
growth is now anticipated in the New Zealand market.
*74% owned by AHG, 26% owned by KTM-Sportmotorcycle AG
Rand Transport
Rand Transport provides refrigerated
transport, cold storage and distribution
services across all mainland state
capitals. In March 2007 AHG took
possession of the 24,000 pallet cold
storage facility at Homebush, New
South Wales. With a strong demand for
cold storage and refrigerated transport
services nationally, this cold storage
facility provides a major growth
opportunity for the Group on the
eastern seaboard.
RAND
Rand Transport has a long term and
stable customer base which includes a
number of major Australian fast moving
consumer goods manufacturers.
VMOTO
It is a significant provider of refrigerated
freight services on both the east/west
and north/south freight corridors. Its
GPS and satellite-controlled thermal
tracking system ensures that cold
chain integrity is constantly monitored
irrespective of where Rand Transport’s
equipment is located nationally in
the pickup, transportation and
delivery process.
Rand Transport operates three main
services, Rand National Transport,
Rand Cold Storage and Rand
Refrigerated Distribution.
Rand National Transport
Rand National Transport operates
a fleet of purpose-built temperature
controlled refrigerated rail containers
and road pans that provide line
haul clients with the crucial cold
chain integrity required to transport
perishable products effectively to its
customers at constant temperatures.
Rand Cold Storage
Rand Cold Storage provides short and
long term chiller and frozen storage
at all of its facilities across Australia
in addition to cross-dock operations
servicing the requirements of the line
haul transport operations.
Rand Refrigerated
Distribution
Rand Refrigerated Distribution
provides local refrigerated distribution
from Rand cold stores to customers.
It has the capacity to deliver all types
of refrigerated products as well as
dry goods from storage to major cold
stores and supermarket chains in
major metropolitan areas in Australia.
5
Corporate Financial Highlights
6
NEW ZEALAND’S JOHN ANDREW – PROPOSED NEW FACILITIES
KTM
ZUPPS HOLDEN
MCGRATH MAZDA
PRESTIGE HINO
...
First move into New Zealand
Rand Transport Cold Storage
KTM New Zealand
The September 2006 acquisition of Ford
and Mazda dealerships in Auckland marked
AHG’s first move into automotive retailing
in New Zealand. A major redevelopment/
refurbishment of the sites is underway.
Rand Transport opened its new 24,000 pallet
cold storage facility at Homebush in Sydney
in March 2007, taking the business to a new
level in the cold storage and distribution
market on the eastern seaboard.
See artists impression on page 6.
Prestige Hino
FY2007 saw AHG commence distribution
of KTM Sportmotorcycles in New Zealand,
building on the success of the Australian
KTM distribution business and the
relationship with the Austrian prestige
motorcycle manufacturer.
McGrath Motor Group
breakthrough acquisition
The purpose built Hino truck dealership
facility at Dandenong, Victoria was opened
in February 2007. The facility provides
AHG with a springboard into one of the
largest truck markets in Australia with
opportunities for solid growth in truck
sales, servicing and related activities.
AHG made its first major acquisition since
listing on ASX with the December 2006
purchase of the New South Wales-based
McGrath Motor Group. The acquisition
costing $70.3 million, added 15 motor
vehicle dealerships including, by volume,
7 of the top 10 motor vehicle manufacturers,
to the AHG network and consolidated the
Group as Australia’s largest automotive
retailer. Lansvale Holden, the first New
South Wales bolt-on acquisition, was
purchased in March 2007 adding to the
McGrath Motor Group operation.
Zupps Queensland
In May 2007 AHG made its single largest
growth move to date with the $123.6 million
acquisition in May 2007 of the Queensland
based Zupps Motor Group. The acquisition
further consolidated AHG’s position as
Australia’s largest automotive retailer and
provided the Group with a second eastern
seaboard beach head from which to build
further growth. At the time of the acquisition
the Zupps Motor Group represented 11
manufacturers including 4 of the top 10
brands. Since the acquisition the Hyundai
and Skoda brands have been added to the
list of manufacturers represented.
Growth in greenfields
Rockingham Mitsubishi, located in Perth’s
burgeoning southern corridor, is a new
greenfield site developed by AHG through
FY2007. AHG continues to build critical
mass with the recent announcement of
the development of four new automotive
retailing dealerships in Western Australia
and Queensland. The new dealerships,
Volkswagen and Kia in Western Australia
and Subaru and Hyundai in Queensland,
are part of AHG’s ongoing growth strategy
of building additional retailing capacity
around its core operations.
RAND TRANSPORT
ROCKINGHAM MITSUBISHI
7
8
Financial Highlights
...
Strong performances from Group operations, favourable trading conditions and the impact
of major acquisitions combined to deliver another year of strong revenue and earnings
growth for AHG.
30 June 2007
30 June 2006
Increase
$ million
$ million
%
Revenue
2,312.4
1,616.4
43.0
75.9
53.6
41.6
3.3
3.3
-
EBIT
67.3
47.2
42.6
NPBT
48.3
33.5
44.2
NPAT – attributable to shareholders
30.2
20.2
49.5
Basic EPS (cents per share)
20.0
16.6
20.5
Dividend per share (cents per share)
12.5
10.0
25.0
Total Assets
947.4
495.5
91.0
Shareholders’ Equity
292.5
137.7
112.0
EBITDA
EBITDA Margin (%)
9
10
Chairman’s Message
...
To our Shareholders,
On behalf of the Board it is my pleasure to present the AHG 2007 annual report. FY2007 was another
very strong year of growth for AHG with very positive contributions from existing business units,
market conditions remaining buoyant, new acquisitions boosting results and the Group beginning
to benefit from the efficiencies flowing from the greater scale of the overall business.
Group net profit after tax rose by 49.3%
to $30.2 million, Group revenue rose 43%
to $2.31 billion and earnings per share
increased by 20.5% to 20 cents. The profit
result was particularly pleasing given the
high level of corporate activity during the
year, including two major acquisitions in
New South Wales with McGrath Motor Group
and Queensland with Zupps Motor Group.
Dividend and Shareholder Return
The Directors have declared a fully franked
7.5 cents final dividend, lifting the full year
fully franked distribution to 12.5 cents from
10 cents last year. The total dividends for
the year represents 70% of net profit after
tax. Combined with an increase in market
capitalisation of approximately 311% to
$832 million at 30 June 2007, the total
shareholder return for FY2007 was 147%.*
Operational Highlights
Automotive retailing continued to be the
engine room of the Group, contributing
$2.06 billion in revenue and a pre-tax profit
of $37.2 million. Through a period of strong
growth, including the integration of two
major acquisitions, the automotive retailing
division’s EBITDA margin was 3.1%.
AHG believes there are growth opportunities
in automotive retailing, both through organic
growth in the existing expanded network
and through new acquisitions that will
complement our operations in Western
Australia, Queensland and New South
Wales. The logistics division also performed
well in FY2007, contributing revenue of
$247.9 million (up 22.7%) and a pre-tax
profit of $7.2 million.
FY2007 was a year of major investment in
logistics infrastructure, with the completion
of Rand Transport’s new 24,000 pallet cold
storage facility at Homebush in Sydney
together with the commitment to a major
expansion of the AMCAP warehouse facility
in WA to cater for growing demand for parts
and associated products distribution. We are
confident that in 2008 these initiatives will
generate solid growth for the logistics division.
Strategic Highlights
AHG’s greatest achievement in FY2007
has been the generation of growth in our
traditional businesses whilst successfully
integrating new acquisitions.
The Group has a proven model for growth
initiatives of acquiring businesses that are
complementary to AHG’s existing operations,
are earnings accretive and will create long
term value for shareholders. Increased size
has started to deliver scale and efficiency
benefits which position AHG well for strong
earnings growth in 2008 and beyond.
Directors and
Corporate Governance
I express my thanks and pay tribute to the
contribution of my fellow Board members to
what was a very busy year, with frequent calls
on their expertise and wisdom through the
many transactions and growth initiatives.
AHG subscribes to best practice in
corporate governance principles with the
main objective being a functional board that
brings corporate insight and commercial
common sense to its deliberations. The
Board continues to enhance its corporate
governance policies and procedures to
ensure it maintains high standards.
In this regard, AHG is very well served by
its board members.
During the earlier part of the year Vern
Wheatley advised the Board of his intention
not to stand for re-election at the November
2006 annual general meeting. Vern has
made an immense contribution to the Board
with his skills and in depth knowledge of
AHG’s operations and his service has been
greatly appreciated.
I welcome David Griffiths to the Board. David
brings to AHG more than 15 years experience
in equity capital markets, mergers and
acquisitions and the corporate advisory
sector. He makes a great addition to our
team and we are delighted to have a
person of his calibre on board.
Employees
The ongoing success of AHG is based on
shareholder focus, financial disciplines and
a good reputation, all of which are reliant
on the efforts and dedication of employees.
The Board is appreciative of the exceptional
contribution of management and staff in
achieving this year’s result and in creating
a platform for continued growth in to
the future.
Looking forward to 2008 and beyond, AHG
will continue to implement its growth plans in
particular building its existing businesses and
making acquisitions where they make sense.
Our New South Wales operations provide
an opportunity for AHG to grow from a
small base in the largest new vehicle
market in Australia.
Further, we will seek to leverage our strong
operations in Australia’s powerhouse
economies of Western Australia and
Queensland and pursue opportunities
in line with our growth initiatives.
We thank you our shareholders, for your
support and we look forward to delivering
further value in the time ahead.
Robert Branchi, Chairman
*Source: Link Market Services
11
12
Managing Director’s Review
...
A backdrop to the year that was
The growth strategy put in place by AHG at the time of listing on ASX paid off in FY2007,
allowing the Group to complete two major acquisitions further consolidating the Group’s
position as Australia’s largest automotive retailer.
This strategy is built around the key goals of
achieving profitable growth and leveraging
critical mass in business operations to
capture scale and efficiency benefits.
AHG has now gained profile and scale that
positions the Group for a potential extended
period of growth in the years ahead. Part
of AHG’s growth strategy is focussed on
finding new businesses that can benefit from
the AHG business model, are synergistic with
existing Group operations, and which are
earnings accretive.
Critical to the success of the growth strategy
to date has been the ability of AHG to quickly
and successfully integrate the new businesses
and with the acquisitions of McGrath Motor
Group in New South Wales and Zupps
Motor Group in Queensland during FY2007,
I am pleased to report that integration is
proceeding as planned for both acquisitions
and our focus will be on ensuring we
maximise the synergy and scale benefits
that have already started to flow strongly.
The year that was
A 49.5% increase in net profit is testament
to the strength of the growth strategy and
supports our belief in the opportunities
that lie ahead.
Through the acquisitions of McGrath Motor
Group and Zupps Motor Group, AHG has
acquired two talented and experienced
management groups that now make groupwide contributions and add to the depth
and breadth of our management team. The
year also saw the opening of the Prestige
Hino truck dealership facility at Dandenong,
providing AHG with an opportunity for further
growth in the Victorian market.
2007 saw an exciting development for
AHG’s motorcycle distribution business with
our appointment of the exclusive distribution
for the prestige KTM Sportmotorcycles in
New Zealand1.
AHG enjoys a strong relationship with the
Austrian manufacturer and is looking for
a repeat of the success of the Australian
KTM Sportmotorcycles distribution business
which has been owned and managed by AHG
since 1994. KTM New Zealand is an example
of the product and geographic diversity that
sits behind AHG’s operations.
AHG expanded its presence in New Zealand
with the acquisition of two Ford and two
Mazda dealerships in central and northern
Auckland. These facilities service two of the
three prime market areas in Auckland and
cover approximately 70% of the Auckland
metropolitan market.
The Group also established a greenfield
operation in Rockingham and announced
a number of proposed greenfield operations
that will form part of the Group’s expanded
network. The acquisitions and greenfield
developments consolidate AHG’s position
at the head of the Australian market with
annual revenues in excess of $2.3 billion.
The Year Ahead
With Australian new vehicle sales tipped
to exceed 1 million units2 for the second
consecutive year and strong growth
continuing in new vehicle sales in our key
markets of Western Australia, Queensland
and New South Wales, we believe there is
potential for further significant growth for
the Group. FY2008 will also see AHG capture
scale and efficiency benefits from
its expanded business network.
McGrath Motor Group and Zupps Motor
Group are very good businesses with scale
and size in their own right and it gives AHG
the opportunity to acquire smaller bolt on
businesses as has already been achieved
with Lansvale Holden being added to the
McGrath Motor Group in FY2007.
Future greenfield dealerships sites and bolt
on acquisitions will add a further layer of
growth and we expect a number of such
developments this year. The Group remains a
natural aggregator in the automotive retailing
sector and we continue to assess a range of
acquisition opportunities placed before us.
AHG is also planning for strong growth
in logistics, including an increase in the
Rand Transport business on the back of
the new 24,000 pallet cold storage facility
at Homebush in Sydney. For some years,
Rand has been the dominant supplier of
refrigerated transport services on the
east-west corridor between WA and the
eastern seaboard.
Rand is expected to emerge as a
substantial operator in the north-south
corridor between Brisbane-SydneyMelbourne and the new Homebush facility
provides infrastructure that allows Rand
to make a major leap in scale and tap into
the growing demand for cold storage and
refrigerated transport nationally.
Crucially, AHG will continue to place major
importance on the successful integration
of new businesses. Our acquisition and
integration performance has been well
received by the investment market and we
remain committed to pursuing only growth
opportunities that are value accretive for
shareholders.
AHG has been fortunate in recent times
to have exposure to booming economies
such as Western Australia and Queensland.
We also anticipate continued favourable
economic conditions in all of our major
markets and have invested heavily in the
businesses and structures that should
support revenue and earnings growth
in the years ahead.
The AHG model has been constructed for
long term sustainable growth. Over 2008
and beyond we will work hard to deliver
that for our shareholders.
Bronte Howson, Managing Director
174% owned by AHG, 26% owned by
KTM-Sportmotorcycle AG
2Source – VFACTS
13
14
Finance Director’s Review
...
AHG reported record growth across its operations in 2007, with improvements in most key
performance indicators and a further strong performance anticipated for 2008.
$ million
Revenue
2500
35
30
2000
25
1500
20
1000
15
10
500
5
0
NPAT - Attributable to Shareholders
$ million
0
2006 2007
Full Year 30 June
2006 2007
Full Year 30 June
Revenue
Net Profit After Tax
The Group revenue increase from the previous financial year of
43% to $2.3 billion was driven substantially by new acquisitions
but existing operations also achieved healthy increases in activity,
in both automotive retailing and logistics.
The 49.3% increase in net profit from the previous financial year
to $30.2 million was also driven by strong trading conditions in
the markets AHG operates in, and contributions from the Group’s
growth initiatives.
$ million
EBITDA
80
Basic EPS
25
20
60
15
40
10
20
5
0
0
Cents/
Share
2006 2007
Full Year 30 June
2006 2007
Full Year 30 June
EBITDA
Earnings Per Share
EBITDA was 41.6% higher than for the previous financial year at
$75.9 million and EBIT rose 42.6% to $67.3 million. The EBITDA
margin in automotive retailing improved slightly from 3.05% to
3.10%. Overall EBITDA margin was steady at 3.28%, with a slight
fall in EBITDA margin in logistics (4.79% v. 5.14%) being affected
by start up costs associated with the investment in Rand Transport’s
new cold storage facility at Homebush.
Earnings per share grew 20.5% from the previous financial year
to 20 cents despite a substantial increase in the issued capital
towards the end of the financial year as a result of the issue of
AHG shares as part consideration for the new acquisitions.
15
16
...
$ million
Automotive Retailing Result
40
30
20
10
0
2006 2007
Full Year 30 June
Automotive
In divisional terms, automotive retailing delivered a pre-tax
result of $37.2 million (up 36.8% from the previous financial year)
on revenue of $2.06 billion (up 46%). Both McGrath Motor Group
and Zupps Motor Group made contributions to the Group during
FY2007 slightly ahead of expectations.
Dividend
Cents
14
The restructure also included the planned divestment of three Ford
dealerships owned by PAA.
12
10
8
6
4
2
0
McGrath Motor Group, which was acquired on 1 December
2006, contributed revenue of $361.1 million and pre-tax profit of
$7.2 million. Zupps Motor Group was acquired on 2 May 2007 and
contributed $125.1 million in revenue and pre-tax profit of $3.3
million. During the year, AHG completed the planned restructure
of the businesses within the Perth Auto Alliance (‘PAA’) with
the Group acquiring 100% ownership through purchasing the
remaining 39.7% of the company from Ford International
Capital Corporation.
2006 2007
Full Year 30 June
Dividend Growth
Shareholders were rewarded with a 25% increase in dividend
to 12.5 cents fully franked.
AHG also received its first contribution from Auckland Auto
Collection Limited, owner of Ford and Mazda dealerships in
Auckland, which the Company acquired on 1 October 2006.
Auckland Auto Collection contributed $125 million in revenue and
a pre-tax profit of $111,000 during the eight months under AHG
ownership. At acquisition, substantial profit was not expected from
these dealerships and this was reflected in the purchase price.
This New Zealand business was acquired on the basis of future
opportunity through redevelopment of the dealership sites and
re-engineering of their business operations through implementation
of AHG’s automotive retailing model.
...
Logistics
Disciplined Capital Management
Pre Tax Result
During the year and in light of the acquisition strategy, the Board
reviewed the capital structure of AHG, ensuring the maintenance
of a strong balance sheet and an appropriate balance between
debt to equity. As a minimum, the Board looks to three times
interest cover when assessing acquisitions and the Group’s capital
structure and the issuing of additional shares during the year was
undertaken with this in mind.
$ million Logistics Results
8
7
6
5
4
3
2
1
0
2006 2007
Full Year 30 June
Logistics contributed a pre-tax profit of $7.2 million (up 14.3%
on the previous financial year) on revenue of $247.9 million
(up 22.7%).
$ million
Logistics Total Revenue
800
600
300
250
400
200
200
150
0
100
50
0
Market Capitalisation
1000
Revenue
$ million This strategy resulted in an increase in issued capital from
140 million shares to 191.2 million shares, representing a 36.6%
increase, in support of the acquisitions of the McGrath and
Zupps Motor Groups. This approach complemented the desire
of the vendors the to participate in AHG’s growth strategy and
allowed AHG to maintain an appropriate mix of debt and equity.
The placement of shares to institutional investors in support of the
Zupps Motor Group acquisition was well received by the market
and is reflective of the increase in market capitalisation from $267
million to $832 million over the 12 month period to 30 June 2007.
2006 2007
Full Year 30 June
While the segment contribution of $7.2 million represented a
14.3% increase on the previous financial year, earnings growth
was restrained by the investment in new infrastructure for
Rand Transport. The Homebush facility is anticipated to drive
an increase in earnings contribution during 2008. The AMCAP
warehouse and distribution business in WA is also undergoing
a major expansion in capacity to meet growing demand, the
benefits of which should also flow through to the 2008 results.
2006 2007
Full Year 30 June
Coupled with the higher full year dividend of 12.5 cents, this delivered
Total Shareholder Return over the course of FY2007 of 147%.*
Information Systems
In reflection of its strong business growth, AHG has commenced
implementation of a nationally-focussed strategic plan for
information systems and technology. Based on a strong existing
core IT infrastructure in WA, this plan will see acquired businesses
aligning on common platforms and standards that leverage existing
investment and intellectual capital whilst facilitating centralised
control. An emphasis will be maintained on robust systems that
support the business reliably and economically, with management
operating under appropriate good governance principles.
Hamish Williams, Finance Director
*Source: Link Market Services
17
18
AHG Growth Initiatives
PRESTIGE HINO
RAND TRANSPORT
ZUPPS MITSUBISHI
MCGRATH SUBARU
JOHN ANDREW MAZDA
AMCAP
...
New Zealand
McGrath Motor Group
Rand Transport
AHG’s foray into New Zealand began in
August 2006 when it was awarded exclusive
importation and distribution rights for KTM
Sportmotorcycles.
In December 2006 AHG purchased the
McGrath Motor Group, one of the largest
automotive retailers in New South Wales.
In March 2007, Rand Transport completed
the purpose built 24,000 pallet cold store
at Homebush, New South Wales with the
facility generating interest from existing and
new customers. This new facility is expected
to provide an outstanding platform for
growth on the eastern seaboard.
AHG increased its presence in September
2006 when it acquired two Ford and two
Mazda motor vehicle dealerships plus
four satellite service centres in central
and northern Auckland.
These facilities service two of the three
prime market areas in Auckland and
cover approximately 70% of the Auckland
metropolitan population.
AHG has embarked on an expansion and
redevelopment program in and around
New Zealand’s largest city.
It is anticipated that in early 2008 John
Andrew, New Zealand’s largest single Ford
and Mazda dealership, will be substantially
demolished and rebuilt over 18 months.
To support the business whilst this is
undertaken, adjoining sites have been
leased. Plans are being finalised for the
refurbishment of North Harbour Ford
and Mazda in North Auckland.
North Harbour Mazda has also expanded
into the emerging Albany area with the
opening of a showroom and workshop
facility in August 2007.
Opportunities are being assessed in West
Auckland to expand the current satellite
service centre into a retail point for both
the Ford and Mazda brands.
Founded in 1938 by Bert McGrath, McGrath
Motor Group is a market leader in the
population centres of Liverpool, Blacktown
and Sutherland.
At the time of purchase, McGrath Motor
Group operated 15 motor vehicle dealerships,
encompassing seven of the top 10 selling
brands in Australia.
The acquisition was consistent with AHG’s
stated growth strategy of acquiring businesses
that are complementary to AHG’s existing
operations, are earnings accretive and will
create long term value for shareholders.
The acquisition and integration of the
McGrath Motor Group has provided AHG
with the critical mass to support acquisitions
of single dealerships that fit the AHG model
along the eastern seaboard. In March 2007,
AHG purchased Lansvale Holden, a stand
alone dealership situated on Hume
Highway, near McGrath’s existing
operations in nearby Liverpool.
Zupps Motor Group
In May 2007, AHG purchased the Zupps Motor
Group, Queensland’s largest privately owned
automotive retailing group. Founded in 1948
by Percy Zupp, Zupps has 32 franchises
operating from 18 locations and representing
13 automotive brands. Its operations include
mega-sites at Aspley, Mount Gravatt and
Southport with the majority of the other
sites multi-branded. It operates three truck
locations and two parts distribution outlets
at Coopers Plains and Townsville. The Zupps
Motor Group secures AHG’s Queensland
beach head allowing it to pursue additional
incremental growth opportunities.
AMCAP
AMCAP’s warehouse will be expanded by
3,800m2 to cater for an increased demand
in its range of products and to offer
existing clients additional purpose-built
facilities, including sales and administration
support for supplier representation,
large item and dangerous goods storage
and a comprehensive freight network.
On completion, which is expected to be
December 2007, AMCAP’s warehouse will
cover an area of more than 16,400m2 on
a site spanning 43,000m2.
Prestige Hino
In November 2005 AHG announced an
outstanding opportunity for the Group
to build its automotive retailing presence
in Victoria. AHG was selected by Hino
Australia as the preferred operator for
the Hino dealership in Dandenong and
with the new purpose built facility completed
in February 2007, AHG now controls and
services Hino’s largest market area in
Victoria in a thriving industrial region.
19
20
...
Total Nissan Redevelopment
Chris Marwick & Garry Wright
Brisbane
Sydney
Perth
Melbourne
ZUPPS SUBARU
VSE
Auckland
...
VSE
Existing Dealership Developments
Most recently AHG has established this
operation to provide truck storage and
engineering services for third parties.
AHG continues to enhance its existing
dealerships with redevelopments planned,
or nearing completion for dealerships
in Western Australia, New South Wales,
Queensland and New Zealand and
expansion of the Group’s Dandenong
facility in Victoria.
The growth of the VSE business has lead
to the leasing of an additional 30,000m2 of
land for storage of up to 400 trucks and
a workshop/body shop for engineering.
Greenfield Initiatives
AHG continues to build critical mass
with the development of greenfield sites in
Western Australia and Queensland which
reinforces AHG’s ongoing growth strategy of
building additional retailing capacity around
its core operations.
In Western Australia, AHG’s latest greenfield
sites are Mitsubishi and Kia dealerships
which are strategically located in the fast
growing suburb of Rockingham, on the
southern fringe of the Perth metropolitan
area. These new sites extend AHG’s footprint
in Rockingham from its well-established
Ford dealership.
To the north of the Perth metropolitan area,
AHG continues to expand its ‘auto mart’
development in Wangara with the addition
of a new Volkswagen dealership due to
open in 2008. This dealership builds on the
success of AHG’s Osborne Park Volkswagen
facility and is the first in Australia to be built
to the new Volkswagen corporate identity.
A new Subaru dealership at Capalaba
south of Brisbane opened in September
2007 and represents an important new
growth initiative for the Queensland
operation. Further, a new Hyundai
dealership at Browns Plains in
Brisbane’s southern suburbs
started trading in July 2007.
In Western Australia, Total Nissan in
Cannington has been rebuilt and is due for
completion in October 2007, a new Skoda
facility is being developed in Osborne Park in
existing showrooms and in Wangara, Subaru
Wangara is building a new facility on the
Wangara auto mart.
In New South Wales planning approvals
are underway to rebuild Lander Nissan
and Kia in Blacktown. This will assist the
McGrath Motor Group in maintaining the
current position as the number one volume
Nissan dealership in NSW. Planning has
also commenced on the redevelopment
of McGrath Sutherland’s super site which
includes rebuilding of the Nissan and
Volkswagen showrooms plus substantial
improvements to the existing service
facilities. Planning has also commenced
on developing a new Mazda facility for
McGrath Liverpool.
In New Zealand, AHG is in the final stages
of planning for substantial redevelopment
of the iconic John Andrew Ford and Mazda
site. Designed over two levels, this stateof-the-art design will set new standards for
Ford, Mazda and AHG in the strong Auckland
market. Work is estimated to commence in
early 2008. Plans are also afoot to refurbish
and expand the North Harbour Ford and
Mazda dealerships.
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Safety, Health and Environment
...
AHG is committed to achieving a high standard of safety, health and environment and prides
itself in being an industry standard setter. Its current initiatives include obtaining service
department green stamp accreditation and installing water reclaiming systems at new
dealerships with a view to installation at all sites in the future.
AHG is also implementing an updated
Occupational Health and Safety System
to accommodate its recent expansion,
commissioning a national audit of the
Group’s OHS&E management systems
and a solid reporting framework for
each of its operations
Other achievements include:
• continued reductions in workers’
compensation claims in its WA
businesses;
• enhancement of safety induction
training for all new employees;
• updating its employee handbook, one
third of which is dedicated to safety,
health and the environment;
• centralised reporting of safety statistics;
• centralised supply of AHG safety
equipment via AMCAP;
• upgrading its Human Resources
Information Services which will
enhance safety health and
environment administration; and
• appointment of a full time National
Safety Manager and implementation
of a National Safety Management
System at Rand Transport.
Green Stamp Accreditation
The Green Stamp Accreditation is
an acknowledgment of an individual
dealership’s commitment to minimising
the environmental impacts associated
with repairing or servicing their
customers’ vehicles.
Eight Western Australian AHG dealerships
are Green Stamp Accredited employing best
environmental practices in regard to cleaner
production and reducing pollution or waste
in the environment.
Green Stamp Accredited businesses, as a
minimum, satisfy legislative requirements
and are audited by the MTA-WA on a yearly
basis to ensure compliance.
The Green Stamp logo is a symbol
of excellent environmental practice
and dealerships that are accredited
are recognised as industry leaders in
environmental management.
The Green Stamp is focusing on
several areas to reduce the industry’s
environmental impact:
• improved storage practices associated
with chemicals and other hazardous
substances
• pre-treatment of wastewater from the
workshop prior to approved disposal
• emergency spill management to prevent
pollution of ground and stormwater
• correct disposal of waste products,
preferably to recycling or reuse
• air quality management
• energy and resource conservation
• the development of environmental
management systems
Water Reclaiming and
Recycling Systems
Water restrictions are becoming part of our
daily lives and AHG is committed to looking
after the environment in which it operates.
AHG has committed to future sites having a
water reclaiming and recycle system installed
in the dealership workshop fit outs.
The process involves having a detailed
filtering system which separates all oil
from the water and filters the water ready
for re-use in wash bays.
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AHG Community Involvement
AHG has long been committed to the community which supports its business and this culture
continues through its recent acquisitions. AHG’s philosophy is to provide sponsorship and
financial assistance to organisations that represent broad cross sections of the community
in which AHG operates. The Group especially seeks to provide assistance to organisations
where AHG’s business activities can lend them direct support.
AHG sponsors over 150 community and
charity groups Australia wide. Examples of
AHG’s local community initiatives include:
Western Australia
Rocky Bay
Rocky Bay, a centre of excellence
for people with neuromuscular and
neurological conditions.
AHG directly subsidises the centre’s motor
vehicle fleet and separately helps to raise
direct funding through vehicle raffles,
and organising and sponsoring an annual
corporate golf day.
The 2007 AHG & Rocky Bay Corporate Golf
Day was held at Joondalup Golf Course on 2
March 2007 raising $146,000, $30,000 more
than the figure raised at the same event last
year and setting what is believed to be a new
record for a fundraising golf day, for a single
charitable organisation in Western Australia.
Senses Foundation for the
Deaf and Deafblind
AHG is the major sponsor of the annual
golf day.
The 13th Annual Senses Foundation Golf
Day, with major sponsor AHG, saw 140
members of Perth’s business community
take to the greens at Royal Perth Golf Club
on Friday April 27, 2007 for a day of sporting
fun, networking and a worthy cause.
