2021 Annual Report
PO Box 6159
Wellington
New Zealand 6141
DX SP21009
Level 6
57 Courtenay Place
Wellington 6011
Telephone 04 384-9734
Facsimile 04 801-7279
Email cmc@colmotor.co.nz
Website www.colmotor.co.nz
103
rd
ANNUAL REPORT 2021
The Directors of The Colonial Motor Company Limited present its 103
rd
Annual Report covering the year to 30 June 2021.
The report is being mailed to all shareholders. Additional copies are
available on request from the Company at PO Box 6159 Wellington
6141, telephone +64 (0)4 384 9734 or e-mail cmc@colmotor.co.nz.
A letter to shareholders will accompany the report. It outlines the
arrangements and timing for the Company to hold a virtual annual
meeting if Covid alert level restrictions require one.
The report and letter to shareholders can also be downloaded from the
Company’s website www.colmotor.co.nz
J G Tuohy
Company Secretary
The Colonial Motor Company Limited
24 September 2021
---
103
rd
Annual Report 2021
2021
103
rd
Annual Report
BOARD OF DIRECTORS
J P (Jim) Gibbons, Chairman
Graeme D Gibbons
Matthew J Newman
Stuart B Gibbons
Ashley J Waugh
John W M Journee
Gillian D Watson
Retires at Annual Meeting
Chair Elect
Appointed 1 September 2021
CHIEF EXECUTIVE
GENERAL MANAGER
GROUP MANAGER People, Process & Technology
GROUP MANAGER Finance
COMPANY SECRETARY
Graeme D Gibbons
Alexander P Gibbons
June E Gibbons
Paul Stephenson
Jack G Tuohy
Retires 30 September 2021
Appointed Chief Executive
effective 1 October 2021
AUDITOR
Grant Thornton New Zealand Audit Limited
(Partner Ryan Campbell)
BANKERS
ANZ Bank New Zealand Limited
Bank of New Zealand
Westpac New Zealand Limited
SHARE REGISTRY
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna, North Shore
Private Bag 92119
Auckland 1142
Website: www.computershare.co.nz/investorcentre
REGISTERED OFFICE AND
ADDRESS FOR SERVICE
Level 6
57 Courtenay Place
PO Box 6159
Wellington 6141
New Zealand
Telephone (04) 384-9734
Facsimile (04) 801-7279
E-mail address cmc@colmotor.co.nz
Website www.colmotor.co.nz
PROSPECTIVE DATES FOR 2022
Interim Half Year Report Late February
Interim Dividend 28 March
Preliminary Full Year Report Late August
Annual Report Late September
Final Dividend 3 October
Annual Meeting 4 November
Shareholder enquiries can be addressed to the Registered Office or directly to the Share Registry.
The Company is able to send shareholders e-mail notifications of the announcement of its preliminary half year (in
February) and full-year results (in August). To register for this service please send an e-mail to cmc@colmotor.co.nz
from the e-mail account you wish to receive the notifications with “Preliminary Results” in the subject line.
1
Notice of 103
rd
Annual Meeting
Notice is hereby given that the 2021 annual meeting of shareholders of
The Colonial Motor Company Limited
will be held at
The QT Hotel, 90 Cable Street, Wellington
on Friday, 5 November 2021 commencing at 12:00 midday
BUSINESS
1. Chairman’s introduction
2. Address from the Chairman
3. Shareholder discussion
4. Resolutions
To consider and if thought fit, to pass the following resolutions
(see explanatory notes on the next page)
1. To re-elect Ashley James Waugh as a director of the Company.
2. To elect Gillian Durrad Watson as a director of the Company.
3. To authorise an increase in the annual remuneration payable to directors from $280,000 to
$305,000 with effect from 1 July 2021.
4. To record the on-going appointment of Grant Thornton as auditor and to authorise the directors
to fix the auditor’s remuneration.
5. General business
Due to the potential for Covid-19 restrictions at the meeting venue, refreshments are not able to be served at the meeting.
LOCATION
PLEASE NOTE this change of location and the possible need to hold a virtual annual meeting
A separate Shareholder advice sheet has been included with this Annual Report. It provides detailed
information concerning the potential deferral of the annual meeting and the need to then hold a virtual annual
meeting.
Te Papa Tongarewa
Museum of New Zealand
QT Hotel
Waitangi Park
2
Explanatory Notes – relating to the annual meeting
Voting
All voting at annual meetings must be conducted by poll rather than by show of hands. Procedures for voting, the
appointment of proxies and representatives, vote counting and the announcement of the results are applied and disclosed
in detail.
Proxies and representatives
If you choose not to attend the meeting, a form is enclosed for you to complete to appoint a proxy or corporate
representative to vote on your behalf. Detailed guidance is provided on the form on how to complete it. Further copies
of the form may be obtained from the Company or downloaded from our website.
Resolutions
Each of the resolutions will be considered as a separate ordinary resolution. To be passed, an ordinary resolution
requires a simple majority of votes of shareholders entitled to vote and voting. Each share in the Company carries one
vote.
The Board supports passing all of the resolutions.
Re-election and election of directors
The Listing Rules require that a director must not hold office (without re-election) past the third annual meeting that
follows the director’s last election or 3 years, whichever is longer.
A director appointed by the Board must not hold office (without election) past the annual meeting following the director’s
appointment.
Resolution 1
Ashley James Waugh was last re-elected as a director at the 2018 annual meeting. He is eligible and offers himself for
re-election.
Ashley has experience in the dairy industry in New Zealand and Australia, with senior roles with the NZ Dairy Board
(now Fonterra) and as Chief Executive of National Foods Australia. Early in his career, Ashley was marketing manager
of Ford in New Zealand and Ford Lio Ho in Taiwan. He is currently a director of Seeka Limited.
Resolution 2
Gillian Durrad Watson was appointed as a director with effect from 1 September 2021. She is eligible and offers herself
for election.
Gillian has a business background in the real estate industry and has worked in production management in the television
industry. She is a significant shareholder who has had a life-long focus and interest in the Company.
Directors’ fees
Resolution 3
Every two years, it has been the Board’s normal practise to review the fees paid to directors in total and individually.
The last review was undertaken in 2018, three years ago. The review was deferred last year due to the disruptions from
Covid-19.
With the increase in the number of non-executive directors, the total annual fees payable will exceed the currently
approved maximum of $280,000 set in 2018. This resolution seeks shareholder approval to increase the maximum to
$305,000.
Total fees paid in the year to 30 June 2021 were $203,950 (2020: $223,258). Following the review of directors’ fees
undertaken this year, which was based on market research by independent surveys, the Board resolved to increase
individual annual fees by 9%.
Auditor re-appointment and remuneration
Resolution 4
Under section 200 of the Companies Act 1993, the auditor is automatically re-appointed each year unless ineligible or
replaced.
The fee paid to the auditor is disclosed in the annual report each year.
3
Facts at a glance
2017 2018 2019 2020 2021
Revenue ($000) 854,764 904,034 909,002
754,922
901,173
Trading profit after tax (excluding non-trading Items) ($000) 21,879 24,670 21,989
17,349
27,924
Profit after tax attributable to shareholders ($000) 22,111 24,909 21,830
21,828
24,833
Return on average shareholders’ funds
- trading profit after tax 12.8% 13.1% 10.9%
8.0%
11.4%
- profit attributable to shareholders 12.9% 13.3% 10.8%
10.0%
10.1%
Trading margin 2.6% 2.7% 2.4%
2.3%
3.1%
Earnings per share - trading profit after tax 66.9c 75.5c 67.3c
53.1c
85.4c
- profit attributable to shareholders 67.6c 76.2c 66.8c
66.8c
76.0c
Dividend per share 44.0c 50.0c 45.0c
32.0c
55.0c
Total dividends for the year ($000) 14,386 16,347 14,713
10,462
17,982
Shares on issue at reporting date 32.695m 32.695m 32.695m
32.695m
32.695m
Current ratio 1.5 1.4 1.4
1.5
1.4
Shareholders' equity as a percentage of total assets 54.6% 48.3% 51.6%
59.2%
58.6%
Net tangible asset backing per share $5.15 $5.60 $6.02
$6.60
$7.60
(after final dividend is paid)
-
200
400
600
800
1,000
20172018201920202021
$ million
Revenue
-
5
10
15
20
25
30
20172018201920202021
$ million
Trading Profit after Tax
11.8%
11.2%
12.0%
9.3%
8.0%
9.0%
8.5%
8.7%
4.7%
9.5%
24.0%
25.4%
31.6%
10.6%
7.8%
21.0%
6.7%
10.0%
-22.2%
34.3%
-25%
-15%
-5%
5%
15%
25%
35%
45%
2012201320142015201620172018201920202021
Percentage return on share price
at start of each year
Shareholder Returns
(Share price plus dividend)
refer to table on page 50
Gross dividend yield
Movement in share price
Average gross return over 10
years18.8% p.a.
-
200
400
600
800
1,000
20172018201920202021
$ million
Revenue
-
5
10
15
20
25
30
20172018201920202021
$ million
Trading Profit after Tax
11.8%
11.2%
12.0%
9.3%
8.0%
9.0%
8.5%
8.7%
4.7%
9.5%
24.0%
25.4%
31.6%
10.6%
7.8%
21.0%
6.7%
10.0%
-22.2%
34.3%
-25%
-15%
-5%
5%
15%
25%
35%
45%
2012201320142015201620172018201920202021
Percentage return on share price
at start of each year
Shareholder Returns
(Share price plus dividend)
refer to table on page 50
Gross dividend yield
Movement in share price
Average gross return over 10
years18.8% p.a.
-
200
400
600
800
1,000
20172018201920202021
$ million
Revenue
-
5
10
15
20
25
30
20172018201920202021
$ million
Trading Profit after Tax
11.8%
11.2%
12.0%
9.3%
8.0%
9.0%
8.5%
8.7%
4.7%
9.5%
24.0%
25.4%
31.6%
10.6%
7.8%
21.0%
6.7%
10.0%
-22.2%
34.3%
-25%
-15%
-5%
5%
15%
25%
35%
45%
2012201320142015201620172018201920202021
Percentage return on share price
at start of each year
Shareholder Returns
(Share price plus dividend)
refer to table on page 50
Gross dividend yield
Movement in share price
Average gross return over 10
years18.8% p.a.
4
Directors’ report
Your Directors have pleasure in presenting the 103
rd
annual report and audited consolidated financial statements of The Colonial
Motor Company Limited (CMC or Company) and its subsidiaries (Group) for the year ended 30 June 2021.
Revenue and profit
Revenue for the year was $901.2m. This is a 19% increase on the previous year’s $754.9m reflecting twelve months of
operations with minimal Covid-19 intrusion. This year’s revenue compares to $909.0m in 2019 and $904.0 in 2018.
The trading profit after tax for the year was $27.9m, up 61% on last year’s $17.3m. Trading profit after tax is not specified under
Generally Accepted Accounting Practice but is a consistent measure of the underlying trading profitability of the Group before
valuation changes of assets and deferred tax movements. It is also the reference point used by the Board when considering
dividends.
Profit for the year attributable to shareholders was $24.8m, compared to $21.8m in 2020 which included a large reversal of a
deferred tax expense created in 2010.
Statement of financial position
Total assets increased to $447.7m at year end (2020: $384.2m). Inventory
increased by $24.1m in line with the market growth.
Additions to Land & Buildings of $14.9m was focused on developing new and upgrading existing facilities in Botany, Lower Hutt
and Christchurch. The annual independent revaluation of the Group’s property brought about an increase in the revaluation
reserve of $25.2m (2020: $6.5m). At reporting date, shareholders’ equity was $262.4m (2020: $227.3m).
Dividends
Dividends paid in respect of this year will total 55.0 cents per share (2020: 32.0 cents per share). An interim dividend of 15.0
cents was paid on 29 March 2021 and a final dividend of 40.0 cents will be paid on 4 October 2021. The dividend will carry the
maximum level of imputation credits. The value of the distributions for this year will be $17.9m ( 2020: $10.5m), representing 64%
(2020: 60%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 3.
Management
On 30 September 2021, the Chief Executive (CE), Graeme Gibbons, is retiring from his position, a role he has held since 1990.
He will continue as a Director of the Company. The new CE will be Alex Gibbons, supported by June Gibbons, Group Manager
People Process and Technology, Paul Stephenson, Group Manager Finance and Jack Tuohy, Company Secretary.
Directors
The independent Directors at 30 June 2021 and the date of this report were A J Waugh and J W M Journee.
The L isting Rules of the New Zealand Stock Exchange specify that a director must not hold office (without re-election) past the
third annual meeting following the director’s appointment or three years, whichever is longer. On that basis, the director to retire
this year is A J Waugh. He is eligible and is seeking re-election at the forthcoming annual meeting. Gillian Watson was appointed
as a director with effect from 1 September 2021 and, as required by the Listing Rules, she will be seeking election at the a nnual
meeting. Gillian is the Company’s first female Director.
It has been the Board’s practise to review the fees paid to directors, in total and to individuals, every two years. The last review
was undertaken three years ago in 2018. It was deferred last year due to the disruptions from Covid-19.
With the increase in the number of non-executive directors, the total annual fees payable will exceed the current approved
maximum of $280,000 set in 2018. Increasing the maximum payable requires shareholder approval, so a resolution will be
considered at the upcoming annual meeting to increase the maximum to $305,000.
Total fees paid in the year to 30 June 2021 were $203,950 (2020: $223,258). Following the review of directors’ fees in 2021,
which was based on market research by independent surveys, the Board resolved to increase individual annual fees by 9% as
follows:
2021
• Non-executive directors $59,500 from $54,500
• Chairman of the Audit & Compliance Committee $65,450 from $59,950
• Chairman of the Board $94,500 from $89,500
Director and company disclosures
Information required to be disclosed by the Directors and by the Company, to comply with the Companies Act 1993 and the
Listing Rules, is provided on pages 46 to 51. A separate Governance Statement is provided on pages 43 to 45 and a report on
the CMC Group strategic direction on page 5.
Auditor
Michael Stewart retired by way of the mandatory ‘lead auditor rotation’ at the conclusion of the 2020 annual meeting. Our new
Audit Partner at Grant Thornton is Ryan Campbell.
17 September 2021
For the Directors
J P Gibbons A J Waugh
Chairman of the Board Chairman of the Audit & Compliance Committee
5
CMC Group strategic direction
Management of capital resources
The Group has a strong balance sheet, with significant shareholder equity and very few long term financial commitments.
The major assets on the balance sheet are property and inventory, with property funded by retained earnings and
inventory funded by short term borrowing (bank borrowing, at call deposits and bailment). There is minimal goodwill.
The Group owns most of its key operational properties. The Group does not have investment properties as such, as all
of the properties are occupied or intended to be occupied by the operational business units of the Group. Ownership
brings greater flexibility when tailoring facilities to the Group’s particular requirements. It provides security of tenure whilst
conversely enabling the Group to sell and relocate as needs arise without the constraints of a long term lease.
The Group seeks to pay regular dividends calculated at 60 - 70% of trading profit. The dividends have the maximum
imputation credits available to New Zealand shareholders. The remaining profit is reinvested in the business, either for
controlled growth or maintaining and reinvesting in the quality of the existing assets.
This investment or reinvestment may be in the form of establishing or acquiring a dealership business or in developing a
new property for use by a dealership or refurbishing and upgrading an existing dealership facility.
By adopting an approach to capital management of;
- paying 60 - 70% of trading profit as dividend
- not overly gearing up the balance sheet by taking on significant long term debt
- not going to the shareholders for more capital
the Group is able to provide controlled growth for shareholders without shareholder dilution.
Operational Model
CMC is the parent company for a group of motor vehicle dealerships – the success of these dealerships is CMC’s
lifeblood.
The CEO’s (Dealer Principals) of our subsidiary companies operate within a financial and operational mandate but have
wide discretion and local autonomy. Their role involves balancing the often conflicting demands of the franchisor,
customers, employees and profitability.
We consider each dealership business individually and the need for reinvestment and growth opportunities available.
The Group balances the need to change and adapt with an awareness that it has specific areas of expertise. The
operational expertise revolves around the franchise business model, as a franchisee i n a local market area or on a
national basis. In this model the franchisor supplies the product (including Electric Vehicles in the near future) and brand
positioning, with the franchisee concentrating on promoting the brand and selling the product and service to the customer.
The model brings its own unique challenges and opportunities.
As a response to, and to enable success in a highly competitive and fragmented market place, particularly in metropolitan
areas, we have been moving to a ‘hub and spoke’ model. Here the main dealership facility, which encompasses all the
business’s array of activities – new and used vehicle sales, parts and service, is complemented by “service only” facilities
in customer convenient locations. This model is operational in South Auckland and greater Wellington.
