100th annual report 2018
2018
100
th
Annual Report
1
“100
th
” Annual Report is but a part of the journey
1859 William Black Coachbuilders established at 89 Courtenay Place
1881 Rouse & Hurrell took over the business and grew into the Empire Steam & Carriage Works in a
new 3 storey building at 89 Courtenay Place.
1902 Grew to become – Rouse & Hurrell Carriage Building Company Limited, a public company.
1908 Ford Motor Car agency taken up
1911 Name change to:
1916 Hope Gibbons & family first become shareholders
1918 Hope Gibbons & family become majority shareholders
1919 Company restructured, new constitution, name retained
The Colonial Motor Company Limited
1922 Company built the 9 storey assembly plant at 89 Courtenay Place.
1936 Ford Motor Company New Zealand Limited established with a new assembly plant in Seaview,
Lower Hutt.
CMC evolved to become a group of ‘Ford’ franchised motor vehicle dealerships – the basis of the
Company in 2018.
1962 Company listed on the New Zealand Stock Exchange.
1987 Deregulation – import restrictions on ‘built up’ motor vehicles into NZ ceased.
1991 Ford Motor Company sell their worldwide tractor business.
1994 Southpac Trucks Limited commenced.
1995 GPG (Guinness Peat Group) acquired 33.9% of the shares in the company – sold to MBM of
Malaysia in 1997 who sold out in 2003.
1998 The last motor vehicle assembly plant in NZ closes. All import tariffs removed
1999 First Mazda franchise taken up
2003 Centenary of Ford Motor Company
2005 89 Courtenay Place sold
2011 100 years of The Colonial Motor Company Limited name
2018 100
th
Annual Report for the Company formed in 1919.
Descendants of Hope Gibbons continue to be majority shareholders
2
Shareholder enquiries can be addressed to the Registered Office or directly to the Share Registry.
BOARD OF DIRECTORS
J P (Jim) Gibbons, Chairman
Graeme D Gibbons
Falcon R S Clouston
Denis M Wood
Matthew J Newman
Stuart B Gibbons
Ashley J Waugh
CHIEF EXECUTIVE
COMPANY SECRETARY
Graeme D Gibbons
Nicholas K Bartle
AUDITOR
Grant Thornton New Zealand Audit Partnership
(Partner Michael Stewart)
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
Facsimilie (04) 801-7279
E-mail address cmc@colmotor.co.nz
Website www.colmotor.co.nz
PROSPECTIVE DATES FOR 2019
Interim Half Year Report Late February
Interim Dividend 15 April
Preliminary Full Year Report Late August
Annual Report Late September
Final Dividend 21 October
Annual Meeting 15 November
3
Notice of Annual Meeting
Notice is hereby given that the 100
th
annual meeting of shareholders of
The Colonial Motor Company Limited
will be held at
Shed 6, Queens Wharf, Jervois Quay
Wellington, New Zealand
on Friday, 2 November 2018 commencing at 12:00 midday.
Agenda
1.The Chairman’s introduction
2.Address from the Chairman
3.Shareholder discussion
4.Resolutions (see explanatory notes)
To consider and, if thought fit, pass the following ordinary resolutions
(a)To re-elect Mr Graeme DurradGibbons as a Director of the Company
(b)To re-elect Mr Ashley James Waugh as a Director of the Company
(c)To authorise an increase in the annual remuneration payable to directors from
$255,000 to$280,000with effect from 1 July 2018.
(d)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.
By order of the Board
N K Bartle
Company Secretary
20September 2018
Explanatory notes to resolutions
Ordinary resolutions are passed by a simple majority of votes.
In accordance with the Company’s constitution and the NZX listing rules, one third of the directors are required to retire
each year. The directors retiring by rotation at the 2018 Annual Meeting are G D Gibbons and A J Waugh. Both continue
to be eligible and offer themselves for re-election.
Under section 200 of the Companies Act 1993, the Auditor is automatically re-appointed each year unless ineligible or
replaced.
Proxies
Any shareholder is entitled to attend and vote at the meeting or to appoint a proxy to attend on their behalf. A proxy need
not be a shareholder of the Company. A proxy form accompanies this notice. Proxy forms must be received at the
registered office of the company not later than 48 hours prior to the scheduled commencement of the meeting.
Representatives of Corporations
Corporate bodies appointing a representative to attend the meeting should comply with Clause 23 of the Constitution that
reads as follows:
"Appointment of representative: A corporation which is a shareholder may appoint a person to attend a meeting
of shareholders on its behalf in the same manner as that in which it could appoint a proxy."
Directions to venue
Please enter via The Arcade
Queen’s Square
(under the sails)
Please join the Board and CEO of
Positively Wellington Venues along with the
Prime Minister of Tourism Rt Hon John Key
and the Mayor of Wellington Her Worship
Celia Wade-Brown.
...we are delighted to invite you to
celebrate the opening of the doors
at Shed6 – Wellington’s newest
waterfront venue.
“
When one
door closes,
another
door opens”
In the wise words of Alexander Graham Bell
As we close the doors of the Wellington
Town Hall for its seismic upgrade...
DATE:Wednesday 21 August
AT:Shed6, Queens Wharf
TIMING: 4.30pm–7.30pm
(please note formalities will begin at 5.00pm sharp).
WATERSIDE
CITYSIDE
TSB BANK ARENA
4
Facts at a glance
2018 2017 2016 2015 2014
Revenue ($000) 904,034 854,764 867,237 789,377 699,314
Trading profit after tax (excluding non-trading Items) ($000) 24,746 22,000 19,207 16,326 18,221
Profit after tax attributable to shareholders ($000) 24,985 22,232 21,479 17,597 19,153
Return on average shareholders’ funds
- trading profit 13.1% 12.8% 12.2% 11.2% 13.4%
- profit for the year 13.2% 13.0% 13.7% 12.1% 14.1%
Trading margin 2.7% 2.6% 2.2% 2.1% 2.6%
Earnings per share - trading profit after tax 75.7c 67.3c 58.7c 49.9c 55.7c
- profit for the year 76.4c 68.0c 65.7c 53.8c 58.6c
Dividend per share 50.0c 44.0c 40.0c 33.0c 35.0c
Total dividends for the year ($000) 15,693 14,386 13,078 10,789 11,443
Shares on issue at reporting date $32.695m 32.695m 32.695m 32.695m 32.695m
Current ratio 1.4 1.6 1.5 1.4 1.4
Shareholders' equity as a percent of total assets 50.6% 57.1% 54.4% 45.9% 49.3%
Net tangible asset backing per share $5.64 $5.19 $4.69 $4.33 $4.05
(after final dividend is paid)
DRAFT PRELIMINARY REPORT
for the year to 30 June 2018
2011201220132014201520162017
Revenue480 543 614 699 789.38 867.24 854.76
Trading proift after tax6 8 12 18 16 19.21 22.00
-
200
400
600
800
1,000
20142015201620172018
$ million
Revenue
-
5
10
15
20
25
20142015201620172018
$ million
Trading Profit after Tax
DRAFT PRELIMINARY REPORT
for the year to 30 June 2018
2011201220132014201520162017
Revenue480 543 614 699 789.38 867.24 854.76
Trading proift after tax6 8 12 18 16 19.21 22.00
-
200
400
600
800
1,000
20142015201620172018
$ million
Revenue
-
5
10
15
20
25
20142015201620172018
$ million
Trading Profit after Tax
Year
Date Net Gross
%cpscps%
2018$8.0016/04/201815.020.88.550.0113.915.2
16/10/201731.043.1
2017$7.5018-Apr-1713.018.19.0130.0185.629.9
17-Oct-1627.037.5
2016$6.2018-Apr-1613.018.18.045.090.815.8
19-Oct-1520.027.8
2015$5.7520-Apr-1513.018.19.355.0103.619.9
20-Oct-1422.030.6
2014$5.204-Apr-1413.018.112.0125.0172.243.6
21-Oct-1321.029.2
2013$3.955-Apr-139.012.511.280.0115.436.6
23-Oct-1216.022.9
2012$3.1523-Apr-129.012.911.861.091.035.8
25-Oct-1112.017.1
2011$2.544-Apr-117.010.010.536.046.021.1
26-Oct-109.012.9
2010$2.1812-Apr-106.08.69.813.622.110.8
26-Oct-099.011.44
2009$2.406-Apr-096.026.98.1-90.0-63.1-19.1
3-Nov-0812.0
2008$3.309-Apr-0711.035.810.1-26.09.82.8
24-Oct-0713.0
Gross
shareholder
return
Share price
at 30 June
Dividends Paid - cps
Dividend
yield
Change in
share price
Total gross
return
8.1%
9.8%
10.5%
11.8%
11.2%
12.0%
9.3%
8.0%
9.0%
8.5%
-27.3%
5.6%
16.5%
24.0%
25.4%
31.6%
10.6%
7.8%
21.0%
6.7%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
2009201020112012201320142015201620172018
Percentage return on share price
at start of each year
Shareholder Returns
(Share price plus dividend)
Gross dividend yield
Movement in share price
Average gross return over
10 years15.5% p.a.
5
Directors’ report
Your Directors have pleasure in presenting the 100
th
annual report and audited financial statements of The Colonial Motor
Company Limited (“CMC” or “Company”) and its subsidiaries (“Group”) for the year ended 30 June 2018.