The money raised from the event and
gala dinner auction is used within the
Foundation’s Specialist Communication
Program, a service highly valued by
clients and their families. This year the
event raised approximately $135,000.
Activ Foundation Perth City to
Surf annual sponsorship.
AHG donate a vehicle to entice entrants
to the Activ Foundation’s Perth City to Surf.
The 2007 event was held on 26 August to
record crowds. The wet and windy weather
did not deter entrants in the 4km, 12km or
21km races.
Starlight Foundation
In February 2007, AHG donated $25,000
to the Starlight Foundation to purchase two
state-of-the-art Starlight Fun Centres for the
Joondalup Health Campus. The Fun Centres
will entertain children in the paediatric ward
that are too ill to leave their beds.
Each purpose built, mobile entertainment
unit contains an LCD flat screen, DVD player,
Nintendo Gamecube and computer, with a
huge variety of preloaded games and movies.
AHG Driving Centre
AHG has entered into a long term strategic
partnership with Perth’s Driver Training
and Education Centre (DTEC) and secured
naming rights to this purpose-built facility
near Perth International Airport. The Group
has made this commitment in recognition
of the community need to increase driver
skills and safety. All customers under the
age of 25 who purchase a car from a Western
Australian AHG dealership are given two free
defensive driver training courses at the AHG
Driving Centre.
ROCKY BAY
CITY TO SURF
CITY TO SURF
...
New South Wales
Queensland
Zupps Free Ladies Drive Day
NSW Police Fire Brigade
and Ambulance Services
Seeing Eye Dogs/Working
Wonders for Sick Kids
Regular support is provided to the
NSW Police Fire Brigade and Ambulance
Services, specifically to the Natalie
Newman Benefit Night.
Each year Zupps Motor Group aligns itself
with one major charity for the full year.
Through fund raising efforts in 2006 Zupps
raised $16,000 for Seeing Eye Dogs. In 2005
it raised approximately $18,000 for Working
Wonders for Sick Kids. Zupps believes that
by supporting such charities it can make a
difference in the community.
Customers are offered the opportunity to take
a defensive driving course which focuses on
driving skills, awareness and safety.
PCYC Kid Smart Official
Blue Light Handbook
This handbook is a kids education
programme that is distributed to
local school children to educate
them on dangers such as drugs.
Queensland Police Community
Policing Vehicles
Lions Club
McGrath Motor Group have been sponsoring
Lions Clubs events for more than 20 years.
Motoring Women Australia
A dealership-based series of evening events
offering basic vehicle maintenance skills to
female customers.
St. Andrews High School
Marayong Career Night
Each year McGrath Motor Group provides
sponsorship to support the graduating
students at their careers advisory night.
The sponsorship enables the school to invite
guest speakers to inspire and guide students
in the final years of their schooling on further
education and future career choices.
AHG DRIVING CENTRE
Providing community-policing vehicles to
Queensland Police for various station-based
community operations.
The Silver Lining Foundation
Helping the disadvantaged indigenous youth
of Queensland by providing sponsorship to
The Silver Lining Foundation.
New Zealand
Maori Warden Trust
AHG provides vehicles for use to the Maori
Warden Trust, a youth group mentor.
Sponsorship and Support
AHG also sponsors the Auckland Rugby
Union, provides support to NZ Rally
Champion, Mark Tapper and hosts a number
of community events throughout the year.
In addition to the above we acknowledge
many of our employees who give their time in
support of these and other worthwhile causes.
Zupps Women at the Wheel program
This program began in 1999 in response
to government and media reports that
suggested many women felt uncertain
unprepared, uncomfortable and
unresponded to when dealing with the
motor industry in general. Each Zupps
dealership invites women who are Zupplink
members (a Zupps referral, loyalty and reward
program) to a special evening event that
involves a tour of the service department,
an overview of vehicle safety features, and
a particular focus on basic instruction on
vehicle maintenance.
STARLIGHT FOUNDATION
SENSES GOLF DAY
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26
AHG’s Industry Excellence
1.
2.
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...
AHG and the motor vehicle industry in general applauds industry excellence with a number
of awards being offered to those who excel.
AHG Awards for Excellence
The collective efforts of all AHG’s business units over the past 12 months delivered an outstanding result for the Group. To recognise and
congratulate teams and individuals for their contribution, AHG holds an annual Awards for Excellence night. The aim of the program is to
identify and recognise those individuals and businesses in our Group who have excelled in their field during the year. The Awards are judged
over the full financial year, and hence related to Western Australian operations only this year, and a gala night is held in August each year
to announce the annual winners. Our employees’ commitment to the Group allows us to achieve excellence in our operations. It is their
motivation that drives the AHG business and we value their shared commitment to customer service.
Our winners include:
Business of the Year
Amcap Distribution Centre
Employee of the Year – Logistics Operations
Maureen Rice
Amcap Distribution Centre
Employee of the Year – Dealerships
Ross Embleton
City Motors Holden & HSV
Service/Panel Manager of the Year
Philip McLardy
Osborne Park Subaru & Volkswagen
Salesperson of the Year
Mark Webster
WA Hino & Volkswagen Commercial Centre
Financial Controller of the Year
John Verrier
Giant Nissan Hyundai
New Vehicle Manager of the Year
Bruno Cirillo
WA Hino & Volkswagen Commercial Centre
Used Vehicle Manager of the Year
Shane Connors
Northside Nissan
Aftercare Manager of the Year
Lynda Arts
Osborne Park Subaru & Volkswagen
Wholesale Manager of the Year
Nevin Porter
Northside Nissan
Finance & Insurance Manager of the Year
Paul Clayton
Nuford
Tradesperson of the Year
Paul Atkinson
Northside Nissan
Safety & Health Award
Melville Mitsubishi
Parts Manager of the Year
Mike Marmo
Amcap Distribution Centre & Skipper Trucks
Apprentice/Trainee of the Year
Jarryd Ruksenas
City Motors Holden & HSV
MTAWA Awards
Western Australia’s Motor Industry Awards
celebrate those people who are significant
contributors and are the cornerstone in the
industry, as well as recognising the people
and organisations who will lead the industry
to a successful future.
The Australian motor vehicle industry is one
of Australia’s most dynamic and interesting
industry sectors, employing in excess of
600,000 people across Australia.
In Western Australia, the vehicle industry
makes a major contribution to the State
economy and supports many vital parts of
its infrastructure. The Awards are open to
all current members of the motor industry
in Western Australia and gives the recipient
the opportunity to be recognised as a leader
in the industry.
The categories include:
• Repairer of the Year
• Quality Service Business of the Year
• Excellence in the Environment and Safety
• Manager of the Year
• Business Commitment to Training
• Apprentice or Trainee of the Year
• Motor Trade Association of W.A. (Inc.)
Lifetime Achievement Award
AHG is proud to have achieved awards in
three out of the five categories recognised at
the 2007 Motor Industry Awards on 21 April
2007. Winners and Finalists include:
MTAWA Winners
• Osborne Park Subaru & Volkswagen’s
Service Manager, Philip McLardy Manager of the Year
• Grand Toyota - Quality Service
Business of the Year
• Big Rock Toyota - Business
Commitment to Training
Photos
1. Business of the Year - AMCAP
2. Finance & Insurance Manager of
the Year - Paul Clayton
3. New Vehicle Manager of the Year Bruno Cirillo
27
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28
2.
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3.
.4
6.
.7
...
MTAWA Finalists
Holden
Suzuki
• Osborne Park Subaru & Volkswagen’s
John Venables-Kyrke, Grand Toyota‘s
Adam Garrat; and Lynford’s Ryan Brandy
- Apprentice of the Year
North City Holden’s Don Cameron was
awarded 2006 Used Vehicle Manager of the
Year in March 2007 at the Holden Guild of
Excellence Awards.
Zupps Browns Plains held Queensland’s
highest market share for 2006, Zupps
Southport was awarded as No. 1 Selling
Non Metro Suzuki Dealer 2006.
• City Motors Holden & HSV, Osborne
Park Subaru & Volkswagen - Business
Commitment to Training
McGrath Holden Liverpool was finalist in two
categories for Liverpool Council Business
Awards 2007, Zupps Browns Plains was
2006 Holden Grand Masters Dealer and
winner of the Chairman’s Award (No. 1
dealer in Australia for Group 2).
• Osborne Park Subaru & Volkswagen Quality Service Business of the Year
• City Motors Holden & HSV’s Richard
Machura - Manager of the Year
Manufacturers also provide awards for
excellence in which AHG dealerships
have excelled, some of which include:
Ford
Zupps Mt Gravatt was 2006 Holden Grand
Masters Dealer, winner of the Guild of
Excellence – Service & After Sales Award,
Queensland and Service Managers Guild
– Top in Zone and Ben O’Neill was named
Foreman of the Year.
John Andrew Ford was named no. 1 Ford
Dealer in New Zealand and Amy O’Connell
was named Ford Apprentice of the year.
Nuford Sales Manager Award 2006 - Dez
De Lange, Star Achievers Award 2006,
Customer Service Division Excellence
Award 2006 - Parts Department.
Mazda
Fuso
Mitsubishi Fuso
Zupps Rocklea was named No. 2 Sales
Dealer of the Year and No. 2 Parts Dealer
of the Year in 2006.
Skipper Trucks was winner of the National
Parts Dealer of the Year.
Nissan
Hino Australia
Northside Nissan was awarded Platinum
Dealer in 2006 and 2007. Zupps Browns
Plains was awarded Platinum Dealer in 2007.
WA Hino was awarded Highest Selling
Dealership 2006/07 and Sales Person
of the Year 2006/07 (Mark Webster).
John Andrew Mazda was named no. 1
Mazda Dealer in New Zealand.
Mitsubishi
Zupps Mitsubishi was named as Australia’s
number 1 selling dealer in 2006.
To reach platinum status dealers must
achieve consistently in each key element of
facilities, sales and marketing, service, parts,
loyalty and operations. This is the most elite
recognition within Nissan. McGrath Nissan
was awarded with the Elite Sales Award 2007.
UD Nissan
Zupps Rocklea was awarded No. 1 Parts
Dealer of the Year 2006, 2006 National
Service Technician of the Year, 2006
No. 1 Sales Dealer of the Year, 2006
Dealer of the Year.
Volkswagen
McGrath Volkswagen’s Chanh Trinh was
voted NSW 2007 Technician of the Year
and was runner up nationally. Osborne
Park Volkswagen was awarded the 2006
Volkswagen Australia Parts Department
of the Year.
Rand Transport
Rachel Pampano was awarded the Frank
Vale Award in New South Wales. Frank
Vale was one of the founding members of
the Refrigerated Warehouse & Transport
Association and the award recognises
young up-and-comers in the refrigerated
warehousing and/or transport industry.
Photos
1. Apprentice/Trainee of the Year Jarryd Ruksenas
2. Aftercare Manager of the Year Lynda Arts
3. Used Vehicle Manager of the Year Shane Connors
4. Service Manager of the Year Phil McLardy
5. Employee of the Year (Logistics Operations)
- Maureen Rice
6. Wholesale Manager of the Year Nevin Porter
7. Financial Controller of the Year John Verrier
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AHG Employees
...
AHG is committed to the ongoing recruitment, development, training and retention of its
employee base, which now numbers more than 3,500 employees. AHG’s goal is to be an
employer of choice within the automotive retail and logistics industries. This objective is
enhanced by AHG’s diversified portfolio of vehicle dealerships and logistics businesses that
provide opportunities for talented staff to advance within the Group, facilitating the Group’s
ongoing succession planning.
As a measure of AHG’s strength in
personnel management, more than 350
employees have served the Group for more
than 10 years. Their dedication is highly
regarded and awarded membership to the
long serving members club led by Chairman
Robert Branchi who has been with AHG for
more than 50 years.
AHG has implemented performancebased reward systems which contribute
to enhanced employee performance and
job satisfaction. The Group has introduced
innovative training programs for Dealer
Principals and other employees that
support performance and provide direct
career advancement opportunities.
AHG takes great pride in its extensive
training programs that enable employees
to develop to their full potential.
AHG believes that the following key
programs give the Group and its
employees a competitive edge:
• Active participation in industry
apprenticeship programs, employing
around 80 new apprentices each year;
• Innovative recruitment drives enabling
AHG to recruit untapped talent in the
market place and bring on approximately
60 new sales cadets each year;
• Tailored training and sales certification
programs canvassing induction and
ongoing training and development;
• Customer designed service advisor
programs to ensure high customer
satisfaction standards are met at
every AHG Dealership;
• Ongoing training at all levels of
management through the Australian
Institute of Management;
• Further education support for senior
employees undertaking post-graduate
studies, such as MBA programs;
• Monthly sales induction courses for all
new employees;
• School to Zupps Apprenticeship Project
in Queensland offers local high school
students, who excel academically,
two-year mechanical service technician
apprenticeships; and
• Total group support of the Deloitte /
Horwarth “Academy for Excellence”
programmes for all senior managers.
College of Automotive Learning
The recently established College of
Automotive Learning (‘CAL’) is a registered
training office based in Perth. While owned
by AHG, the Group treats this division as
an independent training supplier which
provides services to operations both internal
and external to AHG. CAL has the scope
to deliver on six different qualifications
from administration and sales through to
mechanical services. This year 100 trainees
will graduate through the CAL courses.
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32
Statement of Corporate
Governance Practices
...
Automotive Holdings Group Limited and the Board are committed to achieving and
demonstrating the highest standards of corporate governance. The Board continues to
review the framework and practices to ensure they meet the interests of stakeholders.
The relationship between the Board
and senior management is critical to the
Company’s long term success. The directors
are responsible for the performance of the
Company in both the short and the longer
term and seek to balance sometimes
competing objectives in the best interests
of the Group as a whole. Their focus is to
enhance the interests of shareholders and
other key stakeholders and to ensure the
Company is properly managed.
Day to day management of the Company’s
affairs and the implementation of the
corporate strategy and policy initiatives
are formally delegated by the Board to the
Managing Director and senior executives.
A description of the Company’s main
corporate governance practices is set out
below. All these practices, unless otherwise
stated, were in place for the entire year.
Board of Directors
The Board operates in accordance with
the broad principles set out in its Board
Charter, a copy of which is available
from the corporate profile section of the
Company’s investor relations website
at www.ahgir.com.au.
Board Composition
The Board Charter states:
• The Board will be comprised of a
minimum of 3 and a maximum of
9 Directors;
• The Chair shall be a non-executive
Director who is selected on the basis
of the person’s achievements and record
as a leader;
• At least half of the Directors will be
non executive. Non Executive directors
bring a fresh perspective to the Board’s
consideration of strategic, risk and
performance matters and are best placed
to exercise independent judgement and
review and constructively challenge the
performance of management;
• The roles of the Chair and the Managing
Director (“MD”) may not be exercised by
the same individual;
d) providing oversight of the Company,
including its control and accountability
systems;
• The Board shall ensure that collectively,
it has the appropriate range of expertise
to properly fulfil its responsibilities;
e) exercising due care and diligence
and sound business judgement in
the performance of their duties;
• The Remuneration and Nomination
Committee is responsible for providing
recommendations to the Board on the
composition of the Board within the
criteria outlined;
f) considering and approving the
Group’s annual budgets;
• The composition of the Board, its
performance and the appointment of
new directors will be reviewed periodically
by the Board, taking advice from external
advisers as appropriate; and
• All directors are required to voluntarily
review their membership from time to
time taking into account length of service,
age, qualifications and expertise relevant
to the Company’s then current policy and
program, together with the other criteria
considered desirable for composition of a
balanced Board and the overall interests
of the Company.
Responsibilities
Without intending to limit this general role
of the Board, the specific functions and
responsibilities of the Board include:
a) approving the strategic objectives of the
Group and establishing goals to promote
their achievement and comparing actual
results ensuring the planning process
is efficient;
b) ensuring they inform themselves of the
Group’s business and financial status
at all times;
c) establishing investment criteria including
acquisitions and divestments, approving
investments, and implementing ongoing
evaluation of investments against
such criteria;
g) reviewing and ratifying systems of risk
management and internal compliance
and control, codes of conduct and legal
compliance;
h) appointing and removing the MD,
monitoring performance and approving
remuneration of the MD, and the
remuneration policy and succession
plans for the MD;
i) ratifying the appointment and, where
appropriate, the removal of the Chief
Financial Officer (‘CFO’) and the
Company Secretary;
j) monitoring the performance and
implementation of strategy and ensuring
appropriate resources are available;
k) ensuring that business risks facing the
Group are, where possible, identified
and that appropriate monitoring and
reporting internal controls are in place
to manage such risks;
l) approving and monitoring financial
and other reporting;
m)ensuring the Company complies with its
responsibilities under the Corporations
Act, the ASX Listing Rules, the Company’s
Constitution and other relevant laws;
n) adopting clearly defined delegations of
authority from the Board to the MD and
Finance Director; and
o) review its own processes and
effectiveness and the balance
of competence of the Board.
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34
...
Board Members
Details of the members of the Board,
their experience, expertise, qualifications,
term of office and independent status are
set out in the Directors’ Report under the
heading ‘Information on Directors’. There are
currently five non-executive Directors, four
of whom are deemed independent under the
principles set out below, and two executive
Directors at the date of signing this report.
The Board shall ensure that collectively
its membership represents an appropriate
balance between directors with experience
and knowledge of the Company and directors
with an external or fresh perspective. It shall
review the range of expertise of its members
on a regular basis and ensure that it has
operational and technical expertise relevant
to the operation of the Company.
The Board seeks to ensure that its size
is conducive to effective discussion and
efficient decision making.
Directors’ Independence
The Board has adopted specific principles in
relation to Directors’ independence. These
state that a Director is non-executive when
he or she is not a member of management
and is independent when he or she:
(a)is not a substantial shareholder of the
Company or an officer of, or otherwise
associated directly with a substantial
shareholder of the Company (as defined
in section 9 of the Corporations Act 2001);
(b)has not, within the last 3 years, been
employed in an executive capacity by the
Company or another group member, or
been a Director after ceasing to hold any
such employment;
(c) has not, within the last 3 years, been
a principal of a material professional
adviser or a material consultant to the
Company or another group member, or
an employee materially associated with
the service provided;
(d)is not a material supplier or customer
of the Company or other group member,
or an officer of or otherwise associated,
directly or indirectly, with a material
supplier or customer;
(e) has no material contractual relationship
with the Company or another group
member other than as a Director of
the Company;
(f) has not served on the Board for a period
which could, or could reasonably be
perceived to, materially interfere with
the Directors’ ability to act in the best
interests of the Company; and
(g)is free from any interest and any
business or other relationship which
could, or could reasonably be perceived
to, materially interfere with the Directors’
ability to act in the best interests of
the Company.
Term of office
The Company’s Constitution specifies that
at each annual general meeting of the
Company 1/3rd of the Directors for the
time being or, if their number is not 3 or a
multiple of 3, then the number nearest to
but not exceeding 1/3rd, retire from office
but no Director may retain office for more
than 3 years without submitting himself
or herself for re-election even though the
submission results in more than 1/3rd of the
Directors retiring from office. Where eligible,
a retiring Director may stand for re-election.
Chair and MD
The Chair is responsible for leadership of
the Board, for the efficient organisation and
conduct of the Board’s function and for the
briefing of all Directors in relation to issues
arising at Board meetings.
The Company has determined that Mr John
Groppoli, who was a previous partner of the
Company’s advising law firm, Deacons, and
now consults to Deacons on a casual basis,
is an independent director.
The MD is responsible for the ongoing
management of the Company in accordance
with the strategy, policies and programs
approved by the Board.
ASX CGC recommendation 2.2 states that
the chairperson should be an independent
director. Mr Robert Branchi is the Company’s
Chair. Mr Branchi is not an independent
director however the Board believes that
Mr Branchi is the most appropriate person
to chair the meetings given his intimate
knowledge of the Company and industry,
having been involved with the Automotive
Holdings Group for more than 25 years in
an executive capacity.
The full Board currently holds approximately
11 scheduled meetings per year and any
extraordinary meetings at such other times
as may be necessary to address any specific
significant matters that arise. A strategic
planning meeting is held once a year.
Non Executive Directors
The five non executive Directors met once
during the year at an official non executive
Directors’ meeting and several times in a
more casual manner without the presence
of management to discuss the operation
of the Board and a range of other matters.
Relevant matters arising from these meetings
were shared with the full Board.
Commitment
Individual Directors are required to commit
the necessary time and energy to Board
matters to ensure that they are contributing
their best endeavours in the performance of
their duties for the benefit of the Company,
without placing undue reliance on other
Directors to fulfil these duties.
The number of meetings of the Company’s
Board of Directors and each Board
committee held during the year ended 30
June 2007 and the number of meetings
attended by each Director is disclosed in
the Directors’ Report under the heading
‘Meetings of Directors’.
...
Conflicts of Interest
Entities connected with Messrs Wheatley
(who was a related party until 24 May 2007)
and Branchi had business dealings with
the Company during the year, as described
in note 39 to the financial statements. The
Directors concerned declared their interests
in those dealings to the Company and took
no part in decisions relating to them or the
preceding discussions. In addition, where
the Board considered appropriate, those
Directors did not receive any papers from
the Group pertaining to those dealings and
excused themselves from any discussion on
the matters.
Independent Professional Advice
To facilitate independent judgement in
decision-making, each Director has the right
to seek independent professional advice
at the Company’s expense. However, prior
approval from the Chair is required, which
may not be unreasonably withheld.
Performance Assessment
The Board undertakes an annual self
assessment of its collective performance,
the performance of the Chairman and
of its committees by way of a series of
questionnaires. The results are collected
and discussed at a Board meeting and
any action plans are documented together
with specific performance goals which are
agreed for the coming year. This assessment
was undertaken during March/April 2007.
The Chairman undertakes an annual
assessment of the performance of individual
directors and meets privately with each
director to discuss this assessment. This
process is also conducted by way of a series
of questionnaires in March/April 2007.
Corporate reporting
It is the responsibility of both the CEO and CFO
(or equivalent) to provide written assurances to
the Board that in all material respects:
(a)the financial reports submitted to the
Board are complete and present a true
and fair view in all material respects,
of the Company’s financial condition
and operational results of the Company
and are in accordance with relevant
accounting standards; and
(b)the above statement is founded on a
sound system of risk management and
internal compliance and control which
implements the policies adopted by
the Board and that the Company’s risk
management and internal compliance
and control is operating efficiently and
effectively in all material respects.
Board Committees
To assist with the execution of its
responsibilities, the Board has the
authority to establish and determine the
powers and functions of the committees of
the Board. The Board has established the
Audit and Risk Management Committee
and a Remuneration and Nomination
Committee.
Each committee is comprised entirely of
non-executive Directors. The Committee
structure and membership is reviewed on
an annual basis.
Each Committee has its own written charter
setting out its objectives, composition,
powers, role and responsibilities. All of
these charters are reviewed on an annual
basis and are available on the Company’s
investor relations website. All matters
determined by committees are submitted
to the full Board as recommendations for
Board decisions.
Minutes of committee meetings are tabled at
the subsequent Board meeting. Additional
requirements for specific reporting by the
committees to the Board are addressed in
the charter of the individual committees.
Remuneration &
Nomination Committee
The Remuneration & Nomination
Committee will comprise a minimum of
three non-executive Directors and will
meet at least once each year. The current
composition consists of the following:
Robert Branchi (Chair)
Greg Wall
John Groppoli
Details of these Directors’ attendance at
remuneration committee meetings are set
out in the Directors’ report under the heading
‘Meetings of Directors’.
The Remuneration & Nomination
Committee operates in accordance with its
charter which is available on the Company’s
investor relations website. It provides the
Board with advice and recommendations
which enable the Board to:
(a)set in place remuneration policies
which are designed to attract and retain
senior managers and Directors with the
expertise to enhance the performance
and growth of the Company;
(b)ensure that the level and composition
of remuneration packages are fair,
responsible and adequate and, in the
case of executive Directors and senior
managers, display a clear relationship
between the performance of the individual
and the performance of the Company; and
(c) ensure the Company has available to it a
Board with the appropriate competencies
to enable it to effectively discharge
its mandate.
The responsibilities of the Remuneration
& Nomination Committee include:
a) the Company’s recruitment, retention
and termination packages, policies
and procedures, incentive schemes
and superannuation arrangements for
specified senior management;
35
36
...
b) the remuneration framework
for Directors; and
c) reviewing and providing recommendations
to the Board on its composition.
Further information on Directors’ and
executives’ remuneration is set out in
the Directors’ Report under the heading
“Remuneration Report”.
Audit and Risk
Management Committee
The Audit & Risk Management Committee
consists of the following non-executive
Directors:
Greg Wall (Chair)
Robert Branchi
David Griffiths
Details of these Directors’ qualification and
attendance at Audit & Risk Management
Committee meetings are set out in the
Directors’ report under the headings
‘Information on Directors’ and ‘Meetings
of Directors’.
Each member of the Committee must
be able to read and understand financial
statements. The Committee must also
include at least one member who is a
qualified accountant or other financial
professional with experience in financial
and accounting matters.
The role and responsibilities, composition,
structure and membership requirements of
the Audit and Risk Management Committee
include:
a) monitoring and reviewing the integrity
of financial statements, the effectiveness
of the Company’s internal financial
controls, the independence, objectivity
and competency of internal and external
auditors and the policies on risk
oversight and management;
b) providing an independent, objective
review of financial information provided
by management to shareholders and
regulatory authorities; and
c) making recommendations to the
Board in relation to the nomination
and appointment of external auditors,
approving the remuneration and terms
of their engagement and reviewing the
quality of the external audit.
The Committee is not responsible for the
review of related party transactions, as all
such matters must be referred to the
full Board.
The Audit and Risk Management
Committee will comprise
• a minimum of three members;
• a majority of independent Directors; and
• a non-executive Chair who is not the
Chairman of the Board.
Members of the Committee must have
an appropriate level of understanding
of the principles of corporate governance
including knowledge of the Australian
Stock Exchange’s (ASX) Principles of
Good Corporate Governance and Best
Practice Recommendations.
Executives may attend by invitation.
The Audit and Risk Management Committee
operates in accordance with a charter which
is available on the Company’s investor
relations website. Its primary objective is
to assist the Board in fulfilling its corporate
governance and oversight responsibilities
including its responsibilities in relation to
the accounting and reporting practices of
the consolidated entity.
• meets separately with the external
auditors and the internal auditor at
least once a year without the presence
of management;
In fulfilling its responsibilities, the
audit committee:
• receives regular reports from management,
the internal and external auditors;
• meets with the internal and external
auditors at each scheduled meeting;
• provides the internal and external
auditors with a clear line of direct
communication at any time to either the
Committee, Chairman of the Audit & Risk
Management Committee or the Chairman
of the Board.
The Audit & Risk Management Committee
has authority, within the scope of its
responsibilities to seek any information it
requires from any employee or external party.
External Auditors
The Company and Audit & Risk Management
Committee policy is to appoint external
auditors who clearly demonstrate quality
and independence. The performance of
the external auditor is reviewed annually
and applications for tender of external
audit services are requested as deemed
appropriate, taking into consideration
assessment of performance, existing value
and tender costs. BDO Kendalls (previously
Horwaths) was appointed as external auditor
in 2005. It is Company policy to rotate audit
engagement partners on listed companies
at least every five years.
An analysis of fees paid to the external
auditor, including a break down of fees
for non audit services, is provided in the
Directors’ report. It is the policy of the
external auditor to provide an annual
declaration of their independence to
the audit committee.
The external auditor will attend the annual
general meeting and be available to answer
shareholder questions about the conduct of
the audit and the preparation and content of
the audit report.
Risk Assessment and Management
The Board, through the Audit & Risk
Management Committee, is responsible
for providing the Board with advice
and recommendations regarding the
ongoing development of risk oversight and
management policies that set out the roles
and respective accountabilities of the Board,
the Committee, management and the
internal audit function. The Committee
is responsible for:
...
1. Risk Oversight and Management Policies
(a)providing the Board with advice and
recommendations regarding the ongoing
development of risk oversight and
management policies that set out the
roles and respective accountabilities of
the Board, the Committee, management
and the internal audit function;
2. Risk Management and Risk Profile
(a)providing the Board with advice and
recommendations regarding the
establishment and implementation of:
(i) a risk management system; and
(ii) a risk profile for the company that
describes the material risk which
the company faces;
(b)reviewing the effectiveness of the
Company’s implementation of the
risk management system at least
once a year; and
(c) regularly reviewing and updating the
Company’s risk profile
The Committee is responsible for ensuring
that the appropriate senior managers have
established and implemented a system
for identifying, assessing, monitoring and
managing risk throughout the organisation.
Considerable importance is placed on
maintaining a strong control environment.
There is an organisational structure with
clearly drawn lines of accountability and
delegation of authority. Adherence to the
Code of Conduct is required at all times
and the Board actively promotes a culture
of quality and integrity.
Comprehensive practices are established
such that:
• The Board has appointed external
consultants to review its current risk
management framework and to work
with management to finesse it;
• The Company has modified its Occupational
Safety & Health Manual to accommodate
its recent expansion and this will be rolled
out to the Group over the coming months;
• The Board has commissioned external
consultants to conduct a national audit
of AHG’s occupational health, safety and
environment management system;
• The Company’s internal audit division
carries out regular systematic monitoring
of control activities and reports to both the
relevant business operations management,
senior management and the Audit & Risk
Management Committee;
• Quarterly reviews of each operating
entity are undertaken by management
addressing such things as the past
performance of their area of responsibility
and the current and future risks they face;
• Strategic planning sessions are scheduled
each year to review the Company’s
strategic direction in detail and specific
focus on the identification of the key
business and financial risks which could
prevent the company from achieving
its objectives;
• The Board requires that each major
proposal submitted to the Board
for decision is accompanied by a
comprehensive risk assessment and,
where required, management’s proposed
mitigation strategies;
• The Board has adopted a Matters
Retained by the Board policy which
outlines whom has authority to approve
such things as:
- unbudgeted capital expenditure
and revenue commitments above
a certain size;
- sale of property, plant and equipment
above a certain size;
- material changes to the terms of
any borrowing facility, agreement
etc. above a certain size;
• financial exposures are controlled
including the use of derivatives;
• occupational health and safety standards
and management systems are monitored
and reviewed to achieve high standards
of performance and compliance with
regulations;
• business transactions are properly
authorised and executed.