To be successful and grow a dealership, or establish a new one, we need to have management strength and depth and
a franchise opportunity that fits. Where we have existing property, or can provide a property solution, that enhances our
ability to take action. Ideally, we will grow by representing a new franchise partner in a number of locations rather than
as a one off.
With Southpac Trucks we have expanded over time from a small base by increasing the market share of the Kenworth
and DAF brands in a growing heavy truck industry which brings growing parts and service opportunities for the business
and their network of independent parts and service dealers.
The location of our dealerships span all of New Zealand and range from small to large, from single to multiple brands.
The major brands with significant representation are; light vehicles - Ford and Mazda; heavy trucks - Kenworth and DAF;
tractors - New Holland and Case IH.
6
Chief Executive’s report
At the outset, we would like to thank all our dealership management and staff for their continued commitment and efforts in a year of
unrelenting demands from all sides, but with unexpected surprises and success.
This last financial year saw NZ operating in what almost seemed like a bubble of its own. The ravages of Covid-19 largely remained
quarantined, offshore and isolated. The economy was in full flight supported by historically low interest rates, strong exports and a
seemingly endless supply of fiscal stimulus. This was enhanced by consumers’ funds being spent “in country”, fuelling strong housing
and consumer sales to the extent that demand exceeded supply and capacity across a wide spectrum of services.
For the large part of the financial year “favourable trading” conditions persisted, a rare event in a highly competitive vehicle sales and
servicing industry. For those of us with long memories and experience, there was a similar period in 1984. Then, a change of
Government and a post-election 20% currency devaluation led to a sustained consumer “buy now” rush. 1984 was the year I joined the
Group as a salesman at New Lynn Motors and the graph below reflects the highly cyclical nature of the market in which we have
operated over the ensuing period.
At this time last year we were thinking that economic reality would kick in, not that our economy would continue at the ‘frothy’ level that
has been sustained until an uninvited Delta strain arrived in August.
No time period is without its challenges and in this last year two areas stood out. First the move from employment despair, with the
arrival of Covid early in 2020, to a ‘closed border’ employment crisis where a recovering economy needed more hands and skills than
were available. The second challenge, with the exiting of a major brand from the NZ market, has been to maintain and build franchise
relationships at a time of an oversupply of vehicle showroom facilities and operators.
Car Dealerships
In terms of progress on facility developments, it almost feels like time has stood still. Looking at last year’s update we can report the
completion of the Macaulay Ford/Mazda and Southern Lakes Mitsubishi/Nissan service centres in Wanaka. Southern Autos’ Botany
facility for Suzuki and Isuzu was officially opened last month.
Our two biggest projects remain as works-in-progress. Capital City Motors’ hub in Lower Hutt is close to but not complete, although
both the Ford and the Mazda showrooms and workshops are operational. In Christchurch the Team Hutchinson Ford project is nigh
and will be handed over later this calendar year. The fire damaged workshop within M S Ford’s leased facility in Nelson is still under
reconstruction.
Covid and an over-subscribed building industry is playing havoc with the cost of construction. The timeframes for completion of projects
and the ability to commence new projects we have in the pipeline, to complete our franchise brand upgrades, continue to lengthen.
Trucks and Tractors
The heavy truck industry didn’t experience the consumer supercharged reaction in the second half of 2020 but the key areas of forestry,
infrastructure and distribution have all ‘kicked up a gear’ in 2021. Recovering overseas markets – Europe, US and Australia - have led
to extended new build and delivery lead times for new trucks. Local truck bodybuild is now in a similar position of delays as the key
factor in getting new customer trucks on the road.
Southpac continues to look to opportunities to grow its service and parts network. This year Southpac opened a TRP parts store in
Taranaki (having opened a similar operation in Palmerston North the prior year) and has appointed a second service dealer in
Christchurch. This year we have purchased a property in Rotorua for settlement in early 2022. This will enable a new service and parts
outlet to be built along similar lines to the Southpac facility at Te Rapa in Hamilton.
Agricentre South continues to look for opportunities to expand and build on the representation in Southland and Otago of their main
tractor brands – Case IH, New Holland and Kubota. The opening of the new facility in Cromwell enhances Agricentre’s ability to deliver
a higher level of customer service across the Central Otago area.
Health & Safety
We live every day in the expectation that the extensive level of effort undertaken on health & safety education, training and work
procedures at every dealership is enabling our staff to work in a safe environment.
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 990 1 2 3 4 5 6 7 8 910 11 12 13 14 15 16 17 18 19 20 21
Registrations
Calendar Year
Vehicle Registrations
New Vehicles
Used Imports
7
This year has seen an increased focus on what can be described as “what if” or “near miss” incidents, where an event has occurred
that could have resulted in a worse outcome than happened at the time. For us as a group of dealerships, our most identified hazards
are use of vehicle hoists and pits and the vehicle/pedestrian interface on our facilities.
In identifying and analysing in depth these “near miss” incidents, we are looking to identify what we could do better, how we can improve
our procedures, are there any ‘open ends’ or ‘flaws’, were procedures followed and was equipment properly maintained and inspected.
The outcomes of these investigations are then shared around the Group so that we can all learn and improve. June Gibbons, in her
new role, has taken charge of this area. Currently our overall information capture and monitoring process is under review, with a view
to gaining a ‘closer to the coal-face’ and more mobile-based solution. In this financial year we recorded no “serious harm” incidents.
Clean Car Policies
The Government introduced two policies in June this year in the drive to reduce greenhouse gas emissions to 30% below 2005 levels
by 2030.
The “clean car discount”, known as the “feebate”, is a consumer rebate to support a move from higher to lower emission light vehicles.
The feebate does not differentiate between types of vehicle - light commercials are treated to the measure the same as passenger and
SUVs. The consumer scheme kicked off on 1 July with rebates for BEV (battery electric vehicles) and PHEVs (plug-in hybrid electric
vehicles) and will extend to all other light vehicles from 1 January 2022. The ‘fee’ applies to vehicles emitting 192g/km of CO
2
and over.
There has been considerable controversy on the feebate scheme taxing light commercial vehicles where there is almost no alternative
product available that would not attract the fee; certainly not utes. The rush to get into line to buy a ute started immediately after the
announcement. There are no BEV, PHEV or Hybrid utes yet available for sale in the world.
The “clean car standard” targets the light vehicle importers’ fleet of sales and will apply a penalty if their average CO
2
from 2023
exceeds the standard. Draft legislation to enact this standard was introduced this month. This policy aims to reduce average CO
2
emissions of vehicles entering the ‘new to NZ’ fleet from a reported 171g/km in 2020 (Passenger/SUV 161, Light 220) to 105g/km by
2025 (Passenger/SUV 102, Light 132) – a 39% reduction and exceeding the rate of reductions for all other world markets. The clean
car standard will apply a target reducing the limit and increasing the scale of penalty each year. For a relative measure a new Ranger,
with the latest technology 2.0 litre Bi Turbo and 10 speed gearbox, is rated at around 205g/km for 2WD and 225-243 g/km in 4WD
(significantly lower than the current 3.2 version) under the more exacting World Harmonised Light-duty Vehicles Test Procedure
(WLTP- 3).
The single biggest issue is around the speed of the required reductions and the ability of vehicle manufacturers to develop and then
supply product to fit the criteria. Europe in particular has first option on most of the world supply. The second issue is around affordability
– currently a BEV is close to double the price of an equivalent conventional product.
Future Products
The only way to stay in the game is for manufacturers to build, and NZ distributors and franchisors to import, high credit earning vehicles
(BEVs and PHEVs) to balance their fleet sales average emissions in order to be within the standard. The challenge to meet the upcoming
standards in the near term future is enormous. New Zealand has the oldest fleet and the highest per capita vehicle population in the
OECD. The policy focus seems to be totally on greener (CO
2
), only one element of a “cleaner, greener, safer” policy. There appears
to be little or no policy to address the existing fleet.
The New Zealand brands’ EV product strategies and potential introduction timing for our small right hand drive market are closely held.
Mazda recently launched its MX-30, a full EV, Ford has brought to market Escape PHEV, a plug-in hybrid, and Transit Custom PHEV,
also a plug-in hybrid but with a range extender. There is a full size Transit Cargo EV due in 2022.
Every manufacturer we represent is investing heavily in the development of EV type products which will be necessary to have a place
in the vehicle market going forward. We will bring you an update of the latest information we have available on future products at the
Annual Meeting.
The motorised vehicle, be it a bike, car, SUV, utility, van, small and heavy truck or tractor is not going away. They will evolve to have
different forms of motive power utilising clean fuel, be it electricity, hydrogen, bio fuel or others yet-to-be identified. The media frenzy in
recent times over autonomous vehicles and shared forms of transport replacing the motor vehicle is over-hyped. The effectiveness,
versatility and personal freedom the motor vehicle brings will continue to be of value to customers and a necessity for business operators.
Outlook
Our sense of wellbeing took a severe dent on 17 August as the nation plunged back into lockdown and all our insecurities were revisited.
Over 70% of Group staff are involved in vehicle service and the supporting parts business. In service we sell hours worked and time,
once ticked over, is gone.
Being in lockdown is not a great place to be, bringing a range of personal challenges for many of our employees and their families. For
South Auckland Motors and Southern Autos-Manukau, they are in their fifth week at Level 4 - effectively “out of business”. Vehicle
dealerships deal with physical products that need to be transported, prepared for sale and serviced with most dealership staff needing
to be physically on site. Level 3 is very challenging to partially operate at, whereas Level 2 is closer to normal for our business with a
relatively low intensity of public facing foot traffic.
Looking forward we can see a raft of challenges to navigate. These include the unpredictability of Covid, ongoing international supply
chain constraints (particularly around the global semi-conductor (chip) shortage and EV batteries), the evolution in terms of timing and
pricing of new EV products, the unintended consequences that may play out with the clean car discount and related emission standard
policies and the underlying key driver of business – consumer confidence.
The new leadership team of Alex, June and Paul have been working within the business gaining experience and insight as they prepare
to take on the challenge of continuing to forge a successful pathway for the Company.
A P Gibbons G D Gibbons
General Manager Chief Executive
8
Group dealerships
Company Name
Chief Executive /
Dealer Principal
(DP)
Franchises Location Web address
Southpac Trucks Ltd Maarten Durent Kenworth & DAF
Heavy Trucks
Manukau City,
Hamilton, Rotorua,
New Plymouth,
Palmerston North &
Christchurch
www.spt.co.nz
South Auckland Motors Ltd Matthew Newman
Michael Tappenden
(DP)
Ford & Mazda Manukau City, Auckland
Airport, Botany, Takanini
& Pukekohe
www.southaucklandford.co.nz
www.southaucklandmazda.co.nz
Southern Autos – Manukau Ltd Matthew Newman
Andrew Craw (DP)
Suzuki, Peugeot,
Citroen & Isuzu
Manukau City & Botany www.southernautos.co.nz
Energy City Motors Ltd Russell Dempster Ford New Plymouth & Hawera www.energyford.co.nz
Energy Motors Ltd Shaun Biesiek (DP) Hyundai & Isuzu New Plymouth www.energyhyundai.co.nz
www.energymotorsisuzu.co.nz
Ruahine Motors Ltd David Wills Ford Waipukurau www.ruahinemotors.co.nz
The Hawkes Bay Motor
Company Ltd
Paul Bond (DP) Nissan & Mahindra Hastings www.hawkesbaynissan.co.nz
Fagan Motors Ltd Keith Allen Ford & Mazda
Suzuki & Kawasaki
Motorcycles
Masterton www.faganford.co.nz
www.faganmazda.co.nz
www.fagansuzuki.co.nz
Capital City Motors Ltd Matthew Carman Ford & Mazda Lower Hutt,
Taranaki Street,
Waterfront, Porirua &
Kapiti
www.capitalcityford.co.nz
www.capitalcitymazda.co.nz
M.S. Motors (1998) Ltd Alan Kirby Ford Nelson www.nelsonford.co.nz
Nelson KIA
Service Lane
Bridgestone Tyres
Nelson
Richmond
Motueka & Richmond
www.nelsonkia.co.nz
Hutchinson Motors Ltd John Hutchinson Ford
Bridgestone Tyres
Christchurch &
Greymouth
Christchurch & Hornby
www.thf.co.nz
Avon City Motors Ltd John Luxton Ford Christchurch & Rangiora www.acford.co.nz
Avon City Motorcycles Ltd John Luxton Suzuki & BMW
Motorcycles
Mahindra
Christchurch www.avoncitysuzuki.co.nz
Timaru Motors Ltd Wayne Pateman Ford & Mazda Timaru www.timaruford.co.nz
www.timarumazda.co.nz
Dunedin City Motors Ltd Robert Bain Ford & Mazda Dunedin, Oamaru
& Alexandra
www.dcford.co.nz
www.dcmazda.co.nz
Macaulay Motors Ltd Grant Price
Tim Rabbitte (DP)
Ford & Mazda
Mahindra
Invercargill, Queenstown
& Wanaka
www.macaulayford.co.nz
www.macaulaymazda.co.nz
Southern Lakes Motors Ltd Grant Price
Richard Burns (DP)
Mitsubishi & Nissan Queenstown & Wanaka www.southernlakesmotors.co.nz
Agricentre South Ltd
Grant Price Case IH Tractors &
Kuhn Implements
Invercargill, Gore, Milton,
Cromwell & Ranfurly
www.agricentre.co.nz
New Holland, Kubota
Tractors & Norwood
Ag Equipment
Invercargill & Gore
Yamaha Motorcycles Gore
9
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of financial performance
for the year ended 30 June 2021
Notes
2021
$000
2020
$000
Revenue
Revenue 898,511 745,959
Other revenue 2,662 8,963
Total revenue 1 901,173 754,922
Trading expenses
Cost of products and services sold 734,905 609,316
Remuneration of staff 83,442 76,118
Depreciation and amortisation 6,785 6,289
Property occupation costs 3,630 4,017
Marketing, promotion and training 5,414 5,625
Other operating costs 23,290 22,342
Interest 3 3,025 4,600
Total trading expenses 2 860,491 728,307
Trading profit before tax 40,682 26,615
Taxation
Current tax 4 11,628 7,879
Deferred tax
4 (450) 132
Total tax on trading 11,178 8,011
Non-controlling interest 1,580 1,255
Trading profit after tax 27,924 17,349
Non-trading items
Fair value revaluation of property (3,445) (2,040)
Fair valuation of investments 170 (57)
Total non-trading items before tax (3,275) (2,097)
Taxation
Deferred tax
4 184 6,576
Non-trading items after tax (3,091) 4,479
Profit attributable to shareholders 24,833 21,828
Profit for the year
Profit attributable to: Shareholders
Trading profit after tax 27,924 17,349
Non-trading items after tax (3,091) 4,479
Total attributable to shareholders 24,833 21,828
Non-controlling interest 1,580 1,255
Profit for the year 26,413 23,083
Statistics per share
Basic and diluted earnings per share 7
Profit attributable to shareholders (cents) 76.0 66.8
Trading profit after tax (cents) 85.4 53.1
Dividends
Dividends (cents per share) 55.0 32.0
Total dividends ($000) 17,982 10,462
Net tangible assets per share ($)
8.00 6.92
10
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
for the year ended 30 June 2021
Notes
2021
$000
2020
$000
Profit for the year 26,413 23,083
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Property revaluation reserve
Fair value movement 25,166 6,476
Deferred tax 4 1,089 515
Items that will be reclassified subsequently to profit or loss when
specific conditions are met
Cash flow hedge reserve
Movement in fair value of hedge derivatives (962) 785
Deferred tax 4 269 (220)
Total other comprehensive income for the year 25,562 7,556
Total comprehensive income for the year 51,975 30,639
Total comprehensive income for the year attributable to:
Shareholders 50,499 29,299
Non-controlling interest 1,476 1,340
Total comprehensive income for the year 51,975 30,639
Consolidated statement of changes in equity
for the year ended 30 June 2021
Notes
2021
$000
2020
$000
Total equity at beginning of the year 230,800 210,944
Comprehensive income
Profit for the year 26,413 23,083
Other comprehensive income 25,562 7,556
Total comprehensive income 51,975 30,639
Dividends paid to shareholders 22 (15,366) (9,808)
Dividends paid to non-controlling interest (1,575) (975)
Total equity at end of year 20 265,834 230,800
11
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of financial position
at 30 June 2021
Notes
2021
$000
2020
$000
Shareholders’ equity
Share capital 21 15,968 15,968
Retained earnings 156,682 146,936
Property revaluation reserve 89,997 64,021
Foreign exchange cash flow hedge reserve (204) 385
Total shareholders’ equity 262,443 227,310
Non-controlling interest 3,391 3,490
Total equity 265,834 230,800
Current liabilities
Bank borrowings 25 12,197 19,235
At call deposits 24 32,304 27,389
Trade & other payables 12 54,740 42,505
Vehicle floorplan finance 23 55,866 42,851
Financial liabilities – credit contracts 14 1,142 1,403
Lease liabilities 15 2,041 1,813
Tax payable 6,016 2,682
Financial derivatives – foreign exchange 29 332 -
Total current liabilities 164,638 137,878
Non-current liabilities
Financial liabilities – credit contracts 14 1,666 2,379
Lease liabilities 15 15,607 13,175
Total non-current liabilities 17,273 15,554
Total equity and liabilities 447,745 384,232
Current assets
Cash & bank accounts 13 14,736 16,995
Trade & other receivables 11 45,152 41,882
Inventory 8 163,378 139,291
Financial assets – credit contracts 14 1,121 1,379
Asset held for sale - 345
Financial derivatives – foreign exchange 29 - 630
Total current assets 224,387 200,522
Non-current assets
Financial assets – credit contracts 14 1,666 2,379
Intangible assets 16 1,028 1,028
Investments 18 2,552 2,382
Property, plant & equipment 9 196,619 161,109
Deferred tax 4 5,667 3,675
Right of use assets 15 15,826 13,137
Total non-current assets 223,358 183,710
Total assets 447,745 384,232
For the Directors
J P Gibbons
Chairman of the Board
A J Waugh
Chairman of the Audit & Compliance Committee
Authorised for issue on 17 September 2021
12
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
for the year ended 30 June 2021
Notes
2021
$000
2020
$000
Operating cash flows
Receipts from customers 897,607 768,326
Interest received 96 6
Dividends received 202 202
Payments to suppliers and employees (862,531) (692,680)
Interest paid (3,025) (4,600)
Income taxes paid (8,304) (7,033)
Net operating cash flows 6 24,045 64,221
Investing cash flows
Proceeds from sale of property, plant & equipment 1,253 733
Purchase of right of use assets (4,709) (351)
Purchase of property, plant & equipment (19,460) (13,626)
Net investing cash flows (22,916) (13,244)
Financing cash flows
Movement in bank borrowings 5,978 (32,383)
Proceeds from lease liabilities 4,709 351
Repayment of lease liabilities (2,050) (1,729)
Increase in deposits 4,916 3,380
Dividends paid to shareholders (16,941) (10,783)
Net financing cash flows (3,388) (41,164)
Net change in cash held (2,259) 9,813
Cash at beginning of year 16,995 7,182
Cash at end of year 13 14,736 16,995
13
Notes to the consolidated financial statements
for the year ended 30 June 2021
Index to the notes
Note Page
Preparation of the consolidated financial statements
About the reporting entity 14
Statement of compliance 14
Basis of preparation 14
Critical accounting assumptions, estimates and judgements 14
Accounting policies
Impairment 15
Goods & services tax 15
Changes in accounting policies and accounting standards 15
Financial performance
The notes in this section explain the Group’s profit for the year and give more detail of items
that make up its revenue and expenses.