Revenue and profit
Revenue for the year was $904.0m. This is a 6% increase on the previous year’s $854.8m reflecting the continued
strength of the motor vehicle market and, in particular, heavy trucks.
The trading profit after tax for the year was $24.7m, up 12% on last year’s $22.0m. 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. It is also the reference point used by the board when
considering dividends. Profit for the year, which included a number of non-trading items such as asset revaluations and
related deferred tax, was up 15% on last year to $27.1m (2017: $23.5m).
Statement of financial position
Total assets rose to $389.4m at year end (2017: $316.9m).
The annual independent revaluation of the Group’s property brought about an increase in the revaluation reserve of
$5.4m (2017: $7.4m). Capital expenditure, mainly incurred to acquire properties In Queenstown and Lower Hutt,
contributed to the increase in property values. At balance date Shareholders’ equity was $196.9m (2017: $180.9m).
Dividends
Dividends paid in respect of this year will total 50.0 cents per share (2017: 44.0 cents per share). An interim dividend of
15.0 cents per share was paid on 16 April 2018 and a final dividend of 35.0 cents per share will be paid on 15 October
2018. Both dividends will be fully imputed. The value of the distributions for this year will be $16.3m (2017: $14.4m)
representing 66% (2017: 65%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 4 and the table on page 46. The
dividend yield has remained within the range of 8.0% to 12.0% p.a. over the last 10 years.
Directors
The independent Directors at 30 June 2018 and the date of this report were F R S Clouston and A J Waugh.
The Company’s constitution and the NZX listing rules require one third of the Directors to retire each year. The Directors
retiring this year will be Mr G D Gibbons and Mr A J Waugh. Both are eligible and are seeking re-election at the
forthcoming annual meeting. Also at that meeting Mr F.R.S. Clouston will be retiring after 7 years on the board.
The Board has commenced a search for a new independent director using both the Institute of Directors director search
program and an independent consultancy. The board is mindful of the need for board diversity and contributing to the
current matrix of experience on the board.
Directors’ Fees
It has been the Board’s practice to review the fees paid to Directors, in total and to individuals, every two years. The last
review was undertaken in 2016.
Total fees paid in the year to 30 June 2018 were $244,150 (2017: $244,150). Following the review of Directors’ fees in
2018, based on market research by two independent sources, the Board has resolved to increase individual annual fees
by 5.8% as follows:
Non-executive directors $54,500 from $51,500
Chairman of the Audit & Compliance Committee $59,950 from $56,150
Chairman of the Board $89,500 from $84,500
With the current mix of directors the total annual fees will be $258,450, above the current approved maximum of $255,000
set in 2012. Increasing the approved maximum requires shareholder approval and so a resolution will be considered at
the upcoming AGM to increase the maximum to $280,000.
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 of the New Zealand Stock Exchange, is detailed on pages 43 to 47. A separate Governance Statement
is provided on pages 39 to 42.
For the Directors
20 September 2018
J P Gibbons F R S Clouston
5
Directors’ report
Your Directors have pleasure in presenting the 100
th
annual report and audited financial statements of The Colonial Motor
Company Limited (“CMC” or “Company”) and its subsidiaries (“Group”) for the year ended 30 June 2018.
Revenue and profit
Revenue for the year was $904.0m. This is a 6% increase on the previous year’s $854.8m reflecting the continued
strength of the motor vehicle market and, in particular, heavy trucks.
The trading profit after tax for the year was $24.7m, up 12% on last year’s $22.0m. 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. It is also the reference point used by the board when
considering dividends. Profit for the year, which included a number of non-trading items such as asset revaluations and
related deferred tax, was up 15% on last year to $27.1m (2017: $23.5m).
Statement of financial position
Total assets rose to $389.4m at year end (2017: $316.9m).
The annual independent revaluation of the Group’s property brought about an increase in the revaluation reserve of
$5.4m (2017: $7.4m). Capital expenditure, mainly incurred to acquire properties In Queenstown and Lower Hutt,
contributed to the increase in property values. At balance date Shareholders’ equity was $196.9m (2017: $180.9m).
Dividends
Dividends paid in respect of this year will total 50.0 cents per share (2017: 44.0 cents per share). An interim dividend of
15.0 cents per share was paid on 16 April 2018 and a final dividend of 35.0 cents per share will be paid on 15 October
2018. Both dividends will be fully imputed. The value of the distributions for this year will be $16.3m (2017: $14.4m)
representing 66% (2017: 65%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 4 and the table on page 46. The
dividend yield has remained within the range of 8.0% to 12.0% p.a. over the last 10 years.
Directors
The independent Directors at 30 June 2018 and the date of this report were F R S Clouston and A J Waugh.
The Company’s constitution and the NZX listing rules require one third of the Directors to retire each year. The Directors
retiring this year will be Mr G D Gibbons and Mr A J Waugh. Both are eligible and are seeking re-election at the
forthcoming annual meeting. Also at that meeting Mr F.R.S. Clouston will be retiring after 7 years on the board.
The Board has commenced a search for a new independent director using both the Institute of Directors director search
program and an independent consultancy. The board is mindful of the need for board diversity and contributing to the
current matrix of experience on the board.
Directors’ Fees
It has been the Board’s practice to review the fees paid to Directors, in total and to individuals, every two years. The last
review was undertaken in 2016.
Total fees paid in the year to 30 June 2018 were $244,150 (2017: $244,150). Following the review of Directors’ fees in
2018, based on market research by two independent sources, the Board has resolved to increase individual annual fees
by 5.8% as follows:
Non-executive directors $54,500 from $51,500
Chairman of the Audit & Compliance Committee $59,950 from $56,150
Chairman of the Board $89,500 from $84,500
With the current mix of directors the total annual fees will be $258,450, above the current approved maximum of $255,000
set in 2012. Increasing the approved maximum requires shareholder approval and so a resolution will be considered at
the upcoming AGM to increase the maximum to $280,000.
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 of the New Zealand Stock Exchange, is detailed on pages 43 to 47. A separate Governance Statement
is provided on pages 39 to 42.
For the Directors
20 September 2018
J P Gibbons F R S Clouston
5
Directors’ report
Your Directors have pleasure in presenting the 100
th
annual report and audited financial statements of The Colonial Motor
Company Limited (“CMC” or “Company”) and its subsidiaries (“Group”) for the year ended 30 June 2018.
Revenue and profit
Revenue for the year was $904.0m. This is a 6% increase on the previous year’s $854.8m reflecting the continued
strength of the motor vehicle market and, in particular, heavy trucks.
The trading profit after tax for the year was $24.7m, up 12% on last year’s $22.0m. 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. It is also the reference point used by the board when
considering dividends. Profit for the year, which included a number of non-trading items such as asset revaluations and
related deferred tax, was up 15% on last year to $27.1m (2017: $23.5m).
Statement of financial position
Total assets rose to $389.4m at year end (2017: $316.9m).
The annual independent revaluation of the Group’s property brought about an increase in the revaluation reserve of
$5.4m (2017: $7.4m). Capital expenditure, mainly incurred to acquire properties In Queenstown and Lower Hutt,
contributed to the increase in property values. At balance date Shareholders’ equity was $196.9m (2017: $180.9m).
Dividends
Dividends paid in respect of this year will total 50.0 cents per share (2017: 44.0 cents per share). An interim dividend of
15.0 cents per share was paid on 16 April 2018 and a final dividend of 35.0 cents per share will be paid on 15 October
2018. Both dividends will be fully imputed. The value of the distributions for this year will be $16.3m (2017: $14.4m)
representing 66% (2017: 65%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 4 and the table on page 46. The
dividend yield has remained within the range of 8.0% to 12.0% p.a. over the last 10 years.
Directors
The independent Directors at 30 June 2018 and the date of this report were F R S Clouston and A J Waugh.
The Company’s constitution and the NZX listing rules require one third of the Directors to retire each year. The Directors
retiring this year will be Mr G D Gibbons and Mr A J Waugh. Both are eligible and are seeking re-election at the
forthcoming annual meeting. Also at that meeting Mr F.R.S. Clouston will be retiring after 7 years on the board.
The Board has commenced a search for a new independent director using both the Institute of Directors director search
program and an independent consultancy. The board is mindful of the need for board diversity and contributing to the
current matrix of experience on the board.
Directors’ Fees
It has been the Board’s practice to review the fees paid to Directors, in total and to individuals, every two years. The last
review was undertaken in 2016.
Total fees paid in the year to 30 June 2018 were $244,150 (2017: $244,150). Following the review of Directors’ fees in
2018, based on market research by two independent sources, the Board has resolved to increase individual annual fees
by 5.8% as follows:
Non-executive directors $54,500 from $51,500
Chairman of the Audit & Compliance Committee $59,950 from $56,150
Chairman of the Board $89,500 from $84,500
With the current mix of directors the total annual fees will be $258,450, above the current approved maximum of $255,000
set in 2012. Increasing the approved maximum requires shareholder approval and so a resolution will be considered at
the upcoming AGM to increase the maximum to $280,000.
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 of the New Zealand Stock Exchange, is detailed on pages 43 to 47. A separate Governance Statement
is provided on pages 39 to 42.