The Chief Executive Officer and Chief
Financial Officer (or equivalent) declare
in writing to the Board that the financial
reports are based on a sound system of
risk management and internal compliance
and control and that the company’s risk
management and compliance system is
operating efficiently and effectively in all
material respects.
Code of Conduct
Code of Conduct for
Directors and Officers
A Code of Conduct has been established by
the Board to promote ethical and responsible
practices and standards for directors and key
officers of the Company to discharge their
responsibilities and reflects the directors’
and key officers’ intention to ensure that their
duties and responsibilities to the Company
are performed with the upmost integrity.
The Code of Conduct for Directors and
Officers deals with the following main areas:
a)integrity and professionalism;
b)compliance with laws and regulations;
c)conflicts of interest;
d)confidential information;
e)inside information;
f) fair dealing;
g)benefits;
h)corporate opportunities; and
i) encouraging the reporting of unlawful,
unethical behaviour.
Directors and key officers must comply
with the Code of Conduct.
Share trading policies are also in place for
directors, senior executives and general
employees. The objectives of these policies
is to minimise the risk of directors, senior
executives and general employees who may
hold sensitive information, contravening
the laws against insider trading, ensure
the Company is able to meet its reporting
obligations under the ASX Listing Rules
and increase transparency with respect
to trading in securities of the Company.
37
38
...
Directors and senior executives should not
deal in securities of the Company unless:
(1)they have satisfied themselves that
they are not in possession of any price
sensitive information that is not generally
available to the public;
(2)they have advised the Chairman of
their intention to do so;
(3)the Chairman has made appropriate
enquiries of other directors and senior
executives; and
(4)the Chairman has indicated that there
is no impediment to them doing so.
Generally the Chairman will allow directors
and senior executives to deal in securities
of the Company as a matter of course
within 1 month after the release of annual
or half-yearly results and within the period
of 1 month after the issue of a prospectus,
however they should wait sufficient time
after the relevant release so that the market
has had time to absorb the information,
but in any event at least 2 hours after the
relevant release.
General employees may deal in securities of
the Company as a matter of course unless
they are in possession of price sensitive
information that is not generally available
to the public.
The directors are satisfied that the Group
has complied with its policies on conduct,
including trading in securities.
A copy of the Code of Conduct and the
share trading policies are available on the
Company’s investor relations website.
Code of Conduct covering
obligations to stakeholders
The Board has established a Code of Conduct
to guide compliance with legal and other
obligations to legitimate stakeholders.
The Code includes:
a) responsibilities to shareholders and
the financial community;
b) responsibilities to clients and customers;
c) employment practices;
d) obligations relative to fair trading
and dealing;
e) responsibilities to the community;
f) how the Company complies with
legislation affecting its operations; and
g) how the Company monitors and ensures
compliance with the Code.
The Board of Directors aims to ensure that
the shareholders are informed of all major
developments affecting the Company’s state
of affairs. Information is communicated to
shareholders as follows:
An annual report is distributed to all those
shareholders who elect to receive it. The
Board ensures that the report includes
relevant information about the operations
of the Company during the year, changes
in the state of affairs of the Company and
details of future developments, in addition
to the other disclosures required by the
Corporations Act.
The half-yearly report contains summarised
financial information and a review of the
operations of the Company during the
period. The half-year reviewed financial
report is prepared in accordance with the
requirements of applicable Accounting
Standards and the Corporations Act and is
lodged with the Australian Securities and
Investments Commission and the ASX. The
half-year financial report is sent to any
shareholder that requests it.
Proposed major changes in the Company
that may impact on share ownership rights
are submitted to a vote of shareholders.
The Board encourages full participation of
shareholders at the Annual General Meeting
to ensure a high level of accountability and
identification with the Company’s strategy
and goals. Important issues are presented
to the shareholders as single resolutions.
The Company’s external auditor is requested
to attend the Annual General Meeting and be
available to answer shareholder questions.
The shareholders are responsible for
voting on the appointment and aggregate
remuneration of directors, the granting
of options and shares to directors and
changes to the Constitution. A copy of the
Constitution of the Company is available
to any shareholder who requests it.
The latest ASX releases, Board policies
and procedures and financial information
are located on the Company’s investor
relations website.
Continuous Disclosure
The Company has a written policy on
information disclosure that focuses on
continuous disclosure of any information
concerning the Group that a reasonable
person would expect to have a material effect
on the price of the Company’s securities.
The Company Secretary has been
nominated as the person responsible for
communications with the Australian Stock
Exchange. This role includes responsibility
for ensuring compliance with the continuous
disclosure requirements in the ASX Listing
Rules and overseeing and co-ordinating
information disclosure to the ASX, analysts,
brokers, shareholders, the media, customers
and the public.
All information disclosed to the ASX is
posted on the Company’s website as soon as
it is disclosed to the ASX. When analysts are
briefed on aspects of the Group’s operations,
the material used in the presentation is
released to the ASX and posted on the
Company’s web site. Procedures have also
been established for reviewing whether
any price sensitive information has been
disclosed and, if so, this information is
also immediately released to the market.
All shareholders who have elected to receive
a copy of the Company’s annual report do so.
A copy of the Continuous Disclosure Policy
is located on the Company’s investor
relations website.
Annual Financial Report
30 June 2007
39
40
Financial Report Contents
Directors’ Report
41
Auditor’s Independence Declaration
59
Income Statements
60
Balance Sheets
61
Statements of Changes in Equity
62
Cash Flow Statements
63
Notes to the Financial Statements
64
Directors’ Declaration
118
CEO/CFO Declaration
119
Independent Audit Report
120
Shareholder and Optionholder Information
122
Operations Contacts
124
Corporate Directory
125
Financial Calendar*
Record Date for Final Dividend
2 October 2007
Final Dividend Paid
12 October 2007
Annual General Meeting
29 November 2007
Half Year End
31 December 2007
Half Year Profit Announcement
February 2008
Record Date for Interim Dividend^
March 2008
Interim Dividend Payable^
April 2008
Year End
30 June 2008
* timing of events is subject to change
^ subject to board resolution
Directors’ Report
41
Your directors present their report on the consolidated entity consisting of Automotive Holdings Group Limited (“AHG”) and the entities it
controlled (‘Group’) at the end of, or during, the year ended 30 June 2007.
Directors
The following persons were directors of AHG during the year and up to the date of this report:
Robert John Branchi
Non Executive Chairman
David Griffiths
Non Executive Director
Giovanni (John) Groppoli
Non Executive Director
Bronte McGregor Howson
Managing Director
Peter William Stancliffe
Non Executive Director
Gregory Joseph Wall
Non Executive Director
Hamish Calder Williams
Finance Director
Mr G Groppoli was appointed a director on 4 July 2006 and continues in office at the date of this report.
Mr D Griffiths was appointed a director on 27 February 2007 and continues in office at the date of this report.
Mr V C Wheatley was a director from 29 October 2004 until his retirement on 24 November 2006.
Mrs M V Prater (nee Wheatley) was an alternate director to Mr VC Wheatley from 3 October 2005 until Mr Wheatley’s retirement on 24 November 2006.
Principal Activities
The principal continuing activities of the Group consist of:
AHG
Automotive Retail
Logistics
Wholesale Distribution
Automotive Parts
AMCAP
Dealerships
New Vehicle Sales
Used Vehicle Sales
Finance and Insurance Sales
Vehicle Service
Replacement Parts Sales
Refrigerated Transport
Storage and Distribution
Rand Transport
Motorcycle Distribution
KTM Sportmotorcycles
Vmoto
42
...
Dividends – AHG
Dividends paid to members during the financial year were as follows:
Final ordinary dividend for the year ended 30 June 2006 of 6 cents per fully paid share paid
on 13 October 2006 (2006: 5 cents per fully paid shares paid on 2 July 2005)
2007
$’000
2006
$’000
$8,400
$3,350
Interim ordinary dividend for the year ended 30 June 2007 of 5 cents per fully paid share paid
on 2 April 2007 (2006: 4 cents per fully paid shares on 31 March 2006)
$7,103
$5,600
$15,503
$8,950
TOTAL
Dividends not recognised at year end
Since year end the directors have recommended the payment of a fully-franked final dividend of 7.5 cents per share, based on tax paid at
30%. The aggregate amount of dividends to be paid on 12 October 2007 out of the retained profits at 30 June 2007, but not recognised as
a liability at year end, will be $13,950,791.
Review of Operations
Net profit after tax attributable to members for the year ended 30 June 2007 was $30.2 million, a 49.3% increase on the 30 June 2006 net
profit after tax of $20.2 million. Group revenue for the year for continuing and discontinuing operations was $2.3124 billion, up 43.0% on
the $1.6164 billion from the previous year. EBITDA for the period was $75.9 million, 41.6% above the previous year’s result of $53.6 million.
The Automotive retail division achieved an EBITDA of $65.0 million, a 50.5% increase above the previous year’s result of $43.2 million on
revenue of $2.064 billion, an increase of 46.0% on the previous year’s revenue of $1.414 billion. AHG’s logistics division, comprising Rand
Transport, AMCAP and KTM Sportmotorcycles distribution achieved EBITDA of $10.9 million, an increase of 4.8% over the previous year’s
result of $10.4 million, on revenue of $247.9 million, an increase of 22.5% on the previous year’s revenue of $202.3 million.
AHG continues to assess opportunities that fit the company’s growth strategy that delivers sustained earnings growth for shareholders.
This will be pursued by
• continuing to establish new automotive dealerships on greenfield sites,
• adding new franchise brands to AHG’s automotive retailing portfolio,
• expanding the logistics division through broadening the service offering to customers and extending its geographic reach,
• continuing to focus on superior customer service and retention to increase sales through AHG’s automotive and logistics network,
• maintaining tight control of operating costs; and
• targeting selective acquisitions that complement existing businesses are earnings accretive and create long term value for shareholders.
Consolidated sales revenue and results are set out below.
Revenue from continuing operations
30 June 2007
$’000
2,231,907
30 June 2006
$’000
1,388,984
EBITDA from continuing operations
70,251
49,259
Net profit before tax
43,373
30,628
Income tax expense
(13,178)
(9,427)
30,195
21,201
3,021
1,980
Net profit after tax
33,216
23,181
Net profit after tax attributable to minority interests
(3,041)
(2,977)
Net profit after tax attributable to members of AHG
30,175
20,204
Profit from continuing operations
Profit from discontinuing operations
...
Significant Changes in State of Affairs
Significant changes in the state of affairs of the Group during the financial year were as follows:
An increase in contributed equity of $149,914,000 (from $110,407,000 to $260,321,000) as a result of
Opening balance 1 July 2006
30 June 2007
$’000
110,407
Additions
Issue of 10,102,040 fully paid ordinary shares @ $2.45 to AC McGrath & Co. Pty Ltd
as part of the acquisition of the McGrath Lander Motor Group
24,750
Issue of 7,744,320 fully paid shares @ $3.87 to Jonwen Financial Services Pty Ltd for the acquisition of the Zupp Motor Group
30,000
Placement of 31,157,000 fully paid ordinary shares to substantial shareholders and institutional
and sophisticated investors. Funds raised to be applied in the funding of the Zupp Motor Group acquisition
90,355
Issue of 1,780,545 fully paid ordinary shares @ $2.90 to existing shareholders under the Share Purchase Plan
5,161
Issue of 399,296 fully paid ordinary shares @ $2.50 under the AHG Performance Right Plan
998
Issue of 4,488 fully paid ordinary shares @ $2.67 under the AHG Tax Exempt Share Plan
12
Less
Transaction costs arising on the share issue
Closing balance 30 June 2007
(1,362)
260,321
On 1 October 2006 AHG acquired all of the issued capital in Auckland Auto Collection Limited (AACL) a New Zealand automotive sales and
service group, for cash consideration of $1.386 million. For further information regarding the acquisition of AACL please refer to note 29.
On 8 January 2007 AHG issued equity by way of 10,102,040 fully paid ordinary shares to the value of $24.75 million to AC McGrath & Co Pty
Ltd. This issue was part consideration for the acquisition of the assets and businesses of the McGrath Lander Motor Group in New South
Wales acquired pursuant to an Overall Agreement and Asset Sale & Purchase Agreements dated at 1 December 2006. The equity issued
extinguished the loan account balance of $24.75 million classified in the accounts at 31 December 2006 as a current liability.
The shares issued to AC McGrath & Co Pty Ltd are subject to a voluntary escrow agreement for twelve months, commencing on 1 December
2006 and expiring 30 November 2007 and were only entitled to a pro rata dividend from 1 December 2006 for the half year. For further
information regarding the acquisition of McGrath Lander Group please refer to note 29.
On 8 May 2007 AHG issued equity by way of 7,744,320 fully paid ordinary shares to the value of $30 million to Jonwen Financial Services Pty
Ltd. This issue was part consideration for the acquisition of the assets and businesses of the Zupp Motor Group in Queensland acquired
pursuant to an Overall Agreement and Share Sale & Purchase Agreements dated 19 March 2007.
The shares issued to Jonwen Financial Services Pty Ltd are subject to a voluntary escrow agreement. The terms of the agreement include
a two tiered level of restriction whereby 75% (5,808,240 fully paid ordinary shares) of the securities issued will be subject to a twelve month
period of restriction from the date of issue, expiring 2 May 2008. The balance of 25% (1,936,080 fully paid shares) of securities issued were
subject to a three month period of restriction from the date of issue, expired on 2 August 2007. The securities issued are only entitled to a
pro rata final dividend from 1 May 2007. For further information regarding the acquisition of Zupp Motor Group please refer to note 29.
To complete the acquisition of the Zupp Motor Group the AHG Group also issued 31.157 million fully paid ordinary shares (including 6,900,000
fully paid ordinary shares to Mr VC Wheatley or entities associated with Mr VC Wheatley, a related party of AHG at the time) in the Company
at $2.90 per share. The proceeds of this issue were in part applied in satisfaction of the cash component of the acquisition. The share issue
was fully underwritten by Bell Potter Securities Limited.
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Matters Subsequent to the End of the Year
On 10 July 2007, AHG announced that it has executed an agreement with Vmoto Limited to become the exclusive Australian distributor of
Vmoto branded scooters and related merchandise. Under the agreement, AHG’s logistics division will distribute Vmoto and ATVs initially
through the existing Vmoto retail network around Australia.
AHG will establish a dedicated operation within its logistics division to manage the distribution business under the agreement, which took
effect on 1 July 2007 and has an initial term of five years. As part of the agreement, AHG has acquired approximately $800,000 of inventory.
No other matter or circumstance has arisen since 30 June 2007 that has significantly affected, or may significantly affect:
(a) the Group’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the Group’s state of affairs in future financial years.
Likely Developments and Expected Results of Operations
Other than the developments mentioned elsewhere in this report the Group continues to examine a range of organic and acquisition
growth opportunities in the normal course of business. The Group’s automotive growth strategy will be developed within parameters of
manufacturers’ retail distribution strategies. Further information on likely developments in the operations of the Group and the expected results
of operations have not been included in this report as the directors believe it would be likely to result in unreasonable prejudice to the Group.
Environmental Regulation
The Group is subject to significant environmental regulation in respect of its service centre operations as set out below:
The Group holds environmental licenses for its service centres. These licenses arise under the requirements of various State government
regulations. Management continues to work with local regulatory authorities to achieve, where practical, best practice environmental
management so as to minimise risk to the environment, reduce waste and ensure compliance with regulatory requirements. The Group
had no adverse environmental issues during the year. Its current initiatives include obtaining green stamp accreditation and installing
water reclaiming and recycle systems at new dealerships with a view to installing on all sites in the near future.
...
Information on Directors
Giovanni (John) Groppoli, LLB, BJuris,
FAICD.
Non-Executive Director (Independent)
Robert John Branchi, MAICD, FCPA.
Chairman, Non-Executive
Experience and expertise
Mr Branchi has more than 50 years broad
experience and knowledge in the motor
industry and has been a Director of AHG
for over 25 years. Prior to being appointed
Chairman, Mr Branchi was the Group’s
Managing Director.
Other current directorships (of listed entities)
None
Former directorships in the last 3 years
None
Interest in shares
17,641,591 ordinary shares in AHG.
Special responsibilities
• Chairman of the Board of Directors;
• Chairman of the Remuneration & Nominating Committee; and
• Member of the Audit & Risk Management Committee.
David Griffiths, B Econ (Honours) UWA,
Master of Economics ANU.
Non-Executive Director (Independent)
Experience and expertise
Mr Griffiths was appointed as a non-executive
director on 27 February 2007. Mr. Griffiths
has more than 15 years experience in equity
capital markets, mergers and acquisitions
and the corporate advisory sector. He is a
former Divisional Director of Macquarie Bank Limited and Executive
Chairman of Porter Western Limited. Mr. Griffiths is also the Pro
Chancellor of The University of Western Australia.
Experience and expertise
Mr. Groppoli was appointed to the Board
on 4 July 2006. Mr. Groppoli was previously
a partner of national law firm Deacons
from 1987 to 2004 where he specialised in
franchising, legal compliance and corporate
governance. He was Managing Partner of the Perth office of
Deacons from 1998 to 2002.
Mr. Groppoli left private practice in 2004 and is currently Managing
Director of Milners Pty Ltd, a leading Australian brand marketing
group specialising in quality high-end home products.
Other current directorships (of listed entities)
Retravision (WA) Limited
Electcom Limited
Former directorships in the last 3 years
None
Interest in shares
30,825 ordinary shares in AHG.
Special responsibilities
Member of the Remuneration and Nominating Committee.
Bronte McGregor Howson, MAICD.
Executive Director
Advanced Nanotechnology Limited
Experience and expertise
Mr Howson has over 25 years experience in
the automotive industry. He was appointed
as Chief Executive Officer (“CEO”) in January
2000 with his title being recently changed to
Managing Director. Mr Howson successfully
ran his own automotive parts business which
he sold to AHG in 1988 when at the time accepting a position within
the Group as General Manager of AMCAP Distribution and Logistics
Centre. Mr Howson has extensive experience in importing and
distribution of automotive products, coupled with strong local and
national market intelligence. Since listing, the Group has enjoyed
significant success and expansion under Mr Howson’s leadership.
Former directorships in the last 3 years
None
Other current directorships (of listed entities)
None
Interest in shares
30,000 ordinary shares in AHG.
Former directorships in the last 3 years
None
Special responsibilities
• Member of the Audit & Risk Management Committee.
Interest in shares
5,191,765 ordinary shares in AHG.
Other current directorships (of listed entities)
ARC Energy Limited
Great Southern Limited
ThinkSmart Limited
Special responsibilities
• Chief Executive Officer
45
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Peter William Stancliffe, BE (Civil) FAICD
Non-Executive Director (Independent)
Experience and expertise
Mr. Stancliffe was appointed as a nonexecutive director on 25 November 2005.
Mr. Stancliffe has more than 35 years
experience in the management of major
corporations, both in Australia and overseas.
He is a former Chief Executive Officer of
Australian National Industries Limited and of Pirelli Cables Limited
and has extensive experience in strategy development, management
processes and practices and corporate governance.
Other current directorships (of listed entities)
Hills Industries Limited
View Resources Limited
Hamish Calder Williams, FCA, MAICD.
Executive Director
Experience and expertise
Mr Williams joined AHG as Chief Financial
Officer in 1993. He was appointed Finance
Director in 1996 and in that position is
responsible for all corporate finance, taxation,
audit and accounting matters in relation to
AHG, including the treasury function.
Other current directorships (of listed entities)
None
Former directorships in the last 3 years
None
Interest in shares
33,094 ordinary shares in AHG.
Former directorships in the last 3 years
Nil
Special responsibilities
• Chief Financial Officer
Interest in shares
21,725 ordinary shares in AHG
Vernon Charles Wheatley, FAICD Non Executive Director
Mr Wheatley retired as a director on 24 November 2006.
Special responsibilities
None
Gregory Joseph Wall, MA, FAICD, SA Fin.
Non-Executive Director (Independent)
Experience and expertise
Mr. Wall was appointed to the Board on 1
August 2005. He has over 30 years experience
in Banking and Finance and was Chief
Executive, StateWest Credit Society Ltd for
10 years. Following StateWest’s merger
with Home Building Society, Mr. Wall was
appointed Managing Director of Home Building Society. His
former roles include State Manager WA and Head of Marketing
for Challenge Bank Ltd.
Other current directorships (of listed entities)
Home Building Society Limited
Former directorships in the last 3 years
Nil
Interest in shares
20,000 ordinary shares in AHG.
Special responsibilities
• Chairman of the Audit & Risk Management Committee;
• Member of the Remuneration & Nominating Committee
Company Secretaries
Susan Dianna Symmons, (B Comm, ACIS,
MAICD) was appointed Company Secretary on
27 June 2006.
Prior to joining AHG, Ms Symmons spent
five years as Company Secretary of Evans &
Tate Limited where she was responsible for
all legal, company secretarial and investor
relations matters and was involved in a
range of projects involving capital raisings,
acquisitions and divestment transactions. Prior to working with
Evans & Tate, Ms Symmons spent twelve years at Heytesbury Pty
Ltd, the last three of those years as Company Secretary.
David William Kiggins, (ACA ICAEW, BSc
Hons, MAICD)
General Manager Business Development
and Company Secretary
Mr Kiggins joined the Group in September
2004 and was responsible for implementing
the group restructure and project managing
the IPO. He was appointed Company Secretary
in 2005 and since AHG listed on ASX has
been focused on business development – including special projects,
acquisitions and corporate strategy – and primarily the acquisitions of
the McGrath Lander Group and the Auckland Auto Collection in 2006,
and the Zupps Group in 2007. Prior to joining AHG he spent 9 years at
Andersen principally in consulting, and has also held senior roles with
a number of technology and telecommunications companies.
...
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board committee held during the year ended 30 June 2007 and the
number of meetings attended by each Director are as follows:
Full meetings
of directors Non executive
directors
Audit & Risk
Management
Remuneration and Nominating
A
B
A
B
A
B
A
RJ Branchi
17
17
1
1
5
5
2
2
BM Howson
16
17
n/a
n/a
n/a
n/a
n/a
n/a
G Groppoli1
13
17
1
1
n/a
n/a
1
1
D Griffriths2
5
7
1
1
1
1
n/a
n/a
PW Stancliffe3
16
17
1
1
3
4
n/a
n/a
GJ Wall
13
17
1
1
5
5
2
2
5
5
n/a
n/a
n/a
n/a
1
1
16
17
n/a
n/a
n/a
n/a
n/a
n/a
VC
Wheatley4
HC Williams
B
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee
1Mr
G Groppoli was appointed a member of the Remuneration and Nominating Committee in November 2006 and attended all meetings
since his appointment.
2Mr
D Griffiths was appointed a director on 27 February 2007 and attended 5 out of 7 board meetings and all audit meetings since
his appointment.
3Mr
PW Stancliffe resigned as a member of the Audit & Risk Management committee on 29 March 2007 and attended all meetings during
his appointment.
4Mr
VC Wheatley retired on 24 November 2006 and attended all meetings during his appointment.
Retirement, election and continuation in office of directors
In accordance with the Constitution of the Company, Mr Griffiths was appointed a director on 27 February 2007 as a casual vacancy and
offers himself for re-election at the next annual general meeting.
In accordance with the Constitution of the Company, Messrs Wall and Williams will retire by rotation. Being eligible, Messrs Wall and
Williams will offer themselves for re-election at the next annual general meeting.
Remuneration report
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Service agreements
C. Share based compensation
D. Details of remuneration
E. Additional information
The information provided under headings A-D includes remuneration disclosures that are required under Accounting Standard AASB
124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited. The disclosures
in Section E are additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 which have not
been audited.
47
48
...
A. Principles used to determine the nature and amount of remuneration (audited)
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results
delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and
conforms with market practice for delivery of reward. The Board ensure that executive reward satisfies the following key criteria for good
reward governance practices:
• Competitiveness and reasonableness
• Acceptability to shareholders
• Performance linkage / alignment of executive compensation
• Transparency
• Capital management
In consultation with external remuneration consultants, the Group has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the organisation.
Alignment to shareholders’ interests:
• has economic profit as a core component of plan design
• focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price and delivering constant return on
assets as well as focusing the executive on key non financial drivers of value
• attracts and retains high calibre executives
Alignment to program participants’ interests:
• rewards capability and experience
• reflects competitive reward for contribution to growth in shareholder wealth
• provides a clear structure for earning rewards
• provides recognition for contribution
The Company currently has in place short term incentives for certain senior executives, the details of which are listed below. When
considering such incentives, the Board ensures that executive reward satisfies the following criteria listed above for good reward
governance practices. The remuneration framework provides a mix of fixed and variable pay and a blend of short term and long
term incentives.
Non-Executive Directors’ remuneration
Fees and payments to non executive Directors reflect the demands which are made on, and the responsibilities of, the directors.
Non-executive directors’ fees are reviewed annually by the Board. When setting fees and other compensation for non-executive Directors,
the Board takes the advice of independent remuneration consultants to ensure non executive directors’ fees are appropriate and in line
with the market. The Chairman’s fees are determined independently to the fees of non-executive directors based on comparative roles
in the external market provided by independent remuneration consultants. The Chairman is not present at any discussions relating to
determination of his own remuneration.
Non-executive directors do not receive share options however a salary sacrifice plan (AHG Executive Share Plan) has been finalised for
directors and senior executives. The AHG Executive Share Plan will, enable directors and senior executives to sacrifice a portion of their
directors’ fees, salary, bonus or commission, as the case may be, in shares in the Company. Shareholder approval will be obtained for this
plan where required and further details will be provided at the time.
The Constitution provides that the Directors’ remuneration (excluding the salary of an Executive Officer or Managing Director) must not
exceed the maximum aggregate sum determined by the Company in a general meeting. Total remuneration for non-executive Directors last
voted upon by shareholders in a general meeting in 2006 is not to exceed $600,000, in aggregate, per annum. This maximum sum cannot be
increased without members’ approval by ordinary resolution at a general meeting.
...
The following fees have applied
Base Fees
From 1 January 2007
To 31 December 2006
Chairman
$81,000
$75,000
Other non-executive directors
$64,800
$60,000
$10,800
$10,000
Audit & Risk Management Committee Member
$5,400
$5,000
Remuneration & Nominating Committee Chairman
$5,400
$5,000
Remuneration & Nominating Committee Member
$2,700
2,500
Additional Fees
Audit & Risk Management Committee Chairman
Payment of expenses
In addition to remuneration, Directors are entitled to receive travelling and other expenses reimbursement that they properly incur
in attending Directors’ meetings, attending any general meetings of the Company or in connection with the Company’s business.
Payment for extra services
Any Director called upon to perform extra services or undertake any executive or other work for the Company beyond his or her general
duties, may be remunerated either by a fixed sum or a salary as determined by the Directors. This may be either in addition to or in
substitution for the Director’s share in the usual remuneration provided.
Executive Director Remuneration
Executive Director remuneration and reward framework consists of the following components:
• Base pay and benefits;
• Performance-based incentives;
• Other remuneration such as superannuation
The combination of these comprises the Executive Director’s total remuneration. Remuneration policies are currently being reviewed
by the remuneration committee for the year ended 30 June 2008.
Base Pay
Executive Directors are offered a competitive base pay that comprises the fixed component of pay and rewards. External remuneration
consultants provide analysis and advice to ensure base pay is set to reflect the market for a comparable role from time to time. Base pay for
Executive Directors is reviewed annually to ensure the executive’s pay is competitive to the market, however an increase is not guaranteed.
Benefits
Executive Directors may receive benefits such as motor vehicles and life insurance.
Short Term Incentives
If the Company achieves a pre-determined profit target set by the Board, a short-term incentive (STI) is paid to the Executive Directors. Cash
incentives are paid by 30 September each year. Using a profit target ensures variable reward is only available when value has been credited
for shareholders and when profit is consistent with the business plan.
Both Executive Directors have a target STI opportunity given their accountabilities of the role and impact on the organisation or business
unit performance. The maximum target bonus opportunity is 80 % of base pay for the Managing Director and 60% of base pay for the
Finance Director.
49
50
...
Long Term Incentives
Executive Directors are participants of the AHG Performance Rights
Plan whereby rights to acquire shares in the Company may be
awarded to eligible senior executives of the Company as determined
by the Board from time to time. The vesting of those rights will
be subject to certain specified performance criteria. Rights were
issued to both Executive Directors following approval granted at
the Company’s annual general meeting held on 24 November 2006
as follows:
1.156,843 share rights to BM Howson as consideration for
Mr Howson extending his employment contract with the
Company to 31 December 2009: and
2.31,368 share rights to HC Williams as consideration for
Mr Williams extending his employment contract with the
Company to 30 June 2009.
The aforementioned rights vested immediately.
In addition to the above, the following share right entitlements
for the year ended 30 June 2007 were approved by shareholders
in general meeting which allowed for the issue of share right
entitlements up to the following levels:
1.355,511 share rights to Mr BM Howson; and
2.66,658 share rights to Mr HC Williams,
Following a review of the performance criteria for the year ended 30
June 2007 it was determined that this, together with their base pay
and STI, represented an appropriate level and mix of remuneration.