1 Revenue 16
2 Expenditure 16
3 Interest 17
4 Taxation 17
5 Segment report 18
6 Reconciliation of profit for the year with operating cash flows 19
7 Earnings per share 19
Financial position
This section describes the assets and liabilities the Group uses to generate profit including
its working capital.
8 Inventory 20
9 Property, plant and equipment 20
10 Christchurch greenway 22
11 Trade and other receivables 22
12 Trade and other payables 23
13 Cash and bank accounts 23
14 Credit contracts 24
15 Leases 25
16 Intangible assets 27
Investments
This section describes the corporate structure of the Group and how the results and balances
of the individual companies are combined into the consolidated financial statements.
17 Subsidiaries 28
18 Investments 28
Funding
This section describes the sources of funding the Group uses and how they are managed.
19 Capital management 29
20 Movements in equity 30
21 Share capital 31
22 Dividends 31
23 Vehicle floorplan finance 31
24 At call deposits 32
25 Bank borrowing 32
26 Financial instruments 33
27 Reconciliation of liabilities arising from financial activities 35
Managing risk
The notes in this section describe how the Group manages the financial risks that affect its
financial position and performance.
28 Financial risk management 36
29 Financial derivatives – foreign exchange 37
30 Dealership franchise agreements 38
Other notes
31 Related party transactions 39
32 Contingencies 39
33 Events after the reporting date 39
14
Notes on the preparation of the consolidated financial statements
About the reporting entity
The financial statements presented are for The Colonial Motor Company Limited (the Company) and its
subsidiaries (the Group). The Company is an FMC Reporting Entity under the Financial Markets
Conduct Act 2013 (FMCA 2013). Where an FMC Reporting Entity prepares consolidated financial
statements, parent company disclosures are not required and have therefore not been included in these
financial statements.
The Group is a Tier 1 for profit reporting entity as set out in the External Reporting Board’s Accounting
Standards Framework. The Colonial Motor Company Limited is a New Zealand registered company
listed on the New Zealand Stock Exchange.
The Group’s principal activity is operating franchised motor vehicle dealerships. There is a list of the
dealerships and the franchises they represent on page 8.
Statement of compliance
These consolidated financial statements have been prepared in accordance with Generally Accepted
Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS)
issued by the New Zealand Accounting
Standards Board, Part 7 of the FMCA 2013 and the Companies Act 1993. They also comply with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
The consolidated financial statements were authorised for issue by the Directors on 17 September 2021.
Basis of preparation
The consolidated financial statements have been prepared
• on an historical cost basis, modified by the revaluation of certain assets and liabilities to fair value
through profit or loss and other comprehensive income, and
• on the assumption that the Group is a going concern
The consolidated financial statements are presented in New Zealand Dollars, which is the Group’s
functional and presentation currency, rounded to the nearest thousand dollars.
Critical accounting assumptions, estimates and judgements
The Group makes assumptions, estimates and judgements concerning the future. They are based on
historical experience and other factors including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates.
Estimates, judgements and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any future
periods affected.
Estimates and judgements that have a significant risk of causing a material adjustment to the carrying
amount of the assets and liabilities are detailed in the relevant notes of these consolidated financial
statements.
Covid-19
Post balance date the country continues to be impacted by lockdowns caused by the pandemic either
regionally or, in the case of the level 4 lockdown from 17 August 2021 to 31 August, the whole country.
The Group was trading profitably immediately prior to this latest lockdown. It is expected that the Group
will return to profitable trading when normal trading conditions resume. The Group has access to bank
lending facilities and has remained within the bank covenants throughout the year. The Directors believe
that the going concern assumption continues to be valid.
15
Notes on accounting policies
The accounting policies set out in these notes have been applied consistently to all periods presented
in these consolidated financial statements.
The following general accounting policies relate to the overall consolidated financial statements.
Policies specific to particular transactions or balances are detailed within each relevant note and are
highlighted by a solid blue bar:
Specific accounting policy
General accounting policies
Impairment
The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether
there is any objective evidence of impairment. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its estimated recoverable amount. Impairment losses directly reduce the
carrying amount of assets and are recognised as an expense in the consolidated statement of financial
performance.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing fair value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate of the time value of money and risks specific to that
asset.
In respect of all assets (except goodwill and intangibles with indefinite useful lives) an impairment loss
is reversed if there has been a change in the estimate used to determine the recoverable amount.
Goods & Services Tax
The consolidated financial statements are prepared net of Goods & Services Tax (GST) with the
exception of receivables and payables which are stated including GST.
Changes in accounting policies and accounting standards
There have been no changes in the existing accounting policies during the year.
No new accounting standards which became effective from 1 July 2020 were considered to be material
for the Group.
New standards, interpretations and amendments
At the date of authorisation of these consolidated financial statements, certain new interpretations to
existing standards have been published but are not yet effective and have not been adopted early by
the Group.
All pronouncements will be adopted in the first accounting period beginning on or after the effective date
of the new standard. There are no new standards issued but not yet effective that will have a material
impact on the Group in future reporting periods.
16
Notes on financial performance
1 Revenue
Revenue from Contracts with Customers
All of the revenue from contracts with customers arises from the sale of goods or services. The
transaction price is measured as the fair value of the consideration received or receivable and is net
of returns, trade allowances and rebates. All contracts are short term in nature.
For the supply of goods, the performance obligation is considered to be satisfied when control of the
goods has been passed to the buyer. This generally happens on delivery and revenue is recognised
at that time. Payment is usually required before the goods are delivered.
For the supply of services, performance obligations are considered satisfied when the service has
been completed. Revenue is recognised at that time. Payment is due on completion of the service.
The Group sells some products which have extended warranty or maintenance periods. These are
part of the price of the original goods or services and are not identified or treated separately. Any costs
incurred by the Group in respect of these services are recovered from the manufacturers providing
the extended warranties and maintenance agreements.
Other Revenue
Rental revenue arising from premises rental is accounted for on a straight line basis over the lease
term.
Interest comprises interest on funds invested and is recognised in
the statement of financial
performance as it accrues using the effective interest rate method. Subsidies received from the
Government in respect of wage costs have been recognised as revenue in the same period as the
wage expenses to which they relate.
2021
$000
2020
$000
Revenue from
Sale of products 828,119 679,759
Sale of services 70,392 66,200
Total revenue from contracts with customers 898,511 745,959
Interest 96 6
Other revenue 2,566 8,957
Total other revenue 2,662 8,963
2 Expenditure
Expenditure in the consolidated statement of financial performance
includes:
2021
$000
2020
$000
Auditor’s remuneration
Audit fees – statutory audit 500 490
Other services 12 -
Total auditor’s remuneration 512 490
Operating lease expense 578 586
Directors’ fees 204 223
Bad debts written off 31 75
Donations 24 20
Contributions to retirement savings
CMC Workplace Savings Scheme 824 737
KiwiSaver 1,367 1,289
(Decrease)/increase in impairment allowance for:
Parts inventory obsolescence (3) 410
Doubtful debts (49) 22
Credit contracts (4) (8)
17
3 Interest
Interest expense comprises interest on deposits, vehicle floorplan finance, bank borrowings and bank
overdraft facilities.
See note 28 (b) for interest rate disclosures.
Interest costs are recognised using the effective interest rate method and expensed in the period they
are incurred.
4 Taxation
4(a) Tax expense
Income tax expense comprises current and deferred tax. Current tax is the tax payable on taxable
profit for the period using the existing tax rates.
Tax expense is recognised in the consolidated statement of financial performance except when it
relates to items recognised directly in the consolidated statement of comprehensive income.
2021
$000
2020
$000
Trading profit before tax 40,682 26,615
Non-trading items before tax (3,275) (2,097)
Profit before tax for the year 37,407 24,518
Expected tax charge at 28% 10,474 6,865
Tax adjustments for:
Non-deductible expenses 1,178 1,052
Tax exempt income (146) (68)
Changes in unrecognised temporary differences 122 24
Prior year adjustment - 6
Actual current tax charge 11,628 7,879
Movement in deferred tax (634) (6,444)
Total tax expense 10,994 1,435
Effective current tax rate on trading profit before tax 28.6% 29.6%
Effective current tax rate on profit before tax 31.1% 32.1%
4(b) Deferred tax
The calculation of deferred tax uses the liability approach that recognises deferred tax assets and
liabilities based on differences between the accounting and tax values of specific items in the
consolidated statement of financial position.
Deferred tax assets and liabilities are carried:
• at the tax rates expected to apply when the assets are recovered or liabilities settled
• on the basis that the Group expects future profits to exceed any reversal of existing temporary
differences
18
Deferred tax asset/(liability)
2021
$000
2020
$000
At the beginning of the year 3,675 (3,064)
Movement through the consolidated statement of
financial performance
On trading profit 450 (132)
On non-trading property depreciation 184 6,576
Movement through property revaluation reserve 1,089 515
Movement through foreign currency cash flow hedge
reserve
269 (220)
At the end of the year 5,667 3,675
Deferred tax assets and liabilities are attributable to the following:
Trade and other payables 5,608 4,628
Trade and other receivables 13 27
Employee benefits 1,085 912
Inventories 834 770
Financial derivatives 93 (176)
Impairment allowance for finance bad debts 6 7
Property, plant and equipment (4,431) (3,678)
Building depreciation rule change 2,459 1,185
Deferred tax asset at the end of the year 5,667 3,675
Deferred tax on unused tax losses to be utilised against
future taxable profits
- -
4(c) Imputation credit account
2021
$000
2020
$000
Imputation credits available for use in subsequent
reporting periods
39,592 32,011
The New Zealand imputation regime enables tax credits to be attached to dividends paid to
shareholders as a method of avoiding double-taxation of company profits.
5 Segment report
The Group is structured so that each motor vehicle dealership is managed locally under the control of a
dealer principal who reports monthly to the Group Chief Executive. The Group Chief Executive is
considered to be the Chief Operating Decision Maker in terms of NZ IFRS 8 - Operating Segments. The
key measures used to assess d
ealership performance are revenue, trading profit before tax, trade
receivables and inventory.
The dealerships have similar economic characteristics, financial performance (as measured by their
gross profitability), products, services, processes, customers, methods of distribution and all operate in
the same regulatory
environment. On that basis, all of the Group’s operating segments have been
aggregated into a single reporting segment to most appropriately reflect the nature and financial effects
of the business activities in which the Group engages and the economic environment in which it operates.
2021 2020
Operating
segment Corporate
Total
Group
Operating
segment Corporate
Total
Group
$000 $000 $000 $000 $000 $000
Revenue from customers 900,453 624 901,077 754,054 862 754,916
Depreciation & amortisation 4,469 2,316 6,785 4,030 2,259 6,289
Interest income 96 - 96 3 3 6
Interest expense 2,167 858 3,025 3,201 1,399 4,600
Trading profit before tax 38,544 2,138 40,682 23,483 3,132 26,615
Income tax 10,739 889 11,628 6,636 1,243 7,879
Total assets 250,653 197,092 447,745 222,852 161,380 384,232
Material non-cash items
Revaluation loss on property - 3,445 3,445 - 2,040 2,040
Deferred tax credit 316 318 634 68 (6,512) (6,444)
19
6 Reconciliation of profit for the year with operating cash flows
2021
$000
2020
$000
Profit for the year 26,413 23,083
Adjustments for non-cash items
Depreciation and amortisation 6,785 6,289
Revaluation of property and investments 3,275 2,097
Cancellation of lease - (18)
Movement in
Impairment of credit contracts (3) (10)
Deferred tax (634) (6,444)
Movement in working capital
Trade and other payables 12,221 (4,271)
Tax payable 3,334 846
Trade and other receivables (3,260) 13,611
Inventory (24,086) 29,038
Net cash flow from operations 24,045 64,221
7 Earnings per share
2021
$000
2020
$000
Trading profit after tax 27,924 17,349
Profit after tax for the year attributable to shareholders 24,833 21,828
Weighted average number of shares on issue – see note 21
Basic and diluted earnings per share on
Cents per
share
Cents per
share
Trading profit after tax 85.4 53.1
Profit after tax attributable to shareholders 76.0 66.8
Basic and diluted earnings per share are calculated by dividing the profit after tax attributable to
shareholders by the weighted average number of shares outstanding during the year.
There were no potentially dilutive ordinary shares outstanding at the reporting date (2020: none).
20
Notes on financial position
8 Inventory
New and used vehicles are valued at the lower of cost or net realisable value. Parts, accessories,
workshop stocks, fuels and gases are recognised at cost, using where applicable, the first in first out
method. Cost includes expenditure incurred in acquiring the inventory and bringing it to the existing
location and condition. Due allowance has been made for obsolete and slow moving stock.
Inventory, particularly of vehicles, is reviewed, on a transaction by transaction basis, as part of normal
commercial trading. Estimates and judgement are required to ensure that carrying values do not exceed
net realisable values at the reporting date.
Parts inventory is reviewed regularly for slow-moving or obsolete stock. At each reporting date an
impairment allowance is recognised based on the age of stock and historical evidence of inventory held
for a similar timeframe. The movement in the parts obsolescence allowance is as a result of a
combination of the realisation and scrapping of aged stock during the reporting period.
2021
$000
2020
$000
Vehicles 139,274 118,067
Parts, accessories, workshop fuels and gases 27,086 24,179
Impairment allowance (2,982) (2,955)
Total inventory 163,378 139,291
Total inventory write-down including parts, parts obsolescence and vehicles 410 689
9 Property, plant & equipment
Land & buildings
Land and buildings owned by the Group are categorised as property, plant & equipment because they
are owned specifically for use in the revenue generating operations of its subsidiaries.
All land and buildings, other than properties held for sale (if any), were independently valued at reporting
date by QV Asset & Advisory to comply with Property Institute New Zealand Professional Practice
Standards and International Valuation Standards.