For the Directors
20 September 2018
J P Gibbons F R S Clouston
5
Directors’ report
Your Directors have pleasure in presenting the 100
th
annual report and audited financial statements of The Colonial Motor
Company Limited (“CMC” or “Company”) and its subsidiaries (“Group”) for the year ended 30 June 2018.
Revenue and profit
Revenue for the year was $904.0m. This is a 6% increase on the previous year’s $854.8m reflecting the continued
strength of the motor vehicle market and, in particular, heavy trucks.
The trading profit after tax for the year was $24.7m, up 12% on last year’s $22.0m. 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. It is also the reference point used by the board when
considering dividends. Profit for the year, which included a number of non-trading items such as asset revaluations and
related deferred tax, was up 15% on last year to $27.1m (2017: $23.5m).
Statement of financial position
Total assets rose to $389.4m at year end (2017: $316.9m).
The annual independent revaluation of the Group’s property brought about an increase in the revaluation reserve of
$5.4m (2017: $7.4m). Capital expenditure, mainly incurred to acquire properties In Queenstown and Lower Hutt,
contributed to the increase in property values. At balance date Shareholders’ equity was $196.9m (2017: $180.9m).
Dividends
Dividends paid in respect of this year will total 50.0 cents per share (2017: 44.0 cents per share). An interim dividend of
15.0 cents per share was paid on 16 April 2018 and a final dividend of 35.0 cents per share will be paid on 15 October
2018. Both dividends will be fully imputed. The value of the distributions for this year will be $16.3m (2017: $14.4m)
representing 66% (2017: 65%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 4 and the table on page 46. The
dividend yield has remained within the range of 8.0% to 12.0% p.a. over the last 10 years.
Directors
The independent Directors at 30 June 2018 and the date of this report were F R S Clouston and A J Waugh.
The Company’s constitution and the NZX listing rules require one third of the Directors to retire each year. The Directors
retiring this year will be Mr G D Gibbons and Mr A J Waugh. Both are eligible and are seeking re-election at the
forthcoming annual meeting. Also at that meeting Mr F.R.S. Clouston will be retiring after 7 years on the board.
The Board has commenced a search for a new independent director using both the Institute of Directors director search
program and an independent consultancy. The board is mindful of the need for board diversity and contributing to the
current matrix of experience on the board.
Directors’ Fees
It has been the Board’s practice to review the fees paid to Directors, in total and to individuals, every two years. The last
review was undertaken in 2016.
Total fees paid in the year to 30 June 2018 were $244,150 (2017: $244,150). Following the review of Directors’ fees in
2018, based on market research by two independent sources, the Board has resolved to increase individual annual fees
by 5.8% as follows:
Non-executive directors $54,500 from $51,500
Chairman of the Audit & Compliance Committee $59,950 from $56,150
Chairman of the Board $89,500 from $84,500
With the current mix of directors the total annual fees will be $258,450, above the current approved maximum of $255,000
set in 2012. Increasing the approved maximum requires shareholder approval and so a resolution will be considered at
the upcoming AGM to increase the maximum to $280,000.
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 of the New Zealand Stock Exchange, is detailed on pages 43 to 47. A separate Governance Statement
is provided on pages 39 to 42.
For the Directors
20 September 2018
J P Gibbons F R S Clouston
6
Chief Executive’s report
The vehicle industry is now into its ninth year of continuous growth from the low point of the global financial crisis.
CMC, as a group of vehicle dealerships, has benefitted from the strength of the NZ economy which has been behind this industry
growth and has again recorded a record result.
Markets
The light end of the market, passenger cars, SUV’s and light commercials, have slowed their rate of growth this year. It is now
down to around 2.5% year-over-year compared to 14% plus a year ago. The extra heavy truck part of the market while smaller
in numbers, has continued to grow at a much stronger rate which is reflected in Southpac Trucks’ contribution to our results this
year.
The vehicle industry continues to be intensely competitive with every brand pushing for every sale and each point of market
share. Product continues to be ‘king’. Ford light commercials with Ranger – NZ’s number one selling vehicle - and the new
Transit Custom and Mazda with its strong SUV range of CX3, CX5, CX8 and CX9 excel in their respective segments. New
models and competitors’ actions to win back business ensure that we need to be on our game each and every month.
The sheer volume of vehicles coming into the country, both new and used imports, continues to require more capacity than the
domestic vehicle distribution system can cater for. It leads to frustrating delays in being able to deliver vehicles to customers.
There is an intense amount of work going on behind the scenes in our dealerships to serve our customers to the highest level.
It encompasses keeping in touch, ensuring their vehicles are booked in for scheduled servicing, the service itself and then
returning the vehicle to our customers care.
Dealerships
The time frame to achieve any form of facility upgrade or new build continues to stretch out. Initial planning and then the
approvals process - resource and building consents - is becoming more complex with Councils countrywide applying the rule
book to minute detail. Discretion and judgement are no longer a known language and independent expert reports in all areas
are part of the process.
In our car dealerships focus has been on adding capacity primarily in service departments with more technicians and bays for
retail service and vehicle preparation. Constraints for vehicle sales are more related to the capacity, enthusiasm and ability of
our dealership sales teams and the supply chain for vehicles.
It has never been truer than now that the tried and proven process of identifying and training young people is a cornerstone of
our business. We employ them from school, pre-apprenticeship programs or as young adults with work experience and then
“nurture and encourage” them through an apprenticeship program. A qualified technician or parts person is highly skilled and
has a world of opportunity in front of them. This happens at every dealership on a continuous basis. The current nationwide
“got a trade, got it made” campaign covers this training in our industry through MITO (Motor Industry Training Organisation) and
the Polytechnics.
Overarching our perpetual work in optimising facilities from an operational perspective are periodic “brand” upgrades. We are
now well into the process, which is relatively straightforward in the case of Mazda but more complex and expensive for Ford.
Ford’s upgrade covers technology as well as facilities and has a complicated sign-off process. As ever, we are working to get
the best value possible from the expenditure.
The new Queenstown facility for Macaulay Motors - Ford and Mazda - will be twice the area of the current operation and is
expected to be completed by year end. It took around two and a half years from signing the agreement to purchase the land.
In Nelson, M.S. Motors have entered agreements for a “to be built” leased service only facility for Ford in the Annesbrook area
and also for the refurbishment and addition of a KIA showroom on the leased Haven Road dealership property.
TotalTotalNewUsed
YearCarsCommCarsCommCarsCommVehiclesImports
776052616372275017526327618124768984502
786649716571268123306917818901830685011
79681521907926822987083419377872312980
80756662073327012987836721031963992999
818945325389190720891360255971148422115
828365730510181220285469307121141672014
83740772480917662157584325024988861981
849639826849201918698417270351232472205100000150000
858151623062291822284434232841045783140100000150000
86760761816739464168002218583942434362100000150000
8777499152151212990489628161199271413033100000150000
88712171471317372193988589166528593019311100000150000
8983862170305096562451348272327510089257210100000150000
9074422189658532410480159746294459338795804100000150000
9155615134984735111487102966249856911358838100000150000
925296413570391461020292110237726653449348100000150000
935382213728438411367497663274026755057515100000150000
9462088156836208814851124176305347777176939100000150000
9565680148878097614711146656295988056795687100000150000
966488514732111764151121766492984479617126876100000150000
97585581293497041115861555992452071492108627100000150000
9854157114509993790901540942054065607109027100000150000
99581951404613111882821893132232872241139400100000150000
00576181654111612467501737422329174159122874100000150000
01581621680612869366571868552346374968135350100000150000
02640861965713641896622005042931983743146080100000150000
037045321151156972118682274253301991604168840100000150000
047475824037154042152502288003928798795169292100000150000
0577825256231524881397823031339601103448166466100000150000
067680423182123390122252001943540799986135615100000150000
0777454250141203821257319783637587102468132955100000150000
087339723933908418860164238327939733099701100000150000
095440415644687573154123161187987004871911100000150000
106202918424886332797150662212218045391430100000150000
116401920621808523176144871237978464084028100000150000
1276871239247831135161551822744010079581827100000150000
13824333083998971609418140436933113272105065100000150000
149063236716129925794322055744659127348137868100000150000
159509739142143642883823873947980134239152480100000150000
16102644442921495261096725217055259146936160493100000150000
17108616515081656541222527427063733160124177879100000150000
Forecast18107000545001540001200026100066500161500166000100000150000
New Vehicle Registrations 1977 to 2018 (including ex overseas)
NewUsed Imports
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
848688909294969800020406081012141618
Registrations
Calendar Year
Vehicle Registrations
New Vehicles
Used Imports
7
At Tuam Street in Christchurch, we finally reached agreement with the various Crown authorities in April this year on a perpetual
easement for the mid-block “greenway” to go east-west through the centre of Team Hutchinson Ford. This process began in
mid-2012 when the “South Frame” was first announced as part of the Christchurch regeneration plan.
The greenway project will involve demolition of a portion of the workshop buildings: ironically the area of the workshop rebuilt
post-earthquake as a consequence of the demolition of the two storey structure housing the dealership new car showroom. It
will also require the re-orientation of the dealership service reception to work with the greenway crossing point. We aim to
complete the project with the new dealership brand presentation by the end of 2019. The financial details of the settlement are
set out in Note 10.
