Half year report and results

Results for announcement to the market
Name of listed issuer The Colonial Motor Company Limited
Reporting period Six months to 31 December 2016
Corresponding reporting period Six months to 31 December 2015
Consolidated Statement of Financial Performance
Current
half year
Up/
(down)
$ million % $ million
Trading revenue 437.461 (0.3) 438.784
Total operating revenue 438.193 (0.2) 438.989
Operating profit 15.244 10.1 13.844
Adjustments to value of property & intangibles
(0.306) 1.072
Net profit before tax 14.938 0.1 14.916
Taxation 4.394 15.8 3.794
Profit after tax
10.544 (5.2) 11.122
Net profit for period attributable to shareholders 10.032 (5.1) 10.572
Profit attributable to non-controlling Interest 0.512 (6.9) 0.550
Profit for the period
10.544 (5.2) 11.122
Basic earnings per share (cents per share)
30.7 (5.0) 32.3
Diluted earnings per share (cents per share)
30.7 (5.0) 32.3
Net tangible assets per share $5.039.1 $4.61
INTERIM DIVIDEND
Fully-imputed dividend cents per share 13.000
Imputation credit cents per share 5.056
Supplementary dividend (where applicable) 2.294
Payment date
Record date
This report has been prepared in a manner which complies with New Zealand equivalents to
International Financial Reporting Standards and gives a true and fair view of the matters to which
the report relates.
The report is based on unaudited financial statements.
Previous
corresponding
period
18 April 2017
07 April 2017

---

For Six Months Ended 31 December 2016
HALF YEAR REPORT

HALF YEAR REPORT
57 Courtenay Place
Wellington
20 February 2017
For the Six Months Ended 31 December 2016
Dear Shareholder
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For and on behalf of the Board
J P Gibbons
CHAIRMAN

and Subsidiary Companies









Consolidated Statement of PROFIT OR LOSS
For the six months ended 31 December 2016
Notes 6 Months to
31 Dec 2016
$’000
Unaudited
6 Months to
31 Dec 2015
$’000
Unaudited
12 Months to
30 Jun 2016
$’000
Audited
Revenue

Sale of - products
403,912 406,089 801,081
- services
33,549 32,695 64,449
Other income - interest
150 141 180
- other
582 64 1,527
Total revenue
438,193 438,989 867,237
Less expenses


Cost of products sold
368,442 370,063 727,605
Remuneration of staff
36,054 34,433 70,082
Depreciation & amortisation
1,915 2,091 4,182
Property occupation costs
3,407 3,499 7,074
Marketing, promotion & training costs
3,361 3,646 6,292
Other operating costs
8,017 9,096 19,003
Interest cost
1,753 2,317 4,260
Total expenses
422,949 425,145 838,498
Trading profit before tax
15,244 13,844 28,739
Less income tax expense:

Current
4,624 3,849 8,358
Deferred
(162) 16 68
Total tax
10 4,462 3,865 8,426
Less: non-controlling interest
512 550 1,106
Trading profit after tax

10,270 9,429 19,207
Fair value revaluation of property
- - 662
Deferred tax on property depreciation
68 71 141
Realised gain on sale of property
9 1,072 1,072
Fair value revaluation of investments
- - 397
Impairment of intangible assets
(315) - -
Profit after tax
10,032 10,572 21,479
Profit for the period attributable to:

Shareholders
10,032 10,572 21,479
Non-controlling interest
512 550 1,106
PROFIT FOR THE PERIOD
10,544 11,122 22,585




STATISTICS PER SHARE

Basic & diluted earnings per share

- Profit attributable to Shareholders
30.7 cents 32.3 cents 65.7 cents
- Trading profit after tax
31.4 cents 28.8 cents 58.7 cents


Dividend per share
13.0 cents 13.0 cents 40.0 cents
Dividends for the period ($’000)
4,250 4,250 13,078
Net tangible assets per share (pre dividend)
$5.03 $4.61 $4.96