All property has been classified as level 2 in the fair value hierarchy specified in NZ IFRS 13 – Fair Value
Measurement because, although there is an active and open market for commercial properties, each
property is unique in its location, size, age and condition.
All property was valued at its highest and best use by applying a direct sales comparison approach,
which derives fair values by comparing the property to similar assets that have recently sold on the open
market.
Any revaluation surplus is credited to the property revaluation reserve unless it reverses a revaluation
decrease for the same asset previously recognised in profit or loss. In that case, the surplus is credited
to profit or loss to the extent of the decrease previously charged. Any revaluation deficit is recognised
through profit or loss unless it directly offsets a previous surplus in the same asset in the property
revaluation reserve.
Other property, plant & equipment
Property, plant & equipment other than land and buildings are carried at cost less accumulated
depreciation and impairment losses. Cost includes all expenditure that is directly attributable to the
acquisition of the asset. Software that is integral to the functionality of the related equipment is
capitalised as part of the asset.
Depreciation
Land is not depreciated. The economic life of buildings has been assessed at between 33 and 100
years and buildings are depreciated accordingly. Any accumulated depreciation on buildings at
revaluation date is eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset.
Other plant and equipment has been depreciated over its estimated useful life on an accounting basis
that the Group considers best reflects the decline in the economic service potential of each class of
assets. The general rate bands are shown below:
Furniture, fittings and equipment 7.5 – 60% of Diminishing Value
Service vehicles 18 – 36% of Diminishing Value
21
Carrying values and depreciation rates are reviewed at each reporting date to ensure depreciation
rates are appropriate.
Land &
buildings
Furniture,
fittings &
equipment
Service
vehicles Total
$000 $000 $000 $000
Cost or fair value at 30 June 2019 82,775 24,482 5,769 113,026
Accumulated depreciation - (16,427) (2,957) (19,384)
Revaluation 55,083 - - 55,083
Net book value at 30 June 2019 137,858 8,055 2,812 148,725
Additions 10,363 2,327 936 13,626
Disposals (454) (124) (288) (866)
Depreciation (2,094) (1,814) (907) (4,815)
Movement in revaluation 4,439 - - 4,439
Net book value at 30 June 2020 150,112 8,444 2,553 161,109
Cost or fair value at 30 June 2020 90,870 25,992 5,896 122,758
Accumulated depreciation - (17,548) (3,343) (20,891)
Revaluation 59,242 - - 59,242
Net book value at 30 June 2020 150,112 8,444 2,553 161,109
Additions 14,859 3,337 1,284 19,480
Disposals (115) (279) (373) (767)
Depreciation (2,071) (2,035) (818) (4,924)
Movement in revaluation 21,721 - - 21,721
Net book value at 30 June 2021 184,506 9,467 2,646 196,619
Comprised of:
Cost or fair value at 30 June 2021 103,543 29,050 6,807 139,400
Accumulated depreciation - (19,583) (4,161) (23,744)
Revaluation 80,963 - - 80,963
Net book value at 30 June 2021 184,506 9,467 2,646 196,619
2021
$000
2020
$000
Revaluation deficit recognised as non-trading items through the statement of
financial performance (3,445) (2,040)
Capital work in progress included in the value of land & buildings at reporting
date. Capital work in progress is not subject to depreciation until completed
and brought into use 2,542 6,599
Capital commitments
Commitments to the future acquisition of new dealership facilities and
development projects to existing facilities 7,086 8,251
If land and buildings were measured at cost the carrying value would be $103,543 (2020: $90,870k)
22
10 Christchurch greenway
The dealership property occupied by Team Hutchinson Ford on Tuam Street in Christchurch is owned
by the Group and is in the city’s Southern Frame designated area. An east-west greenway is being
constructed through the centre of the dealership. In April 2018 agreement was reached with Crown
authorities for the Group to grant an easement in perpetuity across the site for the construction of the
greenway. The agreement involved:
1. a cash settlement to meet the cost of demolishing part of the workshop and remodelling the
remaining buildings to accommodate the business over a split site, and;
2. acquisition of an adjacent area of land to replace part of the land taken by the greenway.
Initial recognition of the agreement created an asset for the full value of the settlement receivable from
the Crown ($7.555m) based on the reasonable expectation that the agreement was legally binding and
all conditions imposed on the parties would be met. At the same time a liability for the same amount
was established in recognition of the Group’s future performance obligations to clear the land and make
changes to existing buildings in order to continue its business.
At the reporting date, the outstanding receivable, included in Other Receivables, represents further
payments due to be received from the Crown on completion of particular events defined in the
agreement and the value of the land to be acquired. The balance of the performance obligations,
included in Other Payables, reflects the remainder of the settlement that has yet to be allocated to
particular elements of the work to be completed. This includes compensation for the loss in capital value
of the land as a result of granting the easement that will divide, what is currently a single contiguous
area of land, into two separate titles.
The lump sum settlement made in 2018 includes an unspecified amount of compensation for “injurious
affection”, a legal term given to the disruption and additional operational costs that are likely to be
incurred during the creation of the greenway. The amount of the compensation for injurious affection
will only be measurable upon completion of the capital works. Provision has been made within deferred
tax for the anticipated tax effects associated with putting the greenway in place.
2021 2020
$000 $000
Other Receivables
Balance at 1 July 2,555 2,555
Payments received - -
Balance at 30 June – note 11 2,555 2,555
Performance obligation
Balance at 1 July 5,404 6,360
Expenditure incurred (4,332) (956)
Balance at 30 June – note 12 1,072 5,404
11 Trade and other receivables
2021
$000
2020
$000
Trade receivables 41,646 37,449
Impairment allowance for expected credit losses (48) (97)
41,598 37,352
Other receivables – greenway agreement note 10 2,555 2,555
Other receivables 780 1,819
Prepayments 219 156
Carrying value of trade and other receivables 45,152 41,882
Bad debts written off in year 31 75
The net carrying value of trade receivables and prepayments is considered to be their fair value.
23
The Group has adopted the simplified model of recognising lifetime expected credit losses as detailed
in NZ IFRS 9 – F inancial Instruments, as none of the trade or other receivables contain a significant
financing component.
In measuring expected credit losses, the trade receivables have been assessed on a collective basis
as they share similar credit risks. Expected loss rates are based on historic trading patterns over the
last 5 years adjusted for anticipated changes in the 12 months following reporting date.
The items included in other receivables do not share the same credit risks as trade receivables and no
credit loss is expected to arise.
Trade receivables are written off as bad debts when there is no expectation of recovery.
On the above basis the expected credit loss of trade receivables is as follows:
2021
$000
2020
$000
Expected credit loss rate 0.11% 0.25%
Gross carrying amount 41,646 37,449
Expected credit loss 48 97
Movements in the loss allowance are as follows:
Balance at 1 July 97 75
Allowance recognised in the statement of financial
performance (47) 30
Allowance recovered (2) (8)
Balance at 30 June 48 97
12 Trade and other payables
Trade and other payables are stated at amortised cost.
Employee benefits
The Group provides for benefits accruing to employees for:
• salaries and wages earned but not yet paid
• annual leave accrued but not yet taken
• short-term incentives arising from contractual obligations or when it is probable that the incentives
will be paid and they can be reliably measured
Trade and other payables are all due within one year.
2021
$000
2020
$000
Trade payables 34,977 22,182
Employee benefits 9,269 8,143
Other payables – performance obligation note 10 1,072 5,404
Other payables 9,422 6,776
Total trade and other payables 54,740 42,505
13 Cash and bank accounts
2021
$000
2020
$000
Bank accounts in funds 14,736 16,995
Net cash and bank accounts 14,736 16,995
These balances include all cash and cash equivalents.
Bank overdrafts are payable at call.
The Company guarantees the amounts owing by its subsidiaries under overdraft facilities and the
subsidiaries guarantee the indebtedness of the Company.
Aggregate limit on bank overdrafts 6,835 6,835
24
14 Credit contracts
Dealerships arrange finance for customers to buy vehicles with a number of finance companies. Before
the customers enter into the finance agreements, information is gathered and provided to the finance
companies to check that customers meet their creditworthiness, affordability and
other criteria.
Dealerships make the initial loans to the customer but instantaneously assign them to the finance
company.
Credit contracts with Motor Trade Finance Limited (MTF) differ from the other finance companies. MTF
retains the right of recourse to the dealership if a particular customer defaults on their payments.
Accounting for the MTF credit contracts results in creating a receivable from the customer (which is
collected by MTF due to the assignment) and an equal and opposite liability for the amount that may
become payable to MTF if the customer defaults. In the normal course of business, the receivable and
liability for each finance deal reduce in parallel as customers make routine repayments.
The financial liabilities under credit contracts at reporting date consist of the outstanding balances on
customers’ accounts. The movement in the liability is detailed in note 27.
Financial receivables – credit contracts
There is a risk if customers fail to make the necessary repayments that the receivable will not be
recoverable and the liability will remain payable to MTF. Factors that mitigate
this risk include:
• credit checks that are carried out when the finance is arranged
• timely credit control practices
• the number of outstanding loans means there is no concentration of credit risk on a restricted
number of debtors
• security over the vehicles that are financed so that, if other measures fail, the vehicles can be
repossessed and sold to offset bad debts
Bad debts
If customers default and the sale proceeds of the vehicle do not cover the outstanding balance, the
deficit is recognised as an expense in the statement of financial performance.
Impairment
The balances are routinely reviewed for impairment and an allowance is made for amounts that are
unlikely to be recovered. The impairment allowance is calculated as a percentage of net amounts
outstanding under the credit contracts based on historic trading patterns.
Amounts owed by customers are recoverable over a number of years. To determine the percentage
used for the impairment allowance, estimates are based on historical data for contracts in default.
Financing agreements outstanding at reporting date that have been assigned to MTF with recourse
have the following repayment schedule:
2021
$000
2020
$000
Up to 1 year 1,142 1,403
1 to 2 years 913 1,145
2 to 3 years 490 696
3 to 4 years 230 396
4 to 5 years 33 142
Total 2,808 3,782
Impairment allowance (21) (24)
Carrying value of receivables 2,787 3,758
Number of credit contracts 170 231
Value of impaired accounts written off in the year ($000) - -
Actual arrears past due at 30 June ($000) 33 36
Arrears as a percentage of total 1.17% 0.95%
Total value of accounts in arrears at 30 June ($000) 304 547
Accounts in arrears as a percentage of total 10.83% 14.46%
25
The amounts payable by customers under the financial assets – credit contracts, including future
interest, have the following repayment profile, which is the maximum amount the Group may be required
to pay if subject to recourse under its contractual obligations.
2021
$000
2020
$000
Less than 1 year 1,371 1,719
1 to 2 years 1,041 1,337
More than 2 years 817 1,371
Total 3,229 4,427
15 Leases
At the start of a contract the Group assesses whether the contract is, or contains, a lease being the
right to control the use of an identified asset for a period of time in exchange for consideration. With
the exception of low value assets and short term leases, at the start date of the lease the Group
recognises a right of use asset, representing the right to use the underlying asset, and a lease liability,
representing the obligation to make lease payments.
The right of use asset is initially measured at cost comprising the lease liability recognised, any initial
direct costs including lease payments made before the commencement date, less any incentives.
Right of use assets are then depreciated on a straight line basis over the shorter of the lease term or
the estimated useful life of the assets. The Group also assesses the impairment of the right of use
asset when such indicators exist.
The lease liability is recognised from the start date of the lease measured at the present value of lease
payments to be made over the life of the lease. When calculating the present value of lease payments,
the Group uses its incremental borrowing rate at the commencement date of the lease as the interest
rate implicit in the lease is not determinable. After the commencement date, the amount of the lease
liability is increased to reflect the addition of interest charges and reduced for the lease payments
made. The carrying amount of lease liabilities is remeasured if there is a change in the terms of the
lease (for example a change in the length of the lease or a change in the lease payments). The term
of the lease includes any rights of renewal where there is a reasonable level of certainty that the lease
will be renewed.
Lease payments on low value assets or short term leases (less than 12 months) are recognised as an
expense on a straight line basis over the lease term.
The Group has leases for dealership facilities, including showrooms, workshops, office space and
storage areas at a number of sites across the country and for office accommodation in Wellington.
With the exception of short term leases and leases on low value assets, each lease is reflected on the
statement of financial position as a right of use asset and an associated lease liability. Property leases
have original terms up to 24 years and most have rights to renew exercisable at the option of the
Group. The majority of leases allow for a market rent increase when renewals are exercised and some
have annual inflation increases.
The following table summarises the Group’s leasing activities:
Number
leased
Range of
remaining
terms (years)
Average
remaining
term (years)
Number with
renewal options
Number
with rent
reviews
Dealership
facilities
29 1 – 17 6 24 24
Office
building
1 9 9 1 1
26
The value of right of use assets by type is summarised below:
Dealership
facilities
Office
building Total
$000 $000 $000
At 1 July 2019 13,104 1,487 14,591
Additions 351 - 351
Disposals (83) - (83)
Depreciation (1,582) (140) (1,722)
Right of use assets at 30 June 2020 11,790 1,347 13,137
Additions 4,709 - 4,709
Depreciation (1,881) (139) (2,020)
Total right of use assets at 30 June 2021 14,618 1,208 15,826
Lease liabilities are presented as current or non-current liabilities based on the maturity date of the
underlying lease. The maturity of lease liabilities is as follows:
Within
one
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
5 to 10
years
Over
10
years
$000 $000 $000 $000 $000 $000 $000
2021
Lease liability 2,041 1,687 1,480 1,245 1,234 5,868 4,093
Finance charge 577 510 453 404 359 1,122 324
2020
Lease liability 1,813 1,693 1,377 1,224 982 4,944 2,955
Finance charge 567 497 437 385 340 1,095 308
Interest costs for the year on lease liabilities was $612k (2020: $640k). This has been included in
interest in the statement of financial performance.
A number of leases have right to renew options exercisable by the lessee. The Group has included all
of these renewal options in the right of use asset with the exception of three properties which are sub-
leased and exercise of the renewal is subject to the head lease. During the year, the Group made a
commitment to lease a dealership facility which has a commencement date in the future. The lease
has a 18 year term, including two rights of renewal and will commence when building work has
completed.
The Group has a number of properties which are leased on terms which have less than 12 months to
run. The cost of these leases was $578k (2020: $586k) for the year and has been included in property
occupation costs in the statement of financial performance. At 30 June 2021 the total commitment on
these leases was $258k (2020: $226k).
The Group owns some properties that are not completely occupied by Group companies and the space
is leased to third parties. The leases are negotiated under normal commercial arrangements with
varying terms, escalation clauses and renewal conditions and without undue restrictions. Rent of
$764k (2020: $696k) has been included in other revenue. The rent is receivable during the non-
cancellable periods of these leases according to the following schedule.
Lease receivables
2021
$000
2020
$000
Within one year 497 480
Between one and two years 266 266
Between two and five years 489 304
Over five years 141 192
Total operating lease receivables 1,393 1,242
27
16 Intangible assets
Intangible assets consist of goodwill.
Goodwill is recognised on acquisitions of subsidiaries or purchases of business assets and represents
the excess of the acquisition costs over the fair value of the individually identified acquired assets and
liabilities at acquisition date.
Goodwill relates to the acquisition of business assets which have no foreseeable limit to the period over
which they are expected to generate cash inflows for the Group. As such they are considered to have
an indefinite useful life.
The value of intangibles is compared with the “value in use” of the affected dealerships, which have
been identified as the cash generating units associated with the intangibles. Impairment of the intangible
assets is recognised if there is considered to be a permanent reduction in the “value in use”.
Impairment testing calculations require the use of estimates and assumptions. The calculations of “value
in use” are based on the actual results for the past five reporting periods together with the projected
results for the next five reporting periods. It was assumed that there would be no real growth during the
period of the forecasts and that the results for the initial part of the period would continue to be impacted,
in some way, by the economic downturn from the Covid-19 pandemic.
Key assumptions relate to the general economic outlook, the level of the new and used vehicle industries
and the performance of the Group’s business units in this environment.
The discount rate used in completing the cash flow forecast to assess value in use was 8.6%
(2020: 8.4%).
Management considers that any reasonable change in a key assumption used in the determination of
the value in use would not cause the carrying amount of intangible assets to exceed their recoverable
amount.
The value of intangible assets was reviewed at 30 June 2021. There was no indication of impairment
below their carrying amount (2020: $Nil).
2021 2020
Goodwill $000 $000
Balance at 1 July 1,028 1,028
Impairment loss during the year - -
Balance at 30 June 1,028 1,028
Cost 1,028 1,028
Accumulated amortisation and impairment - -
Balance at 30 June 1,028 1,028
28
Notes on investments
17 Subsidiaries
Subsidiaries are entities controlled by the Company. Control requires the investor to have exposure or
rights to variable returns and the ability to affect those returns through power over the investee. The
financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases. Intra-group balances, and any revenue and
expenses from intra-
group transactions, are eliminated in preparing the consolidated financial
statements.