As a result the following rights are to be issued:
1.355,511 share rights to BM Howson; and
2.66,658 share rights to Mr HC Williams.
A further issue of share rights to BM Howson and HC Williams is
to be considered at the Company’s Annual General Meeting for the
performance period 30 June 2008.
Details of the Executive Directors’ short and long term incentives are
set out below. Remuneration policies are currently being reviewed
by the Remuneration Committee for the year ended 30 June 2008.
Specific details relating to the terms and conditions of employment
for each Executive Director are also set out below.
Effect of cessation of office
Under the Company’s Constitution, with the approval of the
Company in a general meeting, the Directors may, upon a Director
ceasing to hold office or at any time after a Director ceases to hold
office whether by retirement or otherwise, pay to the former Director
or any of the legal personal representatives or dependents of the
former Director, in the case of death, a lump sum in respect of past
services of the Director of an amount not exceeding the amount
either permitted by the Corporations Act or ASX Listing Rules.
The Company may contract with any Director to secure payment
of the lump sum to the Director, his or her legal personal
representatives or dependants or any of them, unless prohibited
by the Corporations Act or the ASX Listing Rules.
Payment of superannuation contributions
The Company pays the Directors’ superannuation contributions
of an amount at least necessary to meet the minimum level of
superannuation contributions required under any applicable
legislation to avoid any penalty, charge, tax or impost.
Financial benefit
A Director must ensure that the requirements of the Corporations
Act are complied with in relation to any financial benefit given by the
Company to the Director or to any other related party of the Director.
The Company must not make loans to Directors or provide
guarantees or security for obligations undertaken by Directors
except as may be permitted by the Corporations Act.
Details of Remuneration (audited)
Details of the nature and amount of each major element of the
remuneration of the directors and key employees for the year ended
30 June 2007 are set out below.
B. Service Agreements (audited)
Executive Directors
Remuneration and other terms of employment for the Executive
Directors are formalised in an Executive Service Agreement. The
agreements for the Executive Directors provide for the provision
of performance-related cash bonuses and other benefits. Specific
details relating to the terms and conditions of employment, which
are reviewed annually by the Remuneration Committee, for each
Executive Director is as follows:
Bronte McGregor Howson
- Expiry of service agreement – 31 December 2009;
- Total remuneration of $850,000 per annum (inclusive of
superannuation, benefits and motor vehicle but exclusive of
bonuses);
- Entitlement to short term bonus of $340,000 upon the budgeted
net profit after tax being achieved by the company in a relevant
financial year. If the Company achieves more than 100% but less
than 115% of budget the employee will receive $340,000 plus
$11,333.33 for each percentile from 100% up to 115%. If the
company achieves more than 115% but less than 125% of budget
the employee will receive $510,000 plus $17,000 for each higher
percentile ranking from 115% up to 125%;
...
- Participation in the AHG Performance Rights Plan which awards
the executive director with ordinary shares in the company for nil
consideration, provided specified performance criteria is met.
- Either party can terminate on 12 months’ notice;
- Company may terminate without compensation (excluding
statutory entitlements) under certain conditions including
disobeying a lawful direction, conduct which brings the company
into disrepute, serious misconduct, breach of confidentiality,
being found guilty or being convicted by a court of a serious
criminal offence;
- If employment ceases for any reason, the executive director will
be required to resign as director.
Hamish Calder Williams
- Expiry of service agreement – 30 June 2009;
- Total remuneration of $425,000 per annum (inclusive of
superannuation, benefits and motor vehicles but exclusive
of bonuses);
Remuneration and other terms of employment for the key
employees are formalised in a letter of agreement and may
provide for the provision of performance-related cash bonuses
and other benefits.
The terms of the key employees’ employment may include:
- standard leave entitlements;
- continuing term employment;
- rights of summary dismissal are preserved;
- the total remuneration of each key employee is subject to annual
review, but an increase is not guaranteed;
- termination provisions of 1-3 months.
Specific details relating to the terms and conditions of employment
for each key employee are set out below:
Christopher Bevan Marwick, Chief Operating Officer,
Western Australia
- Participation in the AHG Performance Rights Plan which awards
the executive director with ordinary shares in the company for nil
consideration, provided specified performance criteria is met.
- Continuing term employment;
- Total remuneration of approximately $242,000 per annum
(inclusive of superannuation, benefits and motor vehicles but
exclusive of bonuses);
- Entitlement to monthly bonus payments of an amount equal to
1.5% of the Western Australian dealerships’ monthly operating
profits;
- Executive can terminate on 3 months’ notice;
- Company may terminate without compensation (excluding
statutory entitlements) under certain conditions including
disobeying a lawful direction, conduct which brings the company
into disrepute, serious misconduct, breach of confidentiality,
being found guilty or being convicted by a court of a serious
criminal offence.
- Either party can terminate on 12 months’ notice;
Robert McGrath, Chief Executive Officer, New South Wales
- Entitlement to short term bonus of $127,500 upon the budgeted
net profit after tax being achieved by the company in a relevant
financial year. If the company achieves more than 100% but
less than 115% of budget the employee will receive $127,500
plus $4,250 for each percentile from 100% up to 115%. If the
company achieves more than 115% but less than 125% of budget
the employee will receive $191,250 plus $6,375 for each higher
percentile ranking from 115% up to 125%;
- Company may terminate without compensation (excluding
statutory entitlements) under certain conditions including
disobeying a lawful direction, conduct which brings the company
into disrepute, serious misconduct, breach of confidentiality,
being found guilty or being convicted by a court of a serious
criminal offence;
- If employment ceases for any reason, the executive director will
be required to resign as director
Other Key Employees
Other than the Executive Directors dealt with above, the following
persons are considered key employees of the company:
- Christopher Bevan Marwick
- Robert McGrath
- Gary Gooding
- David William Kiggins
- Susan Dianna Symmons
- Continuing term employment;
- Total remuneration of approximately $352,000 per annum
(inclusive of superannuation, benefits and motor vehicles but
exclusive of bonuses);
- Entitlement to additional bonus payment of $200,000 on the
achievement of the Group’s budget.
- Entitlement to an addition bonus payment of $250,000 upon
a successful acquisition of an agreed acquisition target.
- Executive can terminate on 3 months’ notice;
- Company may terminate without compensation (excluding
statutory entitlements) under certain conditions including
disobeying a lawful direction, conduct which brings the company
into disrepute, serious misconduct, breach of confidentiality,
being found guilty or being convicted by a court of a serious
criminal offence.
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Gary Gooding, Chief Executive Officer, Queensland
C. Share based compensation (audited)
- Continuing term employment;
(i)AHG Performance Rights Plan
- Total remuneration of approximately $250,000 per annum
(inclusive of superannuation, benefits and motor vehicles
but exclusive of bonuses);
The Board has adopted the AHG Performance Rights Plan (Plan).
Under the Plan, rights to acquire shares in the company (Rights)
may be awarded to eligible senior executives of the company as
determined by the Board from time to time. The vesting of these
Rights will be subject to certain specific performance criteria.
At this point only executive directors have been invited to
participate in the Plan.
- Entitlement to additional bonus payment of $50,000 on the
achievement of the Group’s budget.
- Executive can terminate on 1 months’ notice;
- Company may terminate without compensation (excluding
statutory entitlements) under certain conditions including
disobeying a lawful direction, conduct which brings the company
into disrepute, serious misconduct, breach of confidentiality,
being found guilty or being convicted by a court of a serious
criminal offence.
David William Kiggins, GM Business Development
- Continuing term employment
- Base salary of $203,513 (inclusive of superannuation, benefits
and motor vehicle but exclusive of bonuses)
- Entitlement to additional bonus payment of $60,000 on the
achievement of the Group’s budget.
- Entitlement to an additional $1,000 for each 1% that the Group
results exceed budget up to a maximum of $20,000 or 20%
- Executive can terminate on 1 months’ notice.
- Company may terminate without compensation (excluding
statutory entitlements) under certain conditions including
disobeying a lawful direction, conduct which brings the
company into disrepute, serious misconduct, breach of
confidentiality, being found guilty or being convicted by
a court of a serious criminal offence.
Susan Dianna Symmons, Company Secretary
- Continuing term employment
- Base salary of $165,000 (inclusive of superannuation)
- Entitlement to additional bonus payment of $10,000 for each
5% that the Group results exceed budget up to a maximum
of $30,000 or 15%.
- Executive can terminate on 1 months’ notice
- Company may terminate without compensation (excluding
statutory entitlements) under certain conditions including
disobeying a lawful direction, conduct which brings the
company into disrepute, serious misconduct, breach of
confidentiality, being found guilty or being convicted by
a court of a serious criminal offence.
Summary of the terms of the Plan are as follows;
Type of Plan
Awards under the Plan will be structured as Rights to acquire
ordinary shares in the Company for nil consideration, provided
specified performance criteria decided by the Board are met
within defined time restrictions.
The Plan rules allow participation by any executive director of the
Company and other senior executives of the Company deemed to
be eligible by the Board.
Awards under the Plan will be expressed as a number of Rights
to acquire a certain number of ordinary shares in the Company
(generally one share for every Right).
Purchase Price
Plan participants will not be required to pay any amount in respect
of the award of the Rights or on acquisition of the shares pursuant
to the exercise of Rights.
Number of Rights to be issued
The Board will determine the number of Rights to be granted to
each participant through an assessment of market remuneration
practice, performance against budget and in line with the
Company’s executive remuneration strategy. The Board will call
on recommendations from the Remuneration and Nominating
Committee.
Vesting
Subject to certain performance criteria being satisfied (see below),
it is currently proposed that Rights will vest on 30 September each
year (after the finalisation of the Company’s yearly audited financial
statements) during the applicable performance period.
In the normal course, the exact number of Rights that will vest will
be determined by reference to whether the performance criteria has
been achieved. There are two performance criteria as outlined below
for the year ended 30 June 2007.
Rights linked to Total Shareholder Return (TSR) that remain
unvested when the performance criteria are first tested will be
carried forward for re-testing on 30 September in the 2 following
performance periods, after which they will immediately lapse.
...
Rights linked to earnings per share (EPS) that remain unvested when the performance criteria are first tested will immediately lapse.
The Board has retained discretion under the Plan to permit variations to the terms on which Rights are issued (including to permit early
vesting of the Rights) in some limited circumstances, particularly where a “cessation event” or “change of control” event occurs. “Cessation
events” include (among other things) the death, retirement or redundancy of a participant. “Control” has the meaning given to it in section
50AA of the Corporations Act 2001 (Cth).
Performance Criteria
Performance criteria will be designed to align the performance of senior executives with the interests of shareholders. While performance
hurdles will be determined by the Board at its discretion, the current intention is to use TSR and EPS as a measure of performance.
TSR will be determined on the basis of the total shareholder return (including dividends) during the relevant performance period. For the
purpose of calculating the TSR, the share price to be used on the first and last day of a performance period will be the volume weighted
average price for the shares of the Company traded on ASX for the 5 trading days up to and including that day.
EPS will be determined with reference to the percentage increase in EPS over the performance period, with a higher EPS giving a higher
entitlement to Rights vested.
The number of Rights issued to the executives is linked to performance against budget, and then 50% of these Rights are tested against
the TSR criteria and 50% are tested against the EPS criteria to determine the number of Rights which are exercisable.
TSR schedule
The percentage of TSR Rights that will be exercisable will be calculated by reference to the Company’s TSR as follows:
Company’s TSR relative to Reference Group
comprising of a selection of ASX 300 companies
< 51st percentile
Percentage of Rights that are exercisable
0%
≥ 51st percentile but < 75th percentile
50% (plus a pro rata increase of 2% for each
higher percentile ranking up to the 75th percentile)
≥ 75th percentile
100%
EPS schedule
The percentage of EPS Rights that will be exercisable for the Performance Period will be calculated by reference to the Company’s EPS
growth as follows:
Company’s EPS Growth
< 8%
Percentage of Rights that are exercisable
Nil
≥ 8% but < 10%
50%
≥10% but < 12%
75%
≥12%
100%
Cap
The aggregate number of shares subject to outstanding Rights (that is, Rights that have not yet been exercised and that have not lapsed)
that have been awarded under all of the Company’s equity incentive plans will not exceed 5% of the issued share capital.
(ii) AHG Tax Exempt Share Plan
AHG has also introduced a tax exempt share plan that provides Eligible Employees with more than 3 years service with an opportunity
to share in the growth in value of the AHG shares and to encourage them to improve the performance of the Company and its return to
shareholders by the issue of $1,000 of shares which are purchased by the employee by way of salary sacrifice.
(iii) AHG Executive Share Plan
The AHG Executive Share Plan has recently been finalised. The plan will allow certain senior executives the opportunity to salary sacrifice
their salary, commission or bonus to the purchase of AHG shares up to a maximum of $50,000.
53
54
...
Management of the Plans
The Plans will be administered by the Board or a committee to whom the Board has delegated the responsibility for administering the Plan.
The Company has appointed CPU Share Plans Pty Ltd to act as trustee of the Plan (Trustee). The Trustee will, at the direction of the Board
(or Board committee), acquire the Company’s shares either by way of on-market acquisition or by subscription, and the shares will be held
on trust for participants under the Plan.
As explained above, it is the current intention of the Board that the Trustee (or another appointed to act as trustee of the Plan) will
either purchase shares on-market or subscribe for new shares, using funds provided by the Company and hold those shares on trust
for participants under the Plan. Once a participant satisfies his or her performance criteria, the Rights issued to that participant vest,
and the participant may then direct the Trustee to transfer to him or her that number of shares equal to the number of the participant’s
Rights vesting.
D. Details of remuneration (audited)
The following table provides the details of remuneration for all directors of the company and the key employees of the Group with authority
and the nature and amount of the elements of their remuneration for the year ended 30 June 2007:
Short-term and long-term employee benefits
Post
Employment
Benefits
Less,
Commission
Commission
/ Bonus Commission
Cash
/ Bonus
accrued
/ Bonus Share Plan Share Plan
Salary Paid during from June Accrued for
Benefits
Benefits
& fees
the year
2006 June 2007
(2006)
(2007)
$
$
$
$
$
$
Total
Other Non
Monetary
Benefits
$
Superannuation
$
$
Non Executive Directors
Robert John Branchi
68,850
Nil
Nil
Nil
Nil
Nil
37,846
28,263
134,959
Peter William Stancliffe
63,708
Nil
Nil
Nil
Nil
Nil
Nil
5,734
69,442
Giovanni Groppoli
62,291
Nil
Nil
Nil
Nil
Nil
Nil
5,606
67,897
5,328
Nil
Nil
Nil
Nil
Nil
Nil
5,904
11,232
Gregory Joseph Wall
12,083
Nil
Nil
Nil
Nil
Nil
Nil
66,942
79,025
Vernon Charles Wheatley2
24,999
Nil
Nil
Nil
Nil
Nil
Nil
Nil
24,999
David Griffiths1
Executive Directors
Bronte McGregor Howson 712,387
Hamish Calder Williams
284,850
429,244
141,289
(442,500)
(147,500)
680,000
416,7545
1,273,4903
39,158
255,000
83,3495
238,7784
38,226
96,675
990,667
105,113 3,213,646
Key Executives
Christopher Bevan Marwick 187,861
468,845
(105,998)
191,989
Nil
Nil
91,978
42,384
877,059
16,442
86,042
Nil
Nil
Nil
Nil
Nil
2,196
104,680
Robert McGrath
102,500
54,166
Nil
Nil
Nil
Nil
8,131
104,237
269,034
David William Kiggins
150,000
72,926
(12,926)
40,000
Nil
Nil
27,270
15,686
292,956
Susan Dianna Symmons
145,346
Nil
Nil
30,000
Nil
Nil
Nil
16,151
191,497
1,836,645
1,252,512
(708,924)
1,196,989
500,103
1,512,268
242,609
Gary Gooding
TOTAL
494,891 6,327,093
...
1 Mr. Griffiths was appointed a director on 27 February 2007
2 Mr. Wheatley resigned as a director on 24 November 2006.
3 The estimated value of shares issues and dividends under AHG Performance Rights Plan. See table below for further details.
4 The estimated value of share issues and dividend entitlement under AHG Performance Rights Plan. See table below for further details.
5 Value of shares and dividend entitlement under the AHG Performance Rights Plan. These amounts represent entitlement that were
derived for the year ended 30 June 2006 and have been brought to account following the approval at the Company’s annual general
meeting held on 24 November 2006. See table below for further details.
In accordance with the AHG Performance Rights Plan, the following eligible persons have the right to receive the following shares. Due to the
Trust being required to purchase shares to meet the AHG Performance Rights Plan obligations, the following is a summary of the cost of the
shares at 30 June 2007;
AHG Performance Rights Plan
Bronte Howson
Hamish Williams
Total
2007
2006
2007
2006
Share Rights
Share Rights
Share Rights
Share Rights
355,511
156,843
66,658
31,368
422,169
188,211
$
$
$
$
$
$
$2.50
-
392,107
-
78,420
-
470,527
$2.50
444,390
-
83,323
-
527,713
-
$4.35
773,234
-
144,980
-
918,214
-
unsatisfied dividend rights
55,866
24,647
10,475
4,929
TOTAL
1,273,490
416,754
238,778
83,349
Number of shares
2007
2006
Share Rights Share Rights
Shares acquired to
satisfy 2006 rights
Shares acquired to
satisfy 2007 rights
Shares to be purchased
at 30 June 2007
Amounts payable for
66,34129,576
1,512,268
500,103
55
56
...
Comparative details for the year ended 30 June 2006 is as follows:
Short-term employee benefits
Post
Employment
Benefits
Less
Commission
Commission
Cash
Commission
accrued
/ Bonus
Salary
Paid during
from June
Accrued for
& fees
the year
2005
June 2006
$
$
Non
Monetary
Benefits
$
Total
Superannuation
$
$
Non Executive Directors
Robert John Branchi
Nil
Nil
Nil
Nil
30,018
87,200
117,218
Vernon Charles Wheatley
60,000
Nil
Nil
Nil
Nil
Nil
60,000
Gregory Joseph Wall
61,249
Nil
Nil
Nil
Nil
5,513
66,762
Peter William Stancliffe
38,500
Nil
Nil
Nil
Nil
3,465
41,965
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
55,624
Nil
Nil
Nil
Nil
5,006
60,630
Bronte McGregor Howson
750,000
293,717
(293,717)
442,500
45,331
67,500
1,305,331
Hamish Calder Williams
314,200
137,781
(137,781)
147,500
43,512
84,450
589,662
Christopher Bevan Marwick
209,217
252,691
(116,143)
105,998
42,042
12,138
505,943
David Williams Kiggins
140,000
73,193
(53,972)
12,926
28,327
12,139
212,613
10,084
Nil
Nil
Nil
Nil
1,011
11,095
1,638,874
757,382
(601,613)
708,924
189,230
278,422
Giovanni
David
Groppoli4
Griffiths1
Trevor James
Flügge3
Executive Directors
Key Executives
Susan Dianna Symmons
TOTAL
2
2.971,219
1 Mr Griffiths was appointed a director on 27 February 2007 and consequently did not earn any director fees or attend any meetings for the
year ended 30 June 2006.
2 Ms Symmons was appointed company secretary on 27 June 2006.
3 Mr Flügge resigned from AHG on 30 June 2006.
4 Mr Groppoli was appointed a director on 4 July 2006 and consequently did not earn any director fees or attend any meetings for the year
ended 30 June 2006.
...
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Fixed Remuneration
2007
2006
2007
At risk – STI
2006
2007
At risk - LTI
2006
Robert John Branchi
100%
100%
Nil
Nil
Nil
Nil
Vernon Charles Wheatley
100%
100%
Nil
Nil
Nil
Nil
Gregory Joseph Wall
100%
100%
Nil
Nil
Nil
Nil
Peter William Stancliffe
100%
100%
Nil
Nil
Nil
Nil
Giovanni Groppoli
100%
100%
Nil
Nil
Nil
Nil
100%
100%
Nil
Nil
Nil
Nil
26%
63%
21%
37%
53%1
Nil
26%
29%
32%1
Nil
Non Executive Directors
David
Griffiths1
Executive Directors
Bronte McGregor Howson
Hamish Calder Williams
42%
71%
Key Executives
Christopher Bevan Marwick
37%
52%
63%
48%
Nil
Nil
Gary Gooding
18%
Nil
82%
Nil
Nil
Nil
Robert McGrath
42%
Nil
58%
Nil
Nil
Nil
David Williams Kiggins
69%
66%
31%
34%
Nil
Nil
Susan Dianna Symmons 84%
100%
16%
Nil
Nil
Nil
1
The 2007 percentages include the share plan benefits for both 2006 and 2007. If the 2006 benefit was excluded from 2007 remuneration,
the percentages would have been 46% and 26% respectively.
E. Additional Information
Performance of AHG
The company listed on 31 October 2005 and accordingly does not have 4 years previous financial information of the company’s earnings and
the consequences of the company’s performance of shareholder wealth, as required to be disclosed under the Corporations Act Section 300
(1AA). The only relevant information is an increase of earnings of $10.0 million over the previous year profit attributable members and an
increase in EPS from 16.6 cents per share to 20.0 cents per share.
Insurance of Officers
During the year AHG paid insurance premiums in respect of a Directors’ and Officers’ liability insurance contract. The contract insures each
person who is or has been a director or executive officer of the Group against certain liabilities arising in the course of their duties to the
Group. The directors have not disclosed details of the nature of the liabilities covered or the amount of the premium paid in respect of the
insurance contract as such disclosure is prohibited under the terms of the contract.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the
company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.
The company was not a party to any such proceedings during the year.
57
58
...
Non-audit services
The board of directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the
year by the Group’s auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:
- an Auditors Independence Policy has been adopted by the Board specifying the circumstances which it is deemed appropriate for
management to contract the services of the external auditors for non audit work ensuring they do not adversely affect the integrity
and objectivity of the auditor; and
- the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute
of Chartered Accountants in Australia and APES 110 Code of Ethics of Professional Accountants.
The following fees for non-audit services were paid / payable to the external auditors during the year ended 30 June 2007:
CONSOLIDATED
2007
2006
$000
$000
Advisory Services
Fees paid to BDO Kendalls Audit & Assurance (WA) Pty Ltd (formerly Horwath Audit (WA) Pty Ltd)
24
58
Fees paid to BDO Kendalls Corporate Tax (WA) Pty Ltd (formerly Horwath (WA) Pty Ltd)
193
307
TOTAL
217
365
Taxation Services
Auditor’s Independence Declaration
The lead auditor’s independence declaration as required under section 307C of the Corporations Act 2001 has been received and follows the
directors’ report.
Auditor
BDO Kendalls Audit & Assurance (WA) Pty Ltd (formerly Horwath Audit (WA) Pty Ltd) was appointed on 14 June 2005 and continues in office
in accordance with section 327 of the Corporations Act 2001.
Rounding of Amounts
The company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the
“rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order
to the nearest thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of the directors.
Robert J. Branchi, Director
Perth, 26th September 2007
Auditor’s Independence Declaration
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
PO Box 700
WEST PERTH WA 6872
Phone 61 8 9380 8400
Fax 61 8 9380 8499
[email protected]
www.bdo.com.au
ABN 79 112 284 787
26 September 2007
The Directors
Automotive Holdings Group Limited
21 Old Aberdeen Place
WEST PERTH WA 6005
Dear Sirs
DECLARATION OF INDEPENDENCE BY BDO KENDALLS TO THE DIRECTORS
OF AUTOMOTIVE HOLDINGS GROUP LIMITED
As lead auditor of Automotive Holdings Group Limited for the year ended 30 June
2007, I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
•
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Automotive Holdings Group Limited and the entities it
controlled during the period.
Yours faithfully
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Glyn O’Brien
Director
59
60
Income Statements
As at 30 June 2007
Note
Revenue from continuing operations
CONSOLIDATED
2007
2006
$000
$000
PARENT
2007
$000
2006
$000
3
2,231,907
1,388,984
32,337
19,032
Cost of sales
(1,873,596)
(1,154,642)
-
-
Gross Profit
358,311
234,342
32,337
19,032
Employee benefits expense
(166,002)
(110,007)
(9,163)
(7,486)
Depreciation and amortisation expense
4
(8,459)
(6,407)
(585)
(382)
Finance costs expense
4
(20,795)
(13,067)
(1,897)
(1,360)
Advertising and promotion
(21,866)
(18,729)
(650)
(470)
Occupancy costs
(30,673)
(22,062)
(767)
(304)
Vehicle preparation and service
(15,626)
(9,008)
-
-
Supplies and outside services
(16,652)
(8,201)
(813)
(379)
Motor vehicle expenses
(7,564)
(4,040)
(261)
(170)
Equipment rental
(4,908)
(4,842)
(287)
(167)
Other expenses
(22,644)
(7,563)
(1,981)
(1,449)
34
251
212
-
-
Profit before income tax
43,373
30,628
15,933
6,865
5
(13,178)
(9,427)
1,400
984
Profit from continuing operations
30,195
21,201
17,333
7,849
40
3,021
1,980
-
-
Profit for the year
33,216
23,181
17,333
7,849
Profit attributable to minority interest
(3,041)
(2,977)
-
-
Automotive Holdings Group Limited
30,175
20,204
17,333
7,849
Cents
Cents
Share of net profit of jointly controlled operation
Income tax (expense)/benefit
Profit from discontinued operations
Profit attributable to members of
Earnings per share for profit attributable to
the ordinary equity holders of the company:
Basic earnings per share
36
20.0
16.6
Diluted earnings per share
36
20.0
16.6
The above income statements should be read in conjunction with accompanying notes.
Balance Sheets
61
As at 30 June 2007
Note
CONSOLIDATED
2007
2006
$000
$000
PARENT
2007
$000
2006
$000
ASSETS
Current Assets
Cash and cash equivalents
6
28,652
42,781
3,886
27,052
Trade and other receivables
7
159,021
81,445
2,197
1,992
Inventories
8
442,495
245,897
-
-
Other current assets
9
5,554
5,342
1,809
790
40
-
8,176
-
-
Total current assets
Assets of disposal group classified as held for sale
635,722
383,641
7,892
29,834
Non-current assets
Other financial assets
10
-
-
202,316
78,739
Available-for-sale financial assets
11
3,467
416
3,457
406
Receivables
7
-
-
27,685
18,834
Property, plant and equipment
12
81,039
31,330
2,251
1,471
Intangible assets
13
213,102
71,434
59,943
484
Deferred tax assets
14
14,036
8,663
2,548
1,893
Total non-current assets
311,644
111,843
298,200
101,827
Total assets
947,366
495,484
306,092
131,661
LIABILITIES
Current liabilities
Trade and other payables
15
119,596
76,473
5,757
3,028
Borrowings
16
424,358
228,625
12,058
227
Current tax liabilities
17
11,152
9,640
10,651
8,898
Provisions
18
10,436
6,984
700
620
565,542
321,722
29,166
12,773
Liabilities directly associated with assets of a
disposal group classified as held for sale
40
-
424
-
-
Total current liabilities
565,542
322,146
29,166
12,773
Non-current liabilities
Borrowings
19
69,172
25,266
12,324
8,336
Deferred tax liabilities
20
1,818
592
725
14
Provisions
21
18,358
9,762
1,399
1,240
Total non-current liabilities
89,348
35,620
14,448
9,590
Total liabilities
654,890
357,766
43,614
22,363
Net assets
292,476
137,718
262,478
109,298
EQUITY
Contributed equity
22
260,321
110,407
260,321
110,407
Reserves
23
1,369
-
1,436
-
Retained profits/(accumulated losses)
23
30,453
15,781
721
(1,109)
Parent entity interest
292,143
126,188
262,478
109,298
24
333
11,530
-
-
Total equity
Minority interest
292,476
137,718
262,478
109,298
The above balance sheets should be read in conjunction with the accompanying notes
62
Statements of Changes in Equity
For the Year Ended 30 June 2007
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
Total equity at the beginning of the financial year
137,718
70,463
109,298
55,168
Revaluation of available for sale financial assets
1,436
-
1,436
-
Foreign currency translation reserve movement
(67)
-
-
-
Net income recognised directly in equity
1,369
-
1,436
-
Profit for the year
33,216
23,181
17,333
7,849
Total recognised income and expense for the year
34,585
23,181
18,769
7,849
Contributions of equity, net of transactions costs
149,914
55,228
149,914
55,231
Dividends provided for or paid
26
(15,503)
(8,950)
(15,503)
(8,950)
Additional minority interest
105
-
-
-
Deconsolidation of minority interest
(13,435)
-
-
-
Dividends paid to minority interests
(908)
(2,204)
-
-
120,173
44,074
134,411
46,281
Total equity at the end of the financial year
292,476
137,718
262,478
109,298
Members of Automotive Holdings Group Limited
31,544
20,204
18,769
7,849
Minority interest
3,041
2,977
-
-
34,585
23,181
18,769
7,849
Note
Transactions with equity holders in their
capacity as equity holders:
Total recognised income and expense for the
year attributable to:
The above statements of changes in equity should be read in conjunction with the accompanying notes.