In Wellington, the new retail service facility in upper Taranaki Street is nearing completion and Capital City Ford & Mazda expects
to be fully operational there this year. Two new leased “brand hubs” on the waterfront are currently being fitted out. The current
main dealership facility is occupied on a short term lease basis. We have acquired a number of smaller properties in High Street
around the Stevens Motors facility.
At South Auckland Motors, the new leased purpose-built high profile Takanini service facility for Ford and Mazda was opened
late in 2017. We are continuing to look toward medium term growth opportunities to match the expansion of Auckland
developments in Drury and Pukekohe. For Southern Autos – Manukau, who took up the Suzuki franchise at the start of 2018,
we are looking to expand our operations beyond Manukau in the South and East of Auckland.
At Southpac Trucks, the continued high level of the heavy truck industry and increased market share of Kenworth and DAF has
meant adding capability and capacity, particularly in the new truck preparation area. During this year we have expanded the
new truck engineering shop and nearing completion is a 400m
2
expansion to the parts warehouse. The new Hamilton location
was opened at the beginning of the financial year. In this year we have been delivering around 50 new trucks each month
compared to 30 trucks a month two years ago. This increased level of activity reflects through to our overall current asset
inventory and receivables levels.
Southpac continues to focus on customer service and product backup through its nationwide parts & service dealer network.
Later this month Southpac will open a new parts distribution centre in leased premises in Palmerston North to support its network
and complement its Manukau, Hamilton, Rotorua and Christchurch operations.
The main drivers of the demand for heavy trucks have been the export of primary products (including logs), distribution of goods
around the country, the building industry and particularly government based infrastructure projects.
Health & Safety
A safe workplace is an every minute, every day part of doing business. It involves all of our dealership staff having safe work
practices as part of their DNA. While we have had no “serious harm” incidents in this year, we have been working through the
legal consequences of the tractor accident in April 2016 and expect finality in the near future. Learning from accidents that
might have happened - ‘near miss incidents’ - is part of a fresh look at risks and hazards that we might have missed and further
improvement to our work practices. We have recently introduced a Group-wide external audit process to walk through each
dealerships operations. This audit program replaces what was previously carried out under the now-ended ACC Workplace
Safety Management Practices Program audits.
The future of the motor vehicle
Except in the densest of metropolitan city environments the ownership or access to a motor vehicle in New Zealand is a practical
reality of everyday life as well as a personal choice. The demand for “park and ride” as a complementary part of public transport
in our spread-out cities is a reminder of that choice.
Many of us might consider we have too many vehicles on the road in New Zealand but to reduce this requires a combination of
significantly improved public transport systems in Auckland and hard choices. If we are serious about reducing our total emission
levels then fewer vehicles, with the most up-to-date emission levels and latest safety features is part of the solution. Taking
older, less safe, less economical, higher emission vehicles off our roads is hard enough. Reducing the age of our fleet by
restricting the importation of older used vehicles is similarly politically difficult. Politically it is simpler to talk about the future
nirvana of driverless autonomous electrical vehicles.
The biggest roadblock restricting the uptake of electric vehicles by anyone other than early adopters and corporate owners are
price and range. For all countries the methods of encouraging change are challenging because someone (i.e. the taxpayer,
other vehicle owners or road users) have to pay for any subsidies or tax breaks that might be granted to offset the currently
substantial price differential between conventional and electric technologies.
Our dealerships are dependent on our brand franchises to bring these new technology products to the market when they are
ready. New Zealand, with its high level of renewable electricity generation, is ideally placed to benefit when the product and
price are right.
Outlook
The factors that have driven the New Zealand and world economies for the last decade are changing - economic fundamentals
and international trade policies have the potential to disrupt. The political tune in NZ is leading to change. What is unsure is
how these changes might affect our future economic prospects. Meanwhile we will continue to look to the future, make the most
of today and be prepared to adapt and change at any time.
G D Gibbons
Chief Executive
8
Group dealerships
Company name Chief Executive /
Dealer Principal
Franchises Location Web address
Southpac Trucks Ltd Maarten Durent Kenworth & DAF
Heavy Trucks
Manukau City,
Hamilton,
Rotorua &
Christchurch
www.spt.co.nz
South Auckland Motors
Ltd
Matthew Newman
Michael Tappenden
(DP)
Ford & Mazda Manukau City,
Auckland Airport,
Botany, Takanini &
Pukekohe
www.southaucklandmotors.co.nz
Southern Autos –
Manukau Ltd
Matthew Newman
Andrew Craw (DP)
Suzuki, Peugeot,
Citroen & Isuzu
Manukau City www.southernautos.co.nz
Energy City Motors Ltd Russell Dempster Ford New Plymouth &
Hawera
www.energyford.co.nz
Hertz Rentals New Plymouth
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 Hastings www.hawkesbaynissan.co.nz
Fagan Motors Ltd Keith Allen Ford & Mazda
Suzuki
Motorcycles
Masterton www.faganmotors.co.nz
www.fagansuzuki.co.nz
Stevens Motors Ltd Stuart Gibbons Ford & Mazda Lower Hutt www.stevensmotors.co.nz
Capital City Motors Ltd Matthew Carman Ford & Mazda Wellington,
Porirua & Kapiti
www.capitalcitymotors.co.nz
M.S. Motors (1998) Ltd Alan Kirby Ford Nelson www.nelsonford.co.nz
KIA Richmond www.nelsonkia.co.nz
Hutchinson Motors Ltd John Hutchinson Ford
Bridgestone Tyres
Christchurch 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
Christchurch www.avoncitysuzuki.co.nz
Timaru Motors Ltd Wayne Pateman Ford & Mazda Timaru www.timarumotors.co.nz
Dunedin City Motors Ltd Robert Bain Ford & Mazda Dunedin, Oamaru
& Alexandra
www.dcmotors.co.nz
Macaulay Motors Ltd Grant Price Ford & Mazda Invercargill &
Queenstown
www.macaulaymotors.co.nz
Agricentre South Ltd
Grant Price Case IH Tractors &
Kuhn Implements
Invercargill, Gore,
Milton & Cromwell
www.agricentre.co.nz
New Holland,
Kubota Tractors
Norwood Ag
Equipment
Invercargill & Gore
The consolidated financial statements should be read in conjunction with the accompanying notes.
9
Consolidated statement of financial performance
for the year ended 30 June 2018
Notes
2018
$000
2017
$000
Revenue
Revenue 902,076 852,860
Other income 1,958 1,904
Total revenue 1 904,034 854,764
Trading expenses
Cost of products and services sold 755,544 716,611
Remuneration of staff 71,181 69,172
Depreciation and amortisation 3,741 3,750
Property occupation costs 6,571 6,607
Marketing, promotion and training 5,847 6,246
Other operating costs 18,744 16,476
Interest 3 4,565 3,852
Total trading expenses 2 866,193 822,714
Trading profit before tax 37,841 32,050
Taxation
Current tax 11,354 9,075
Deferred tax
(366) (328)
Total tax on trading 4 10,988 8,747
Non-controlling interest 2,107 1,303
Trading profit after tax 24,746 22,000
Non-trading items
Fair value revaluation of property (406) (119)
Realised gain on sale of property - 9
Fair valuation of investments 476 544
Impairment of intangible assets - (315)
Total non-trading item before tax 70 119
Taxation
Deferred tax
4 (169) (113)
Non-trading items after tax 239 232
Profit attributable to shareholders 24,985 22,232
Profit for the year
Profit attributable to: Shareholders
Trading profit after tax 24,746 22,000
Non-trading items after tax 239 232
Total attributable to shareholders 24,985 22,232
Non-controlling interest 2,107 1,303
Profit for the year 6 27,092 23,535
Statistics per share
Basic and diluted earnings per share 7
Profit for the year (cents) 76.4 68.0
Trading profit after tax (cents) 75.7 67.3
Dividends
Dividends (cents per share) 50.0 44.0
Total dividends ($’000) 16,347 14,386
Net tangible assets per share ($) 5.99 5.50
The consolidated financial statements should be read in conjunction with the accompanying notes.
10
Consolidated statement of comprehensive income
for the year ended 30 June 2018
Notes
2018
$000
2017
$000
Profit for the year 27,092 23,535
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Property revaluation reserve
Fair value movement 5,430 7,414
Deferred tax 4 108 (9)
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 862 789
Deferred tax 4 (241) (221)
Total other comprehensive income for the year 6,159 7,973
Total comprehensive income for the year 33,251 31,508
Total comprehensive income for the year attributable to:
Shareholders 31,051 30,120
Non-controlling interest 2,200 1,388
Total comprehensive income for the year 33,251 31,508
Consolidated statement of changes in equity
for the year ended 30 June 2018
Notes
2018
$000
2017
$000
Total equity at beginning of the year 182,885 165,805
Comprehensive income
Profit for the year 27,092 23,535
Other comprehensive income 6,159 7,973
Total comprehensive income 33,251 31,508
Dividends paid to shareholders 22 (15,040) (13,078)
Dividends paid to non-controlling interest (1,350) (1,350)
Total equity at end of year 20 199,746 182,885
The consolidated financial statements should be read in conjunction with the accompanying notes.