Non-controlling interests in the results and equity of subsidiaries are shown separately in each of the
consolidated financial statements. They represent the portion of the profit or loss, other comprehensive
income and net assets of subsidiaries that are not held by the Group based on their respective ownership
interests.
All subsidiaries are 100% owned (2020: 100%), with the exception of Southpac Trucks Limited which is
85% owned (2020: 85%). All subsidiaries have a reporting date of 30 June. All Group companies are
registered in New Zealand. Subsidiary companies operate as motor vehicle dealerships and related or
incidental activities. The Company provides administrative and financial services to the subsidiaries as
well as leasing them, at market rates, many of the properties they occupy.
Trading subsidiaries
Agricentre South Ltd, Avon City Motorcycles Ltd, Avon City Motors Ltd, Capital City Motors Ltd,
Dunedin City Motors Ltd, Energy City Motors Ltd, Energy Motors Ltd, Fagan Motors Ltd, Hutchinson
Motors Ltd, M.S. Motors (1998) Ltd, Macaulay Motors Ltd, Ruahine Motors Ltd, South Auckland
Honda Ltd, South Auckland Motors Ltd, Southern Autos – Manukau Ltd, Southern Lakes Motors Ltd,
Southpac Trucks Ltd, The Hawkes Bay Motor Company Ltd and Timaru Motors Ltd.
Non-trading subsidiaries
Advance Agricentre Ltd, Avery Motors Ltd, Capital City Paint & Panel Ltd, Central Lakes Automotive
Ltd, East City Ford Ltd, Jeff Gray Ltd, Metro Motors (Porirua) Ltd, Metro Training Services Ltd,
Panmure Motors Ltd, Papakura Ford Ltd, Pukekohe Motors Ltd, Queenstown Motors Ltd,
South Auckland Ford Ltd, Southland Tractors Ltd, Stevens Motors Ltd, Tower Motors (2012) Ltd and
Trucks South Ltd.
Non-controlling interest
Southpac Trucks Ltd operates branches and service agencies throughout New Zealand and its principal
place of business is Auckland. The summarised financial position and cash flows at the reporting date
were as follows:
2021
$000
2020
$000
Shareholders’ equity 21,531 22,082
Total liabilities 74,838 69,088
Total equity and liabilities 96,369 91,170
Total assets 96,369 91,170
Net cash flows from:
Operating activities 19,864 15,406
Investing activities (1,795) (520)
Financing activities (17,565) (14,224)
Net movement in cash held 504 662
Opening cash balance 1,853 1,191
Closing cash balance 2,357 1,853
18 Investments
2021
$000
2020
$000
Shares in Motor Trade Finance Limited (MTF) 2,551 2,381
Other 1 1
Total investments 2,552 2,382
MTF shares are traded in a quoted but restricted market and are categorised as level 2 in the fair value
hierarchy set out in NZ IFRS 13 – Fair Value Measurement.
Shares are carried at fair value with changes in value recognised through the statement of financial
performance.
29
Notes on funding
19 Capital management
The Group’s capital includes share capital, retained earnings and property revaluation reserves.
The Group’s policy is to maintain a strong capital base to ensure that it continues as a going concern,
to maintain investor, supplier and market confidence and to sustain future development of the business.
The Board regularly monitors future capital requirements and costs to maintain an appropriate balance
of shareholders’ equity and debt. The Group generally maintains the capital structure by setting a
sustainable level of dividends.
The Group issues call debt securities and maintains relationships with a number of financial institutions
to ensure that adequate debt facilities are available to meet short to medium term strategic cash flow
requirements and as a buffer for unexpected events. The Group complied with all of the financial
covenants incorporated in the bank borrowing facilities (note 25) and the at call deposit trust deed (note
24) at the reporting date and at 30 June 2020. There are no
other externally imposed capital
requirements.
There has been no change in the Group’s management of capital during the years ended 30 June 2021
or 30 June 2020.
30
20 Movements in equity
Share
capital
(Note 21)
Property
revaluation
reserve
Foreign
exchange
cash flow
hedge
reserve
Retained
earnings
Total
attributable
to share-
holders
Non-
controlling
interest
Total
equity
$000 $000 $000 $000 $000 $000 $000
Balance at 30 June 2019 15,968 57,030 (95) 134,916 207,819 3,125 210,944
Dividends paid - note 22 - - - (9,808) (9,808) (975) (10,783)
Total transactions with
shareholders
- - - (9,808) (9,808) (975) (10,783)
Profit for the year - - - 21,828 21,828 1,255 23,083
Other comprehensive income
Property revaluation reserve
Fair value movement - 6,476 - - 6,476 - 6,476
Deferred tax - 515 - - 515 - 515
Foreign exchange cash flow
hedge reserve
Fair value movement - - 667 - 667 118 785
Deferred tax - - (187) - (187) (33) (220)
Total comprehensive income - 6,991 480 21,828 29,299 1,340 30,639
Balance at 30 June 2020 15,968 64,021 385 146,936 227,310 3,490 230,800
Dividends paid - note 22 - - - (15,366) (15,366) (1,575) (16,941)
Total transactions with
shareholders
- - - (15,366) (15,366) (1,575) (16,941)
Profit for the year - - - 24,833 24,833 1,580 26,413
Other comprehensive income
Property revaluation reserve
Fair value movement - 25,166 - - 25,166 - 25,166
Deferred tax - 1,089 - - 1,089 - 1,089
Transfer on sale of property - (279) - 279 - - -
Foreign exchange cash flow
hedge reserve
Fair value movement - - (818) - (818) (144) (962)
Deferred tax - - 229 - 229 40 269
Total comprehensive income - 25,976 (589) 25,112 50,499 1,476 51,975
Balance at 30 June 2021 15,968 89,997 (204) 156,682 262,443 3,391 265,834
Reserves
The property revaluation reserve arises on the revaluation of land and buildings. Where revalued land
or buildings are sold, the portion of the revaluation reserve that relates to the asset and is effectively
realised, is transferred directly to retained earnings.
The foreign exchange cash flow hedge reserve comprises the cumulative balance of adjustments to
uncompleted transactions that qualify as effectively hedged under NZ IFRS 9 – Financial Instruments.
31
21 Share capital
All shares on issue are fully paid-up and have no par value.
All ordinary shares:
• have equal voting rights
• share equally in dividends
• would share equally in any surplus on winding up
2021
$000
2020
$000
Share capital 15,968 15,968
Thousands
of shares
Thousands
of shares
Number of ordinary shares authorised and on issue 32,695 32,695
Weighted average number of ordinary shares on issue 32,695 32,695
22 Dividends
2021
$000
2020
$000
Date paid Cents per share
Final for the previous year 5 October 2020 32.0 10,462 9,808
Interim for the current year 29 March 2021 15.0 4,904 -
Dividends paid during the year 15,366 9,808
For details of the final dividend for the current year, see note 33.
23 Vehicle floorplan finance
When not purchased outright, new vehicles are funded by bailment arrangements, which represent a
financial liability, accounted for at amortised cost. The vehicles are initially included in inventory at the
same value.
Most of the subsidiaries have bailment facilities with finance companies to provide funding for new
vehicles. The main finance company is UDC Finance Limited
. Under these facilities the finance
companies own the vehicles that are placed in the control of the subsidiaries as bailees and are available
to display for sale to the public in the dealerships. The subsidiaries pay bailment fees (similar to interest)
for the use of the vehicles. The bailment agreements are subject to financial limits. The vehicles are
purchased from the finance companies when they are sold to customers.
If the subsidiaries breach the bailment agreements, the finance companies retain the right to repossess
and sell the vehicles and the subsidiaries must meet any shortfall of the sale proceeds from the purchase
price of the vehicles.
Liabilities under bailment agreements are due for payment within the next 12 months.
2021
$000
2020
$000
Total vehicle floorplan finance 55,866 42,851
32
24 At call deposits
The Company offers for subscription unsecured call debt securities (Deposits) that are repayable on
demand. Acceptance of Deposits is restricted to shareholders, employees and their associates.
At reporting date the Deposits were constituted by, issued under and described in, a trust deed dated
13 September 2016 between the Company, its Guaranteeing Subsidiaries (as therein defined) and
Public Trust as supervisor for the holders of Deposits (the Depositors). Under the terms of the trust
deed the Guaranteeing Subsidiaries unconditionally guarantee, jointly and severally, the repayment
of the deposits together with interest thereon by the Company and by each of the other Guaranteeing
Subsidiaries. The governance documents, including a product disclosure statement, are available on
the Disclose Register. On 9 September 2020 the product disclosure statement was re-issued and the
maximum amount of deposits on offer increased to $40m.
Interest is payable on Deposits at rates that vary from time to time as disclosed to the Depositors
on the application form or as subsequently notified to Depositors in writing. The interest rate
applicable at 30 June 2021 was 1.80% (2020: 2.30%).
2021
$000
2020
$000
Deposits 32,304 27,389
Maximum amount of deposits on offer 40,000 30,000
25 Bank borrowing
The Group has wholesale facilities with BNZ, ANZ and Westpac, three highly-respected international
registered trading banks. The bank facilities are reviewed annually by the banks and have terms that
extend up to three years from the date of each review.
Wholesale borrowing is transacted only by the Company. Its indebtedness is guaranteed by its trading
subsidiaries to the full extent of the facilities. All borrowing at the reporting date was repayable at call.
The agreements with each of the banks are very similar and require the Group to meet financial criteria
based on ratios derived from its financial statements. The Group also pledges to the banks not to grant
security over any of its assets i.e. a “negative pledge”.
During the year, the facility limit with Westpac was increased by $5m.
2021
$000
2020
$000
Bank borrowing 12,197 19,235
Combined facility limits 70,000 65,000
33
26 Financial instruments
Financial instruments primarily comprise cash at bank, receivables, payables, credit contracts, forward
exchange contracts, shares in companies, borrowings and loans.
Financial assets and liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A
financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Except for trade receivables that do not contain a financing component a
nd are measured at
transaction price, all financial assets are initially measured at fair value adjusted for transaction costs
(where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into
the following categories:
• amortised cost
• fair value through profit or loss
• fair value through other comprehensive income
The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset
Measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are
not designated as fair value through profit or loss):
• the assets are held to collect contractual cash flows
• the contractual terms of the assets give rise to cash flows that are only payments of principal
and interest
After initial recognition, the assets are measured at amortised cost using the effective interest rate
method. Discounting is ignored where the effect of discounting is not material.
Financial assets at fair value through profit or loss
Financial assets that are held under a different model than ‘held to collect’ or ‘held to collect and sell’
and assets whose cash flows are not solely payments of principal and interest are accounted for as
fair value through profit or loss. All derivative financial instruments fall into this category, except for
those designated and effective as hedge instruments. This category also contains any equity
investments.
Assets in this category are all measured at fair value with gains or losses recognised in the statement
of financial performance. The fair values of the assets in this category are determined by reference to
an active market or using an alternative valuation technique where no market exists.
Financial assets at fair value through other comprehensive income
The Group had no financial assets in this category at 30 June 2021.
34
Impairment of financial assets
Recognition of credit losses is not dependent on identifying a credit loss event but instead considers
a broader range of information when assessing credit risk including past events, current conditions
and reasonable forecasts that could affect the expected collectability of future cash flows. In applying
this approach, distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial
recognition, or that have a low credit risk (Stage 1)
• financial instruments that have deteriorated in credit quality since initial recognition and whose
credit risk is not low (Stage 2)
• financial instruments that have objective evidence of impairment at the reporting date
Twelve month expected credit losses are recognised for Stage 1 instruments while lifetime expected
credit losses are recognised for Stage 2 instruments. Measurement of expected credit losses is
determined by a probability weighted assessment of the credit losses over the life of the instrument.
The Group makes use of a simplified approach in accounting for trade receivables. See note 11 for
more information.
Measurement of financial liabilities
Financial liabilities are initially measured at fair value and, where applicable, adjusted for transaction
costs. Subsequently, financial liabilities are measured at amortised cost using the effective interest
method except for derivative financial instruments that are designated and effective as hedging
instruments (see note 29).
Financial instruments by category
2021 2021 2020 2020
$000 $000 $000 $000
Fair value
through
profit or loss
Amortised
cost
Fair value
through
profit or loss
Amortised
cost
Assets
Cash and bank accounts - 14,736 - 16,995
Trade and other receivables - 44,933 - 41,726
Credit contracts - 2,787 - 3,758
Shares in companies 2,552 - 2,382 -
Financial derivatives – foreign exchange - - 630 -
Financial
liabilities at
amortised
cost
Financial
derivatives
at fair value
Financial
liabilities at
amortised
cost
Financial
derivatives
at fair
value
Liabilities
Bank borrowings 12,197 - 19,235 -
At call deposits 32,304 - 27,389 -
Trade and other payables 44,246 - 30,325 -
Lease liabilities 17,648 - 14,988 -
Vehicle floorplan finance 55,866 - 42,851 -
Credit contracts 2,808 - 3,782 -
Financial derivatives – foreign exchange - 332 - -
35
27 Reconciliation of liabilities arising from financing activities
Movements in liabilities from financing activities during the year were as follows:
At 1 July
2020 Cash flows
Non-cash
changes
At 30 June
2021
$000 $000 $000 $000
Bank borrowing – note 25 19,235 (7,038) - 12,197
At call deposits – note 24 27,389 4,915 - 32,304
Vehicle floorplan finance – note 23 42,851 13,015 - 55,866
Total short term borrowings 89,475 10,892 - 100,367
Credit contracts – note 14
Short term 1,403 - (261) 1,142
Long term 2,379 - (713) 1,666
Lease liabilities – note 15
Short term 1,813 228 - 2,041
Long term 13,175 2,432 - 15,607
Total liabilities arising from financing
activities 108,245 13,552 (974) 120,823
36
Notes on managing risk
28 Financial risk management
28 (a) Credit risk
Financial instruments which potentially subject the Group to concentrations of credit risk consist
principally of bank balances, deposits, receivables and credit contracts.
The carrying amounts of financial assets represents the Group’s maximum credit exposure.
The Group places its cash and short term investments with high credit quality financial institutions (as
determined by independent credit rating agencies) and limits the amount of credit exposure to any one
financial institution.
The Group performs credit evaluations on all customers requiring credit and generally does not require
collateral or other security to support financial instruments with credit risk.
Concentrations of credit risk with respect to accounts receivable are limited due to the large number of
customers included in the Group’s customer base.
The rate of impairment of amounts receivable under credit contracts (note 14) is low. If the incidence of
recourse requiring balances to be written off were to increase by 1% it would increase the annual amount
written off through profit or loss by $0.03m (2020: $0.04m).
28 (b) Interest rate risk
The Group is not exposed to any specific interest rate risk other than normal interest rate movements
on a daily basis in the New Zealand market. The specific rates that the Group was exposed to during
the year were:
2021 2020
Bank overdrafts 3.72% - 9.35% 5.00% - 10.50%
At call deposits 1.80% - 2.30% 2.30% - 3.15%
Bank borrowing facilities 1.65% - 2.00% 1.65% - 3.15%
Bank borrowings are unsecured and fall within the agreed committed facility requirements in place with
the Group’s bankers. These facilities have maturity dates ranging from March 2022 to March 2023 and
are expected to be renewed in the normal course of business. The facilities can be drawn on or repaid
at any time and interest rates are variable. The carrying value of these loans is considered to be the fair
value.
Interest rate sensitivity
The effect of a movement of 1% in interest rates would be to change finance costs in the statement of
financial performance and equity by $0.445m per annum (2020: $0.466m).
28 (c) Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual payment obligations. The Group
monitors its cash on an ongoing basis to ensure it has sufficient credit facilities to meet its obligations.
The Group obtains funding for its operations from several sources. In addition to its shareholders’ funds
(made up of share capital and reserves), funding is also provided by depositors through the at call
deposit scheme and from banks and other financial institutions.
Financial liabilities in the form of at c all deposits and bank borrowings are repayable at call. Trade and
other payables fall due within one year. The potential repayment profile of amounts due under financial
liabilities – credit contracts is provided in note 14.
There is a risk that the banks may reduce or withdraw the facilities or will be unable to provide the level
of funding required. The Group would then be required to obtain alternative funding which could cost
more. If no alternative funding was available, the consequences would disrupt cash flows and potentially
the Group may not be able to continue to pay suppliers and staff or repay depositors.
If the finance companies were to withdraw the bailment facilities described in note 23 or were unable to
fund as many vehicles as required, the Group would have to seek alternative methods of funding the
vehicles. This could involve bailment agreements with other providers or additional bank funding to
purchase the vehicles outright. The consequences could include increased costs and disruption to the
supply of new vehicles for sale.