Cash Flow Statements
63
For the Year Ended 30 June 2007
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
2,406,603
1,765,989
9,215
6,654
(inclusive of GST)
(2,404,854)
(1,729,679)
(16,708)
(8,944)
1,749
36,310
(7,493)
(2,290)
Interest and costs of finance paid
(20,795)
(14,500)
(1,583)
(1,360)
Income taxes (paid) / received
(16,791)
(6,958)
(13,534)
8,519
Note
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees
Interest received
2,375
1,771
1,938
2,154
27
(33,462)
16,623
(20,672)
7,023
Dividends and distributions received
48
19
20,991
10,788
Payments for property, plant and equipment
(19,118)
(10,425)
(1,141)
(408)
29
(91,234)
-
(88,821)
-
Payment for investments (16,113)
(570)
(16,113)
(570)
Proceeds of sale of property, plant and equipment
3,908
2,836
69
42
Proceeds on sale of goodwill
13,504
-
-
-
Payment for purchase of businesses
(36,736)
-
(36,736)
-
Loans from related parties
-
-
22,971
-
Loans to related parties
-
-
-
(6,835)
Net cash (outflow) inflow from investing activities
(145,741)
(8,140)
(98,780)
3,017
Proceeds from borrowings
87,651
12,073
17,530
-
Repayment of borrowings
-
(23,068)
(323)
(34,704)
transaction costs
94,582
39,917
94,582
55,229
Dividends paid to minority shareholders
(1,656)
-
-
-
Dividends paid to company’s shareholders
(15,503)
(8,950)
(15,503)
(8,950)
Net cash inflow from financing activities
165,074
19,972
96,286
11,575
Net increase (decrease) in cash and cash equivalents
(14,129)
28,455
(23,166)
21,615
Cash and cash equivalents at the beginning of the year
42,781
14,326
27,052
5,437
Cash and cash equivalents at the end of the year
28,652
42,781
3,886
27,052
Net cash inflow (outflow) from operating activities
Cash flows from investing activities
Payment for purchase of controlled entity,
net of cash acquired
Cash flow from financing activities
Proceeds from issue of shares, net of
6
Financing arrangements (notes 16 & 19)
Non-cash financing and investing activities (note 27)
The above cash flow statements should be read in conjunction with accompanying notes.
64
Notes to the Financial Statements
30 June 2007
Note 1 Summary of Significant Accounting Policies
The principle accounting policies adopted in the preparation of
the financial report are set out below. These policies have been
consistently applied to all the years unless otherwise stated.
The financial report includes separate financial statements for
Automotive Holdings Group Limited as an individual entity and
the consolidated entity consisting of Automotive Holdings Group
Limited and its subsidiaries.
Automotive Holdings Group Limited is a listed public company,
incorporated and domiciled in Australia.
(a) Basis of preparation
decision that, in principle, all options that currently exist
under International Financial Reporting Standards (IFRS)
should be included in Australian Equivalents to International
Financial Reporting Standards (AIFRS), and additional
Australian disclosures initially required should be eliminated,
other than those now considered particularly relevant in the
Australian reporting environment or those which would be
in conflict with the Corporations Act. Early adoption of the
revised standard has had no effect on any of the amounts
recognised in the financial report but certain disclosures
which are no longer required have been omitted.
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting
Standards Board, Australian Accounting Interpretations and
the Corporations Act 2001.
This includes applying the pronouncements to the comparatives
in accordance with AASB 108 Accounting Policies, Changes
in Accounting Estimates and Errors. No adjustments to
any of the financial statements were required for the above
pronouncement, but certain disclosures are no longer
required and have therefore been omitted.
Compliance with IFRS
Historical cost convention
Australian Accounting Standards include Australian equivalents
to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the consolidated financial
statements and notes of Automotive Holdings Group Limited
comply with International Financial Reporting Standards (IFRS).
The parent entity financial statements and notes also comply
with IFRS except that it has elected to apply the relief provided
to parent entities in respect of certain disclosure requirements
contained in AASB 132 Financial Instruments: Presentation
and Disclosure.
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation
of available-for-sale financial assets, financial assets and
liabilities at fair value through profit or loss and certain
classes of property, plant and equipment.
Early adoption of standards
The following new accounting standards, amendments to
standards and interpretations have been issued and are
not mandatory as at 30 June 2007. They are available for
early adoption and have been applied in preparing this
financial report.
The company has made a formal written election to change
accounting policies early from adoption of these new standards,
interpretations and consequential amendments in accordance
with s334 (5) of the Corporations Act:
- revised AASB 101 Presentation of Financial Statements
(issued October 2006)
The company has elected to early adopt the revised version
of AASB 101: Presentation of Financial Statements for
the annual financial period commencing 1 July 2006. The
revised standard is mandatory for annual reporting periods
commencing on or after 1 January 2007. The amendments
result from an Australian Accounting Standards Board (AASB)
Critical accounting estimates, assumptions and judgements
in applying accounting policies.
Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that may have a financial impact
on the entity and that are believed to reasonable under the
circumstances.
The group makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The following
estimates and assumptions have an element of risk which
may result in an adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
- Note 1(g) Impairment of Assets
- Note 1(o) Intangibles
- Note 21(a) Warranties
- Note 1(k) Demo Provisions
- Note 1(k) Used Car Provisions
- Note 1(t) Share-based payments
In relation to the aforementioned matters the most
significant area of estimates relates to intangibles and
impairment of assets.
...
The group tests annually whether intangibles have suffered
any impairment in accordance with the accounting policy stated
in note 1(g). The recoverable of cash generating units have
been determined based on value in use calculations. These
calculations require the use of assumptions. Refer to note 13
for details of these assumptions and the potential impact of
changes to the assumptions.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets
and liabilities of all entities controlled by Automotive Holdings
Group Limited, the ultimate parent entity, as at 30 June 2007
and the results of all controlled entities for the year then ended.
Automotive Holdings Group Limited and its controlled entities
together are referred to in this financial report as the Group or
consolidated entity. Subsidiaries are all those entities (including
special purpose entities) over which the Group has the power
to govern the financial and operating policies, generally
accompanying a shareholding of more than one-half of the
voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The Group applies a policy of treating transactions with minority
interests as transactions with parties external to the Group.
The effects of all transactions between entities in the Group are
eliminated in full.
Minority interests in the results and equity of subsidiaries are
shown separately in the consolidated income statement and
balance sheet respectively.
(ii) Joint ventures
Jointly controlled operations
The proportionate interests in the assets and liabilities of a
joint venture operation have been incorporated in the financial
statements under the appropriate headings. The share of the
profits or losses is recognised in the consolidated income
statement. Details of the joint venture are set out in note 34.
(c) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. It is recognised to the extent that it is
probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. Amounts disclosed
as revenue are net of returns, trade allowances, rebates and
amounts collected on behalf of third parties. The following
specific recognition criteria must also be met before revenue
is recognised:
(i) Sale of goods
Revenue from the sale of goods is recognised upon the delivery
of goods to the customer.
(ii) Rendering of services
Revenue from the rendering of a service is recognised in the
period in which the service is provided.
(iii) Commissions and finance income
Commissions and finance income are recognised in the
period in which the related sale of goods or rendering of
service is recognised.
(iv) Interest income
Interest income is recognised on a time proportionate basis
using the effective interest method.
(v) Dividends
Dividends are recognised as revenue when the right to receive
payment is established.
(d) Income Tax
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on the
Australian Taxation Office rate of 30% adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and
their carrying amount in the financial statements.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled. The relevant tax rates
are applied to the cumulative amounts of deductible and taxable
temporary difference to measure the deferred tax asset or
liability. An exception is made for certain temporary differences
arising from the initial recognition of an asset or a liability. No
deferred tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction, other than
a business combination, that at the time of the transaction did
not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary
differences only if it is probable that future taxable amounts
will be available to utilise those temporary differences.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent
entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
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Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority.
Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly
in equity.
Tax consolidation legislation:
Automotive Holdings Group Limited and its wholly-owned
Australian controlled entities have implemented the tax
consolidation legislation as of 1 April 2005.
The head entity, Automotive Holdings Group Limited, and
the controlled entities in the tax consolidated group continue
to account for their own current and deferred tax amounts.
These tax amounts are measured as if each entity in the tax
consolidated group continues to be a stand alone taxpayer
in its own right.
In addition to its own current and deferred tax amounts,
Automotive Holdings Group Limited also recognises the
current tax liabilities (or assets) and the deferred tax assets
arising from unused tax credits assumed from controlled
entities in the tax consolidated group.
(e) Leased assets
Leases of property, plant and equipment where the Group
has substantially all the risks and rewards of ownership are
classified as finance leases. Assets acquired under finance
leases are capitalised at the lease’s inception at the lower
of the fair value of the leased asset and the present value of
the minimum lease payments. They are amortised over the
anticipated life of the relevant lease. Lease payments are
allocated between interest expense and reduction in the
lease liability to achieve a constant rate on the finance
balance outstanding.
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases (note 25). Operating lease assets are not capitalised and
rental payments are charged against operating profit in the
period in which they are incurred.
(f) Business combinations
The purchase method of accounting is used for all business
combinations regardless of whether equity instruments or
other assets are acquired. Cost is measured as the fair value
of the assets given up, shares issued or liabilities undertaken
at the date of the acquisition plus incidental costs directly
attributable to the acquisition.
Where equity instruments are issued in an acquisition, the fair
value of the instruments is their published market price as at
the date of exchange unless, in rare circumstances, it can be
demonstrated that the published price at the date of exchange
is an unreliable indicator of fair value and that other evidence
and valuation methods provide a more reliable measure of
fair value. Transaction costs arising on the issue of equity
instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective
of the extent of any minority interest. The excess of the cost
of acquisition over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill. If the
cost of acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognised directly
in the income statement, but only after a reassessment of the
identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the
amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity’s incremental borrowing rate, being the rate at which
a similar borrowing could be obtained from an independent
financier under comparable terms and conditions.
(g) Impairment of assets
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in
circumstances indicate that they might be impaired. Assets
that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units).
...
(h) Cash and cash equivalents
For cash flow statement presentation purposes, cash and
cash equivalents includes cash on hand, deposits at call with
financial institutions and other highly liquid investments with
short periods to maturity which are readily convertible to cash
on hand and are subject to an insignificant risk of changes in
value, net of outstanding bank overdrafts.
(i) Bank
Outstanding cheques are recorded as payables whilst
outstanding lodgments are shown as receivables.
(j) Trade receivables
All trade debtors are recognised at the amounts receivable as
they are due for settlement no more than 60 days from the date
of recognition.
Collectibility of trade debtors is reviewed on an ongoing basis.
Debts which are known to be uncollectible are written off. A
provision for doubtful debts is raised when some doubt as to
collection exists.
(k) Inventories
New motor vehicles are stated at the lower of cost and net
realisable value. Demonstrator vehicles are written down
to net realisable value. Costs are assigned on the basis of
specific identification.
Used motor vehicles are stated at the lower of cost and net
realisable value on a unit by unit basis. Net realisable value has
been determined by reference to the likely net realisable value
given the age and condition of the vehicle at year end. Costs are
assigned on the basis of specific identification.
Parts and accessories are stated at the lower of cost and net
realisable value. Costs are assigned to individual items on the
basis of weighted average cost.
Work in progress is stated at cost. Cost includes labour
incurred to date and consumables utilized during the service.
Costs are assigned to individual customers on the basis of
specific identification.
(l) Investments and other financial assets
The Group classifies its investments or other financial assets
in the following categories: available-for-sale financial assets,
other financial assets (shares in subsidiaries) and loans and
receivables. The classification depends on the purpose for
which the investments or other financial assets were acquired.
Management determines the classification of its investments
at initial recognition and re-evaluates this designation at each
reporting date.
(i) Other Financial Assets
Other financial assets comprise shares in subsidiaries (notes
10 and 28). Assets in this category are classified as non-current
as they are not expected to be realised within 12 months of the
balance sheet date.
(ii) Available-for-sale financial assets
Available for sale financial assets, comprising principally
marketable equity securities, are non-derivatives that are either
designated in this category or not classified in any of the other
categories. They are included in non-current assets unless
management intends to dispose of the investment within 12
months of the balance sheet date.
(iii) Loans and Receivables
Loans and receivables are non-derivative financial assets
with fixed and determinable payments that are not quoted in
an active market. They are included in current assets, (Note
7) except for those with maturities greater than 12 months
after the balance date which are classified as non-current
assets. Loans and receivables are included in trade and other
receivables in the balance sheet.
Purchases and sales of investments are recognised on the
trade-date on which the Group commits to purchase or sell
the asset. Investments are initially recognised at fair value plus
transaction costs. Financial assets are derecognised when
the rights to receive cash flows from the financial assets have
expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
Available-for-sale financial assets are subsequently carried
at fair value. Loans and receivables and held-to-maturity
investments are carried at amortised cost using the effective
interest method. Unrealised gains and losses arising from
changes in the fair value of non-monetary securities classified
as available-for-sale are recognised in equity in the availablefor-sale investments revaluation reserve. When securities
classified as available-for-sale are sold or impaired, the
accumulated fair value adjustments are included in the income
statement as gains and losses from investment securities.
The fair values of quoted investments are based on current
bid prices. If the market for a financial asset is not active (and
for unlisted securities), the Group establishes fair value by
using valuation techniques. These include reference to the fair
values of recent arm’s length transactions, involving the same
instruments or other instruments that are substantially the
same, discounted cash flow analysis, and pricing models to
reflect the issuer’s specific circumstances.
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The Group assesses at each balance date whether there is
objective evidence that a financial asset or group of financial
assets is impaired. In the case of equity securities classified
as available-for-sale, a significant or prolonged decline in fair
value of a security below its cost is considered in determining
whether the security is impaired. If any such evidence exists
for available-for-sale financial assets, the cumulative loss –
measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that financial
asset previously recognised in the income statement in equity
instruments are not reversed through the income statement.
(m) Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets
(such as publicly traded derivatives and available-for-sale
securities) is based on quoted market prices at the balance
sheet date. The quoted market price used for financial assets
held by the Group is the current bid price.
The fair value of financial instruments that are not traded in
an active market is determined using valuation techniques. The
Group uses a variety of methods and makes assumptions that
are based on market conditions existing at each balance date.
The nominal value less estimated credit adjustments of trade
receivables and payables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available
to the Group for similar financial instruments.
(n) Property, plant and equipment
Plant and equipment (excluding property and land) are
measured on a cost basis and are depreciated over their
estimated useful economic lives, as follows:
Life
Owned plant & equipment
2 – 20 years
Motor vehicles
4 - 8 years
Plant & equipment under lease
Term of Lease
Land and buildings are shown at cost less subsequent
depreciation for buildings. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can
be measured reliably.
All other repairs and maintenance are charged to the
income statement during the financial period in which
they are incurred.
The cost of improvements to or on leasehold properties is
amortised over the unexpired period of the lease (including
option periods) or the estimated useful life of the improvement
to the consolidated entity, whichever is the shorter.
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date (note 1(g)).
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
income statement.
(o) Intangibles
(i) Goodwill on acquisition:
The difference between the purchase consideration and the
fair value of identifiable net assets acquired is initially brought
to account as goodwill or discount on acquisition. Goodwill on
the acquisition of subsidiaries is included in intangible assets.
Goodwill is not amortised. Instead, goodwill is tested for
impairment annually or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing.
(ii) Franchise rights:
The Group has franchise agreements with manufacturers for
the distribution of new vehicles and parts. The franchise rights
agreements have varying terms and periods of renewal. The
Group considers that the franchise agreements will be renewed
indefinitely and accordingly no amortisation is charged on these
assets. The Group assesses the franchise rights for impairment
on a periodic basis, but at least annually, and where there are
indications of impairment the franchise rights values
are adjusted to their recoverable values.
(p) Trade and other payables
These amounts represent liabilities for goods and services
provided to the consolidated entity prior to the end of financial
year and which are unpaid. The amounts are generally
unsecured and are usually paid within 30 days of recognition.
...
(q) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption amount
is recognised in the income statement over the period of the
borrowings using the effective interest method. Fees paid on
the establishment of loan facilities, which are not incremental
costs relating to the actual draw-down of the facility, are
recognised as prepayments and amortised on a straight-line
basis generally over the estimated term of the facility.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
(r) Borrowing costs
Borrowing costs are recognised as expenses in the period in
which they are incurred.
Borrowing costs include:
- interest on bank overdrafts, short and long-term borrowings
- interest on new vehicle bailment arrangements
- amortisation of ancillary costs incurred in connection with the
arrangement of borrowings
(s) Provisions
Provisions for legal and other claims are recognised when
the Group has a present legal or constructive obligation as a
result of past events, it is more likely than not that an outflow
of resources will be required to settle the obligation and the
amount has been reliably estimated. An extended mechanical
warranty is offered on the majority of the Group’s retail used car
sales. A fee is paid to an independent third party to administer
the warranty programme and an amount is set aside as
a provision for future warrantable repairs in respect of all
policies taken up. All warrantable repairs are submitted to the
administrator for approval and, once approved, are debited to
the provision.
(t) Employee benefits
(i) Wages, salaries and annual leave
The provision for employee entitlements to wages, salaries
(including non-monetary benefits) and annual leave expected
to be settled within 12 months of the reporting date are
recognised in current liabilities in respect of employees’
services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled.
(ii) Long Service Leave
The liability for long service leave expected to be settled within
12 months of the reporting date is recognised in the provision
for employee entitlements and is measured in accordance with
the above.
The liability for long service leave expected to be settled more
than 12 months from the reporting date is recognised in the
provision for employee entitlements and measured as the
present value of expected future payments to be made in
respect of services provided by employees up to the reporting
date. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of
service. Expected future payments are discounted using
market yields at the reporting date on national government
bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash flows.
(iii) Profit-sharing and bonus plans
The Group recognises a liability and an expense for
bonuses and profit-sharing based on a formula that takes
into consideration the profit attributable to the company’s
shareholders after certain adjustments. The Group recognises
a provision where contractually obliged or where there is a past
practice that has created a constructive obligation.
(iv) Share-based payments
Share-based compensation benefits are provided to eligible
senor executives of the company via the AHG Performance
Rights Plan. Information relating to this scheme is set out
in the director’s report.
The fair value of performance rights is recognised as an
employee benefit expense based on the probability of meeting
certain performance hurdles during a performance period.
At each balance date, the entity revises its estimate of the
number of performance rights that are expected to become
exercisable. The employee benefit expense recognised each
period takes into account the most recent estimates.
(u) Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
(v) Dividends
Provision is made for the amount of any dividend declared,
determined or publicly recommended by the directors on
or before the end of the financial year but not distributed
at balance date.
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(w) Earnings per share
(i) Basic earnings per share:
Basic earnings per share is determined by dividing profit
attributable to equity holders of the company, excluding any
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
(ii) Diluted earnings per share:
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs
associated with the dilutive potential ordinary shares and the
weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential
ordinary shares.
(x) New motor vehicle stock and related bailment
Motor vehicles secured under bailment plans are provided to
the Group under bailment agreements between the floor plan
loan providers and entities within the Group. The Group obtains
title to the vehicles immediately prior to sale. The floor plan
providers treat the vehicles from a practical point of view as
forming part of the Group’s trading stock. Both the inventory
value and the corresponding floor plan obligation have been
included in the financial statements although ownership of
such inventory rests with the floor plan financiers.
(y) Rounding of amounts
The company is of a kind referred to in Class Order
98/0100, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the
financial report. Amounts in the financial report have been
rounded off in accordance with that Class Order to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
(z) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other
receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation
authority, are presented as operating cash flow.
(aa) Segment reporting
A business segment is a group of assets and operations
engaged in providing products or services that are subject to
risks and returns that are different to those of other business
segments. A geographical segment is engaged in providing
products or services within a particular economic environment
and is subject to risks and returns that are different from those
of segments operating in other economic environments.
(ab) Non-current assets (or disposal groups) held for
sale and discontinued operations
Non-current assets (or disposal groups) are classified as held
for sale and stated at the lower of their carrying amount and
fair value less costs to sell if their carrying amount will be
recovered principally through a sale transaction rather than
through continuing use.
An impairment loss is recognised for any initial or subsequent
write-down of the assets (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases
in fair value less costs to sell of an asset (or disposal group),
but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date
of the sale of the non-current assets (or disposal group)
is recognised at the date of derecognition.
Non-current assets (including those that are part of a
disposal group) are not depreciated or amortised while they
are classified as held for sale. Interest and other expenses
attributable to the liabilities of a disposal group classified as
held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets
of a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet. The
liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the balance sheet.
A discontinued operation is a component of the entity that
has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical
area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a
subsidiary acquired exclusively with a view to resale. The results
of discontinued operations are presented separately on the face
of the income statement.
...
(ac) Financial guarantee contracts
Financial guarantee contracts are recognised as a financial
liability at the time the guarantee is issued. The liability is
initially measured at fair value and subsequently at the higher
of the amount determined in accordance with AASB 137
Provisions, Contingent Liabilities and Contingent Assets and
the amount initially recognised less cumulative amortisation,
where appropriate.
The fair value of financial guarantees is determined as the
present value of the difference in net cash flows between the
contractual payments under the debt instrument and the
payment that would be required without the guarantee, or the
estimated amount that would be payable to a third party for
assuming the obligation.
Where guarantees in relation to loans or other payables of
subsidiaries or associates are provided for no compensation,
the fair values are accounted for as contributions as part of
the cost of the investment.
Change in accounting policy
The policy recognising financial guarantee contracts as
financial liabilities was adopted for the first time in the current
financial year. In previous reporting periods, a liability for
financial guarantee contracts was only recognised if it was
probable that the debtor would default and a payment would
be required under the contract.
The change in policy was necessary following the change
to AASB 139 Financial Instruments; Recognition and
Measurement made by AASB 2005-9 Amendments to
Australian Accountant Standards in September 2005.
The parent entity has reviewed the level of financial
guarantees and the existing contractual payments under the
debt instruments and considers there is no material impact of
the application of the standard. Accordingly the retrospective
application of this standard has not resulted in any restatement
of the financial statements.
(ad) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘functional currency’). The consolidated financial statements
are presented in Australian dollars, which is AHG Limited’s
functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as part of the net
investment in a foreign operation.
Translation differences on non-monetary financial assets and
liabilities are reported as part of the fair value gain or loss.
(iii) Group companies
The results and financial position of all the Group entities
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the balance sheet;
-income and expenses for each income statement are
translated at average exchange rates (unless this is not a
reasonable approximate of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions) and
-all resulting exchange differences are recognized as a
separate component of equity.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and of
borrowings are taken to shareholders’ equity.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
(ae)Accounting standards issued not yet effective
The following new/amended accounting standards and
interpretations have been issued, but are not mandatory for
financial years ended 30 June 2007. They have not been adopted
in preparing the financial report for the year ended 30 June
2007 and are expected to impact the entity in the period of
initial application. In all cases the entity intends to apply these
standards from application date as indicated in the table below.
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AASB Reference
Title and Affected
Standard(s):
Nature of Change
Application
Date:
Impact on Initial
Application
AASB Interpretation
10 (issued Sept 2006)
Interim Financial
Reporting and
Impairment
Prevents the reversal of
impairment losses on
goodwill, investments in
equity instruments carried
at cost and available-forsale financial assets being
reversed in the annual
financial report.
Periods
commencing
on or after
1 November
2006
There will be no impact
because the entity has
not previously made any
impairment write-downs
on these items during an
interim reporting period
(or has not subsequently
reversed such impairment
write-downs).
AASB Interpretation
11 (issued Feb 2007)
AASB 2 – Group
and Treasury Share
Transactions
Clarifies the accounting
treatment under AASB 2:
Share-Based Payments
where the parent entity
grants rights to its equity
instruments to employees
of its subsidiaries, or
where a subsidiary grants
to its employees rights to
equity instruments of its
parent.
Periods
commencing
on or after
1 March 2007
There will be no impact
because at the reporting
date neither the entity
nor its parent entity has
granted any rights to equity
instruments for employee
services.
AASB 2007-4
(issued Apr 2007)
Amendments
to Australian
Accounting
Standards
arising from ED
151 and Other
Amendments
[AASB 1, 2, 3, 4, 5,
6, 7, 102, 107, 108,
110, 112, 114, 116,
117, 118, 119, 120,
121, 127, 128, 129,
130, 131, 132, 133,
134, 136, 137, 138,
139, 141, 1023 &
1038]
Inserts accounting
treatment options that
currently exist under
IFRSs back into AIFRSs
and removes Australianspecific disclosures that
were originally added
into AIFRSs on first-time
adoption from 1 January
2005.
Periods
commencing
on or after
1 July 2007
Most changes relate to
certain Australian-specific
disclosures not being
required.
Customer Loyalty
Programmes
The fair value of revenue
is to be allocated between
sales and reward credits,
resulting in a portion of
revenue being deferred
until reward credits are
redeemed.
Periods
commencing
on or after
1 July 2008
AASB
Interpretation 13
The entity does not intend to
adopt any reinstated options
for accounting treatment
when the standard is
adopted. As such, there
here will be no future
financial impacts on the
financial statements.
There will be no impact
as the entity does not
have a customer loyalty
programme
...
AASB Reference
Title and Affected
Standard(s):
Nature of Change
Application
Date:
Impact on Initial
Application
AASB 123
(revised Jun 2007)
Borrowing Costs
To the extent that
borrowing costs are
directly attributable to the
acquisition, construction
or production of a
qualifying asset, the option
of recognising borrowing
costs immediately as
an expense has been
removed. Consequently
all borrowing costs for
qualifying assets will have
to be capitalised.
Periods
commencing
on or after
1 January 2009
The transitional provisions
of this standard only require
capitalisation of borrowing
costs on qualifying assets
where commencement date
for capitalisation is on or
after 1 January 2009. As
such, there will be no impact
on prior period financial
statements when this
standard is adopted.
AASB 7
(issued Aug 2005)
Financial
Instruments:
Disclosures
Replaces the disclosure
requirements relating
to financial instruments
currently included in
AASB 132: Disclosure and
Presentation
Annual periods
commencing
on or after
1 January 2007
As this is a disclosure
standard only, there
will be no impact on
amounts recognised in
the financial statements.
However, various additional
disclosures will be required
about the group’s and the
parent entity’s financial
instruments.
AASB 8
(Issued Feb 2007)
Operating
Segments
Replaces the disclosure
requirements of AASB 114:
Segment Reporting.
Periods
commencing
on or after
1 January 2009
As this is a disclosure
standard only, there will
be no impact on amounts
recognised in the financial
statements. However,
disclosures required for the
operating segments will
be significantly different to
what is currently reported
(business and geographical
segment).
Note 2 Segment Information
Description of Segments
Primary Reporting – Business Segments
AHG is made up of two operating divisions in which it operates within the geographical area of Australia:
- Automotive Retail – operating from 100 locations, from 24 manufacturers, including both continuing and discontinuing operations; and
- Logistics – comprising AHG’s automotive parts warehousing and distribution business, refrigerated transport, cold storage and
distribution and motorcycle distribution.
73
74
...
Segment Reporting 2007
Revenue
Automotive Retail
$000
1,983,984
Share of net profits of joint venture partnership
Logistics
$000
247,923
Discontinued
$000
80,487
Consolidated
$000
2,312,394
-
251
-
251
1,983,984
248,174
80,487
2,312,645
Unallocated corporate revenue
-
Total segment revenue
Total revenue
2,312,645
Segment result
36,184
7,189
4,880
48,253
Unallocated corporate expenses
-
Income tax expense
(15,037)
Profit for the year
33,216
Depreciation and amortisation
Segment assets
5,995
2,464
135
8,594
836,112
96,415
-
932,527
Unallocated corporate assets
Total consolidated assets
14,839
947,366
Segment liabilities
-
632,519
Unallocated corporate liabilities
553,336
79,183
22,371
Total consolidated liabilities
654,890
Acquisition of property, plant and equipment,
intangibles and other non current segment assets
180,340
25,727
-
206,067
Automotive Retail
$000
1,186,703
Logistics
$000
202,069
Discontinued
$000
227,442
Consolidated
$000
1,616,214
-
212
-
212
1,186,703
202,281
227,442
1,616,426
Unallocated corporate revenue
-
Segment Reporting 2006
Revenue
Share of net profits of joint venture partnership
Total segment revenue
Total revenue
Segment result
1,616,426
2,877
33,506
Unallocated corporate expenses
24,313
6,316
-
Income tax expense
(10,325)
Profit for the year
Depreciation and amortisation
23,181
4,133
1,758
516
6,407
374,210
78,852
8,176
461,238
Unallocated corporate assets
34,246
Segment assets
Total consolidated assets
Segment liabilities
495,484
424
347,402
Unallocated corporate liabilities
294,505
52,473
10,364
Total consolidated liabilities
Acquisition of property, plant and equipment,
intangibles and other non current segment assets
357,766
12,786
2,493
570
15,849
...
Note 3 Revenue
CONSOLIDATED
PARENT
2007
2006
2007
2006
From continuing operations:
Sales revenue
$000
$000
$000
$000
2,151,855
1,346,340
-
-
74,563
38,802
8,524
6,243
2,226,418
1,385,142
8,524
6,243
2,375
1,732
1,938
2,154
48
19
20,991
10,074
2
-
(13)
3
3,064
2,091
897
558
Sale of goods
Rendering of services
Other revenue:
Interest
Dividends
Net profit (loss) on disposal of vehicles, plant,
furniture and equipment
Other revenue Total revenue
From discontinued operations (Note 40)
5,489
3,842
23,813
12,789
2,231,907
1,388,984
32,337
19,032
80,487
227,442
-
-
Note 4 Expenses
CONSOLIDATED
PARENT
2007
2006
2007
2006
Profit before income tax includes the following specific expenses:
Depreciation
$000
$000
$000
$000
Vehicles, plant, furniture and equipment
4,610
4,060
404
254
113
63
-
-
4,723
4,123
404
254
2,976
1,930
181
128
Land and buildings
Total depreciation
Amortisation
Capitalised leased assets
Leasehold improvements
760
354
-
-
3,736
2,284
181
128
Interest paid – other persons
3,574
2,844
1,396
1,007
Interest paid – finance leases
1,158
525
48
37
16,063
9,698
-
-
-
-
453
316
20,795
13,067
1,897
1,360
74
91
-
-
-
86
-
-
19,547
18,298
881
412
Total amortisation
Finance costs – net
Interest paid – floor plan
Interest paid – related entities
Finance costs expensed
Bad debts written off
Net loss on sale of vehicles, plant, furniture and equipment
Rental expenses relating to operating leases
75
76
...