11
Consolidated statement of financial position
at 30 June 2018
Notes
2018
$000
2017
$000
Shareholders’ equity
Share capital 21 15,968 15,968
Retained earnings 130,698 120,753
Property revaluation reserve 49,995 44,457
Foreign exchange cashflow hedge reserve 214 (314)
Total shareholders’ equity 196,875 180,864
Non-controlling interest 2,871 2,021
Total equity 199,746 182,885
Current liabilities
Bank borrowings 25 41,550 7,800
At-call deposits 24 21,588 18,017
Trade & other payables 12 50,449 37,418
Vehicle floorplan finance 23 61,386 54,709
Financial liabilities – credit contracts 14 2,779 3,637
Tax payable 5,001 3,112
Financial derivatives – foreign exchange 29 - 513
Total current liabilities 182,753 125,206
Non-current liabilities
Financial derivatives – credit contracts 14 3,025 4,556
Deferred tax 4 3,844 4,245
Total non-current liabilities 6,869 8,801
Total equity and liabilities 389,368 316,892
Current assets
Cash & bank accounts 13 10,251 8,060
Trade & other receivables 11 57,991 34,747
Inventory 8 181,022 147,767
Financial assets – credit contracts 14 2,734 3,561
Financial derivatives – foreign exchange 29 349 -
Total current assets 252,347 194,135
Non-current assets
Financial assets – credit contracts 14 3,026 4,557
Intangible assets 16 1,028 1,028
Investments 18 2,497 2,048
Property, plant & equipment 9 130,470 115,124
Total non-current assets 137,021 122,757
Total assets 389,368 316,892
For the directors
J P Gibbons F R S Clouston
Authorised for issue on 20 September 2018
5
Directors’ report
Your Directors have pleasure in presenting the 100
th
annual report and audited financial statements of The Colonial Motor
Company Limited (“CMC” or “Company”) and its subsidiaries (“Group”) for the year ended 30 June 2018.
Revenue and profit
Revenue for the year was $904.0m. This is a 6% increase on the previous year’s $854.8m reflecting the continued
strength of the motor vehicle market and, in particular, heavy trucks.
The trading profit after tax for the year was $24.7m, up 12% on last year’s $22.0m. 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. It is also the reference point used by the board when
considering dividends. Profit for the year, which included a number of non-trading items such as asset revaluations and
related deferred tax, was up 15% on last year to $27.1m (2017: $23.5m).
Statement of financial position
Total assets rose to $389.4m at year end (2017: $316.9m).
The annual independent revaluation of the Group’s property brought about an increase in the revaluation reserve of
$5.4m (2017: $7.4m). Capital expenditure, mainly incurred to acquire properties In Queenstown and Lower Hutt,
contributed to the increase in property values. At balance date Shareholders’ equity was $196.9m (2017: $180.9m).
Dividends
Dividends paid in respect of this year will total 50.0 cents per share (2017: 44.0 cents per share). An interim dividend of
15.0 cents per share was paid on 16 April 2018 and a final dividend of 35.0 cents per share will be paid on 15 October
2018. Both dividends will be fully imputed. The value of the distributions for this year will be $16.3m (2017: $14.4m)
representing 66% (2017: 65%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 4 and the table on page 46. The
dividend yield has remained within the range of 8.0% to 12.0% p.a. over the last 10 years.
Directors
The independent Directors at 30 June 2018 and the date of this report were F R S Clouston and A J Waugh.
The Company’s constitution and the NZX listing rules require one third of the Directors to retire each year. The Directors
retiring this year will be Mr G D Gibbons and Mr A J Waugh. Both are eligible and are seeking re-election at the
forthcoming annual meeting. Also at that meeting Mr F.R.S. Clouston will be retiring after 7 years on the board.
The Board has commenced a search for a new independent director using both the Institute of Directors director search
program and an independent consultancy. The board is mindful of the need for board diversity and contributing to the
current matrix of experience on the board.
Directors’ Fees
It has been the Board’s practice to review the fees paid to Directors, in total and to individuals, every two years. The last
review was undertaken in 2016.
Total fees paid in the year to 30 June 2018 were $244,150 (2017: $244,150). Following the review of Directors’ fees in
2018, based on market research by two independent sources, the Board has resolved to increase individual annual fees
by 5.8% as follows:
Non-executive directors $54,500 from $51,500
Chairman of the Audit & Compliance Committee $59,950 from $56,150
Chairman of the Board $89,500 from $84,500
With the current mix of directors the total annual fees will be $258,450, above the current approved maximum of $255,000
set in 2012. Increasing the approved maximum requires shareholder approval and so a resolution will be considered at
the upcoming AGM to increase the maximum to $280,000.
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 of the New Zealand Stock Exchange, is detailed on pages 43 to 47. A separate Governance Statement
is provided on pages 39 to 42.
For the Directors
20 September 2018
J P Gibbons F R S Clouston
5
Directors’ report
Your Directors have pleasure in presenting the 100
th
annual report and audited financial statements of The Colonial Motor
Company Limited (“CMC” or “Company”) and its subsidiaries (“Group”) for the year ended 30 June 2018.
Revenue and profit
Revenue for the year was $904.0m. This is a 6% increase on the previous year’s $854.8m reflecting the continued
strength of the motor vehicle market and, in particular, heavy trucks.
The trading profit after tax for the year was $24.7m, up 12% on last year’s $22.0m. 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. It is also the reference point used by the board when
considering dividends. Profit for the year, which included a number of non-trading items such as asset revaluations and
related deferred tax, was up 15% on last year to $27.1m (2017: $23.5m).
Statement of financial position
Total assets rose to $389.4m at year end (2017: $316.9m).
The annual independent revaluation of the Group’s property brought about an increase in the revaluation reserve of
$5.4m (2017: $7.4m). Capital expenditure, mainly incurred to acquire properties In Queenstown and Lower Hutt,
contributed to the increase in property values. At balance date Shareholders’ equity was $196.9m (2017: $180.9m).
Dividends
Dividends paid in respect of this year will total 50.0 cents per share (2017: 44.0 cents per share). An interim dividend of
15.0 cents per share was paid on 16 April 2018 and a final dividend of 35.0 cents per share will be paid on 15 October
2018. Both dividends will be fully imputed. The value of the distributions for this year will be $16.3m (2017: $14.4m)
representing 66% (2017: 65%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 4 and the table on page 46. The
dividend yield has remained within the range of 8.0% to 12.0% p.a. over the last 10 years.
Directors
The independent Directors at 30 June 2018 and the date of this report were F R S Clouston and A J Waugh.
The Company’s constitution and the NZX listing rules require one third of the Directors to retire each year. The Directors
retiring this year will be Mr G D Gibbons and Mr A J Waugh. Both are eligible and are seeking re-election at the
forthcoming annual meeting. Also at that meeting Mr F.R.S. Clouston will be retiring after 7 years on the board.
The Board has commenced a search for a new independent director using both the Institute of Directors director search
program and an independent consultancy. The board is mindful of the need for board diversity and contributing to the
current matrix of experience on the board.
Directors’ Fees
It has been the Board’s practice to review the fees paid to Directors, in total and to individuals, every two years. The last
review was undertaken in 2016.
Total fees paid in the year to 30 June 2018 were $244,150 (2017: $244,150). Following the review of Directors’ fees in
2018, based on market research by two independent sources, the Board has resolved to increase individual annual fees
by 5.8% as follows:
Non-executive directors $54,500 from $51,500
Chairman of the Audit & Compliance Committee $59,950 from $56,150
Chairman of the Board $89,500 from $84,500
With the current mix of directors the total annual fees will be $258,450, above the current approved maximum of $255,000
set in 2012. Increasing the approved maximum requires shareholder approval and so a resolution will be considered at
the upcoming AGM to increase the maximum to $280,000.
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 of the New Zealand Stock Exchange, is detailed on pages 43 to 47. A separate Governance Statement
is provided on pages 39 to 42.
For the Directors
20 September 2018
J P Gibbons F R S Clouston
The consolidated financial statements should be read in conjunction with the accompanying notes.
12
Consolidated statement of cash flows
for the year ended 30 June 2018
Notes
2018
$000
2017
$000
Operating cash flows
Receipts from customers 880,336 852,463
Interest received 307 222
Dividends received 147 147
Payments to suppliers and employees (878,114) (823,646)
Interest paid (4,565) (3,852)
Income taxes paid (9,465) (9,507)
Net operating cash flows 6 (11,354) 15,827
Investing cash flows
Proceeds from sale of property, plant & equipment 833 2,144
Proceeds from sale of intangibles & investments - 139
Purchase of property, plant & equipment (14,895) (14,077)
Net investing cash flows (14,062) (11,794)
Financing cash flows
Increase/(decrease) in bank borrowings 40,427 2,567
Increase/(decrease) in deposits 3,570 486
Dividends paid to shareholders (16,390) (14,428)
Net financing cash flows 27,607 (11,375)
Net change in cash held 2,191 (7,342)
Cash at beginning of year 8,060 15,402
Cash at end of year 13 10,251 8,060
13
Notes to the consolidated financial statements
for the year ended 30 June 2018
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 estimates and judgements 14
Accounting policies
Impairment 15
GST 15
Changes in accounting policy and accounting standards 15
Financial performance
The notes in this section explain CMC’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
Operating assets
The notes in this section describe the assets CMC uses to generate profit including its
working capital.