The statement of accounting policies and the accompanying notes form part of the financial statements


Consolidated Statement of PROFIT OR LOSS
For the six months ended 31 December 2016
Notes 6 Months to
31 Dec 2016
$’000
Unaudited
6 Months to
31 Dec 2015
$’000
Unaudited
12 Months to
30 Jun 2016
$’000
Audited
Revenue

Sale of - products
403,912 406,089 801,081
- services
33,549 32,695 64,449
Other income - interest
150 141 180
- other
582 64 1,527
Total revenue
438,193 438,989 867,237
Less expenses


Cost of products sold
368,442 370,063 727,605
Remuneration of staff
36,054 34,433 70,082
Depreciation & amortisation
1,915 2,091 4,182
Property occupation costs
3,407 3,499 7,074
Marketing, promotion & training costs
3,361 3,646 6,292
Other operating costs
8,017 9,096 19,003
Interest cost
1,753 2,317 4,260
Total expenses
422,949 425,145 838,498
Trading profit before tax
15,244 13,844 28,739
Less income tax expense:

Current
4,624 3,849 8,358
Deferred
(162) 16 68
Total tax
10 4,462 3,865 8,426
Less: non-controlling interest
512 550 1,106
Trading profit after tax

10,270 9,429 19,207
Fair value revaluation of property
- - 662
Deferred tax on property depreciation
68 71 141
Realised gain on sale of property
9 1,072 1,072
Fair value revaluation of investments
- - 397
Impairment of intangible assets
(315) - -
Profit after tax
10,032 10,572 21,479
Profit for the period attributable to:

Shareholders
10,032 10,572 21,479
Non-controlling interest
512 550 1,106
PROFIT FOR THE PERIOD
10,544 11,122 22,585




STATISTICS PER SHARE

Basic & diluted earnings per share

- Profit attributable to Shareholders
30.7 cents 32.3 cents 65.7 cents
- Trading profit after tax
31.4 cents 28.8 cents 58.7 cents


Dividend per share
13.0 cents 13.0 cents 40.0 cents
Dividends for the period ($’000)
4,250 4,250 13,078
Net tangible assets per share (pre dividend)
$5.03 $4.61 $4.96

and Subsidiary Companies


Consolidated statement of COMPREHENSIVE INCOME
For the six months ended 31 December 2016
6 Months to
31 Dec 2016
$’000
Unaudited
6 Months to
31 Dec 2015
$’000
Unaudited
12 Months to
30 Jun 2016
$’000
Audited
Profit after tax for the period
10,544 11,122 22,585
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Property revaluation reserve
Fair value movement - - 7,318
Deferred tax movement 370 (135) (1,457)
Items that may be classified subsequently to profit or loss:
Foreign exchange reserve
Movement in effective cashflow hedge 239 (2,578) (4,274)
Deferred tax movement (67) 722 1,196
Other comprehensive income for the period 542 (1,991) 2,783
Total comprehensive income
11,086 9,131 25,368


Attributable to: Shareholders 10,548 8,860 24,724
Non-controlling interests 538 271 644
11,086 9,131 25,368




Consolidated statement of CHANGES IN EQUITY
For the six months ended 31 December 2016
6 Months to
31 Dec 2016
$’000
Unaudited
6 Months to
31 Dec 2015
$’000
Unaudited
12 Months to
30 Jun 2016
$’000
Audited
Total equity at beginning of period 165,805 152,576 152,576
Profit for the period 10,544 11,122 22,585
Other comprehensive income 542 (1,991) 2,783
Total comprehensive income 11,086 9,131 25,368
Dividends paid to shareholders (8,827) (6,539) (10,789)
Dividend paid to non-controlling interest (450) (600) (1,350)
Total equity at end of period 167,614 154,568 165,805




Consolidated statement of CASH FLOWS
For the six months ended 31 December 2016
6 Months to
31 Dec 2016
$’000
Unaudited
6 Months to
31 Dec 2015
$’000
Unaudited
12 Months to
30 Jun 2016
$’000
Audited