Note 5 Income Tax Expense
CONSOLIDATED
PARENT
2007
2006
2007
2006
Income tax expense
$000
$000
$000
$000
Current tax
17,043
11,565
(1,422)
(727)
Deferred tax
(1,701)
(1,240)
22
(257)
Adjustment for current tax of prior periods
(305)
-
-
-
15,037
10,325
(1400)
(984)
13,178
9,427
(1,400)
(984)
1,859
898
-
-
15,037
10,325
(1,400)
(984)
(2,293)
(1,380)
(73)
(263)
592
140
95
6
(1,701)
(1,240)
22
(257)
43,373
30,628
15,933
6,865
4,880
2,877
-
-
14,476
10,052
4,780
2,060
-
81
-
-
865
192
331
15
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
Deferred income tax expense included in
income tax expense comprises:
Decrease in deferred tax assets (note 14)
Decrease in deferred tax liabilities (note 20)
Numerical reconciliation of income tax
expense to prima facie tax payable
Profit from continuing operations before income tax expense
Profit from discontinued operations before income tax expense
Tax at the Australia tax rate of 30% (2006 – 30%)
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Non deductible amortisation
Non deductible expenses
Tax benefit on restructure costs
-
-
-
-
Non assessable dividends
-
-
(7,244)
(3,398)
Tax offset for franking credits
-
-
733
339
15,341
10,325
(1,400)
(984)
(305)
-
-
-
15,036
10,325
(1,400)
(984)
(616)
319
(616)
319
Net deferred tax – debited (credited) directly to equity (note 14)
582
986
582
986
(34)
1,305
(34)
1,305
Adjustment for current tax of prior periods
Income tax expense / (benefit)
Amounts recognised directly in equity
Aggregate current and deferred tax arising in
the reporting period and not recognised in net
profit or loss but directly debited or credited to equity
Current tax – debited/(credited) directly to equity (note 20)
...
Tax consolidation legislation
Automotive Holdings Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation
as of 1 April 2005. The accounting policy in relation to this legislation is set out in note 1(d).
On adoption of the tax consolidation legislation, the entities in the tax consolidation group entered into a tax sharing agreement which, in
the opinion of the directors, limits the joint and several liabilities of the wholly-owned entities in the case of a default by the head entity,
Automotive Holdings Group Limited.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Automotive Holdings
Group Limited for any current tax payable assumed.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is
issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to
assist with its obligations to pay tax installments. The funding amounts are recognised as non-current intercompany receivables or payables
(see notes 7 and 39).
Note 6 Cash And Cash Equivalents (Current)
Note
Cash at bank and at hand
Deposits at call
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
27,591
$000
23,546
$000
2,825
$000
7,817
1,061
19,235
1,061
19,235
28,652
42,781
3,886
27,052
The above figures agree to cash at the end of the financial year as shown in the statement of cash flows.
Cash at hand is non-interest bearing. Cash at bank bears floating interest rates between 5.83% and 6.20% (2006: 3.50% and 5.36%)
The deposits at call interest rates at 30 June were 6.20% (2006: 5.70%)
Note 7 Trade And Other Receivables (Current)
Trade receivables Provision for impairment of receivables
160,764
82,796
2,197
1,992
(1,743)
(1,351)
-
-
159,021
81,445
2,197
1,992
Impaired trade receivables
The Group has recognised a loss of $74,378 (2006: $91,415) in respect of impaired trade receivables during the year ended 30 June 2007.
The loss has been included in “other expenses” in the Income Statement.
Receivables (Non Current)
Loans to subsidiaries
39
-
-
27,685
18,834
The fair value of the loans to subsidiaries is consistent with their carrying value.
Information concerning the effective interest rate and credit risk of current and non-current receivables is set out in note 33.
Note 8 Inventories (Current)
Vehicle inventory – at cost
402,067
230,124
-
-
Write-down to net realisable value
(6,478)
(5,097)
-
-
Other stock – at cost
49,900
22,496
-
-
Write-down to net realisable value
(2,994)
(1,626)
-
-
442,495
245,897
-
-
Inventory recognised as an expense during the year ended 30 June 2007 amounted to $1,873,596,000 (2006: $1,154,642,000).
77
78
...
Note 9 Other Assets (Current)
Notes
CONSOLIDATED
PARENT
2007
2006
2007
2006
Prepaid expenses and deposits
$000
5,554
$000
5,342
$000
1,809
$000
790
5,554
5,342
1,809
790
28
-
-
202,316
78,739
-
-
202,316
2,468
416
2,458
406
999
-
999
-
3,467
416
3,457
406
Note 10Other Financial Assets (Non Current)
Shares in subsidiaries
78,739
These financial assets are carried at cost.
Note 11 Available-for-Sale Financial Assets (Non Current)
Shares in unlisted companies
Shares in listed companies
For further information refer to note 1(m).
Unlisted securities
Unlisted securities are shares held in carsales.com.au Limited.
Listed securities
Listed securities represent shares issued in AHG that will be transferred to senior executives under the AHG Performance Rights Plan
subsequent to the year-end.
Note 12 Property, Plant And Equipment
Land & buildings at cost
Accumulated depreciation
Plant and equipment at cost
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
11,420
$000
7,743
$000
-
$000
-
(273)
(96)
-
-
11,147
7,647
-
-
49,406
21,341
2,411
1,235
(25,292)
(9,635)
(778)
(338)
24,114
11,706
1,633
897
Capitalised lease assets
38,203
8,823
839
704
Accumulated amortisation
(4,088)
(2,009)
(221)
(130)
34,115
6,814
618
574
Leasehold improvements at cost
13,897
6,376
-
-
Accumulated depreciation
Accumulated amortisation
(2,234)
(1,213)
-
-
11,663
5,163
-
-
Total property, plant and equipment
81,039
31,330
2,251
1,471
...
Land and
buildings
$’000
Plant and
equipment
$’000
Capitalised
leased assets
$’000
Leasehold
improvements
$’000
Total
$’000
3,757
11,706
6,814
5,163
27,440
group previously held for sale
3,890
-
-
-
3,890
Sub-total
7,647
11,706
6,814
5,163
31,330
Additions
2,787
9,311
29,976
7,021
49,095
826
9,932
1,239
285
12,282
-
(2,120)
(938)
(16)
(3,074)
(113)
(4,715)
(2,976)
(790)
(8,594)
11,147
24,114
34,115
11,663
81,039
-
897
574
-
1,471
CONSOLIDATED 2007
Carrying amount at 1 July 2006
Assets included in a disposal
Acquisitions through business combinations
Disposals
Depreciation
Carrying amount at 30 June 2007
PARENT 2007
Carrying amount at 1 July 2006
Additions
-
1,223
306
-
1,529
Disposals
-
(83)
(81)
-
(164)
Depreciation
-
(404)
(181)
-
(585)
Carrying amount at 30 June 2007
-
1,633
618
-
2,251
Carrying amount at 1 July 2005
6,452
12,832
6,644
2,401
28,329
Additions
1,289
6,486
3,336
4,168
15,279
Disposals
-
(2,771)
(1,236)
(18)
(4,025)
-
(1,030)
-
(816)
(1,846)
(94)
(3,811)
(1,930)
(572)
(6,407)
7,647
11,706
6,814
5,163
31,330
Carrying amount at 1 July 2005
-
717
352
-
1,069
Additions
-
473
416
-
889
Disposals
-
(39)
(66)
-
(105)
Depreciation
-
(254)
(128)
-
(382)
Carrying amount at 30 June 2006
-
897
574
-
1,471
CONSOLIDATED 2006
Assets included in a disposal group
classified as held for sale
Depreciation
Carrying amount at 30 June 2006
PARENT 2006
Non-current assets pledged as security
Refer to note 19 for information on non-current assets pledged as security by the parent entity and its controlled entities.
79
80
...
Note 13 Intangibles (Non Current)
(a) Intangibles are allocated to the groups CGU’s identified according to business segments. A segment level summary of the intangible
allocation is presented below.
CONSOLIDATED 2007
Goodwill
$’000
Franchise rights
$’000
Total
$’000
Carrying amount at 1 July 2006
28,282
43,152
71,434
Additions
48,230
96,460
144,690
Disposal of discontinued operations
(1,007)
(2,015)
(3,022)
Carrying amount at 30 June 2007
75,505
137,597
213,102
484
-
484
Additions
19,820
39,639
59,459
Carrying amount at 30 June 2007
20,304
39,639
59,943
29,822
47,371
77,193
570
-
570
Discontinued operations
(2,110)
(4,219)
(6,329)
Carrying amount at 30 June 2006
28,282
43,152
71,434
484
-
484
-
-
-
484
-
484
PARENT 2007
Carrying amount at 1 July 2006
CONSOLIDATED 2006
Carrying amount at 1 July 2005
Additional costs in relation to restructure and acquisition of controlled entities
PARENT 2006
Carrying amount at 1 July 2005
Reversal of amortisation
Carrying amount at 30 June 2006
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified in accordance with business operations; being automotive retail
and logistics operations (note 2).
CONSOLIDATED 2007
Automotive retail 64,164
131,157
195,321
Logistics 11,341
6,440
17,781
Carrying amount at 30 June 2007
75,505
137,597
213,102
20,304
39,639
59,943
-
-
-
20,304
39,639
59,943
PARENT 2007
Automotive retail Logistics Carrying amount at 30 June 2007
...
CONSOLIDATED 2006
Goodwill
$’000
Franchise rights
$’000
Total
$’000
Automotive retail 16,941
36,712
53,653
Logistics 11,341
6,440
17,781
Carrying amount at 30 June 2006
28,282
43,152
71,434
484
-
484
-
-
-
484
-
484
PARENT 2006
Automotive retail Logistics Carrying amount at 30 June 2006
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based
on financial budgets approved by management covering a five-year period. The key assumptions used in the value-in-use calculations are
as follows:
(b) Key assumptions used for value in used calculations
In performing the value in use calculation for each CGU, the group has applied a pre tax discount rate of 7.5% representing the
incremental borrowing rate.
The weighted average growth rate used to extrapolate cash flows beyond the budget period was 3%. The weighted average growth
rate used is consistent with forecasts included in industry reports.
In the analysis of the value in use calculation the group has applied a number of sensitivity assumptions which incorporated the
following;
(i)
Sensitivity analysis of discounts rates applied in the value in used calculation. This included a range of discount rates of
6.5% to 10.0%.
(ii)
A breakeven analysis of value in use calculation based on estimated future cash flows after extrapolating an appropriate
discount rate. This calculation resulted in a significant positive gap between the baseline discount rate applied and the
breakeven discount rate.
(iii) Sensitivity analysis of estimated future cash flows against the pre tax discount rate of 7.5% and the breakeven point.
(c) Impact of possible changes in key assumptions
The recoverability of intangibles has been reviewed on a segment basis. This includes the automotive retail and logistics businesses.
The group has multiple identifiable CGU’s across each of the segments. In isolation none of the individual CGU’s is significant in its own
right as compared to the groups total intangible assets.
Based on the key assumptions on which management has based its determinations there are no underlying assumptions which would
significantly affect the groups recoverable amount of intangibles.
(d) Impairment charge
Discounted cash flows indicate that goodwill is not impaired and accordingly no impairment charge has been provided.
(e) Provisional assessment of intangibles
AASB 3 Business Combinations permits companies to assign a provisional fair value to the intangible assets at the date of acquisition
and then allows a further 12 months from the date of acquisition to determine the final values.
In regard to the classification allocation of the identifiable intangible assets acquired, external advice has been sought due to the
complexity of these intangibles. Once a final determination of the classification allocation of the identifiable intangible assets is
achieved, any changes in the disclosure of the allocations will be made in the 2008 financial year.
81
82
...
Note 14 Deferred Tax Assets
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
478
373
-
-
Employee benefits
4,168
3,853
630
558
Provision for warranties
1,002
957
-
-
(20)
(14)
-
-
(687)
(319)
(687)
(319)
Vehicle & parts write-down
460
124
-
-
Provision for fringe benefits tax
531
248
135
63
1,283
845
245
262
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Doubtful debts
Leases
Amortisation of share issue expense
Accrued expenses
Other provisions
2,436
1,291
338
24
9,651
7,358
661
588
Amounts recognised directly in balance sheet
Employee benefits
1,332
-
-
-
Accrued expenses and other provisions
1,166
-
-
-
1,887
1,305
1,887
1,305
14,036
8,663
2,548
1,893
Opening balance 1 July
8,663
6,298
1,893
5,153
Credited to income statement (note 5)
2,293
1,380
73
263
582
985
582
985
2,498
-
-
-
-
-
-
(4,508)
Closing balance 30 June
14,036
8,663
2,548
1,893
Deferred tax assets to be recovered after more than 12 months
11,229
1,733
2,038
379
2,807
6,930
510
1,514
14,036
8,663
2,548
1,893
Amount recognised directly in equity
Share issue expenses (note 22)
Closing balance 30 June
Movements:
Credited to equity
Acquisition of subsidiary deferred tax asset (note 29)
De-recognition of deferred tax resulting from tax consolidation
Deferred tax assets to be recovered within 12 months
...
Note 15 Trade And Other Payables (Current)
Note
CONSOLIDATED
PARENT
2007
2006
2007
2006
Trade payables
$000
64,728
$000
47,361
$000
-
$000
-
Other payables and accruals
48,464
27,958
4,607
2,981
Goods and services tax
5,406
1,154
152
47
38
998
-
Amounts owing to related entities
119,596
76,473
998
5,757
3,028
Note 16 Borrowings (Current)
Finance company loans
(a)
406,283
217,117
-
-
Lease liability (note 25(c))
(b)
4,709
2,499
285
227
Hire purchase liability (note 25(d))
(b)
890
1,007
17
-
Deferred settlement (note 29)
(c)
4,756
-
-
-
Other loans
(c)
7,720
8,002
11,756
-
424,358
228,625
12,058
227
(a) Finance company loans
The finance company loans are in respect of vehicles provided to the Group (note 1(x)) and are secured over certain plant and equipment,
receivables, cash and inventories of the Group. The Group has floor plan facilities amounting to $440,135,000 (2006: $243,251,500). At
30 June 2007 $397,274,000 (2006: $203,004,592) of these facilities were used. The average interest rate applicable at 30 June 2007 on
these loans was 7.02% (2006: 6.71%). Finance company loans are repayable within a short period after the vehicle is sold to a third party,
generally 48 hours.
$9,000,000 (2006: $14,000,000) is a working capital loan secured by registered first debenture charge with interest charged at 1% above the
90 day bank bill rate (currently 7.37% 2006: 6.88%). $9,000 (2006: $112,000) is a property loan charged with interest (currently 7.37% 2006:
6.88%).
(b) Lease and hire purchase liabilities
Lease liabilities are fully secured while hire purchase liabilities are partly secured. Refer Note 19 for further information on security and
guarantees provided over lease and hire purchase liabilities.
(c) Other loans
$7,000,000 (2006: $8,000,000) are commercial bills secured, plant and equipment, receivables, cash and inventories of the Group.
Interest is charged at an average rate of 6.41% (2006: 6.09%) for the period of the bill. They mature on 21st August 2007 and are
expected to be rolled over under the terms of the facility agreement.
$4,756,000 (2006:Nil) is an interest bearing deferred settlement consideration payable relating to the acquisition of the Zupps Group as
detailed in note 29.
$720,000 (2006: Nil) is the current component of a commercial loan in relation to franchise imposed redevelopment costs in relation to
Perth Auto Alliance. Interest is charged on the loan at an average rate of 7.72% (2006: Nil)
There are Nil (2006: $2,000) unsecured deposits in relation to subsidiaries.
83
84
...
(d) Interest rate risk exposure
Details of the Group’s exposure to interest rate changes on borrowings are set out in note 33.
(e) Fair value disclosures
Details of the fair value of borrowings for the Group are set out in note 19(f).
(f) Security
Details of the security relating to each of the secured liabilities are set out in notes 16 and 19.
Note 17 Current Tax Liabilities
Note
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
Income tax
11,152
9,640
10,651
8,898
11,152
9,640
10,651
8,898
Employee benefits
7,554
4,920
700
620
Other
21(b)
1,257
883
-
-
Warranties
21(a)
1,625
1,181
-
-
10,436
6,984
700
620
Note 18 Provision (Current)
Refer Note 21 for movement in warranties and other provisions.
Note 19 Borrowings (Non Current)
Other loans (a)
29,944
18,811
2,835
8,000
Deferred vendor finance
(a)
9,185
-
9,185
-
Lease liability (note 25(c))
28,404
4,216
261
336
Hire purchase liability (note 25(d))
1,209
1,809
43
-
(b)
430
430
-
-
69,172
25,266
12,324
8,336
Amounts owing to manufacturer
(a) Other loans
$6,260,000, (2006: $5,811,000) property loans secured by mortgage properties. Interest was charged at 7.72%, (2006: 6.88%).
$20,335,000 (2006: $12,000,000) are commercial bills secured over certain properties, plant and equipment, receivables, cash and
inventories of the Group. Interest is charged at an average rate of 6.43% (2006: 5.89%) for the period of the bill. They mature between
30/7/06 and 04/9/07.
$1,000,000 (2006: $1,000,000) are commercial loans with a 5 year term. Interest is charged at a variable rate, currently 6.48%
(2006: 8.3%).
$9,185,000 (2006:Nil) is the net present value of an interest bearing deferred settlement consideration payable of $10,000,000 relating
to the acquisition of the McGrath Group as detailed in note 29.
$2,209,000 (2006: Nil) is a franchise supported working capital loan between Auckland Automotive Collection Limited and Ford Credit.
Interest is charged at an average rate of 9.97% (2006: Nil)
$140,000 is a secured capital loan held with Zupps Group secured over certain properties, plant and equipment, receivables, cash and
inventories of the Group. Interest is charged at an average rate of 7.07% .
...
(b) Amounts owing to manufacturer
The amount owing to the manufacturer is repayable after a period of three years and is non-interest bearing. It is unsecured.
(c) Assets pledged as security
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Note
CONSOLIDATED
2007
2006
$000
$000
PARENT
2007
$000
2006
$000
Current
Floating charge
Cash and cash equivalents
6
24,766
15,729
-
-
Trade and other receivables
7
156,824
79,453
-
-
Inventories
8
442,495
245,897
-
-
Other current assets
9
3,746
4,552
-
-
11
-
1,846
-
-
Total current assets pledged as security
627,831
347,477
-
-
12
11,147
7,647
-
-
12
34,115
6,814
618
574
Available for sale financial assets
11
10
10
-
-
Plant and equipment
12
33,526
15,972
-
-
Total non-current assets pledged as security
78,798
30,443
618
574
Total assets pledged as security
706,629
377,920
618
574
Available for sale financial assets
Non-Current
First Mortgage
Freehold land and buildings
Finance lease
Plant and equipment
Floating charge
(d) Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Total facilities
In addition to (a) the consolidated entity has bank overdraft facilities of $4,100,000 (2006: $4,850,000). Refer Note 16(a) for details of
floor plan facilities.
Used bank overdraft facilities at balance date
Facilities are subject to annual review and as at 30 June 2007 $1,113,000 (2006: $193,255) of these facilities were used.
(e) Interest rate risk exposure
Details of the Group’s exposure to interest rate changes on borrowings are set out in note 33.
85
86
...
(f) Fair value
The carrying amounts and fair values of non-current borrowings at balance date are:
CARRYING VALUE
2007
2006
$000
$000
FAIR VALUE
2007
$000
2006
$000
Financial liabilities
Advances Vendor financing
Lease liability
Hire purchase liability
Amounts owing to manufacturer
Other loans
28,943
17,811
28,943
17,811
9,185
-
9,185
-
28,404
4,216
28,404
4,216
1,209
1,809
1,209
1,809
430
430
430
430
1,000
1,000
1,000
1,000
69,171
25,266
69,171
25,266
Note 20 Deferred Tax Liability (Non Current)
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
Prepayments
288
125
107
11
Inventories
261
261
-
-
Other
645
206
2
3
18
-
-
-
616
-
616
-
1,818
592
725
14
Opening balance 1 July
592
452
14
345
Charged to income statement (note 5)
592
140
95
6
18
-
-
-
616
-
616
-
-
-
-
(337)
Closing balance 30 June
1,818
592
725
14
Deferred tax liabilities to be settled within 12 months
1,818
592
725
14
1,818
592
725
14
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Amounts recognised in balance sheet
Deferred tax liability acquired
Amounts recognised in equity
Revaluation of unlisted shares
Movements:
Acquisition of subsidiary deferred tax liability (note 29)
Charged to equity De-recognition of deferred tax resulting from tax consolidation
...
Note 21 Provision (Non Current)
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
Warranties (a)
3,249
2,261
-
-
Employee entitlements
15,109
7,501
1,399
1,240
18,358
9,762
1,399
1,240
(a) Warranties
Provision is made for the estimated claims in respect of extended warranties provided on the majority of the Group’s retail used car
sales. These claims are expected to settle over the next three years. Management estimates the provision based on historical warranty
claim information and any recent trends that suggest future claims could differ from historical amounts.
(b) Other
Provision is made for various legal or constructive liabilities across the group where none of these are material in their own right.
(c) Movements in provision
Movements in each class of current and non-current provision during the year, other than employee benefits, are set out below:
Note
CONSOLIDATED
2007
2007
$000
$000
Warranties
Other
Carrying amount at start of year
3,442
883
Additional provisions recognised
2,452
374
Payments / other sacrifices of economic benefits
(1,020)
-
18 / 21
4,874
1,257
Current
18
1,625
1,257
Non-current
21
3,249
-
Total provisions
4,874
1,257
Carrying amount at end of year
Represented as follows:
87
88
...
Note 22 Contributed Equity
PARENT
PARENT
2007
2006
2007
2006
Shares
Shares
$000
$000
Ordinary shares fully paid
191,187,689
140,000,000
260,321
110,407
191,187,689
140,000,000
260,321
110,407
(a) Share Capital
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of
and amounts paid on the shares held.
Date
Details
Note
Number of shares
Issue price
$000
(b) Movement in ordinary share capital
30/06/05
Balance
67,000,001
55,178
28/07/05
Share split
(c)
13,000,000
-
01/08/05
Notes conversion
(d)
14,299,999
$1.00
14,300
04/11/05
ASX share issue (e)
45,700,000
$1.00
45,700
115,178
Less: transaction costs arising on share issue (4,771)
30/06/06
Balance
08/01/07
Shares issues as consideration
for the purchase of assets
(f)
10,102,040
$2.45
24,750
25/01/07
Shares issued for AHG Performance Rights
(g)
399,296
$2.50
998
27/02/07
Issue of share for AHG Tax Exempt Plan
(h)
4,488
$2.67
12
04/05/07
Share Placement
(i)
31,157,000
$2.90
90,355
11/05/07
Share Purchase Plan
(j)
1,780,545
$2.90
5,161
11/05/07
Shares issued as consideration
for the purchase of assets
(k)
7,744,320
$3.87
30,000
Less: transaction costs arising on share issues
(1,362)
30/06/07
Balance
140,000,000
110,407
191,187,689
260,321
(c) Share split
On 28 July 2005 the company passed a resolution of members approving a share split of 13,000,000 ordinary shares.
(d) Other equity securities
The amount shown for other equity securities is the value of the conversion rights relating to the 7% convertible notes. These notes
converted during the year ended 30 June 2006.
(e) ASX share issue
On 3 August 2005, Automotive Holdings Group Limited lodged with ASIC a prospectus for the offer of 45,700,000 shares at $1.00
to raise $45,700,000. The Group applied for the shares to be listed for quotation on the Australian Stock Exchange, which they were
on 3rd November 2005. The prospectus was fully subscribed.
...
(f) Shares issued as consideration for purchase of assets
On 8 January 2007 Automotive Holdings Group Limited issued shares to the value of $24.75 million (10,102,040 ordinary shares @ $2.45
per share) to AC McGrath & Co Pty Ltd as part of the consideration for the purchase of the McGrath Lander Motor Group. Refer to note
29 for further information.
The shares issued are subject to a Voluntary Escrow agreement for twelve months commencing from 1 December 2006 and expiring
30 November 2007 and were only entitled to a pro rata dividend from 1 December 2006 to 31 December 2006.
(g) Share issued for AHG Performance Rights Plan
On 25 January 2007 Automotive Holdings Group Limited issued shares under the AHG Performance Rights Plan, details of which are
contained in note 42 to this report.
(h) Issue of shares for the AHG Tax Exempt Plan
On 27 January 2007 Automotive Holdings Group Limited issued shares to employees under the AHG Tax Exempt Share Plan. The shares
are subject to a restriction on disposal so that they can not be sold until the earlier of three years from the date of issue or the cessation
of employment from the AHG Group.
(i) Share Placement
On 4 May 2007 Automotive Holdings Group Limited issued shares to substantial shareholders, other institutional and sophisticated
investors, to fund the acquisition of the Zupps Group.
(j) Share Purchase Plan
On 11 May 2007 Automotive Holdings Group Limited issued shares to allow existing shareholders the opportunity to subscribe for shares
up to the maximum legal value of $5,000 at the same price as the institutional placement.
(k) Shares issued as consideration for the purchase of acquired entities
On 11 May 2007 Automotive Holdings Group Limited issued shares for the purchase of the Zupps Group to the value of $30 million as
part consideration.
The shares issued are subject to a voluntary escrow agreement. The terms of the agreement include a two tiered level of restrictions
whereby 75% (5,808,240 fully paid ordinary shares) of the securities issued will be subject to a twelve month period of restriction from
the date of issue commencing from 2 May 2007 and expiring 2 May 2008. The balance of 25% (1,936,080 fully paid ordinary shares) of the
securities issued will be subject to a three month period of restriction from the date of issue, commencing from 2 May 2007 and expiring
2 August 2007. The securities issued are only entitled to a pro rata dividend from 2 May 2007 of the final dividend.
89
90
...
Note 23 Reserves
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
-
-
-
-
2,052
-
2,052
-
Deferred tax (note 20)
(616)
-
(616)
-
Balance 30 June
1,436
-
1,436
-
-
-
-
-
(67)
-
-
-
(I) Available-for-sale investments revaluation reserve
Balance 1 July
Revaluation
(Ii) Foreign currency translation reserve
Balance 1 July
Currency translation differences arising during the year
Balance 30 June
Total Reserves
(67)
-
-
-
1,369
-
1,436
-
Retained Profits/ Accumulated Losses
Balance 1 July
15,781
4,527
(1,109)
(10)
Net profit for the year
30,175
20,204
17,333
7,849
(15,503)
(8,950)
(15,503)
(8,950)
30,453
15,781
721
(1,109)
Dividends paid
Balance 30 June
Nature and purpose of reserves:
(i) Available-for-sale investments revaluation reserve
Changes in the fair value of investments classified as available-for-sale financial assets are taken to this reserve, as described in note
1(l). Amounts are recognised in the profit and loss when the associated assets are sold or impaired.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve, as
described in note 1(ad). The reserve is recognised in profit and loss when the net investment is disposed of.
Note 24 Minority Interests
CONSOLIDATED
PARENT
2007
2006
2007
2006
Interest in:
$000
$000
$000
$000
Share capital
106
10,583
-
-
Retained profit
227
947
-
-
Balance 30 June
333
11,530
-
-
On 1 March 2007, Automotive Holdings Group Limited acquired the balance of shares in Perth Auto Alliance Pty Ltd (PAA) from Ford
International Capital Corporation a company associated with Ford.
The acquisition of the additional 39.7% of shares has resulted in PAA becoming a wholly owned subsidiary of the parent entity.
As a result of the acquisition of the balance of shares in the PAA a significant proportion of minority interest has been removed from the
Group’s financial statement.
...
Note 25Commitments
(a) Capital commitments
Entities within the Group are committed to purchase vehicles from various manufacturers and are required to forward order these
vehicles. The vehicles are recognised once physically received.
The exception relates to the purchase of trucks where a proportion is recognised in advance of the trucks being received.
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
Within one year
1,275
1,475
1,275
1,475
Later than one year but not later than 5 years
1,700
1,475
1,700
1,475
(b) Remuneration commitments
Commitments for the payment of salaries and other remuneration
under long-term employment contracts in existence at the reporting
date but not recognised as liabilities, payable:
(c) Finance lease commitments
The Group leases various plant and equipment under finance
leases, with the options to acquire them on expiry of the leases.
Commitments in relation to finance leases are payable as follows:
- within one year
6,732
2.901
321
262
- later than one year but not later than five years
21,686
4,573
277
361
- later than five years
14,877
-
-
-
Total lease payments
43,295
7,474
598
623
(10,182)
(759)
(52)
(60)
33,113
6,715
546
563
4,709
2,499
285
227
Non-current (note 19)
28,404
4,216
261
336
33,113
6,715
546
563
Future finance charges
Lease liability
Representing lease liabilities:
Current (note 16)
The weighted average interest rate implicit in the leases is 7.2% (2006: 7%)
91
92
...