8 Inventory 20
9 Property plant and equipment 20
10 Christchurch greenway 22
11 Trade & other receivables 23
12 Trade & other payables 23
13 Cash and bank accounts 23
14 Credit contracts 24
15 Operating leases 25
16 Intangible assets 26
Investments
The notes in this section describe the corporate structure of the Group and how the results
and balances of the individual companies are combined into the financial statements.
17 Subsidiaries 27
18 Investments 27
Funding
The notes in this section describe what sources of funding CMC uses and how they are
managed.
19 Capital management 28
20 Movements in equity 29
21 Share capital 30
22 Dividends 30
23 Vehicle floorplan finance 30
24 At call deposits 31
25 Bank borrowing 31
26 Financial instruments 32
27 Reconciliation of liabilities arising from financial activities 32
Managing risk
The notes in this section describe how CMC manages the financial risks that affect its
financial position and performance.
28 Financial risk management 33
29 Financial derivatives – foreign exchange 34
Other
30 Related party transactions 35
31 Contingencies 35
32 Events after the reporting date 35
14
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. Where an FMC Reporting Entity prepares consolidated financial statements, parent
company disclosures are not required and have 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), the Financial Reporting Act 2013 and the
Companies Act 1993. They also comply with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board.
The financial statements were authorised for issue by the Directors on 20 September 2018.
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.
on the assumption that the Group is a going concern.
The 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 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 relevant notes to the financial statements.
15
Accounting policies
The accounting policies set out in these notes have been applied consistently to all periods presented
in these 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 sold 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 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 (GST)
The financial statements are prepared net of 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 accounting policies during the year.
Accounting standards have been updated during the year
with the consequence that additional
disclosure has been made including note 27 introduced this year under NZ IAS 7 – Statement of Cash
Flows to provide details of movements in financial liabilities.
New standards, interpretations and amendments
At the date of authorisation of these financial statements, certain new standards and 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. Information on new standards, amendments and interpretations that are expected
to be relevant to the consolidated financial statements is provided in the relevant notes as follows:
NZIFRS 15 Revenue from contracts with customers – note 1
NZIFRS 16 Leases – note 15
NZIFRS 9 Financial instruments – note 26.
Certain other new standards and interpretations issued but not yet effective and not expected to have
a material impact on the consolidated financial statements have not been disclosed.
16
Notes on financial performance
1 Revenue
Revenue is measured at the fair value of the consideration received or receivable. It is recognised to
the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured.
Amounts disclosed as revenue are net of returns, trade allowances and rebates. The following specific
recognition criteria must also be met before revenue is recognised:
Sale of products: Revenue from the sale of goods is recognised when the significant risks and rewards
of ownership have passed to the buyer and can be reliably measured. Risk and rewards are considered
to have passed to the buyer generally upon the delivery of goods to the customer.
Rendering of services: Revenue from the rendering of a service is recognised in the period in which the
service is provided.
Rental income arising from premises rental is accounted for on a straight line basis over the lease term.
Interest Income comprises interest on funds invested. Interest income is recognised in profit or loss as
it accrues using the effective interest rate method.
2018
$000
2017
$000
Revenue from
Sale of products 839,621 786,945
Sale of services 62,455 65,915
Total revenue from customers 902,076 852,860
Interest 307 222
Rental income 1,651 976
Other - 706
Total other income 1,958 1,904
New standard
NZIFRS 15 – Revenue from contracts with customers becomes effective for CMC for the reporting
period beginning 1 July 2018 and ending on 30 June 2019.
Detailed assessment of its impact has been completed. The nature of trading transactions with
customers carried out by the Group are such that contracts are of short duration and are fulfilled at a
point in time. No changes to Group accounting policies or procedures have been identified as necessary
and there will be no material change to the timing of recognition of revenue. Compliance with NZ IFRS
15 will involve some additional disclosure.
2 Expenditure
Expenditure in the statement of financial performance includes:
2018
$000
2017
$000
Auditor’s remuneration
Audit fees 423 417
Other services - -
Total auditor’s remuneration 423 417
Operating lease expense 3,028 3,128
Directors’ fees 244 244
Bad debts written off 101 49
Donations 21 29
Contributions to retirement savings
CMC Workplace Savings Scheme 754 749
KiwiSaver 1,180 1,094
Movement in impairment allowance for:
Parts inventory obsolescence (decrease) / increase (264) (181)
Doubtful debts (18) 81
Credit contracts (32) (20)
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) Income 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 statement of financial performance except when it relates to items
recognised directly in the statement of comprehensive income.
2018
$000
2017
$000
Profit before tax for the year 37,911 32,169
Expected tax charge at the NZ domestic tax rate of 28%
10,615 9,007
Tax adjustments for:
Non-deductible expenses 598 474
Tax exempt income (147) (155)
Changes in unrecognised temporary differences 308 (237)
Prior year adjustment (20) (14)
Actual current tax charge 11,354 9,075
Movement in deferred tax (535) (441)
Total tax expense 10,819 8,634
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 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.
Deferred tax liability
2018
$000
2017
$000
At the beginning of the year (4,245) (4,457)
Movement through the statement of financial
performance
On trading profit 366 328
On non-trading property depreciation 169 114
Movement through property revaluation reserve 108 (9)
Movement through foreign currency cashflow hedge
reserve
(241) (221)
At the end of the year (3,844) (4,245)
Deferred tax assets and liabilities are attributable to the following
Trade and other payables 809 579
Trade and other receivables 19 26
Employee benefits 1,001 875
Inventories 628 552
Financial derivatives (98) 144
Impairment allowance for finance bad debts 13 21
Property plant and equipment (1,724) (1,782)
Building depreciation rule change (4,492) (4,660)
Deferred tax liability at the end of the year (3,844) (4,245)
Deferred tax on unused tax losses to be utilised against
future taxable profits
- -
18
4(c) Imputation credit account
2018
$000
2017
$000
Imputation credits available for use in subsequent
reporting periods
23,399 20,415
The NZ 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
dealership performance are revenue, trading profit before tax, trade
receivables and inventory.
Each of the trading subsidiaries enters into agreements in its 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 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 e
ngages and the economic environments in which it
operates.
2018 2017
Operating
segment Corporate
Total
Group
Operating
segment Corporate
Total
Group
$000 $000 $000 $000 $000 $000
Revenue from customers 902,076 - 902,076 852,860 - 852,860
Depreciation & amortisation 2,168 1,573 3,741 2,362 1,388 3,750
Interest income 301 6 307 189 33 222
Interest expense 2,871 1,694 4,565 2,736 1,116 3,852
Trading profit before tax 34,582 3,259 37,841 29,051 2,999 32,050
Total assets 261,998 127,370 389,368 207,163 109,729 316,892
19
6 Reconciliation of profit for the year with operating cash flows
2018
$000
2017
$000
Profit after tax for the year 27,092 23,535
Adjustments for non-cash items
Depreciation 3,741 3,650
Amortisation - 415
Revaluation of property and investments (70) (425)
Realised gain on sale of property - (9)
Movement in
Impairment of credit contracts (4) (29)
Deferred tax (535) (441)
Movement in working capital
Trade & other payables 13,031 511
Tax payable 1,888 (433)
Trade & other receivables (23,243) (1,932)
Inventory (33,254) (9,015)
Net cash flow from operations (11,354) 15,827
7 Earnings per share
2018
$000
2017
$000
Trading profit after tax 24,746 22,000
Profit after tax for the year attributable to shareholders 24,985 22,232
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 75.7 67.3
Profit after tax for the year attributable to shareholders 76.4 68.0
Basic and diluted earnings per share is 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 balance date (2017: 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 value at 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.
2018
$000
2017
$000
Vehicles 160,989 130,084
Parts, accessories, workshop fuels and gases 22,795 19,632
Impairment allowance (2,762) (1,949)
Total inventory 181,022 147,767
Total inventory write-down including parts, parts
obsolescence and vehicles. 660 18
9 Property, plant & equipment
Land & buildings
Land and buildings owned by the Company are categorised as property, plant & equipment because
they are owned specifically for use in the revenue generating operations of its subsidiaries.
All land & 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. The principal valuer was Daryl Taggart B Com (VPM)
ANZIV MPINZ Registered Valuer.
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, condition and many other factors.
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.