37
28 (c) Liquidity risk (continued)
The Group mitigates its funding risk by adopting prudent financial management practices (such as
closely monitoring its cash flows and regularly checking compliance with the financial ratios) and by
maintaining open and honest relationships with the banks and finance companies.
The extent of the bank facilities is disclosed in note 25 and bailment facilities in note 23.
28 (d) Foreign currency risk
The Group enters into fixed rate foreign exchange contracts to create cash flow hedges for the purchase
of trucks on a contract-by-contract basis with firm customer orders and for units ordered for stock. Other
short term transactions are covered by forward exchange contracts and accounted for at that rate.
The principal values (stated in New Zealand Dollars) of forward exchange contracts entered into and
outstanding at each reporting date were denominated in the following currencies. All forward exchange
contracts have value dates of less than 12 months.
Currency
2021
$000
2020
$000
Australian Dollars (AUD 70.9m) 76,208 22,403
Euros (EUR 26.6m) 46,118 4,150
Total 122,326 26,553
Due to the close association between foreign currency commitments for imported goods, their selling
price and the underlying forward exchange contracts, it is estimated that any change in the New Zealand
Dollar exchange rates against the above currencies would have had minimal impact on the result and
equity for the year ended 30 June 2021 or 30 June 2020.
29 Financial derivatives – foreign exchange
Foreign exchange asset/(liability)
2021
$000
2020
$000
Balance at 1 July 630 (155)
Movement during the year through
Other comprehensive income (962) 785
Statement of financial performance - -
Balance at 30 June (332) 630
The Group uses forward currency contracts to hedge its foreign currency risks. Such derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when the fair value is negative.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the
exposure to variability in cash flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an
unrecognised firm commitment.
At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which it wishes to apply hedge accounting and the risk management objective and
strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item, the nature of the
risk being hedged and how the Group assesses whether the hedging relationship meets the hedge
effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the
hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the
following effectiveness requirements:
• there is ‘an economic relationship’ between the hedged item and the hedging instrument
• the effect of credit risk does not ‘dominate the value changes’ that result from that economic
relationship
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the Group actually hedges and the quantity of the hedging instrument that the
Group actually uses to hedge that quantity of hedged item
38
Hedges that meet all the qualifying criteria for hedge accounting all fall into one category of hedge and
are accounted for as described below:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in Other Comprehensive
Income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the
statement of financial performance. The cash flow hedge reserve is adjusted to the lower of the
cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged
item. The Group continues to designate all of the forward contracts as hedging instruments.
The amounts accumulated in Other Comprehensive Income are accounted for depending on the nature
of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition
of a non-financial item such as inventory, the amount accumulated in equity is removed from the
separate component of equity and included in the initial cost or other carrying amount of inventory.
30 Dealership franchise agreements
Each of the trading subsidiaries enters into agreements in their own right with the New Zealand
distributor to sell and service specific brands of motor vehicle in a defined primary marketing area. As
national distributor of two brands of heavy trucks, Southpac Trucks Limited has equivalent agreements
with the international suppliers covering the whole country. Most of these agreements (called either
dealer or franchise agreements) do not have a specific duration. All of the dealer or franchise
agreements contain the right for the distributor/franchisor or the dealer to terminate the arrangements
at short notice. Some of these agreements have finite terms from one to three years, usually without
automatic rights of renewal. If a dealership or franchise agreement is terminated or not renewed there
could be a detrimental effect on the future financial performance of the Group.
The Group manages and mitigates this risk through stable and profitable operating businesses that
deliver on franchise objectives in conjunction with a customer first approach. In addition, strong
relationships with brand partners, at both the Group and dealership levels, focuses on delivering
mutually beneficial long term outcomes to further manage this risk.
39
Other notes
31 Related party transactions
The Group has related party transactions with key management personnel and the CMC Group
Workplace Savings Scheme.
Management personnel
Transactions with key management personnel were:
2021
$000
2020
$000
Short term benefits (including salary, incentives, profit share, use of motor
vehicles and other benefits) 8,543 6,521
Post-employment benefits (including contributions to retirement savings
schemes) 229 221
Share related benefits - -
Total remuneration benefits 8,772 6,742
Key management personnel includes current Directors (executive and non-executive), key management
at the group office and chief executives of all trading subsidiaries.
Some key management personnel have funds on deposit with the Company by way of its unsecured at
call debt securities – note 24 – on the same terms and conditions as all other depositors.
Also see remuneration of Directors on page 47 and remuneration of employees on page 48.
The CMC Group Workplace Savings Scheme
The Company is the sponsoring employer of the CMC Group Workplace Savings Scheme (the Scheme)
which is a defined contribution scheme. It is categorised as an employer-related restricted workplace
savings scheme registered under the FMCA 2013.
The Company ceased to be the trustee of the Scheme when a new trust deed was registered on
18 November 2016 but continues to provide administrative services to the Scheme and received fees
of $0.067 during the year (2020: $0.086m).
The Scheme holds 162,196 (2020: 162,196) ordinary shares in the Company representing 4.4% (2020:
3.1%) of its total assets. The Company is a related party to the Scheme and FMCA limits investments
in related parties to 5% of total assets.
All transactions between key management personnel, the Scheme and Group companies were in the
normal course of business.
32 Contingencies
2021
$000
2020
$000
Contingent assets
Contingent liabilities
-
-
-
-
The Group has provided guarantees to PACCAR Australia Pty Limited in respect of obligations owed to
that company. The guarantee is in proportion to the shareholding in Southpac Trucks Limited and the
maximum exposure for the Group is $1.3m.
33 Events after the reporting date
On 13 August 2021, a dividend of 40.0 cents per share was declared to be paid fully imputed on
4 October 2021, representing a total payment of $13.1 million.
On 17 August 2021, the NZ Government placed the country into a Covid-19 Level 4 lockdown as a result
of a Delta variant outbreak in Auckland. New Zealand, south of Auckland, moved to Level 3 on 31
August and on 7 September everyone, except Auckland, moved to level 2. At Level 4, all the Group’s
businesses, apart from a limited amount of essential services, are effectively closed.
On 19 August 2021, as a result of an offer to buy back shares from shareholders no longer transacting,
the Group sold 547,254 shares in Motor Trade Finance Limited receiving $1.3m based on a price of
$2.31 per share.
40
Independent auditor’s report
To the shareholders of The Colonial Motor Company Limited
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of The Colonial Motor Company Limited
(the “Company”) and its subsidiaries (the “Group”) on pages 9 to 39 which comprise the
consolidated statement of financial position as at 30 June 2021, and the consolidated statement
of financial performance, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting
policies
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 30 June 2021 and its consolidated
financial performance and cash flows for the year then ended in accordance with New Zealand
Equivalents to International Financial Reporting Standards (“NZ IFRS”) issued by the New
Zealand Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand)
(ISAs (NZ)) issued by the New Zealand Auditing and Assurance Standards Board. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for
Assurance Practitioners (including International Independence Standards) (New Zealand) issued
by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Our firm carried out other assignments for the Group in taxation advice and a consultancy
project. The firm has no other interest in the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters
41
Why the matter is significant How our audit addressed the key audit matter
Recognition of revenue In obtaining sufficient and appropriate audit
evidence we:
The Group has recognised revenue of $901m for
the financial year. The accounting policies for
recognition of revenue and the breakdown of
revenue from different performance obligations
are set out in note 1.
Revenue is recognised when the control of the
goods has passed to the buyer which is normally
at delivery of the vehicle.
We have raised this as a key audit matter due to
the large number of transactions throughout the
reporting period and risk that revenue transactions
have been recorded in the incorrect period based
on the date of recording the transaction compared
to when control of the vehicle has been
transferred to the customer.
• Evaluated the Group’s recognition of revenue
by assessing the processes that Group
management has in place to ensure that
appropriate revenue recognition policies have
been consistently applied in accordance with NZ
IFRS 15 Revenue from contracts with
customers; and
• Selected a sample of sales transactions on
either side of the reporting date to substantiate
that the appropriate terms of the relevant
contracts had been satisfied and that the risks
and rewards associated with the contract had
passed to the customer.
Valuation and existence of inventory In obtaining sufficient and appropriate audit
evidence we:
The Group has a significant level of inventory on
hand ($163m) held at multiple locations. It is
measured at the lower of cost or net realisable
value. The majority of the inventory relates to
vehicles ($139m) as set out in note 8.
• Attended year end stock counts at all
dealerships and verified the existence of new,
used and demonstrator vehicles, including those
financed through bailment arrangements;
• Confirmed the inventory balances funded by
bailment arrangements directly with the finance
companies;
• Compared the carrying value of a sample of
vehicles held at reporting date to post year end
sale values, or if not sold, to equivalent market
evidence to verify that the value of inventory
was not overstated; and
• Challenged the assumptions used in the
inventory provisions by comparing the Group’s
historical trading patterns to the current aged
vehicle listing.
The assessment of net realisable value can
fluctuate as a result of general economic
conditions, new vehicle sales, incentives, prices
paid on trade in, age, condition and configuration
of vehicles.
We have raised this as a key audit matter due to
the large number of vehicles held at different
locations and the judgement applied in
determining that inventory is held at the correct
value.
Other information
The Directors are responsible for the other information. The other information comprises the
information in the Annual Report which accompanies the consolidated financial statements and
audit report.
Our opinion on the consolidated financial statements does not cover the other information
and we do not express any form of audit opinion or assurance conclusion thereon.
In connections with our audit of the consolidated financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Directors’ responsibilities for the consolidated financial statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS, and for such internal control
as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
42
In preparing the consolidated financial statements, the directors are responsible on behalf of the
Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the financial statements is
located on the External Reporting Board’s website at: https://www.xrb.govt.nz/assurance-
standards/auditors-responsibilities/audit-report-1/
Restriction on use of our report
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state to the Company’s shareholders, as a body, those matters which
we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s shareholders, as a body, for our audit work, for this report or for the
opinion we have formed.
Grant Thornton New Zealand Audit Limited
Ryan Campbell
Auckland
17 September 2021
43
Governance statement
The Colonial Motor Company Limited (CMC or Company) is a public company with its shares listed on
the New Zealand Stock Exchange (NZX) operated by NZX Limited.
CMC’s Board of Directors (Board) is committed to maintaining high standards of governance by
implementing a framework of structures, practices and processes that it considers appropriate and
effective. CMC’s corporate governance policies and procedures and its board and committee charters,
which document the framework, have been approved by the Board. Components of the system of
governance are reviewed from time to time.
This statement sets out how these measures meet the recommendations made in the NZX Corporate
Governance Code 2019 and the requirements of the NZX Main Board Listing Rules.
The Board’s view
is that the corporate governance structures, practices and processes have followed these
recommendations and requirements in the year to 30 June 2021.
The Group is organised so that each motor vehicle dealership is incorporated as a subsidiary company
that is managed locally. The CEO of each Group company reports to the Group Chief Executive. Each
dealership also has a direct relationship with the franchisor(s) that it represents.
1. Code of ethical behaviour
Directors should set high standards of ethical behaviour, model this behaviour and hold management
accountable for these standards being followed throughout the organisation.
The Board ensures that, consistent with its history and industry standing, CMC conducts its dealings
with all stakeholders with integrity and respect. It maintains a directors’ manual including a code of
ethics that extends to all staff and sets out definitive standards of behaviour. In particular, Directors
take care to comply with rules requiring disclosure of positions and occupations they have outside of
CMC that may involve a conflict of interest.
The directors have established a securities trading policy to comply with prevailing legislation that
requires full disclosure by directors and senior executives both before and after buying and selling CMC
shares. All share trades by directors and officers are reported to the market and Director’s trades are
disclosed in annual reports.
2. Board composition and performance
To ensure an effective board, there should be a balance of independence, skills, knowledge,
experience and perspectives.
The Board operates under a written charter which sets out the roles and responsibilities of the Board
and distinguishes them between the respective roles and responsibilities of the Board and the
Management.
The Company’s constitution specifies that there should be between five and seven directors. The Board
contains a mix of two independent directors and five executive and non-executive directors who are not
independent, which reflects the shareholder mix. Information about each director regarding their
experience, length of service, independence, ownership interests and meeting attendance is disclosed
in the annual report.
As vacancies arise, new directors are identified by the Nominations Committee of the Board. A person
identified by the Nominations Committee can be appointed as a director by the Board during the year
but then must stand for election at the next annual meeting. A person can also be nominated by
shareholders and stand for election as a director at an annual meeting. The terms of appointment of
each newly appointed director are provided in writing.
The constitution specifies that a director cannot serve (without re-election) past the third annual meeting
following their appointment or three years, whichever is longer.
3. Board committees
The board should use committees where this will enhance its effectiveness in key areas, while still
retaining board responsibility.
Where additional detailed supervision or consideration is required, the Board establishes committees
that operate by making recommendations to the Board for final resolution. There are three standing
committees with written terms of reference.
Audit & Compliance Committee: Members of the Committee have relevant financial qualifications
and/or commercial experience. The Committee met five times during the reporting year, with all its
members present at each meeting.
44
Comprising A J Waugh (Chairman), J W M Journee and J P Gibbons, the Committee meets regularly
with management, the internal auditor and the external auditor to:
• review the adequacy of controls to identify and manage areas of potential risk and to safeguard
the assets of the Group
• maintain the independence of the external auditor and review the external audit functions
generally
• evaluate the processes to ensure that financial records and accounting policies are properly
maintained in accordance with statutory requirements and financial information provided to
shareholders and the Board is accurate and reliable.
Management is delegated the responsibility for developing, maintaining and enforcing the system of
internal controls. The same basic set of controls is applied across the Group. Monthly reports from
each dealership form a key element of the financial control mechanism. An internal auditor works in
conjunction with the external auditor to complete a review of all dealerships every year to ensure
maintenance of the standard of accounting practices and for compliance with the internal policies and
procedures. The internal auditor regularly reports to the Committee.
Remuneration Committee: J P Gibbons (Chairman) and A J Waugh make up this Committee, the
purpose of which is to ensure the directors and senior executives are fairly and reasonably rewarded
for their individual contributions. The Committee met three times during the reporting year. The
Company’s
policy is to review remuneration levels for directors and senior staff every two years.
Directors’ fees were reviewed this year.
Director and management remuneration is disclosed in the Annual Report. The Company has no
equity-based remuneration plan and does not require its directors to purchase or hold CMC shares.
Nominations Committee: This Committee has the task of identifying potential directors with skills that
are complementary to the needs of the Company and the Board. All Directors serve on this C ommittee.
4. Reporting and disclosure
The board should demand integrity in financial and non-financial reporting and in the timeliness and
balance of corporate disclosures.
The Board schedules at least eight meetings each year to monitor the progress of management on
achieving the targets and objectives the Board has set. The Board usually meets in Wellington but at
least once a year it holds a meeting at a dealership in order to meet front-line staff and experience
operations at first hand. Additional ad hoc meetings are held when necessary, sometimes by telephone
conference. During the reporting period, the Board held 13 meetings, seven with all of the directors
physically present and six with differing blends of telephone call or video conference and a number of
directors able to physically attend.
The Board of Directors issues three reports annually - a Half Year Report, a Preliminary Result and an
Annual Report - to provide shareholders with the information they need to monitor their investment in
the Company. These
reports are designed to deliver that information in a clear and concise manner.
The reports are mailed to all shareholders and are available for download from CMC’s website
(www.colmotor.co.nz). Shareholders may register to receive the interim and preliminary reports
electronically.
In the reporting period, CMC also made two additional disclosures to shareholders and on NZX in
relation to guidance and the retirement of the Chief Executive.
A condition of listing is that CMC complies with the Listing Rules issued by NZX. The rules include the
requirement to continuously disclose market sensitive information. The market acts in the position of
all current and potential shareholders and disclosure via the NZX is generally considered adequate
notification to all. However, CMC also has a policy of communicating directly with its shareholders
whenever practical.
5. Remuneration
The remuneration of directors and executives should be transparent, fair and reasonable.
As stated above, remuneration of directors and senior executives is considered by the Remuneration
Committee of the Board. During its assessments, the Committee generally refers to independent
survey reports to provide suitable market-related benchmarks.
The actual amounts paid to directors are disclosed in the Company’s Annual Reports, including full
details for executive directors. Remuneration of other staff is also disclosed in the $10,000 bands
specified in company disclosure legislation.
The packages of senior staff are made up of fixed and variable components. The variable portions
include only short-term incentives. There are no long-term incentives or share schemes in place. The
45
variable elements are based on dealership profit and comprise higher proportions of the total than are
seen in the general market. Participation in the financial performance provides a strong incentive for
success. The Group has a proud record of staff retention, particularly at senior levels.