Operating activities - inflows 439,349 437,099 871,128
- outflows (426,917) (430,572) (832,886)
Net cash flow from operating activities
12,432 6,527 38,242
Investing activities - inflows 3,514 14,527 16,143
- outflows (7,859) (3,448) (7,426)
Net cash flow from investing activities
(4,345) 11,079 8,717
Financing activities - inflows 10,400 - -
- outflows (24,412) (18,788) (37,338)
Net cash flow from financing activities
(14,012) (18,788) (37,338)

Net increase/(decrease) in cash held (5,925) (1,182) 9,621
Cash balance/(overdraft) at beginning of period 15,402 5,781 5,781
Cash balance/(overdraft) at end of period 9,477 4,599 15,402

The statement of accounting policies and the accompanying notes form part of the financial statements

and Subsidiary Companies

Consolidated statement of FINANCIAL POSITION
As at 31 December 2016
Notes


31 Dec 2016
$’000
Unaudited
31 Dec 2015
$’000
Unaudited

30 Jun 2016
$’000
Audited

SHAREHOLDERS’ EQUITY

Share capital 7 15,968 15,968 15,968
Retained earnings 112,803 104,688 111,344
Property revaluation reserve 37,422 31,311 37,307
Foreign exchange cashflow hedge reserve (650) 241 (797)
TOTAL SHAREHOLDERS’ EQUITY
165,543 152,208 163,822
Non controlling interest 2,071 2,360 1,983
TOTAL EQUITY
167,614
154,568 165,805


CURRENT LIABILITIES


Bank borrowings 9,900 22,800 -
At call deposits 18,032 17,341 17,531
Trade & other payables 36,620 28,716 36,907
Vehicle floorplan finance 4 44,808 50,883 59,942
Financial liabilities – credit contracts 6 4,331 5,377 4,996
Tax payable 10 2,265 1,516 3,545
Financial derivatives – foreign exchange 11 1,063 - 1,302


TOTAL CURRENT LIABILITIES
117,019 126,633 124,223




NON CURRENT LIABILITIES


Financial liabilities – credit contracts 6 5,508 8,014 6,433
Deferred tax 10 3,923 3,628 4,457
TOTAL NON CURRENT LIABILITIES
9,431 11,642 10,890
TOTAL EQUITY AND LIABILITIES 294,064 292,843 300,918


CURRENT ASSETS

Cash & bank accounts 9,477 4,599 15,402
Property held for sale 14 - - 350
Trade & other receivables 31,622 38,596 32,816
Inventory 5 136,769 142,034 138,752
Financial assets – credit contracts 6 4,228 5,229 4,891
Financial derivatives – foreign exchange 11 - 394 -
TOTAL CURRENT ASSETS
182,096 190,852 192,211



NON CURRENT ASSETS


Financial assets – credit contracts 6 5,509 8,014 6,433
Intangible assets 12 1,028 1,628 1,578
Investments 1,504 1,111 1,508
Property, plant & equipment 8 103,927 91,238 99,188
TOTAL NON CURRENT ASSETS
111,968 101,991 108,707
TOTAL ASSETS 294,064 292,843 300,918




The statement of accounting policies and the accompanying notes form part of the financial statements

Linda Aries (2nd from left) retired from Avon City
Ford at Christmas after 40 years service.
In her career Linda worked for the four
Dealer Principals the dealership has had since
its inception.
Also pictured (L) John Luxton CEO;
Craig Fuller, Business Manager and
Bruce McCoubrey, Service Manager. Bruce also
ticked off 40 years service in January this year.
and Subsidiary Companies
Jeffrey Irving was awarded his gold watch at
Dunedin City Ford in November for 25 years in the
CMC group, pictured with fellow gold watch
recipients at the dealership (L - R) Robert Bain,
Dealer Principal; Steve Simpson, Used Vehicle
Manager; Jeffrey Irving, Accountant; Laurie Troy,
Parts Manager and Lindsay Phillips, Technician.
Also receiving gold watches in 2016 were John
Heslin at Avon City Motors; Mark O’Hara, Southpac
Trucks and John Urlich, South Auckland Motors.
Stuart Gibbons, CEO at Stevens Motors, pictured here with
the Chairman and the dealership team, receiving his gold watch for
25 years continuous service.