21
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 have been depreciated over their estimated useful lives 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:-
Service vehicles 18 - 36% of Diminishing Value
Furniture, fittings and equipment 7.5 - 60% of Diminishing Value
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 2016 52,818 21,992 5,195 80,005
Accumulated depreciation - (14,783) (2,312) (17,095)
Revaluation 36,278 - - 36,278
Net book value at 30 June 2016
89,096 7,209 2,883 99,188
Additions 11,034 1,439 1,415 13,888
Disposals (158) (698) (650) (1,506)
Depreciation (1,384) (1,452) (904) (3,740)
Movement in revaluation 7,294 - - 7,294
Net book value at 30 June 2017
105,882 6,498 2,744 115,124
Cost or fair value at 30 June 2017 62,565 21,476 5,314 89,355
Accumulated depreciation - (14,978) (2,570) (17,548)
Revaluation 43,317 - - 43,317
Net book value at 30 June 2017
105,882 6,498 2,744 115,124
Additions 11,589 1,966 1,265 14,820
Disposals (6) (26) (685) (718)
Depreciation (1,548) (1,445) (789) (3,781)
Movement in revaluation 5,025 - - 5,025
Net book value at 30 June 2018
120,942 6,993 2,535 130,470
Comprised of:
Cost or fair value at 30 June 2018 72,598 22,696 5,313 100,607
Accumulated depreciation - (15,703) (2,778) (18,481)
Revaluation 48,344 - - 48,344
Net book value at 30 June 2018
120,942 6,993 2,535 130,470
2018
$000
2017
$000
Revaluation (deficit)/reversal of previous deficits recognised as non-trading
items through profit or loss (406) (119)
Capital work in progress included in value of land & buildings at reporting
date. Capital work in progress is not subject to depreciation until completed
and brought into use. 2,624 1,300
Capital commitments
Commitments to the future acquisition of new dealership facilities and
development projects to existing facilities. 4,027 3,726
22
10 Christchurch greenway
The dealership property occupied by Team Hutchinson Ford on Tuam Street in Christchurch is owned
by the Company 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 Company 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
2. acquisition of an adjacent area of land to replace part of the land taken by the greenway
Initial recognition of the agreement was to create an asset for the full value of the settlement receivable
from the Crown 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 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.
Shortly after signing the agreement, the Crown made its first payment to CMC of $4 million. At balance
date, the outstanding receivable represents further payments due to be received from the Crown on
particular events defined in the agreement and the value of the land to be acquired. The balance of the
performance obligations reflects the remainder of the settlement that has yet to be allocated to particular
elements of the work to be completed including 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 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
potential tax effect.
$’000
Consideration for granting the easement and making land available for the greenway
Cash 7,000
Value ascribed to land to be acquired 555
Total receivable from the Crown 7,555
less first instalment received in cash April 2018 (4,000)
Balance included in “Other receivables” at 30 June 2018 – note 11, receivable in
instalments following specified events over the course of the construction of the
greenway
3,555
Performance obligation 7,555
Expenditure incurred to fulfil the performance obligation incurred primarily to design
the greenway solution, prepare submissions to Crown and local authorities and reach
agreement. (524)
Balance of performance obligation included in “Other payables” at 30 June 2018 –
note 12 7,031
23
11 Trade and other receivables
The carrying value of trade receivables and prepayments is considered to be their fair value. Bad debts
are written off as soon as they become evident. In addition, all receivables are reviewed for indications
of impairment and an allowance maintained to cover accounts where there is objective evidence that
the amount may not be able to be collected. The Group considers that no material concentration of credit
risk exists with trade receivables due to the spread over a large number of customers.
Recoverability of receivables
Reliance is placed on credit control measures to minimise bad debts but estimates and judgement based
on experience are required in determining the level of possible future impairment of all types of
receivables.
2018
$000
2017
$000
Trade receivables 52,069 29,120
Impairment allowance for doubtful debts (67) (94)
52,002 29,026
Other receivables 5,408 4,754
Prepayments 581 967
Carrying value of trade and other receivables 57,991 34,747
Bad debts written off in year 101 40
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 and
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.
2018
$000
2017
$000
Trade payables 28,457 24,678
Employee benefits 8,175 6,675
Other payables 13,817 6,065
Total trade and other payables 50,449 37,418
13 Cash & bank accounts
2018
$000
2017
$000
Bank accounts in funds 10,573 8,362
Bank accounts in overdraft (322) (302)
Net cash and bank accounts 10,251 8,060
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 7,035 7,000
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, checks are made that the customers meet the
creditworthiness, affordabililty and other criteria of the finance companies. 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 liabilities is further described 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 profit or loss.
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.
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 of contracts in default.
Financing agreements outstanding at reporting date that have been assigned
to MTF with recourse have the following repayment schedule.
2018
$000
2017
$000
Up to 1 year 2,779 3,637
1 to 2 years 1,652 2,770
2 to 3 years 945 1,262
3 to 4 years 342 461
4 to 5 years 86 64
Total 5,804 8,194
Impairment allowance (44) (76)
Carrying value of receivables 5,760 8,118
Number of credit contracts 410 568
Value of impaired accounts written off in the year ($000) - 1
Actual arrears/amounts past due at 30 June ($000) 37 35
Arrears as percentage of total 0.63% 0.43%
Total value of accounts in arrears at 30 June ($000) 471 491
Accounts in arrears as % of total 8.11% 5.99%
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.
2018
$000
2017
$000
Less than 1 year 3,256 4,385
1 to 2 years 1,895 3,119
More than 2 years 1,504 1,940
Total 6,655 9,444
25
15 Operating leases
The Group owns most of the property from which it operates. Some Dealerships operate from sites not
owned by the Group that are leased from third parties. The leases are negotiated under normal
commercial arrangements with varying terms, escalation clauses and renewal conditions. There are no
undue restrictions imposed on these leases or contingent rents due. The financial commitments created
by the leases are primarily for the regular payment of rent with payments due over the periods up to the
earliest date each lease may be terminated summarised in the table below
The Group does not carry any material finance leases.
Operating lease commitments
2018
$000
2017
$000
Within one year 2,484 1,674
Between one and two years 1,250 1,181
Between two and five years 2,080 1,911
Over five years 138 626
Total operating lease commitments 5,952 5,392
The Group owns some properties that are not completely occupied by Group companies and the space
is leased to third parties. The leases are also negotiated under normal commercial arrangements with
varying terms, escalation clauses and renewal conditions and without undue restrictions. The rent is
receivable over the following schedule during the non-cancellable periods of these leases
Operating lease receivables
Within one year 572 649
Between one and two years 345 257
Between two and five years 459 229
Over five years 53 129
Total operating lease receivables 1,429 1,264
Change in financial reporting standard
Under current financial reporting standards, the commitments and receivables under operating leases
are not included in the financial statements of the lessors and lessees (landlords and tenants) but need
only be disclosed as above.
A new standard, NZ IFRS 16 Leases, is coming into effect and will be compulsory for the first time in the
Group’s financial statements for the year ending 30 June 2020. The Group does not intend to adopt the
standard before that date.
The new standard does not impose material changes for lessors but completely changes the financial
reporting by lessees. It will require them to recognise the present value of the rental commitments over
the most likely term of the lease (a potentially longer period than the non-cancellable period used to
determine the commitments above) as a liability on their balance sheets. The liability will be offset by
an asset representing the right to use the properties. The liability and asset will be equal and opposite
only at the start of each lease and the reductions in their value over the terms of the leases will be
recognised on different bases. The right of use asset will be amortised on a straight line basis. Rather
than recognise the rental payments as expenses through profit or loss they will be split between partial
settlement of the liability and a notional interest expense component.
The standard provides a lease-by-lease option either to
restate the accounting from inception of each lease or
transition from implementation date of the standard
It is the Group’s current intention to apply full re-statement of all its leases.
The Group estimates, based on its current portfolio of leases, that at 30 June 2020 the lease liability will
be valued in the range of $10 - 12 million and that, in the year ending 30 June 2020, the replacement of
the rental expense by amortisation of the right of use asset and interest will
increase earnings before interest, tax depreciation and amortisation (EBITDA) by $1.5 - 1.7
million
increase interest $1.6m and
decrease trading profit before tax by approximately $0.1 million.
26
16 Intangible assets
Intangible assets consist of goodwill and other intangibles.
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.
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 of 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.
Key assumptions relate to the general economic outlook, the level of the new and used vehicle industries
and our business unit performance in this environment.
The discount rate used in completing the cash flow forecast to assess value in use was 8.9%
(2017: 11.3%).
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 2018. There was no indication of impairment
below their carrying amount. (2017: none)
2018 2017
Goodwill Goodwill
$000 $000
Balance at 1 July 2017 1,028 1,028
Impairment loss during the year - -
Balance at 30 June 1,028 1,028
Cost 1,028 1,028
Accumulated amortisation & impairment - -
Balance at 30 June 1,028 1,028
27
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.
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 is not held by the Group based on their respective ownership
interests.
Intra-group balances, and any income and expenses from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
All subsidiaries are 100% owned (2017: 100%), with the exception of Southpac Trucks Ltd which is 85%
owned (2017: 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 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 Motors Ltd,
Southern Autos – Manukau Ltd, Southpac Trucks Ltd, Stevens Motors Ltd, The Hawkes Bay Motor
Company Ltd, 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, South Auckland Ford Ltd, Southland Tractors
Ltd, Tower Motors (2012) Ltd, and Trucks South Ltd,
Non-controlling interest
The Company owns 85% of Southpac Trucks Limited. Its principal place of business is Auckland and it
operates branches and service agencies throughout New Zealand. Its summarised financial position at
balance date was as follows:
2018
$000
2017
$000
Shareholders’ equity 19,139 13,472
Current liabilities 86,368 52,580
Total equity and liabilities 105,507 66,052
Current assets 100,745 60,937
Non-current assets 4,762 5,115
Total assets 105,507 66,052
18 Investments
2018
$000
2017
$000
Shares in Motor Trade Finance Limited (MTF) 2,494 2,018
Other 3 30
Total investments 2,497 2,048
MTF shares are traded in a quoted but restricted market and are categorised as level two in the fair
value hierarchy.