6. Risk management
Directors should have a sound understanding of the material risks faced by the issuer and how to
manage them. The board should regularly verify that the issuer has appropriate processes that identify
and manage potential and material risks.
The range of tools used to mitigate risk includes elements of corporate governance outlined in this
report, the system of internal controls and management reporting and accountability. The Board
reviews the Group insurance programme annually and as needs arise and assesses which risks to
insure with the assistance of an external insurance broker. The Audit and Compliance Committee has
particular responsibility for internal audit on which it receives regular reports from the internal auditor.
Management provides the Committee with an annual internal management and regulatory compliance
summary report.
Health & Safety: CMC is committed to providing healthy and safe environments for all its customers,
employees, contractors and other visitors to its facilities. A comprehensive group-wide workplace safety
management programme is operated with a Health & Safety Committee active at each subsidiary. The
Group Health and Safety Co-ordinator maintains and is continually improving CMC’s workplace health
and safety systems that are based on a comprehensive policy and procedures manual and are subject
to independent external audits.
The Board receives regular detailed reports, considers health and safety issues at each of its meetings
and experiences first-hand the practicalities of maintaining a healthy and safe workplace during its
regular dealership visits.
7. Auditors
The board should ensure the quality and independence of the external audit process.
The role of the external auditor is to report to shareholders on the truth and fairness of the financial
statements prepared by management, authorised by the Board and included in the Annual Report.
The audit partner and the chairman of the Audit & Compliance Committee meet at least twice a year,
the auditor attends Committee meetings at least three times a year and the audit partner attends the
Company’s annual meetings. The scope of discussions is not limited but includes issues identified
during audits, audit planning and staffing and the extent of non-audit work by the audit firm. The lead
audit partner is changed periodically to provide a fresh perspective and to ensure greater
independence. Fees paid for audit and any non-audit work (such as taxation advice) are disclosed in
the Annual Report.
8. Shareholder rights and relations
The board should respect the rights of shareholders and foster constructive relationships with
shareholders that encourage them to engage with the issuer.
The Board acts in a stewardship role on behalf of all shareholders. It approves the strategic direction
of the Group, oversees the management of its capital resources, monitors its performance and
compliance, ensures its assets are safeguarded and its workplaces are safe.
Shareholders meet in person at annual meetings to:
• consider the Company’s financial performance and financial position
• elect or re-elect directors
• record the on-going appointment of the external auditor and to authorise the audit remuneration
• set the maximum level of director remuneration following reviews in alternate years. The actual
amount paid to each director is disclosed in Annual Reports
The shareholders adopted the current constitution in 2004 which specifies the administration of the
Company and the relationship with shareholders. Copies of the constitution are available from the
Company or can be downloaded from the New Zealand Companies Office website. The requirements
of the Listing Rules are incorporated by reference into the constitution.
CMC maintains a website through which shareholders and interested stakeholders can communicate
with the Company.
Computershare Investor Services Limited maintains the register of shareholders.
46
Disclosures as required by the Companies Act 1993
(a) Director profiles and interests
In relation to sections 140 and 211(1)(e) of the Act, no director has declared any interest in a related party
transaction with the Company during the year. The Company has received the following general
disclosures of interest pursuant to section 140(2) of the Act that remain in place at the date of this report:
James Picot Gibbons, BCA (Hons), CA
Lower Hutt
Jim has worked in the motor vehicle industry throughout his career. After graduating he was employed
as a dealership accountant in 1974. He has since occupied many different roles within the Company’s
dealerships. Immediately before retiring from full-time employment, he was dealer principal at Energy
City Ford in New Plymouth, a position he had held for many years.
Jim has been a Director since 1992, has been Chairman since 2011 and will retire from the Board at
the conclusion of the 2021 Annual Meeting in November. He is a director of all of the Company’s
subsidiaries. Jim is a life member of the Motor Trade Association and was a director of MTA and MTA
Group Investments Limited until 2019.
Graeme Durrad Gibbons, BCom, CA
Lower Hutt
After gaining a commerce degree at Otago University, Graeme began his career with Ford New Zealand
and joined the CMC Group in 1984. He took up the role of Chief Executive in 1990 and became a
director of the Company in 1995. Graeme will retire as Chief Executive on 30 September 2021.
Graeme is Chairman of all of the Company’s subsidiaries until his retirement as Chief Executive but will
remain as a Director. He was previously a director of Motor Trade Finances Limited and Chairman of
its Audit Committee.
Matthew James Newman, BA
Auckland
Matthew is the Chief Executive Officer of the Group’s largest car dealership South Auckland Motors
(Ford and Mazda) and Southern Autos – Manukau (Suzuki, Citroen, Peugeot and Isuzu). He joined the
Group in 1986, having previously worked for Ford New Zealand and became Dealer Principal of South
Auckland Motors in 1991. Matthew is a past chairman of the Ford Dealer Council and also of Counties
Manukau Rugby Union. Matthew became a director in November 2013.
Stuart Barnes Gibbons
Lower Hutt
Stuart first joined the Group in 1982 as an apprentice technician in Morrinsville. He was the Chief
Executive / Dealer Principal of Stevens Motors, Lower Hutt, a position he held from 2002 until Stevens
Motors was merged with Capital City Motors on 1 July 2020. Stuart managed the property project for
the new Lower Hutt hub facility up to its completion and continues to work with the management team
on the successful transition of the merged dealership. Stuart is the immediate past Chairman of the
Ford Dealer Council. Stuart became a director in July 2014.
Ashley James Waugh, BBS
Te Awamutu
Ashley has experience in the dairy industry in New Zealand and Australia, with senior roles with the NZ
Dairy Board (now Fonterra) and as Chief Executive of National Foods Australia. Early in his career,
Ashley was marketing manager of Ford in New Zealand and Ford Lio Ho in Taiwan. He is currently a
director of Seeka Limited. Ashley became a director in November 2015.
John William Michael Journee, BCom
Auckland
John has held various senior executive positions in the retail industry in New Zealand and Australia
including with Noel Leeming and The Warehouse. He is currently a director of The Warehouse Group
Limited, The Warehouse Group Investments Limited, Farmlands Co-operative Society Limited and West
Auckland Trust Services Limited and is a member of the Quantiful Limited Advisory Board. John
became a director in December 2018.
Gillian Durrad Watson
Auckland
Gillian was appointed a director with effect from 1 September 2021. She has a business background in
the real estate industry and has worked in production management in the television industry. Gillian is a
significant shareholder who has had a life-long focus and interest in the Company and is CMC’s first
female Director.
47
(b) Remuneration of directors
Remuneration and all other benefits received by the directors who held office during the year ended 30
June 2021 are disclosed pursuant to section 211(1)(f) of the Act as follows:
Directors’ fees
2021
$
Total remuneration
2021
$
Total remuneration
2020
$
J P Gibbons (Chairman) 89,500 114,131 112,642
A J Waugh 59,950 59,950 56,680
G D Gibbons - 1,224,285 879,829
S B Gibbons - 186,931 274,215
M J Newman - 872,683 612,989
J W M Journee 54,500 54,500 53,591
D M Wood (retired Nov 2019) - - 24,979
Remuneration for the Chairman, additional to directors’ fees, includes the provision of a motor vehicle.
A J Waugh was elected Chairman of the Audit and Compliance Committee in December 2019 and has
received additional fees commensurate with that position from that date.
Executive Directors do not receive directors’ fees for acting as a director of the Company or of any
subsidiary. Executive Directors acting in their capacity as employees of the Company or of a subsidiary
received total remuneration including salary, incentives, superannuation contributions, use of a motor
vehicle and other benefits in the year ended 30 June 2021 as disclosed above. No other employee of the
Company or of any Group subsidiary retains or receives any remuneration or other benefits as a director.
The remuneration package of the Group Chief Executive, G D Gibbons (who is also a director), has in the
year to 30 June 2021
a fixed component (including salary, motor vehicle and superannuation
contributions) of $415,134 (2020: $415,134) and an annual short term incentive component of $809,151
(2020: $464,695) based on the current year’s trading performance. There are no long term incentives or
share schemes in place.
Dealer Principals/Chief Executive Officers of subsidiary companies receive a profit incentive in their
remuneration based on their dealership’s profit. The remuneration received by M J Newman as an
executive, as disclosed above, is for the twelve months to 30 June 2021 and includes a short term profit
incentive component of $606,552 (2020: $374,714). Similarly, the remuneration of S B Gibbons as an
executive is shown for the twelve months to 30 June 2021 and includes no short term profit component
this year (2020: $88,326).
In accordance with clause 28.4 of its constitution, the Company may provide for director retirement
benefits. The total provided at 30 June 2021 was $268,500 (2020: $268,500). Directors appointed after
1 May 2004 are not eligible to receive a retirement allowance unless authorised by shareholder resolution.
This benefit will be paid to J P Gibbons following his retirement from the board after 29 years as a director,
including the past 10 years as Chairman. There will be no further payment made under clause 28.4 of
the Constitution.
As permitted by clause 29.4 of the Company’s constitution, an insurance policy is in place in relation to
directors and officers liability. The policy ensures that, generally, directors will incur no monetary loss as
a result of actions they undertake as directors. Certain actions are specifically excluded, such as incurring
penalties and fines that may be imposed in respect of breaches of the law.
(c) Use of company information by directors
During the year the Board did not receive any requests from directors to use Company information
provided to them in their capacity as an officer or employee that would not otherwise have been available
to them.
48
(d) Share dealings by directors
Directors have disclosed under Section 148(2) of the Act the following acquisitions and disposal of a
relevant interest in shares in the Company between 1 July 2020 and 31 August 2021.
Director
Number of shares
acquired/ (disposed)
Date of transaction
Price per
share
Type of interest
J P Gibbons
(1)
(664,006) 15 October 2020 Nil Beneficial
J P Gibbons
(1)
186,335 15 October 2020 Nil Beneficial
J P Gibbons
(1)
30,000 15 October 2020 Nil Associated
J P Gibbons
(2)
(90,000) 15 October 2020 Nil Beneficial
J P Gibbons
(2)
90,000 15 October 2020 Nil Associated
S B Gibbons
(3)
474,348 11 March 2021 Nil Non-beneficial
J P Gibbons
20,000 17 March 2021 $8.85 Beneficial
G D Gibbons
(4)
(1,173,642) 17 March 2021 Nil Beneficial
G D Gibbons
(5)
106,449 17 March 2021 Nil Beneficial
G D Gibbons
(5)
80,000 17 March 2021 Nil Associated
G D Gibbons
(6)
195,607 17 March 2021 Nil Non-beneficial
G D Gibbons
(6)
195,607 17 March 2021 Nil Non-beneficial
G D Gibbons
(6)
195,607 17 March 2021 Nil Non-beneficial
G D Gibbons
(6)
260,809 17 March 2021 Nil Non-beneficial
G D Gibbons
(6)
326,012 17 March 2021 Nil Non-beneficial
(1) Distribution from the Estate of Robert Craig Gibbons
(2) Transfer to Associated Persons
(3) Appointed as Trustee of a shareholding Trust
(4) Transfer from a Trust of which G D Gibbons had a beneficial interest
(5) Distribution from the Estate of Peter Craig Gibbons
(6) Transfer to Trusts of which G D Gibbons is a Trustee
Directors disclosed no other transactions in the shares of the Company during the period.
(e) Composition of the Board
At the reporting date, all of the 6 Directors were male. Of the 17 Group officers, there was one female
officer and the rest were male (2020: 6 Directors - male, 17 officers - male).
(f) Remuneration of employees
During the year to 30 June 2021 the number of employees in the Group, not being directors of The
Colonial Motor Company Limited
, who received remuneration (including salary, incentives,
superannuation contributions, use of a motor vehicle and other benefits) which exceeded $100,000 were
as follows:
Remuneration
Remuneration Number of employees
$ 2021 2020 $ 2021 2020
100,001 - 110,000 45 53 310,001 - 320,000 - 1
110,001 - 120,000 32 32 320,001 - 330,000 4 -
120,001 - 130,000 24 19 330,001 - 340,000 - 1
130,001 - 140,000 20 18 340,001 - 350,000 - -
140,001 - 150,000 11 17 360,001 - 370,000 - 1
150,001 - 160,000 9 11 370,001 - 380,000 1 1
160,001 - 170,000 8 2 380,001 - 390,000 1 1
170,001 - 180,000 8 7 390,001 - 400,000 - 1
180,001 - 190,000 6 4 430,001 - 440,000 2 1
190,001 - 200,000 7 5 440,001 - 450,000 1 -
200,001 - 210,000 5 6 470,001 - 480,000 1 1
210,001 - 220,000 1 4 490,001 - 500,000 - 1
220,001 - 230,000 2 2 620,001 - 630,000 1 -
230,001 - 240,000 3 2 680,001 - 690,000 1 -
240,001 - 250,000 2 2 690,001 - 700,000 1 -
250,001 - 260,000 2 1 730,001 - 740,000 - 1
260,001 - 270,000 5 1 790,001 - 800,000 - -
270,001 - 280,000 - 2 870,001 - 880,000 1 -
290,001 - 300,000 2 1 1,130,001 - 1,140,000 - 1
300,001 - 310,000 2 - 1,270,001 - 1,280,000 1 -
Total 209 200
Total full time equivalent employees 988 965
Number of employees
49
Disclosures as at 30 June 2021 as required by the New Zealand Stock Exchange
Listing Rules
(a) Director independence
The following directors were Independent Directors at the reporting date:
A J Waugh
J W M Journee
The following directors were not Independent Directors at the reporting date:
J P Gibbons
G D Gibbons
M J Newman
S B Gibbons
(b) Directors’ relevant interests at 30 June 2021
Shares in which the
director has a beneficial
interest solely or jointly
Shares in which the
director has a non-
beneficial interest
Shares held by
associated person of the
director
2021 2020 2021 2020 2021 2020
G D Gibbons 670,656 1,737,849 2,474,467 1,300,825 184,520 104,520
J P Gibbons 973,513 1,521,184 1,126,086 1,126,086 287,560 167,560
S B Gibbons 1,975,299 1,975,299 650,435 176,087 6,151 6,151
M J Newman 30,000 30,000 - - - -
A J Waugh 8,365 8,365 - - 376 376
J W M Journee 2,613 2,613 - - - -
(c) Substantial Product Holders
As required by section 293 of the Financial Markets Conduct Act 2013, the Substantial Product Holders
as at 31 August 2021 (from whom a notice under the Act had been received and the date of each such
notice) were as follows:
Date Shares %
J P Gibbons 21 October 2020 2,079,599 6.36
S B Gibbons 11 March 2021 2,625,734 8.03
G D Gibbons 22 March 2021 3,145,123 9.62
Issued and fully paid capital as at 30 June 2021 was made up of 32,694,632 ordinary shares. The
above disclosures include voting securities arising by reason of joint holdings, powers of attorney and
directorships as specifically required by section 280(1) of the Financial Markets Conduct Act 2013. No
shares have been counted more than once in the determination of Substantial Product Holders.
A number of shares identified under J P Gibbons are also jointly held or have trustees in common with
D M Gibbons and P L & L C Bennett.
A number of shares identified under S B Gibbons are also jointly held or have trustees in common with
A D Gibbons & L B Rogerson, J H Smith & A F Peake and M A Gibbons & A K Cook.
A number of shares identified under G D Gibbons are also jointly held or have trustees in common
with A K Gibbons & S D Wood, S D & D M Wood, R D Gibbons & S D Wood, A D & G V Beaumont,
D D & B W Harrison and G D & I W Watson.
50
(d) Distribution of shareholders and shareholdings
This distribution information reflects the position as at 31 August 2021
Number of shareholders Number of shares
Number % Number %
1 - 999 325 20.0 145,259 0.4
1,000 - 9,999 976 60.1 3,119,698 9.5
10,000 - 99,999 262 16.1 6,965,458 21.3
100,000 - 999,999 59 3.7 19,434,952 59.5
1,000,000 + 2 0.1 3,029,265 9.3
Total 1,624 100.0 32,694,632 100.0
(e) Five year summary of shareholder return on investment - 30 June year ended
Year
Share
price Dividends paid - cps
Gross
dividend
Change
in share
Total
gross
Gross
shareholder
at 30
June
Date Net Gross yield
%
price
cps
return
cps
return
%
2021 $9.20 29/03/21 15.0 65.3 9.5 235.0 300.3 43.8
05/10/20 32.0
2020
(1)
$6.85 20/04/20 - - 4.7 (195.0) (153.3) (17.4)
21/10/19 30.0 41.7
2019 $8.80 15/04/19 15.0 69.4 8.7 80.0 150.4 18.8
15/10/18 35.0
2018 $8.00 16/04/18 15.0 63.9 8.5 50.0 113.9 15.2
17/10/17 31.0
2017 $7.50 18/04/17 13.0 55.6 9.0 130.0 185.6 29.9
17/10/16 27.0
Note: Yields are calculated on the share price at the beginning of each year. The share price at 30 June
2016 was $6.20.