The new multi ‘car of the year’ award winning Mazda CX9
in the showroom at Capital City Mazda.
Pictured below the new Mazda MX5.
and Subsidiary Companies
A new entry into the large SUV market is the Ford Everest pic-
tured above with unsurpassed off highway and towing capability
pictured at MS Ford with the sales team L – R Ross Harvey; Matt
Dowell; Marcel Guy and Buzz Bartlett.
Ford internationally and in New Zealand are fully engaged in rais-
ing the Consumer Experience to a new level. Ford Focus and the
new Ford Escape pictured right at M.S. Ford in Nelson.
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Agricentre South has one of these arriving next
month for delivery to a Southland farm business.
The Case IH Steiger Quadtrac with 600hp is
designed to minimise soil compaction and operate
in a wide range of terrain and ground conditions.
This is the special limited edition in anniversary
colours celebrating 20 years of the Quadtrac.
Ford internationally and in New Zealand are fully engaged in
raising the Consumer Experience to a new level. Ford Focus and
the new Ford Escape pictured above at M S Ford in Nelson.
A new entry into the large SUV market
is the Ford Everest pictured above with
unsurpassed off highway and towing
capability pictured at M S Ford with the
sales team L – R Ross Harvey;
Matt Dowell; Marcel Guy and Buz Bartlett.
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ThThThTh
in in in in
PicPicPicPic

Kenworth Australia’s ‘best truck yet’,
the new wide cab T610 and T610 SAR
will be launched in New Zealand at the
Truck Expo at Mystery Creek, 2-4 March.
and Subsidiary Companies
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In addition to Southpac Trucks'
operations in Manukau City, Rotorua
(parts & service), Christchurch (parts)
and the new Hamilton operation
(parts & service) Southpac has a network
of 19 independent parts & service, dealers
from Whangarei to Invercargill.
Artist's impression of the finished article – a 1500 m2 facility on the
8000 m2 site including a 300m2 parts showroom / warehouse and
five drive through services bays. Water harvesting from the roof will
be recycled for truck cleaning. Southpac Trucks expect to be
operational by mid-year.
Turning the first sod (with a digger rather than a spade) at
Te Rapa, Hamilton for Southpac Trucks new parts and service
branch, Maarten Durent, CEO of Southpac at the controls.
One of two 25m length pits for truck servicing taking shape.
The first major concrete pour earlier this month.
OOOOfttt2225555lllththiiitfffttttkkkiiiiiiiitkikikhhhh

and Subsidiary Companies

ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31 December 2016

1. Unaudited financial statements
The financial statements for the six months to 31 December 2016 and 31 December 2015 have not been audited.

2. Basis of preparation
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New
Zealand (NZ GAAP) and NZ IAS 34 Interim Financial Reporting, as appropriate for Tier 1 for profit entities as defined
by the External Reporting Board. They do not include all the notes in the most recent annual financial statements
and are to be read in conjunction with the annual report for the year ended 30 June 2016 which was prepared in
accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).

These financial statements are presented in New Zealand dollars (rounded to the nearest thousand) which is the
functional and presentation currency of the Group.

These consolidated interim financial statements were approved for issue by the Board of Directors on 20 February
2017.

3. Significant accounting policies
The accounting policies, methods of computation, critical accounting estimates and judgements of The Colonial
Motor Company Limited and its subsidiaries (the Group) have been applied consistently to all periods and as
disclosed in the audited financial statements for the year ended 30 June 2016 except land, buildings and investments
are not revalued at the half year. Land and buildings remain at the independent professional valuations and
investments remain at the market values disclosed at 30 June 2016.