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
- within one year
1,045
1,078
21
-
- later than one year but not later than five years
1,237
2,083
44
-
Total hire purchase payments
2,282
3,161
65
-
Future finance charges
(183)
(345)
(5)
-
Total hire purchase liability
2,099
2,816
60
-
890
1,007
17
-
Non-current (note 19)
1,209
1,809
43
-
2,099
2,816
60
-
(d) Hire purchase commitments
The Group finances various plant and equipment under
hire purchase agreements. Commitments in relation to
hire purchase agreements are payable as follows:
Representing hire purchase liabilities:
Current (note 16)
The weighted average interest rate implicit in the hire purchase agreements is 6.6% (2006: 6.6%)
(e) Operating lease commitments
The Group leases property and equipment under operating
leases with varying terms, escalation clauses and renewal rights.
Non cancellable operating leases contracted for but not capitalised
in the accounts are payable as follows:
- within one year
40,088
25,269
524
660
- later than one year but not later than five years
129,097
105,512
1,790
1,229
- later than five years
149,451
95,171
2,502
-
318,636
225,952
4,816
1,889
...
Note 26 Dividends
PARENT
2007
2006
$000
$000
8,400
3,350
7,103
5,600
15,503
8,950
13,951
8,400
(a) Ordinary shares
Final dividend for the year ended 30 June 2006 of 6 cents per fully paid shares paid on
13 October 2006 (30 June 2005 of 5 cents per fully paid share paid on 2 July 2005)
Interim dividend for the year ended 30 June 2007 of 5 cents per fully paid shares paid on
2 April 2007 ( 30 June 2006 of 4 cents per fully paid share paid on 31 March 2006)
(b) Dividends not recognised at year end:
Since year end the directors have recommended the payment of a fully franked final
dividend of 7.5 cents per share (2006: 6 cents), based on tax paid at 30%.
The aggregate amount of dividends to be paid on 12 October 2007 (2006: 13 October 2006)
out of the retained profits at 30 June 2007, but not recognised as a liability as year end is
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
47,696
8,410
47,696
8,410
(c) Franked dividends:
Franking credits available for subsequent financial years
based on a tax rate of 30% (2006 – 30%)
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at year
end, will be a reduction in the franking account of $5,980,286 (2006 - $3,600,000).
93
94
...
Note 27 Reconciliation Of Profit After Income Tax To Net Cash Inflow/ (Outflow) From Operating Activities
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
33,216
23,181
17,333
7,849
(48)
(19)
(20,991)
(10,074)
Amortisation
3,736
2,284
181
128
Depreciation
4,723
4,123
404
254
2
86
13
(3)
Increase in trade debtors
(48,444)
(1,463)
(205)
(147)
Increase in inventories
(59,502)
(28,348)
-
-
356
(1,442)
(1,019)
72
(2,702)
-
(73)
3,261
357
-
(14,956)
4,269
29,365
16,476
(1,693)
340
4,889
1,745
239
1,068
590
-
95
6
(33,462)
16,623
(20,672)
7,023
Profit for the year
Distribution / dividends received
Non-cash flows in profit:
Loss/(profit) on sale of non current assets
Changes in operating assets and liabilities:
Decrease (Increase) in other current assets
(Increase) decrease in deferred tax assets
Increase (decrease) in provision for income taxes payable
Increase (decrease) in trade creditors and accruals
Increase in provisions
Increase in provision for deferred tax liabilities
Net cash inflow/(outflow) from operating activities
Non cash financing and investing activities
During the year the consolidated entity acquired plant and equipment with a fair value of $29,976,147 (2006: $3,335,705) by means of finance
leases. These acquisitions are not reflected in the Cash Flow Statement.
During the year parent entity issued shares to the value of $24.75 million (10,102,040 ordinary shares @ $2.45 per share) to AC McGrath & Co
Pty Ltd as part of the consideration for the purchase of the McGrath Lander Motor Group. This financing activity is not reflected in the Cash
Flow Statement. Refer to notes 22 and 29 for further information.
As part of the financing of the McGrath Lander Motor Group acquisition the parent entity entered into a deferred settlement arrangements
where the parent entity received vendor financing from AC McGrath & Co Pty Ltd for a total amount of $10 million. Under the Asset Sale &
Purchase Agreement dated 1 December 2006 the balance of consideration payable will be made on 1 December 2008. This financing activity
is not reflected in the Cash Flow Statement.
The balance of the vendor financing is reflected in Note 19 to the accounts. Refer to note 29 for further information.
During the year the parent entity issued shares to the value of $30 million (7,744,320 ordinary shares @ $3.87 per share) to Jonwen Financial
Services Pty Ltd as part of the consideration for the Zupp Motor Group. This financing activity is not reflected in the Cash Flow Statement.
Refer to Note 29 for further information.
Note 28 Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the above subsidiaries in accordance with the
accounting policy described in note 1(b). All controlled entities are either directly controlled by Automotive Holdings Group Limited, or wholly
owned within the consolidated entity, have ordinary class shares and are incorporated in Australia or New Zealand.
...
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L6IgjX`hE$A
7jibVXE$A
BdidgW^`ZJ$I
BdidgXnXaZ9^hig^Wjidgh
6jhigVa^VE$A
DhWdgcZEVg`J$I
DhWdgcZEVg`6jidhE$A
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]daYh
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6=<&E$A
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KBHE$A
A:<:C9
B8B6jidhCdb^cZZhE$A
AVg\ZEinAiY
HbVaaEinAiY
Jc^iIgjhi
BX<gVi]AVcYZg<gdjeHZZ6cc&
Ojeeh<gdjeHZZ6cc'
CZlOZVaVcYHZZ6cc(
-% 95
96
...
6ccZmjgZ&
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=^\]aVcY6jidhE$A
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,) ...
Note 29 Business Combinations
(a) Auckland Auto Collection Limited
On 1 October 2006 Automotive Holdings Group Limited acquired all of the issued capital in Auckland Auto Collection Limited (AACL),
a New Zealand automotive sales and service group, for cash consideration of $1,386,000.
The acquired business contributed revenues of $124,991,000 and net profit before tax of $111,000 to the Group for the period from
8 September 2006 to 30 June 2007. If the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated net profit
before tax for the full-year ended 30 June 2007 would have been $167,727,000 and $149,000 respectively.
Details of net assets acquired and goodwill and franchise rights are as follows:
Purchase consideration
($’000)
Cash paid
1,202
Direct costs relating to the acquisition
184
Total purchase consideration
1,386
Fair value of net identifiable assets acquired
(1,026)
Goodwill and franchise rights
360
The goodwill and franchise rights are primarily attributable to AACL’s market position and future prospects.
The assets and liabilities arising from the acquisition are as follows:
Acquiree’s carrying amount ($’000)
Fair value ($’000)
Cash and cash equivalents
1,818
1,818
Property, plant and equipment
2,615
2,615
Inventories
27,455
27,455
Receivables
6,447
6,447
(2,233)
(2,233)
(736)
(736)
(34,340)
(34,340)
1,026
1,026
Payables
Employee benefit liabilities, including superannuation
Borrowings
Net identifiable assets acquired
CONSOLIDATED
PARENT
2007
2006
2007
2006
Outflow of cash to acquire subsidiary, net of cash acquired:
$000
$000
$000
$000
(1,386)
-
(1,386)
-
1,818
-
1,818
-
-
-
-
-
432
-
432
-
Cash consideration
Less: balances acquired:
Cash
Bank overdraft
Inflow of cash
97
98
...
(b) McGrath Motor Group
On 1 December 2006 Automotive Holdings Group Limited acquired the business and assets of McGrath Motor Group, a New South Wales
automotive sales and service group. On 1 March 2007 Lansvale Holden a Sydney dealership was acquired and incorporated into the
McGrath Motor Group.
The acquired business contributed revenues of $361,575,000 and net profit before tax of $7,234,000 to the Group for the period from 2
December 2006 to 30 June 2007. If the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated net profit before
tax for the full-year ended 30 June 2007 would have been $631,609,000 and $10,738,000 respectively.
Details of net assets acquired and goodwill and franchise rights are as follows:
Purchase consideration
Cash paid
($’000)
32,397
Shares issued (10,102,040 @ $2.45) 24,750
Deferred vendor financing
8,850
Subtotal
65,997
Direct costs relating to the acquisition
4,339
Total purchase consideration
70,336
Fair value of net identifiable assets acquired
(10,877)
Goodwill and franchise rights
59,459
As part of the settlement agreement for the purchase of the McGrath Motor Group the parent entity entered into a vendor financing
arrangement with AC McGrath & Co Pty Ltd. Under this agreement an amount of $10.0 million is payable to the vendor on the second
anniversary of the completion date. The amount of $8.85 million reflected the net present value of the liability on the completion date.
The balance of $1.15 million represents the deferred interest that will be matured to the profit and loss over the period of the loan.
The shares issued are subject to a Voluntary Escrow agreement for twelve months, commencing on 1 December 2006 and expiring 30
November 2007 and were only entitled to a pro rata dividend from 1 December 2006 to 31 December 2006.
The goodwill and franchise rights are primarily attributable to the McGrath Motor Group’s market position and future prospects.
The assets and liabilities arising from the acquisition are as follows:
Property, plant and equipment
Acquiree’s carrying amount ($’000)
37
Fair value ($’000)
37
15,516
15,516
(268)
(268)
(2,782)
(2,782)
Inventories
Payables
Employee benefit liabilities, including superannuation
Borrowings
(1,626)
(1,626)
Net identifiable assets acquired
10,877
10,877
CONSOLIDATED
PARENT
2007
2006
2007
2006
Outflow of cash to acquire subsidiary, net of cash acquired:
$000
$000
$000
$000
(36,736)
-
(36,736)
-
Cash
-
-
-
-
Bank overdraft
-
-
-
-
Outflow of cash
(36,736)
-
(36,736)
-
Cash consideration
Less: balances acquired:
...
(c) Zupps Motor Group
On 2 May 2007 Automotive Holdings Group Limited acquired the business and assets of Zupps Motor Group, Queensland’s largest
privately owned automotive retailing group.
The acquired business contributed revenues of $125,175,799 and net profit before tax of $3,269,698 to the Group for the period from
2 May 2007 to 30 June 2007. If the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated net profit before tax
for the full-year ended 30 June 2007 would have been $642.1 million and $13.1 million respectively.
Details of net assets acquired and goodwill are as follows:
Purchase consideration
($’000)
Cash paid
87,928
Shares Issued (7,744,320 @ $3.87) 30,000
Estimated balance of amount payable under the Settlement agreement
Subtotal
Direct costs relating to the acquisition
4,756
122,684
872
Total purchase consideration
123,556
Fair value of net identifiable assets acquired
(42,068)
Goodwill and franchise rights
81,488
The goodwill and franchise rights are primarily attributable to the Zupps Group’s market position and future prospects.
The final value of consideration payable for the purchase of the Zupps Group is subject to the finalisation of settlement accounts.
The aforementioned figures are preliminary numbers. At 30 June 2007 the total consideration exchanged for the acquisition represents
cash consideration of $87.928 million plus the issue of 7,744,320 shares in the parent entity with an equivalent value of $30.0 million.
The estimated balance of consideration payable of $4.756 million will be finalised during the year ended 30 June 2008. This amount is
reflected as a current liability in the group’s financial statements.
The shares issued are subject to a Voluntary Escrow agreement. The terms of the agreement include a two tiered level of restriction
whereby 75% (5,808,240 fully paid ordinary shares) of the securities issued will be subject to a twelve month period of restriction from
the date of issue, commencing from 2 May 2007 and expiring 2 May 2008. The balance of 25% (1,936,080 fully paid shares) of securities
issued will be subject to a three month period of restriction from the date of issue, commencing from 2 May 2007 and expiring 2 August
2007. The securities issued are only entitled to a pro rata dividend from 2 May 2007 of the final dividend.
99
100
...
Acquiree’s carrying amount ($’000)
Fair value ($’000)
23
23
24,912
24,912
333
333
91,798
91,798
Property, plant and equipment
9,323
9,323
Deferred Tax Assets (net)
2,070
2,070
Other receivables
1,145
1,145
GST Receivable
801
801
Bank overdraft
(3,228)
(3,228)
Payables
(8,228)
(8,228)
Cash at bank
Receivables (net)
Prepayments
Inventories
Accrued expenses
(2,168)
(2,168)
Employee benefit liabilities, including superannuation
(4,399)
(4,399)
Other provisions
(1,281)
(1,281)
Provision for income tax payable
(1,155)
(1,155)
(46)
(46)
(67,832)
(67,832)
42,068
42,068
Lease liability
Borrowings
Net identifiable assets acquired
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
(88,800)
-
(88,800)
-
23
-
23
-
Bank overdraft
(3,228)
-
(3,228)
-
Outflow of cash
(92,005)
-
(92,005)
-
Outflow of cash to acquire subsidiary, net of cash acquired:
Cash consideration
Less: balances acquired:
Cash
...
(d) Perth Auto Alliance
On 1 March 2007, Automotive Holdings Group Limited acquired the balance of shares in Perth Auto Alliance Pty Ltd (PAA) from Ford
International Capital Corporation a company associated with Ford.
The acquisition of the additional 39.7% of shares has resulted in PAA becoming a wholly owned subsidiary of the parent entity. The total
purchase consideration was $15.1 million. As a result of the acquisition, the group has recognised an additional $2.5 million to goodwill
and franchise rights representing the difference between the net assets attributable to the balance of shares acquired and the total
consideration paid.
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
(15,114)
-
(15,114)
-
Cash
-
-
-
-
Bank overdraft
-
-
-
-
Outflow of cash
(15,114)
-
(15,114)
-
Outflow of cash to acquire subsidiary, net of cash acquired:
Cash consideration
Less: balances acquired:
Note 30 Contingencies
A liability exists for after sales service and finance rebates but the amount can not be quantified, but in the opinion of the directors is not
material amount.
At 30 June 2007, trusts within the Group entered into sale and buyback agreements for a number of vehicles. At this date the directors of the
trustees are of the opinion that the repurchase price of these vehicles, net of provision at 30 June 2007, is below their expected selling price.
Parent Entity:
Unsecured guarantees, indemnities and undertakings have been given by the parent entity in the normal course of business in respect
of financial trade arrangements entered into by its controlled entities. It is not practicable to ascertain or estimate the maximum amount
for which the parent entity may become liable in respect thereof. At 30 June 2007 no controlled entity was in default in respect of any
arrangement guaranteed by the parent entity and all amounts owed have been brought to account as liabilities in the financial statements.
Cross guarantees have been given by Automotive Holdings Group Limited and controlled entities as described in note 31. No deficiencies
of assets exist in any of these companies. No contingent liabilities exist in respect of joint venture interests (note 34).
101
102
...
Note 31 Deeds Of Cross Guarantee
Automotive Holdings Group Limited has entered into a Deed of Cross Guarantee with all of its controlled entities, excluding the legal entities
initiated / acquired within the financial year, under which each entity guarantees the debts of the others. The excluded legal entities initiated
/ acquired within the financial year and in the process of being included in the deed of cross guarantees are as follows;
ACM Autos Pty Ltd
121 604 082
Southeast Automotive Group Pty Ltd
103 071 290
ACM Liverpool Pty Ltd
121 604 055
Southwest Automotive Group Pty Ltd
096 279 480
Highland Autos Pty Ltd
121 604 297
Vehicle Storage & Engineering Pty Ltd
121 604 242
Highland Autos Nominees Pty Ltd
121 604 037
Zupps Aspley Pty Ltd
009 900 298
Highland Kackell Pty Ltd
121 805 785
Zupps Gold Coast Pty Ltd
009 681 261
MCM Autos Pty Ltd
121 606 862
Zupps Holdings Pty Ltd
009 824 462
MCM Autos Nominees Pty Ltd
121 606 826
Zupps Mt Gravatt Pty Ltd
009 695 694
MCM Sutherland Pty Ltd
121 606 808
Zupps Parts Pty Ltd
009 842 648
Perth Auto Alliance Pty Ltd
089 353 346
Zupps Southside Pty Ltd
009 839 187
Southern Automotive Group Pty Ltd
103 181 237
The parent entity has determined that there are no material deficiencies in the controlled entities, and therefore there is no liability that
should be recognised in relation to these guarantees.
Note 32 Economic Dependency
The Group is dependent on various vehicle manufacturers for the supply of new vehicles and replacement parts and motorcycles for sale.
Various subsidiaries have dealer agreements with manufacturers. The dealer agreements are franchise agreements for the purpose of
the franchising code which confers on the parties certain rights and obligations in respect of termination, assignment and mediation that
override any conflicting provisions in the dealer agreements.
Dealership agreements usually run for a fixed term, typically between 3 and 5 years, often with no automatic right of renewal. There is a risk
that these arrangements may not be renewed which would have a detrimental effect on the future financial performance of the Group. The
manufacturers and distributors usually include a termination clause which provides them with the ability to terminate the agreements on
short notice. If a franchise is terminated, it would have a detrimental effect on the future financial performance of the Group.
Note 33 Financial Risk Management
The Group’s activities expose it to a variety of financial risks – foreign exchange risk, interest rate risk, operational risk, credit risk and
liquidity risk. The Group’s overall risk management program focuses on, amongst other things, the efficient management of Automotive
Holdings Group Limited‘s financial risks that arise through the automotive retail and logistics businesses and establishes a sound policy to
minimise the financial risk and uncertainty that AHG faces through the uncertain and volatile nature of its cash flows that could materially
reduce AHG revenues and profitability.
Risk management is monitored by the Audit & Risk Management Committee who advises the Board and report on the status of business
risks through integrated risk management programs aimed at ensuring risks are identified, assessed and appropriately managed. The
Company has implemented a Financial Risk Management Policy that:
• identifies the actual and forecast financial exposures, through timely information flow within AHG;
• ensures effective management processes are followed for the financial risks identified and maintained within acceptable levels, to avoid
unaffordable losses;
• delivers managed outcomes in terms of Australian dollar cash flows, employing a management approach that focuses on risk
minimisation and moderation of volatility;
...
• safeguards AHG’s financial resources by adhering to authorised hedging parameters, appropriate levels of authority, operational controls
and credit guidelines;
• maintains adequate selection of treasury facilities and lines of credit required to minimise AHG financial exposures/risks and meet its
short and long-term liquidity needs;
• ensure that accounting policies adopted for the treasury function are in accordance with generally accepted accounting practices; and
• ensures that the taxation treatment of treasury products is in accordance with income tax legislation and where appropriate adjustments
are made to accounting income, thereby avoiding income tax penalties.
Under this policy, a Treasury Committee has been established comprising of the Managing Director, Finance Director, Company Secretary
and an external treasury adviser. This Committee is to meet regularly to overview internal and external reports at least on a quarterly basis,
with minutes circulated to the Board after each meeting. The Committee’s responsibilities will include:
• Discussing current industry and financial market trends, views and expectations;
• Supervision of financial market activities and exposures in terms of the potential impact on AHG and Policy;
• Reviewing the existing hedged positions, with view to any top-up and/or restructuring opportunities that may exist or may be permitted;
• Discuss and recommend appropriate strategies for both short-term defensive and long-term strategic hedging; and
• Periodically review required changes to the policy and make recommendation to the Audit & Risk Management Committee (who in turn
make recommendations to the Board where required).
(a) Foreign Exchange Risk
The management approach to financial risk management is aimed at minimising and managing the impact of movements in foreign
exchange rates on its purchases and to protect future cash flow. Policy has been developed by considering the following criteria:
• Negotiating purchase contracts in AUD where possible to reduce its foreign exchange exposure;
• Achieving budget/profitability on the cost of specific delivery; and
• Obtaining competitive quotes to ensure no counterparty is favoured over another and the best returns are being achieved.
All foreign exchange hedging is undertaken in conjunction with the most updated details of the underlying exposure. The fundamental
approach is that AHG will only enter into hedging transactions that match its underlying exposure, which is in line with industry best
practice.
(b) Interest Rate Risk
The objective of AHG interest rate risk policy is to minimise the potential for financial loss arising from unfavourable movements in
interest rates to cause an increase in costs and adversely affect AHG profitability when compared against budget expectations.
In the context of AHG activities, interest rate risk arises from:
• Exposure on its inventory financing arrangements via its floor-plan refinancing for its dealership group;
• Risk return exposure on surplus cash within the AHG businesses;
• Exposure to interest rate movements on specific debt financing as a result of acquisitions or strategic developments of AHG.
The key elements of AHG approach to manage interest rate risk are to:
• Support working capital requirements at a cost of funds that is market competitive;
• Manage its liquidity risk through daily cash position and projected forecasts, to ensure funds are available to meet its operating
expenditure and reduce the incidence of overdraft;
• Monitor counterparty covenants and compliance ratios;
• Manage any substantial surplus of Australian dollar funds; and
• Minimise the overall cost of funds through prudent, effective and efficient management of borrowings and investments such as
capping or fixing funding costs within acceptable levels or risk in terms of fixed/floating mix of liabilities.
103
104
...
(c) Operational Risk
The objective of AHG operational risk policy is to ensure that AHG operates under a controlled environment and infrastructure that
minimises the risk of mismanagement, error, fraud and unauthorised activities associated with the day-to-day financial activities.
In the context of AHG activities, operational risk arises from:
• The number of personnel within AHG and the degree of segregation of duties;
• The complexity of financial instruments and structures used; and
• Adequate infrastructure and systems.
The key elements of AHG’s approach to manage operational risk are:
• Defining the roles, responsibilities and authority framework and ensuring AHG have adequate staffing and established controls to
mitigate operational risk;
• Effective control and segregation of duties to ensure that front and back office personnel are responsible for different activities during
the deal life cycle (i.e. no one person is singularly responsible for initiating and settling a transaction to the end);
• Having international swap dealers association agreements in place with each counterparty to cover legal risk for all hedging
instruments; and
• Establishing a suite of financial reports, sourced internally.
(d) Credit Risk
The objective of AHG’s credit risk policy is to contain the potential for losses arising from a buyer or financial intermediary’s
unwillingness, inability or failure to meet its financial commitment against its obligations.
AHG’s risk lies predominately with its limited investment activities, hedging counterparties, and through insurance institutions providing
insurance cover.
AHG’s credit risk arises from:
• Credit funds (i.e. cheque account or investments) with its banking counterparty, the risk the counterparty denies access to funds or is
unable or unwilling to repay principal and accrued interest;
• Non performance of obligations by the financial counterparty holding hedging or derivative transactions, where the mark-to-market
revaluations reflects an unrealised gain in favour of AHG;
• Non performance of obligations by the insurance company with respect to the amount of outstanding insurance claims, where
counterparty is unwilling or unable to honour its commitment.
(e) Liquidity Risk
The objective of AHG’s liquidity risk policy is to ensure that AHG has adequate financing facilities and operating cash flows available to
meet its financial commitments in a timely manner.
The liquidity risk management approach is to identify and manage AHG financial commitments on the following basis:
• Long-term liquidity management involving the structuring of AHG‘s balance sheet and debt maturity profile to protect against a
liquidity problem in the future.
...
Fixed interest rate maturing in
Floating
interest
2007
More
Non-
1 yr or
Over 1-2
Over 2-3
Over 3-4
Over 4-5
than 5 interest
Notes
rate
less
years
years
years
years
years
bearing
Total
Financial assets
$000
$000
$000
$000
$000
$000
$000
$000
$000
Cash and deposits
6
28,364
-
-
-
-
-
-
288
28,652
Receivables
7
-
-
-
-
-
-
-
159,021
159,021
Other current assets
9
-
-
-
-
-
-
-
5,554
5,554
11
-
-
-
-
-
-
-
3,467
3,467
Total
28,364
-
-
-
-
-
-
168,330
196,694
-
-
-
-
-
-
-
119,596
119,596
Available-for-sale
financial assets
(non-current)
Weighted average
Interest rate - %
5.89%
Financial liabilities
Trade & other creditors 15
Vehicle bailment
16
406,283
-
-
-
-
-
-
-
406,283
Bills payable (current)
16
12,476
-
-
-
-
-
-
-
12,476
19
28,803
-
-
-
-
-
-
-
28,803
Deferred vendor finance 19
-
-
-
-
-
-
-
9,185
9,185
Bills payable
(non-current)
Deferred settlement
16
4,756
-
-
-
-
-
-
-
4,756
Other loans
19
-
-
-
-
-
-
-
1,430
1,430
Lease liabilities
16/19
33,114
-
-
-
-
-
-
-
33,114
Hire purchase
16/19
-
889
1,016
193
-
-
-
-
2,099
Total
485,432
889
1,016
193
-
-
-
130,211
617,742
7.04%
6.60%
6.60%
6.60%
Weighted average
interest rate - %
105
106
...
Fixed interest rate maturing in
Floating
interest
2006
More
Non-
1 yr or
Over 1-2
Over 2-3
Over 3-4
Over 4-5
than 5 interest
Notes
rate
less
years
years
years
years
years
bearing
Total
Financial assets
$000
$000
$000
$000
$000
$000
$000
$000
$000
Cash and deposits
6
42,578
-
-
-
-
-
-
203
42,781
Receivables
7
-
-
-
-
-
-
-
81,445
81,445
Other current assets
9
-
-
-
-
-
-
-
5,342
5,342
41
-
-
-
-
-
-
-
8,176
8,176
11
-
-
-
-
-
-
-
416
416
Total
42,578
-
-
-
-
-
-
95,582
138,160
-
-
-
-
-
-
-
76,473
76,473
Assets of disposal group
classified as held for
sale (current)
Available-for-sale
financial assets
(non-current)
Weighted average
Interest rate - %
5.27%
Financial liabilities
Trade & other creditors 15
Vehicle bailment
16
217,117
-
-
-
-
-
-
-
217,117
Bills payable (current)
16
8,000
-
-
-
-
-
-
2
8,002
(non-current)
19
-
12,000
-
-
-
-
-
-
12,000
Other loans
19
5,811
-
-
-
-
-
-
1,430
7,241
Lease liabilities
16/19
6,715
-
-
-
-
-
-
6,715
Hire purchase
16/19
-
1,070
532
542
570
102
-
-
2,816
Total
237,643
13,070
532
542
570
102
-
77,905
330,364
6.71%
6.60%
6.60%
6.60%
6.60%
6.60%
Bills payable
Weighted average
interest rate - %
...
Note 34Interest In Joint Ventures
Jointly controlled operation
A subsidiary has entered into a jointly controlled operation called Vehicle Parts (WA) Pty Ltd for the distribution of Subaru Parts. The
Company has a 50% participating interest in this jointly controlled operation and is entitled to 50% of its profit. The Company’s interests in the
assets employed in the jointly controlled operation are included in the consolidated balance sheet, in accordance with the accounting policy
described in note 1(b), under the following classifications:
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
88
82
-
-
Receivables
374
403
-
-
Inventories
499
344
-
-
2
2
-
-
963
831
-
-
1
-
-
-
964
831
-
-
Revenue
3,777
3,258
-
-
Expenses
(3,526)
(3,046)
-
-
251
212
-
-
Current assets
Cash on hand
Other
Non-current assets
Property, plant and equipment
Share of assets employed in joint venture
Share of joint venture’s revenue, expenses and results:
Profit before income tax
Note 35Events Occurring After Balance Date
On 10 July 2007, AHG announced that it has executed an agreement with Vmoto Limited to become the exclusive Australian distributor of
Vmoto branded scooters and related merchandise. Under the agreement AHG’s logistics division will distribute Vmoto and ATVs initially
through the existing Vmoto retail network around Australia.
AHG will establish a dedicated operation within its logistics division to manage the distribution business under the agreement, which takes
effect on 1 July 2007 and has an initial term of five years. As part of the agreement AHG has acquired approximately $800,000 of inventory.
No other matter or circumstance has arisen since 30 June 2007 that has significantly affected, or may significantly affect:
(a) the Group’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the Group’s state of affairs in future financial years.
107
108
...
Note 36 Earnings Per Share
PARENT
2007
2006
Cents
Cents
19.6
15.0
(a) Basic earnings per share
Profit from continuing operations attributable to the ordinary equity holders of the company
Profit from discontinuing operations
0.4
1.6
20.0
16.6
19.6
15.0
0.4
1.6
20.0
16.6
Profit from continuing operations
30,195
21,201
Profit from continuing and discontinued operations attributable to minority interests
(3,041)
(2,977)
27,154
18,224
3,021
1,980
30,175
20,204
27,154
18,224
3,021
1,980
30,175
20,204
151,130,650
122,047,945
151,130,650
122,047,945
Profit attributable to the ordinary equity holders of the company
(b) Diluted earnings per share
Profit from continuing operations attributable to the ordinary equity holders of the company
Profit from discontinuing operations
Profit attributable to the ordinary equity holders of the company
(c) Reconciliation of earnings used in calculating earnings per share
Basic earnings per share
Profit from continuing operations attributable to the ordinary equity holders of the
company used in the calculation of basic earnings per share
Profit from discontinuing operations
Profit attributable to the ordinary equity holders of the company
used in the calculation of basic earnings per share
Diluted earnings per share
Profit from continuing operations attributable to the ordinary equity holders of the
company used in the calculation of diluted earnings per share
Profit from discontinuing operations
Profit attributable to the ordinary equity holders of the company used in the
calculation of diluted earnings per share
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the
denominator in calculating of basic earnings per share
Weighted average number of ordinary shares used as the
denominator in calculating of diluted earnings per share
...