(1)
Due to the effects on the Group’s business of the Covid-19 nationwide level 4 lockdown, the interim dividend of 15.0 cps, that
had been declared to be paid on 20 April 2020, was cancelled.
51
Fifty largest shareholdings as at 31 August 2021
Shares %
AD & SB Gibbons & LB Rogerson 1,742,228 5.3
Florence Theodosia Gibbons 1,287,037 3.9
JP & DM Gibbons & PL Bennett 803,653 2.5
Graeme Durrad Gibbons 670,656 2.1
PL & LC Bennett & JP Gibbons 634,030 1.9
Diana Durrad Harrison 630,078 1.9
BR & CM Gibbons & PL Bennett 627,208 1.9
Gillian Durrad Watson 614,069 1.9
Robert Durrad Gibbons 613,930 1.9
Sara Durrad Wood 613,369 1.9
Alison Durrad Beaumont 603,454 1.8
RJ Field & AJ Palmer 600,000 1.8
AD & GV Beaumont & GD Gibbons 585,215 1.8
MI & C Louisson & RM Carruthers 563,777 1.7
JP & DM Gibbons & PL Bennett 492,055 1.5
MA Gibbons, AK Cook & SB Gibbons 474,348 1.5
GD & AK Gibbons & SD Wood 470,012 1.4
JG, J & CG Harrison 458,317 1.4
Citibank Nominees (New Zealand) Limited 396,695 1.2
May Alice Gibbons 355,196 1.1
DD & BW Harrison & GD Gibbons 354,810 1.1
GD & IW Watson & GD Gibbons 354,810 1.1
RD Gibbons, SD Wood & GD Gibbons 354,810 1.1
SD & DM Wood & GD Gibbons 354,810 1.1
Hart Capital Partners Limited 349,488 1.1
CG & JG Harrison 335,244 1.0
E A Romans 325,482 1.0
KS, SKE & J Bale 324,244 1.0
RB & JG Tait & IJ Craig 305,006 0.9
Rebecca Hope Wilson 300,478 0.9
Leanne Barnes Rogerson 281,410 0.9
SH Majors, RH & SJ Wilson 268,556 0.8
David Grindell 252,000 0.8
K Enright & C Louisson 251,366 0.8
CM Louisson & N Tarsa 241,804 0.7
Stuart Barnes Gibbons 233,071 0.7
Pauline Lucy Bennett 223,138 0.7
Bruce Robert Gibbons 201,372 0.6
MC Duurentijdt, JT van Gaal & KD Trustees Limited 190,000 0.6
CG & AJ Harrison & JA Flygenring & P&M Trustees No 2 Limited 188,118 0.6
JH Smith, AF Peake & SB Gibbons 176,087 0.5
James Picot Gibbons 169,860 0.5
CMC Workplace Savings Scheme Trustee Limited 162,196 0.5
KS, SK & MG Bale 147,929 0.5
Helen Ailsa Louisson 140,870 0.4
TA Peglar 138,306 0.4
Ian Forbes Michie 135,730 0.4
GH & FT Gibbons & SJ Wilson 122,413 0.4
Sally Blundell Fell 118,174 0.4
Anne Blundell Norman 118,173 0.4
Total of fifty largest shareholdings 20,355,082 62.3
Total shares on issue 32,694,632 100.0
52
Today the CMC Group’s core business is the operation of Ford
dealerships each holding a franchise in its own right from the Ford
Motor Company of NZ Ltd. A number of these dealerships also hold
Mazda franchises. CMC, through Southpac Trucks, is the NZ
distributor and retailer of Kenworth and DAF heavy duty trucks and in
Southland/Otago, Agricentre South retails New Holland, Case IH and
Kubota tractors and equipment.
The Colonial Motor Company originated from William Black’s
coachbuilding factory which started operations in 1859 at 89
Courtenay Place, Wellington. In 1881 it was taken over by Rouse &
Hurrell, who expanded the business with new three storied premises
calling it Rouse & Hurrell’s Empire Steam and Carriage Works. This
partnership was formed into a limited liability company in 1902 with Mr
Edward Wade Petherick the first Secretary of the Company. The Ford
Motor Car Agency was taken up in 1908 and in August 1911 a new
name “The Colonial Motor Company Limited” was registered.
On Ford Canada’s recommendation a dominant shareholding and
control was acquired by Mr Charles Corden Larmour and the sale of
this majority holding and control to Mr Hope Gibbons and his family
interests was concluded in April 1918 after negotiations in 1916. At
that time there were 17 Authorised Ford Dealers in New Zealand of
which 10 were in the South Island. In 1919 the Company restructured
with a new memorandum and articles but the 1911 name was retained
and remains the same today. 2018 marked the company’s 100th
Annual Report.
The nine storied building at 89 Courtenay Place, designed by architect
J M Dawson to Ford plans, opened as the tallest Wellington
construction in 1922. It was the first motor vehicle assembly plant in
New Zealand - vehicles starting in boxes at the top and driving out
completed at the bottom. The Company later built assembly plants at
Fox Street, Parnell, Auckland and Sophia Street, Timaru. This was the
age of the Model T with Ford market share reaching a peak of 27% in
1926. The ‘CMC’ Building was sold in 2005.
In 1936, Ford Motor Company of New Zealand Limited established an
assembly plant at Seaview, Lower Hutt, and took over the distribution
of Ford products in New Zealand. CMC then concentrated on the retail
side of the business, operating the retail garages it then owned. The
1930's and 1940's were a time of survival with the depression, excess
stock of new product, and then no new vehicles available during the
war years and petrol rationing until 1950. Service became the key to
remaining in business.
Shortly after the end of the war the supply of new vehicles was
resumed and the 30 years up to 1980 saw the Group consolidate. The
Dealer organisation that developed proved to be one of the best retail
motor groups in New Zealand. Over this period nearly every
Dealership was either rebuilt, fully refurbished or relocated and new
Dealerships were opened in East, West and South Auckland to cater
for Auckland growth.
CMC was listed on the NZ Stock Exchange in May 1962.
For the 50 years up to 1987, New Zealand had import licensing, local
assembly of vehicles and heavy additional sales taxes to control
overseas funds. The new vehicle industry under this regime peaked in
1973 and again in 1984 at 123,000 units. The dismantling of controls
and the arrival of second hand imports from Japan saw the industry
fall to just 66,500 new vehicles in 1992. It wasn’t until 2014, 30 years
later, that the new vehicle industry again reached the level seen in
1984. 2015, 2016, 2017 and 2018 all saw record industry sales.
The late 1980’s and all through the 1990’s was a period of change and
adaptation. Over a decade, most smaller Ford dealerships either
closed down or merged with their neighbours. This resulted in fewer
but larger Ford dealerships. CMC closed or sold its smaller
dealerships and acquired others to expand its city and provincial
locations. Nelson was acquired during this period. Compounding the
changes were the international decisions of Ford Motor Company to
sell its tractor and heavy truck businesses which resulted in Ford in NZ
ceasing to import both products.
Most of the CMC dealership tractor departments were closed, with the
exception of Southland. This business has since grown to become
Agricentre South Ltd, retailing New Holland & Kubota tractors in
Southland and Case IH tractors in Southland / Otago with locations in
Invercargill, Gore, Milton, Cromwell and Ranfurly.
In 1994 CMC acquired a major interest in Southpac Trucks, the NZ
distributor for Kenworth and Foden (since retired) and more recently,
DAF, heavy duty trucks which are all part of the USA based PACCAR
organisation. Southpac Trucks has since grown into a major player in
the NZ heavy truck industry with locations in Manukau City, Hamilton,
Rotorua, New Plymouth, Palmerston North and Christchurch together
with a nationwide network of independent parts & service dealers.
Guinness Peat Group plc (GPG) made a takeover offer for CMC in
October 1995. Among the sellers who enabled GPG to acquire 33.9%
were some original Gibbons Family shareholders. As part of a plan to
maximise value to shareholders, Directors resolved to rationalise the
Company's non-dealership property holdings, repay the surplus funds
to shareholders and focus the Company on its core motor trade
activities.
In June 1997, GPG sold its shares to the MBM Group of Malaysia. Over
the following years, MBM sold down its holding in CMC, with many of
the shares acquired by members of the Gibbons family. MBM sold its
final block of 24.9% to a large number of individuals in 2003, resulting
in the addition of 300 shareholders to CMC.
In 1999, CMC's Auckland Dealerships joined with Ford Motor Company
and three other Ford dealerships to form Auckland Auto Collection
Limited (AACL). This move represented the biggest change in the Ford
franchise arrangements in New Zealand for over 60 years. During
1999, this new business acquired the Mazda Dealerships in Auckland
and Mazda Motors joined CMC and Ford as a shareholder. From 2002,
the business operated as three Ford and Mazda dealerships - North
Harbour, John Andrew and South Auckland. CMC sold its shareholding
back to AACL in May 2005 and, in return, acquired the South Auckland
Dealership.
On 16 June 2003, Ford Motor Company celebrated its centennial and
the production of the original Model A Fordmobile with CMC and its
forebears having been actively involved with Ford for 95 of those 100
years. In celebration of this long relationship, a history of the
Company's operations and activities, "Ford Ahead", was written and
published by Roger Gardner.
During the 2000’s CMC also acquired the Mazda franchises in
Invercargill, Dunedin, Timaru, Wellington, Lower Hutt and Masterton.
These were run as dual dealerships with the existing Ford dealerships.
The policy of adding Mazda to Ford dealerships ended when Ford USA
sold its interest in Mazda Japan in 2009.
It has been part of the Company's philosophy and success to own
property sites from which its retail subsidiary companies operate.
In 2014 CMC acquired Jeff Gray BMW & MINI with locations in
Wellingt
on, Christchurch, Palmerston North and Hastings. The
business was subsequently sold in November 2016.
In recent years CMC has increased its franchise representation in a
number of locations as separate dealerships or aligned with existing
businesses and now includes: Suzuki, Nissan, Kia, Hyundai, Isuzu
Utes, Peugeot, Citroen, Mahindra; Suzuki, Kawasaki, Yamaha & BMW
motorcycles.
Details of the Group’s current dealerships, locations and the franchises
they represent are detailed on page 8 in the report.
Greenhouse gas emissions are now driving the power source for
vehicles away from fossil fuel and the internal combustion engine to
clean sources – electricity, hydrogen, bio fuel or others yet-to-be
identified.
The current major shareholdings in CMC are individual descendants of
Hopeful & Jessie Gibbons, who collectively hold over 60% of the
Company shares. There are also many descendants of the original
1902 subscribers to the Rouse & Hurrell Carriage Building Company
Limited who remain shareholders today.
Throughout the Company's history, change has always been with us
and our ability to adapt in good times and in bad has ensured ongoing
wellbeing and prosperity. As well, it has always been recognised that
dedicated, skilled and enthusiastic people have been, and will
continue to be, the key to the Company's future.
---
___________________________________________________________________________
PO Box 6159 Level 6 Telephone 04 384-9734 E-mail cmc@colmotor.co.nz
Wellington 6141 57 Courtenay Place Facsimile 04 801-7279 Website www.colmotor.co.nz
NEW ZEALAND Wellington 6011 DX SP21009
17 September 2021
THIS IS AN IMPORTANT DOCUMENT – PLEASE READ IT CAREFULLY
Dear Shareholder,
The Company is currently planning to hold the normal form of annual meeting this year (i.e.
a physical meeting with shareholders present in person). This is scheduled for midday on Friday,
5 November 2021, so long as the whole of New Zealand is in Alert Levels 1 or 2.
The Notice of Meeting, including full details of the business to be transacted and the venue location
are at pages 1 and 2 of the accompanying Annual Report. The requirements for attending a
physical meeting under Covid restrictions are detailed on the next page of this advice letter.
However, if any part of New Zealand is in Alert Levels 3 or 4 on 5 November, the annual
meeting will change to be a virtual meeting that will be held at the later date advised below (i.e.
it will be held electronically by webcast and with no shareholders physically present). The
instructions on how you can attend a virtual meeting are also on the next page of this letter.
The current Covid-related uncertainties require the Company to plan now for both of these meeting
outcomes and the purpose of this letter is to prepare you for either event.
Right up to the scheduled meeting date, circumstances could arise where the physical meeting
cannot be held. The meeting would therefore be deferred to be a virtual meeting. In that event, an
announcement would be made to the Stock Exchange (CMC NZX announcements can be found
here: https://www.nzx.com/companies/CMO). That announcement would also be posted on the
Company’s website: https://www.colmotor.co.nz/about/nzx-releases/
In the event the annual meeting is deferred to be a virtual meeting, that would be held without
fail at midday on Friday, 19 November 2021.
Any announcement of a deferral will contain all the necessary details for attending the annual
meeting virtually. The Company will email that announcement to you where we have your email
address. If we don’t have your email address already, we encourage you to provide it to the
Company ahead of the annual meeting. This is so you can receive Company communications
directly.
Please note: you can provide your email address to the Company at cmc@colmotor.co.nz and by
doing so it will be assumed you have consented to being sent announcements to Shareholders by
email. Please include your full Shareholder name and CSN/Holder Number - you can find that
number at the bottom of your proxy form or on any dividend advice.
To help us with our planning for holding a physical meeting we ask you to confirm whether you will
be attending. You can do this by emailing to cmc@colmotor,co.nz and putting “RSVP AGM” in the
subject line and include the number of people who will attend. Alternatively, you can telephone the
Group Office on 04 384 9734 and provide these details.
Please contact us if you need clarification of any matter relating to this letter. The Company’s
contact details are at the bottom of this page.
Kind regards,
Jack Tuohy
Company Secretary
What to expect if a physical annual meeting is held on 5 November 2021
• The meeting will commence at midday at the QT Hotel (formally the Museum Hotel)
– refer to the Notice of Meeting for location details.
• Entry will be from the Tory Street entrance to the hotel and you will be directed to
the meeting room foyer on the ground floor.
• The meeting room foyer will open from 11.15am, so please provide plenty of time for
registration on arrival.
• Do not attend if you have any cold or flu-like symptoms.
• Subject to Alert Level guidance at the time, please bring a mask and remain masked
while in the foyer and the meeting room.
• On arrival:
o Scan in using the QR code app or sign into the physical register that will be
available at the entrance to the hotel.
o You will then need to register at the meeting room entrance as a
Shareholder, Proxyholder or Guest for the meeting.
o Shareholders will be issued with a personalised voting paper.
o Please then find a place to sit in the meeting room and maintain physical
distancing if the Alert Level restrictions require this.
• Depending on any Alert Level restrictions, we may need to limit the number of
people in the meeting room. If required, an additional room will be available.
What to expect if a virtual annual meeting is held on 19 November 2021
• The Company’s share registrar, Computershare Investor Services, will host the virtual
annual meeting.
• You will need the latest version of Chrome, Safari, Edge or Firefox to be able to
attend virtually. Well ahead of the meeting, you are encouraged to ensure the device
you plan to view the meeting on has a browser that is compatible with one of these.
• You will be able to access the virtual meeting via the link https://meetnow.global/nz
On that page you will find a schedule of upcoming annual meetings for various
companies in date order. Find the one for The Colonial Motor Company, click GO and
it will take you to the meeting.
• There will then be steps to follow to register for the meeting and enable you to vote
and ask questions.
• You will need to provide your CSN/Holder Number. You can find that number at the
bottom of your proxy form or on any dividend advice.
• Once you have completed these steps you will be able to access the meeting.
• It is recommended you test the system ahead of time to check you are able to access
the meeting.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- EBO — EBOS Group Limited: EBOS Group Annual Report 20212021-09-28
“Business Overview Corporate Governance Remuneration Directors’ Interests and Disclosures Directory Financials 111EBOS Group Limited 2021 Annual Report Directory Registered offices 108 Wrights Road PO Box 411 Christchurch 8024 New Zealand Telephone: +64 3 338 0999 Emai…”
- IPR — Iperion Limited: 2021 Annual Report2021-06-30
“Page 22 Southern Charter Financial Group Limited Annual Report 31 March 2021 • Recommendation 4.2 (key governance documents being available on the company’s website) - the Company’s website is currently under construction but key documents can be obtained on request from the C…”
- NZX — NZX Limited: NZX H1 2021 Results & Interim Report Published2021-08-25
“Corporate directory Getting in touch NZX Interim Report 2021 38 Board of Directors James Miller (Chair) Frank Aldridge Nigel Babbage Richard Bodman Elaine Campbell John McMahon Lindsay Wright Chief Executive Officer Mark Peterson Chief Financial Officer Graham Law General Counsel…”