4. Vehicle floorplan finance


31 Dec 2016
$’000
31 Dec 2015
$’000
30 June 2016
$’000
Vehicle floorplan facilities - 9,610 11,270
Bailment arrangements 44,808 41,273 48,672
Total vehicle floorplan finance 44,808 50,883 59,942

When not purchased outright, new vehicles are funded by bailment arrangements with finance companies or under
vehicle floorplan facilities provided by the distributor.
Under bailment facilities the finance companies retain ownership of the vehicles that are placed in the con trol 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.
In the case of floorplan facilities, ownership of the vehicles is transferred to the dealership on delivery but payment is
delayed generally until the vehicle is sold. Floorplan facilities are also subject to financial limits.
All floorplan facilities were repaid in full in the period as part of the sale of the business Jeff Gray Limited (note 15).

5. Inventory
New and used vehicles have been valued at the lower of cost or net realisable value. Parts, accessories, workshop
stocks, fuels and gases have been valued at cost, using, where applicable, the first in first out method. Cost includes
expenditure incurred in acquiring the inventory and bringing to the existing location and condition. Due allowance
has been made for obsolete and slow moving inventory.
Inventory writedowns for the six months ended 31 December 2016 were $0.4m (31 December 2015: $0.2m, 30 June
2016: $0.7m).

6. Financial assets & liabilities – credit contracts
The Group holds credit contract agreements with Motor Trade Finances Ltd (MTF) which are carried at their net
settlement value. The Group had outstanding vehicle financing agreements with MTF of $9.8m before impairment
allowance at 31 December 2016 (31 December 2015: $13.4m, 30 June 2016: $11.4m).
A liability arises under these agreements in the event of a customer defaulting on their finance payments to MTF and
MTF having recourse to the relevant subsidiary for any outstanding balance. This liability is offset by the value of the
loan to the customer and, ultimately, the value of the related vehicle that can be repossessed and sold in the event of
any individual default. Allowance is also made for the estimated bad debts that may result from such financing
agreements.

7. Share Capital
The number of ordinary shares on issue at all reporting dates was 32,694,632. The weighted average number of
shares on issue throughout the periods was also 32,694,632.

and Subsidiary Companies

8. Property, plant & equipment
Property, plant & equipment are carried at cost less accumulated depreciation and impairment losses. Cost includes
all expenditure that is directly attributable to the acquisition of the asset. Land and buildings, other than properties for
sale, are revalued annually to fair value based on independent professional valuations. Land is not depreciated.

9. Group companies
All subsidiaries are 100% owned (2015: 100%), with the exception of Southpac Trucks Limited which is 85% owned
(2015: 85%) and all subsidiaries have a reporting date of 30 June. All Group companies are registered in New
Zealand.

Subsidiary companies operate as motor vehicle dealerships. The Colonial Motor Company Limited provides
administrative and financial services to the subsidiaries and owns many of the properties they occupy.

10. Taxation
The income tax expense for the current period is the tax payable on that period’s taxable income, plus any deferred
tax adjustment. Changes in deferred tax assets and liabilities, attributable to temporary differences between the tax
bases of assets and liabilities and their carrying amounts in the financial statements, have resulted in a deferred tax
liability of $3.9m at the reporting date (31 December 2015 $3.6m, 30 June 2016: $4.5m).

Deferred tax assets and liabilities are recognised at the tax rates expected to apply when the assets are recovered or
the liabilities settled.

11. Financial derivatives – foreign exchange
Foreign currency transactions are translated into the functional currency using the actual exchange rate at the date of
the transaction.

At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the
hedging instruments are effective.

Foreign exchange contracts outstanding at balance date are adjusted to fair value (mark to market). Adjustments
that qualify as being effectively hedged are recognised through other comprehensive income and form the foreign
exchange hedging reserve and those that do not so qualify are recognised through the profit or loss.

The principal amount of forward exchange contracts outstanding at 31 December 2016 was $40.8m (31 December
2015: $30.4m, 30 June 2016: $47.5m).