Note 37 Remuneration Of Auditors
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
417
411
77
25
329
-
-
-
-
60
-
-
746
471
77
25
24
58
-
-
193
307
116
-
During the year the following services were paid or
payable to the auditor of the parent entity, its related
practices and non-related audit firms:
Audit Services
Fees paid or payable to BDO Kendalls Audit & Assurance (WA) Pty Ltd
(formerly Horwath Audit (WA) Pty Ltd)
Audit and review of financial reports and other audit work
under the Corporations Act 2001
Fees paid or payable to affiliated offices of BDO Kendalls Audit &
Assurance (WA) Pty Ltd (formerly Horwath Audit (WA) Pty Ltd)
Audit and review of financial reports and other audit work
under the Corporations Act 2001
Fees paid to PricewaterhouseCoopers for the audit of financial
reports of an entity in the consolidated entity (Perth Auto Alliance)
Advisory Services
Fees paid to BDO Kendalls Audit & Assurance (WA) Pty Ltd
Taxation Services
Fees paid to BDO Kendalls (WA) Pty Ltd
Note 38 Key Management Personnel Disclosures
(a) Directors
The following persons were directors of Automotive Holdings Group Limited during the financial year:
Robert John Branchi
Chairman (Non-Executive)
David Griffiths
Non-Executive Director (appointed 27 February 2007)
Giovanni Groppoli
Non- Executive Director (appointed 4 July 2006)
Bronte McGregor Howson
Managing Director
Peter William Stancliffe
Non-Executive Director
Gregory Joseph Wall
Non-Executive Director
Hamish Calder Williams
Finance Director
Vernon Charles Wheatley
Non-Executive Director (resigned 24 November 2006)
Michelle Victoria Prater
Alternate for V C Wheatley (resigned 24 November 2006)
109
110
...
(b) Other Key Management personnel
The following persons were the executives of the company with the greatest authority for the strategic direction and management of the
Group during the financial year:
Christopher Bevan Marwick
Chief Operating Officer - WA
Gary Gooding
Chief Executive Officer – QLD.
Robert McGrath
Chief Executive Officer - NSW
David William Kiggins
GM Business Development
Susan Dianna Symmons
Company Secretary
(c) Key Management personnel compensation
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
Short-term employee benefits
5,832
2,693
5,564
2,693
495
278
389
278
6,327
2,971
5,953
2,971
Post-employment benefits
The company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed
remuneration disclosures to the directors report under the heading ‘Remuneration Report’.
Refer to note 42 for further details on share-based payments scheme with executives.
(d) Equity instrument disclosures relating to key management personnel
(i) Share holdings
The number of shares in the company held during the financial year by each director of Automotive Holdings Group Limited and other
key management personnel of the Group, including their personally related parties, are set out below. There were shares granted during
the reporting period to certain key management personnel as compensation under the AHG Performance Rights Plan (note 42).
...
2007
Directors
Beneficial Owner
Balance at
start of the year
Changes
during the year
Balance at
the end of
the year
17,639,866
+1,7251
17,641,591
Bronte McGregor Howson
Croystone Nominees Pty Ltd as +1,7251
trustee for BBK Unit Trust
BM Howson
Robert John Branchi
Auto Management Pty Ltd as
trustee for The Branchi Family Trust
5,056,472
-25,0002
5,033,197
Nil
+156,8433
158,568
+1,7251
Hamish Calder Williams
1
+1,7251
+31,3683
Hamish Calder Williams
Gregory Joseph Wall
33,094
20,000
Nil
20,000
20,000
+1,7251
21,725
Nil
+29,1004
30,825
+1,7251
Peter William Stancliffe
Giovanni Groppoli
Magix Communications Pty Ltd
David Griffiths
Larksea Investments Pty. Ltd. atf
Lake Avenue Trust
Vernon Charles Wheatley
Jove Management Pty Ltd
As trustee for The Wheatley
Family Trust
Vernon Charles Wheatley
P.F.V Pty Ltd as trustee for
The Wheatley Unit Trust
Vernon Charles & Joycelyn
Edith Wheatley
Michelle Victoria Prater
Nil
+30,0004
30,000
16,013,124
Nil
16,013,124
10,000
Nil
10,000
35,545,282
Nil
35,545,282
2,807,916
+6,900,0005
9,707,916
Michelle Victoria Prater
500,000
Nil
500,000
Christopher Bevan Marwick
760,000
+57,0991,4,5,6
817,099
150,000
+25,0005
+1,7251
176,725
+20,0005
20,000
Other Key Management Personnel
Christopher Bevan Marwick
David William Kiggins
Glengarry Estate Pty Ltd
Susan Dianna Symmons
Harvey Charles & Susan
Dianna Symmons
1 Purchased under the Share Purchase Plan
2 Off-market transfer
3 Issued under the AHG Performance Rights Plan (note 42)
4 On market purchase
5 Issued under the Private Placement to Institutional and Sophisticated Shareholders
6 Salary sacrificed under the AHG Tax Exempt Plan
Nil
111
112
...
2006
Directors
Beneficial Owner
Robert John Branchi
Auto Management Pty Ltd
as trustee for The Branchi
Family Trust
Balance at
start of the year
Changes
during the year
Balance at
the end of
the year
13,742,358
+2,666,428
+1,231,080
17,639,866
4,234,795
+821,677
5,056,472
1
-
1
13,410,991
+2,602,133
16,013,124
Nil
+10,000
10,000
29,769,174
+5,776,108
35,545,282
2,351,630
+456,286
2,807,916
Gregory Joseph Wall
Nil
+20,000
20,000
Trevor James Flügge
Nil
+20,000
20,000
Peter William Stancliffe
Nil
+20,000
20,000
Michelle Victoria Prater
Nil
+500,000
500,000
Bronte McGregor Howson
Croystone Nominees Pty Ltd
as trustee for BBK Unit Trust
Hamish Calder Williams
Hamish Calder Williams
Vernon Charles Wheatley
Jove Management Pty Ltd
As trustee for The Wheatley
Family Trust
Vernon Charles Wheatley
P.F.V Pty Ltd as trustee for
The Wheatley Unit Trust
Vernon Charles & Joycelyn
Edith Wheatley
Other Key Management Personnel
Christopher Bevan Marwick
Christopher Bevan Marwick
Nil
+760,000
760,000
David William Kiggins
Glengarry Estate Pty Ltd
Nil
+150,000
150,000
Nil
Nil
Nil
Susan Dianna Symmons
(e) Loans to key management personnel
There were no loans to key management personnel.
(f) Other transactions with key management personnel
Related party disclosures relating to key management personnel are set out in Note 39.
Aggregate amounts of each of the above types of other transactions with key management personnel of Automotive Holdings
Group Limited:
...
2007
2006
($’000)
($’000)
4,573
3,141
9,274
9,390
2007
($’000)
7,236
2006
($’000)
7,443
VC & JE Wheatley atf The Pulo Rd Super Fund
563
589
Ensile Pty Ltd
195
303
Orient Holdings Pty Ltd
455
430
Amounts recognised as distributions to shareholders
Dividends paid
Amounts recognised as expense
Rent of premises
Note 39 Related Parties
(a) Parent entity
The parent entity in the wholly-owned group is Automotive Holdings Group Limited.
(b) Subsidiaries
Interest in subsidiaries is set out in Note 28.
(c) Key management personnel
Disclosures relating to key management personnel are set out in Note 38.
(d) Transactions with related parties
During the year to 30 June 2007, entities within the wholly owned group paid rent on premises to:
Automotive Properties Pty Ltd
Auto Management Pty Ltd
825
625
9,274
9,390
The rental agreements are under terms and conditions no more favourable than those which it is reasonable to expect would have
applied if the transactions were at arm’s length. Vernon Charles Wheatley was a director of Automotive Holdings Group Limited until
24 November 2006 and remained a related party until 24 May 2007. He is a director of Automotive Properties Pty Ltd, Ensile Pty Ltd and
trustee of the Pulo Rd Super Fund. Robert John Branchi is a director of Automotive Holdings Group Limited, Orient Holdings Pty Ltd and
Auto Management Pty Ltd.
(e) Transactions of directors and director related entities concerning shares
Transactions relating to ordinary shares and subscriptions for new ordinary shares were on the same terms and conditions that applied
to other shareholders.
(f) Other transactions of directors and director related entities
Subsidiaries may, from time to time, sell motor vehicles, parts and servicing of motor vehicles for use to directors of entities in the
consolidated entity or their director-related entities within a normal employee relationship on terms and conditions no more favourable
than those which it is reasonable to expect would have been adopted if dealing with directors or their director-related entities at arm’s
length in the same circumstances.
The Company has applied the exemption under Corporations Amendments Regulation 2006 which exempts listed companies from
providing remuneration disclosures in relation to their key management personnel in their annual financial reports by Accounting
Standard AASB 124 Related Party Disclosures. These remuneration disclosures are provided in the Directors’ Report under the heading
‘Remuneration Report’.
Transactions between the parent entity and its subsidiaries consist of the receipt of dividends, administration charges, transfer of funds
for day to day financing and the receipt of interest on net working capital. Amounts receivable by the parent entity from related parties in
the wholly owned group at balance date are shown in Note 7.
113
114
...
Note 40 Discontinued Operation
(a) Description
On the 11 September 2006 AHG announced the planned divestment of dealerships within the Perth Auto Alliance (PAA) allowing AHG to
exercise its option to purchase the remaining 39.7% shareholding in the PAA. The process of divestment was completed 31 October 2006.
Financial information relating to the discontinued operation for the period to the date of disposal is set out below.
(b) Financial performance and cash flow information for the years ended 30 June 2007 and 2006
Note
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
3
80,487
227,442
-
-
Expenses
(79,517)
(224,565)
-
-
Profit before income tax
970
2,877
-
-
5
(296)
(897)
-
-
Profit from discontinuing operations
674
1,980
-
-
before income tax
3,910
-
Income tax expense
(1,563)
-
-
-
after income tax
2,347
-
-
-
Profit from discontinued operations
3,021
1,980
-
-
Net cash inflows from operating activities
1,367
5,731
-
-
5,369
(2,587)
-
-
6,736
3,144
-
-
Revenue Income tax expense
Gain on sale of discontinued operations
-
Gain on sale of discontinued operations
Net cash inflows/(outflows) from investing
activities (2007 includes an inflow of
$5,368,935 from the sale of
discontinued operations).
Net increase in cash generated
by the discontinued operations
...
(c) Carrying amounts of assets and liabilities of discontinued operations at 30 June 2007 and 2006
The carrying amounts of assets and liabilities as at 30 June 2007 and 30 June 2006 are:
CONSOLIDATED
PARENT
2007
2006
2007
2006
$000
$000
$000
$000
Property, plant and equipment
-
1,030
-
-
Leasehold improvements
-
816
-
-
Goodwill
-
6,330
-
-
Total assets
-
8,176
-
-
Provision for employee benefits
-
424
-
-
Total liabilities
-
424
-
-
Net Assets
-
7,752
-
-
Note 41 Company Details
The registered office of Automotive Holdings Group Limited is 21 Old Aberdeen Place, West Perth, Western Australia 6005.
Note 42 Share-Based Payments
(i) AHG Performance Rights Plan
The Board has adopted the AHG Performance Rights Plan (Plan). Under the Plan, rights to acquire shares in the company (Rights) may
be awarded to eligible senior executives of the company as determined by the Board from time to time. The vesting of these Rights will
be subject to certain specific performance criteria. At this point only executive directors have been invited to participate in the Plan.
Summary of the terms of the Plan are as follows;
Type of Plan
Awards under the Plan will be structured as Rights to acquire ordinary shares in the Company for nil consideration, provided specified
performance criteria decided by the Board are met within defined time restrictions.
The Plan rules allow participation by any executive director of the Company and other senior executives of the Company deemed to be
eligible by the Board.
Awards under the Plan will be expressed as a number of Rights to acquire a certain number of ordinary shares in the Company
(generally one share for every Right).
Purchase Price
Plan participants will not be required to pay any amount in respect of the award of the Rights or on acquisition of the shares pursuant
to the exercise of Rights.
Number of Rights to be issued
The Board will determine the number of Rights to be granted to each participant through an assessment of market remuneration
practice, performance against budget and in line with the Company’s executive remuneration strategy. The Board will call on
recommendations from the Remuneration and Nominating Committee.
115
116
...
Vesting
Subject to certain performance criteria being satisfied (see below), it is currently proposed that Rights will vest on 30 September each
year (after the finalisation of the Company’s yearly audited financial statements) during the applicable performance period.
In the normal course, the exact number of Rights that will vest will be determined by reference to whether the performance criteria
have been achieved. There are two performance criteria as outlined below.
Rights linked to Total Shareholder Return (TSR) that remain unvested when the performance criteria are first tested will be carried
forward for re-testing on 30 September in the 2 following performance periods, after which they will immediately lapse.
Rights linked to earnings per share (EPS) that remain unvested when the performance criteria are first tested will immediately lapse.
The Board has retained discretion under the Plan to permit variations to the terms on which Rights are issued (including to permit
early vesting of the Rights) in some limited circumstances, particularly where a “cessation event” or “change of control” event occurs.
“Cessation events” include (among other things) the death, redundancy or redundancy of a participant. “Control” has the meaning given
to it in section 50AA of the Corporations Act 2001 (Cth).
Performance Criteria
Performance criteria will be designed to align the performance of senior executives with the interests of shareholders. While
performance hurdles will be determined by the Board it its discretion, the current intention is to use TSR and EPS as a measure
of performance.
TSR will be determined on the basis of the total shareholder return (including dividends) during the relevant performance period. For
the purpose of calculating the TSR, the share price to be used on the first and last day of a performance period will be the volume
weighted average price for the shares of the Company traded on ASX for the 5 trading days up to and including that day.
EPS will be determined with reference to the percentage increase in EPS over the performance period, with a higher EPS giving a higher
entitlement to Rights vested.
The number of Rights issued to the executives is linked to performance against budget, and then 50% of these Rights are tested against
the TSR criteria and 50% are tested against the EPS criteria to determine the number of Rights which are exercisable.
TSR schedule
The percentage of TSR Rights that will be exercisable will be calculated by reference to the Company’s TSR as follows:
Company’s TSR relative to Reference Group
comprising of a selection of ASX 300 companies
Percentage of Rights that are exercisable
< 51st percentile
0%
≥ 51st percentile but ≤ 75th percentile
50% (plus a pro rata increase of 2% for each higher
percentile ranking up to the 75th percentile)
≥ 75th percentile
100%
...
EPS schedule
The percentage of EPS Rights that will be exercisable for the Performance Period will be calculated by reference to the Company’s EPS
growth as follows:
Company’s EPS Growth
Percentage of Rights that are exercisable
< 8%
Nil
≥ 8% but < 10%
50%
≥10% but < 12%
75%
≥12%
100%
Cap
The aggregate number of shares subject to outstanding Rights (that is, Rights that have not yet been exercised and that have not lapsed)
that have been awarded under all of the Company’s equity incentive plans will not exceed 5% of the issued share capital.
(ii) AHG Tax Exempt Share Plan
AHG has also introduced a tax exempt share plan that provides Eligible Employees with more than 3 years service with an opportunity
to share in the growth in value of the AHG shares and to encourage them to improve the performance of the Company and its return to
shareholders by the issue of $1,000 of shares which are purchased by the employee by way of salary sacrifice.
(iii) AHG Executive Share Plan
The AHG Executive Share Plan has recently been finalised. The plan will allow certain senior executives the opportunity to salary
sacrifice their salary, commission or bonus to the purchase of AHG shares up to a maximum of $50,000 per annum.
117
118
Directors’ Declaration
In the directors’ opinion:
(a) the financial statements and notes are in accordance with the Corporations Act 2001,including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance as
represented by the results of their operations, changes in equity and their cash flows, for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
(c) the audited remuneration disclosures of the directors’ report comply with Accounting Standards AASB 124 Related Party Disclosures and
the Corporations Regulations 2001; and
(d) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in Note
31 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee
described in Note 31
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
RJ Branchi
Director
Perth
26th September 2007
Declaration by the Chief Executive
Officer and the Chief Financial Officer
The Chief Executive Officer and Chief Financial Officer declare that in their opinion:
(a) the financial records of the company have been properly maintained in accordance with CA 286; and
(b) the financial statements and notes to the financial statements for the financial year comply with the accounting standards; and
(c) the financial statements and notes to the financial statements for the financial year give a true and fair view; and
(d) any other matters that are prescribed by the regulations in relation to the financial statements and the notes for the financial year are satisfied.
This declaration is signed by the Chief Executive Officer and Chief Financial Officer:
BM Howson
Perth
26th September 2007
HC Williams
119
120
Independent Audit Report
INDEPENDENT AUDITOR’S REPORT
To the members of Automotive Holdings Group Limited
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
PO Box 700
WEST PERTH WA 6872
Phone 61 8 9380 8400
Fax 61 8 9380 8499
[email protected]
www.bdo.com.au
ABN 79 112 284 787
Report on the Financial Report and AASB 124 Remuneration Disclosures Contained in
the Directors’ Report
We have audited the accompanying financial report of Automotive Holdings Group Limited,
which comprises the balance sheet as at 30 June 2007, and the income statement, statement of
changes in equity and cash flow statement for the year ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end.
We have also audited the remuneration disclosures contained in the directors’ report. As
permitted by the Corporations Regulations 2001, the consolidated entity has disclosed
information about the remuneration of directors and executives (“remuneration disclosures”),
required by Accounting Standard AASB 124 Related Party Disclosures, under the heading
“Remuneration Report” in the directors’ report and not in the financial report.
Directors’ Responsibility for the Financial Report and the AASB 124 Remuneration Disclosures
Contained in the Directors’ Report
The directors of the company are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes
establishing and maintaining internal control relevant to the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making accounting estimates that
are reasonable in the circumstances. In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the
Australian equivalents to International Financial Reporting Standards ensures that the financial
report, comprising the consolidated financial statements and notes, complies with International
Financial Reporting Standards.
The directors of the company are also responsible for the remuneration disclosures contained in
the directors’ report.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement. Our responsibility is to also express an
opinion on the remuneration disclosures contained in the directors’ report based on our audit.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report and the remuneration disclosures contained in the directors’
report. The procedures selected depend on the auditor’s judgement, including the assessment
of the risks of material misstatement of the financial report and the remuneration disclosures
contained in the directors’ report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial report and the remuneration disclosures contained in the directors’
report 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 entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report and the remuneration disclosures contained in the directors’
report.
BDO Kendalls is a national association of
separate partnerships and entities
...
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the
Corporations Act 2001, provided to the directors of Automotive Holdings Group Limited on 26
September 2007, would be in the same terms if provided to the directors as at the date of this
auditor’s report.
Auditor’s Opinion on the Financial Report
In our opinion the financial report of Automotive Holdings Group Limited is in accordance with
the Corporations Act 2001, including:
(a)
giving a true and fair view of the company’s and consolidated entity’s financial position as
at 30 June 2007 and of their performance for the year ended on that date; and
(b)
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
(c)
the consolidated financial statements and notes also comply with International Financial
Reporting Standards as disclosed in Note 1.
Auditor’s Opinion on the AASB 124 Remuneration Disclosures Contained in the Directors’
Report
In our opinion the remuneration disclosures that are contained in the directors’ report comply
with Accounting Standard AASB 124.
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Glyn O’Brien
Director
th
Signed at Perth this 26 day of September 2007.
121
122
Shareholder and
Optionholder Information
The shareholder information set out below was applicable at 31 July 2007.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
-
1000
1001
-
500
5001
-
1000
39
10000
537
10001 - No. of Shareholders
221
659
100001 and over
73
1,888
The number of holders holding a less than marketable parcel of ordinary shares based on the market price as at 5 September 2007 was 53
holders holding 522 shares.
B. Equity Security Holders
The names of the twenty largest holders of fully paid ordinary shares are listed below:
PFV Pty Ltd <<Wheatley Unit Account>>
Ordinary Shares
Percentage of
Number Held
Issued Shares
35,545,282
18.59
Auto Management Pty Ltd <<Branchi Family Account>>
17,641,591
9.23
Jove Management Pty Ltd <<Wheatley Family Account>>
16,013,124
8.38
RBC Dexia Investor Services Australia Nominees Pty Ltd <<PIPooled Account>>
10,485,831
5.48
AC McGrath & Co Pty Ltd
10,103,765
5.28
Mr VC Wheatley and Ms JE Wheatley <<Pulo Road Super Fund>>
9,707,916
5.08
Jonwen Financial Services Pty. Ltd. 7,744,320
4.05
RBC Dexia Investor Services Australia Nominees Pty Ltd <<PIIC Account>>
6,473,639
3.39
Croystone Nominees Pty Ltd <<BBK Unit Account>>
5,000,000
2.62
JP Morgan Nominees Australia Limited
4,612,068
2.41
Citicorp Nominees Pty Limited <<CFS Developing Companies Account>>
3,000,000
1.57
Zero Nominees Pty Ltd
2,973,260
1.56
Citicorp Nominees Pty Limited <<CFS Future Leaders Fund Account>>
2,898,276
1.52
National Nominees Limited
2,818,604
1.47
Bond Street Custodians Limited <Macquarie Smaller Co’s A/c>
2,630,986
1.38
TPIC Pty. Ltd.
2,277,248
1.19
Cogent Nominees Pty. Ltd.
2,165,634
1.13
Argo Investments Limited
1,819,435
0.95
Creative Corporation Pty Ltd <<Leisk Investment Account>>
1,632,208
0.85
Ms Colleen Christine Howson
1,501,725
0.79
147,044,912
76.92
...
C. Substantial holders
PFV Pty Ltd <<Wheatley Unit Account>>
Ordinary Shares
Percentage of
Number Held
Issued Shares
35,545,282
18.59
Auto Management Pty Ltd <<Branchi Family Account>>
17,641,591
9.23
Jove Management Pty Ltd <<Wheatley Family Account>>
16,013,124
8.38
RBC Dexia Investor Services Australia Nominees Pty Ltd <<PIPooled Account>>
10,493,379
5.46
AC McGrath & Co Pty Ltd
10,103,765
5.28
9,707,916
5.08
Mr VC Wheatley and Ms JE Wheatley <<Pulo Road Super Fund>>
D. Voting Rights
The voting rights attaching to the Ordinary shares are set out below:
-On a show of hands, each member has 1 vote;
-On a poll, each member has 1 vote for each share the member holds;
-The vote may be exercised in person or by proxy, body corporate, representative or attorney;
-If a share is held jointly and more than 1 member votes in respect of that share, only the vote of the member whose name appears first in
the register counts.
123
124
Operation Contacts
Western Australia
AMCAP Distribution Centre
General Manager – Rod Williams
(08) 9351 6666
Big Rock Toyota
Dealer Principal – Ken Hogan
(08) 9344 0111
Challenger Ford
Dealer Principal – John Jones
(08) 9527 2666
Chellingworth Motors
Dealer Principal – Greg Arnold
(08) 9273 3131
City Motors Holden & HSV
Dealer Principal – Mark Branchi
(08) 9422 7777
Duncan Nissan
Dealer Principal – Richard Veza
(08) 9262 0000
Giant Nissan
Dealer Principal – Cameron Hede
(08) 9445 5666
Giant Hyundai
Dealer Principal – Cameron Hede
(08) 9445 5700
Grand Toyota Wangara
Dealer Principal – Chris Emmerson
(08) 9403 9000
Grand Toyota Clarkson
General Manager – Craig Tickner
(08) 9407 1900
KTM Sportmotorcycles
General Manager – Jeff Leisk
(08) 9351 4771
Lynford
Dealer Principal – Nigel Morgan
(08) 9242 9000
Melville Mitsubishi
Dealer Principal – Alan Blazevic,
Acting
(08) 9330 6222
North City Holden
Dealer Principal – Peter Thompson
(08) 9273 2222
Northside Nissan
Dealer Principal – Richard Hewes
(08) 9409 0000
Nuford
Dealer Principal – John Ball
(08) 9309 8888
Osborne Park Volkswagen
Dealer Principal – Shane Marshall
(08) 9273 2333
Osborne Park Skoda
Dealer Principal - Shane Marshall
(08) 9445 5666
Rand Transport
General Manager – Vere Lodder
(08) 9353 7099
Rockingham Mitsubishi
Dealer Principal – Ray Fiori
(08) 9550 8800
Seaview Ford
General Manager – Jedd Fudger
(08) 9407 2222
Skipper Trucks (Belmont)
Dealer Principal – Simon Ramsay
(08) 9333 1888
Skipper Trucks (Bunbury)
Dealer Principal – Simon Ramsay
(08) 9721 7177
Southside Mitsubishi
Dealer Principal – Dion Wagner
(08) 9358 9555
Subaru Osborne Park
Dealer Principal – Shane Marshall
(08) 9273 2777
Subaru Wangara
General Manager – Carlos DaCosta
(08) 9309 2889
Titan Ford
Dealer Principal – Steve Waller
(08) 9333 5544
Total Nissan
Dealer Principal – Garry Wright
(08) 9351 4444
Vmoto Distribution
General Manager – Jeff Leisk
(08) 9351 4771
WA Hino Sales & Service and
Volkswagen Commercial Centre
Dealer Principal – Paul McGovern
(08) 9351 2000
Wangara Kia
Dealer Principal – Frank Benedetti
(08) 9309 8300
Wangara Suzuki
Dealer Principal – Frank Benedetti
(08) 9309 3720
Queensland
Zupps Burleigh Trucks Fuso / UD Nissan
Dealer Principal – Larry McConnie
(07) 5569 5111
Zupps Burpengary Trucks Fuso / UD Nissan
Dealer Principal – Larry McConnie
(07) 3888 1633
Zupps Rocklea Trucks Fuso / UD Nissan
Dealer Principal – Larry McConnie
(07) 3277 9355
Zupps Aspley – Holden / HSV
Mitsubishi / Suzuki
Dealer Principal – John Mills
(07) 3246 8000
Zupps Beaudesert – Holden /
Nissan / Suzuki
Dealer Principal – Peter Gwinner
(07) 5542 1220
Zupps Browns Plains –
Holden / HSV / Suzuki / Hyundai
Dealer Principal – Roger Farrell
(07) 3802 4000
Zupps Burleigh – Mitsubishi / Suzuki
Dealer Principal – David Miller
(07) 5569 7200
Zupps Capalaba – Subaru
Dealer Principal – Ian Lloyd
(07) 3843 8130
Zupps Cleveland - Mitsubishi
Dealer Principal – Ben Carreira
(07) 3383 2688
Zupps Coopers Plains - Parts
General Manager – Greg Lovett
(07) 3259 5059
Zupps Helensvale –
Mitsubishi / Suzuki
Dealer Principal – David Miller
(07) 5514 3800
Zupps Mt Gravatt –
Mitsubishi / Peugeot
Dealer Principal – Ben Carreira
(07) 3243 8888
Zupps Mt Gravatt – Subaru / Kia
Dealer Principal – Ian Lloyd
(07) 3404 8800
Zupps Mt Gravatt –
Holden / HSV / Saab /
Hummer / Skoda
Dealer Principal – Keith Beach
(07) 3877 0000
Zupps Southport – Mitsubishi /
Subaru / Suzuki / Peugeot
Dealer Principal – David Miller
(07) 5561 6161
New Zealand
Albany Mazda
Dealer Principal – Mike Critchley
+64 9 414 0770
John Andrew Ford
Dealer Principal – David Wills
+64 9 376 9829
John Andrew Mazda
Dealer Principal – David Wills
+64 9 376 9829
North Harbour Ford
Dealer Principal – Mike Critchley
+64 9 443 5000
North Harbour Mazda
Dealer Principal – Mike Critchley
+64 9 443 5000
Warkworth Ford & Mazda
Dealer Principal – Mike Critchley
+64 9 425 8078
KTM Sportmotorcycles
General Manager – Paul Ottaway
+61 9 274 9095
Victoria
Prestige Hino
Dealer Principal – Sam Nixon
(03) 9212 5555
VSE – Vehicle Storage & Engineering
General Manager - Stan Taylor
(03) 9212 5580
New South Wales
Lander Nissan & Kia
Dealer Principal – Nigel Hamilton
(02) 8884 4888
Lander Mitsubishi & Suzuki
Dealer Principal – John Drakoulis
(02) 9839 9000
Lander Toyota
General Manager – Steve McLaughlin
(02) 8884 4888
Lansvale Holden
Dealer Principal – David Berry
(02) 9728 7333
McGrath Liverpool – Holden
Dealer Principal – Chad Davies
(02) 9821 5000
McGrath Liverpool – Volkswagen
Dealer Principal – Gary Swanton
(02) 9821 5070
McGrath Liverpool –
Mitsubishi / Mazda / Subaru
Dealer Principal – Greg Hook
(02) 9600 5555
McGrath Sutherland – Holden /
Volkswagen / Saab / Mazda / Nissan
Dealer Principal – Phillip Diab
(02) 9545 7333
Corporate Directory
125
Directors
Registered Office and Head Office
Solicitors
Robert John Branchi
David Griffiths
Giovanni (John) Groppoli
Bronte McGregor Howson
Peter William Stancliffe
Gregory Joseph Wall
Hamish Calder Williams
21 Old Aberdeen Place
West Perth WA 6005
Tel: +61 8 9422 7676
Fax: +61 8 9422 7686
Email: [email protected]
Deacons
108 St George’s Terrace
Perth WA 6000
Tel: +61 8 9426 3222
Fax: +61 8 9426 3444
Email: [email protected]
Managing Director
Bronte McGregor Howson
Chief Financial Officer
Hamish Calder Williams
Company Secretary
Susan Dianna Symmons
David William Kiggins
Auditors
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
Subiaco WA 6008
Tel: +61 8 9380 8400
Fax: +61 8 9380 8499
Email: [email protected]
Share Registry
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001
Enquiries (within Australia): 1300 850 505
Enquiries (outside Australia) +61 3 9415 4000
Fax: +61 3 9473 2500
AHG Annual Report 2007 ACN 111 470 038