12. Intangible assets
Intangible assets consist of goodwill, franchise rights and customer databases.

Intangible assets are subject to impairment testing twice annually, or when events indicate that the carrying amount
may not be recoverable. The carrying value was reviewed as at all reporting dates and considered to be fair value.

Following the sale of the business of Jeff Gray Limited (note 15) the value of customer databases, which were being
amortised over a period of 3 years, has been fully written off. Impairment of the unrecovered value of franchise rights
has also been recognised in the period.

13. Reconciliation of cash flows to operating profit

6 months to 6 months to 12 months to

31 Dec 2016 31 Dec 2015 30 June 2016

$’000 $’000 $’000
Profit after tax for the period 10,544 11,122 22,585
Adjustments for non-cash items:
Depreciation, amortisation and impairment 1,915 2,091 4,182
Revaluation (increase)/decrease of property - - (1,059)
Realised gain on sale of property (9) (1,072) (1,072)
Movements in provisions 83 (57) (119)
Movements in working capital:
Receivables & prepayments 1,156 (1,891) 3,891
Tax payable (1,280) (1,066) 964
Trade & other payables 32 (20,532) (12,344)
Inventory (9) 17,932 21,214
Net cash flow from operating activities 12,432 6,527 38,242

and Subsidiary Companies

14. Sale of property
An area of bare land at Washdyke in Timaru was subject to a conditional agreement for its sale and was consequently
categorised as property for sale at 30 June 2016. The outstanding conditions were subsequently met. The sale was
completed and settled in September 2016.

15. Business disposal
During the period Jeff Gray Limited, a wholly-owned subsidiary, entered into unconditional contracts to sell its
business with effect on 30 November 2016.
The agreements covered the sale of its assets, settlement of its liabilities, transfer of staff and assignment of the
leases relating to four BMW franchise dealerships in Christchurch, Wellington, Palmerston North and Hastings. The
Wellington and Christchurch dealerships included MINI Garages.
Settlement as at 30 November 2016 was made up as follows:

$’000
Assets sold - Inventory 7,590
- Property, plant & equipment 837
- Intangible assets 508
- Prepaid expenses 38
Total assets 8,974
Less liabilities - Vehicle Floorplan Finance (5,612)
- Trade & other payables (319)
Total liabilities (5,931)
Cash proceeds 2,672
Loss on sale (370)
The intangible assets sold related to franchise rights and customer databases (note 12).

16. Segment reporting
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 Chief Executive. The 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 dealership
performance are revenue, trading profit before tax, debtors and inventory. Each dealership represents vehicle
franchises in defined marketing territories within New Zealand and constitutes an operating segment.
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 environments in which it operates.

6 months to 6 months to 12 months to

31 Dec 2016 31 Dec 2015 30 June 2016

$’000 $’000 $’000
Revenue

Aggregate motor vehicle dealerships 437,890 438,687 866,414
Corporate and non-trading units 303 302 823
Consolidated Group revenue 438,193 438,989 867,237
Trading profit before tax


Aggregate motor vehicle dealerships 13,630 11,840 25,416
Corporate and non-trading units 1,614 2,004 3,323
Consolidated Group trading profit before tax 15,244 13,844 28,739


Total Assets at period end


Aggregate motor vehicle dealerships 196,948 212,317 204,896
Corporate and non-trading units 97,116 80,526 96,022
Consolidated Group Total Assets 294,064 292,843 300,918

17. Capital commitments & contingent liabilities

Contingent liabilities - - -
Capital commitments for new and
developments to dealership facilities

3,497

2,366 10,333

18. Post balance date
On 20 February 2017 the Company announced an interim dividend of 13.0 cents per share payable on 18 April 2017.
There have been no other significant post balance date events (31 December 2015: NIL, 30 June 2016: NIL).

57 Courtenay Place, PO Box 6159, Marion Square, Wellington 6141. Telephone (04) 384-9734
www.colmotor.co.nz