Shares are carried at fair value with changes in value recognised through profit or loss.
28
Notes on funding
19 Capital management
The Group’s capital includes share capital, retained earnings and property revaluation reserve.
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 2017. 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 2018
or 30 June 2017.
29
20 Movements in equity
Share
capital
(Note 20)
$’000
Property
revaluation
reserve
$’000
Foreign
exchange
cashflow
hedge
reserve
$’000
Retained
earnings
$’000
Total
attributable
to share-
holders
$’000
Non-
controlling
interest
$’000
Total
equity
$’000
Balance at 30 June 2016 15,968 37,307 (797) 111,344 163,822 1,983 165,805
Dividends paid - note 22 - - - (13,078) (13,078) - (13,078)
Total transactions with
shareholders - - - (13,078) (13,078) - (13,078)
Profit for the year - - - 22,232 22,232 1,303 23,535
Other comprehensive income
Property revaluation reserve
Fair value movement - 7,414 - - 7,414 - 7,414
Transfer on sale of property - (255) - 255 - - -
Deferred tax - (9) - - (9) - (9)
Foreign exchange cashflow
hedge reserve
Fair value movement - - 671 - 671 118 789
Deferred tax - - (188) - (188) (33) (221)
Total comprehensive income - 7,150 483 22,487 30,120 1,388 31,508
Balance at 30 June 2017 15,968 44,457 (314) 120,753 180,864 2,021 182,885
Dividends paid - note 22 - (15,040) (15,040) (1,350) (16,390)
Total transactions with
shareholders - - - (15,040) (15,040) (1,350) (16,390)
Profit for the year - - - 24,985 24,985 2,107 27,092
Property revaluation reserve
Fair value movement - 5,431 - - 5,431 - 5,431
Transfer on sale of property - - - - - - -
Deferred tax - 108 - - 108 - 108
Forex hedge reserve
Fair value movement - - 733 - 733 129 862
Deferred tax - - (205) - (205) (36) (241)
Comprehensive income - 5,538 528 24,985 31,052 2,200 33,252
Balance at 30 June 2018 15,968 49,995 214 130,698 196,875 2,871 199,746
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 cashflow hedge reserve comprises the cumulative balance of adjustments to uncompleted
transactions that qualify as effectively hedged.
-
-
30
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 and
would share equally in any surplus on winding up
2018
$000
2017
$000
Share capital 15,968 15,968
Thousands
of shares
Thousands
of shares
Number of ordinary shares on issue 32,695 32,695
Weighted average number of ordinary shares on issue 32,695 32,695
22 Dividends
Dividends paid during the year
2018
$000
2017
$000
Date paid Cents per share
Final for the previous year 16 October 2017 31.0 10,136 8,828
Interim for the current year 16 April 2018 15.0 4,904 4,250
Total dividends paid and provided for in the financial statements 15,040 13,078
For details of the final dividend for the current year, see note 32.
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.
2018
$000
2017
$000
Total vehicle floorplan finance 61,386 54,709
31
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 are 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.
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 2018 was 3.25% (2017: 3.25%).
2018
$000
2017
$000
Deposits 21,588 18,017
Maximum amount of deposits on offer 30,000 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”.
2018
$000
2017
$000
Bank borrowing 41,550 7,800
Combined facility limits 56,500 56,500
32
26 Financial instruments
Financial instruments primarily comprise cash at bank, receivables, payables, credit contracts, forward
exchange contracts, shares in companies, borrowings and loans.
All financial instruments are recognised in the financial statements initially at fair value plus any directly
attributable transaction costs. Subsequent measurement is detailed under the accounting policy of each
specific financial instrument.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the
instrument. Financial instruments are derecognised if the Group’s contractual rights to the cash flows
from the financial instrument is cancelled, expires or if the Group transfers substantially all the risks and
rewards of the financial instrument to another party.
New standard
NZIFRS 9 – Financial instruments becomes effective for CMC for the reporting period beginning
1 July 2018.
This standard addresses the classification and measurement of financial assets, financial liabilities and
hedge accounting. Whilst requiring some changes to disclosure for the Group, adoption of the standard
is not otherwise expected to have a material effect.
Financial instruments by category
2018 2018 2017 2017
$000 $000 $000 $000
Fair value
through
profit or loss
Loans and
receivables
Fair value
through
profit or loss
Loans and
receivables
Assets
Cash & bank accounts - 10,251 - 8,060
Trade & other receivables - 57,410 - 33,780
Credit contracts - 5,760 - 8,118
Shares in companies 2,497 - 2,048 -
Financial derivatives foreign exchange 349 - - -
Financial
liabilities at
amortised
cost
Financial
derivatives
at fair value
Financial
liabilities at
amortised
cost
Financial
derivatives
at fair
value
Liabilities
Bank borrowings 41,550 - 780 -
At-call deposits 21,588 - 18,017 -
Trade & other payables 36,632 - 31,453 -
Vehicle floorplan finance 61,386 - 54,709 -
Credit contracts 5,804 - 8,193 -
Financial derivatives – foreign exchange - - - 513
27 Reconciliation of liabilities arising from financing activities
Start of year Cash flows
Non-cash
changes
End of
year
$000 $000 $000 $000
Bank borrowing - note 25 7,800 33,750 - 41,550
At call deposits - note 24 18,017 3,571 - 21,588
Vehicle floorplan finance - note 23 54,709 6,677 - 61,386
Total short term borrowings 80,526 43,998 - 124,524
Credit contracts - note 14
Short term 3,637 - (858) 2,779
Long term 4,556 - (1,528) 3,028
Total liabilities arising from financing
activities 88,719 43,998 (2,386) 130,331
33
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 represent 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 0.1% it would increase the annual
amount written off through profit or loss by $0.01m (2017: - $0.01m).
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. At each reporting date the specific rates were:
2018 2017
Bank overdrafts 5.45% - 11.00% 5.39% - 11.65%
At-Call Deposits 3.25% 3.25%
Bank facilities 2.87% - 3.00% 2.90% - 3.45%
The at-call 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 December 2018 to
March 2020 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 profit or loss and
equity by $0.631m per annum. (2017: $0.258m).
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, from banks and other financial institutions.
Financial liabilities in the form of At-Call 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
it 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.
34
28(c) Liquidity risk contd
The Group mitigates its funding risk by adopting prudent financial management practices (such as
closely monitoring its cash flows, 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 a cash flow hedge 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
2018
$000
2017
$000
Australian dollars (AUD 23.853m) 25,915 34,724
Euros (EUR 20.269m) 35,229 41,341
Total 61,144 76,065
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 2018 or 30 June 2017.
29 Financial derivatives - foreign exchange
Foreign exchange asset / (liability)
2018
$000
2017
$000
Opening balance (513) (1,302)
Movement during the year through
Other comprehensive income 862 789
Profit or loss - -
Closing balance 349 (513)
Foreign currency transactions are translated into the functional currency using the actual exchange rate
at the date of the transaction.
Forward exchange contracts are recognised initially at fair value.
Foreign exchange contracts outstanding at reporting date are adjusted to fair value (marked to market).
The market rates used at reporting date to calculate this adjustment are supplied by the bank through
which the contracts were established.
Forward rate contracts are used to hedge against exchange rate fluctuations. At the inception of a
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.
Adjustments that qualify as being effectively hedged are recognise
d through the statement of
comprehensive income and form the foreign exchange cashflow hedge reserve. Those that do not so
qualify are recognised through profit or loss.
Refer note 28(d) for additional details of foreign currency risk management.
35
Other notes
30 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:
2018
$000
2017
$000
Short term benefits (including salary, incentives, profit share, use of motor
vehicle and other benefits) 7,504 7,502
Post-employment benefits (including contributions to retirement savings
schemes) 238 263
Share related benefits - -
Total remuneration benefits 7,742 7,765
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
call debt securities - note 24 - on the same terms and conditions as all other depositors.
Mr J P Gibbons is a director of the Motor Trade Association. Group operating subsidiaries are members
on normal commercial terms and conditions.
Also see remuneration of Directors on page 43 and remuneration of employees on page 44.
The CMC Group Workplace Savings Scheme
The Company is the sponsoring employer of the CMC Group Workplace Savings Scheme which is a
defined contribution scheme. It is categorised as an employer-related restricted workplace savings
scheme registered under the Financial Markets Conduct Act 2013 (FMCA).
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 $0.062m (2017: $0.062m) during the year.
The Scheme holds 162,196 (2017: 162,196) ordinary shares in the Company. The Company and MTF
are related parties to the Scheme and FMCA limits investments in related parties to 5% of total assets.
At 30 June 2017 the Scheme held 835,000 perpetual preference shares in MTF but in December 2017
the Trustee sold those shares in the open market in order to bring the Scheme’s holding in in-house
assets below the FMCA limit.
All transactions between key management personnel, the Scheme and Group companies were in the
normal course of business and provided on arm’s length commercial terms.
31 Contingencies
2018
$000
2017
$000
Contingent assets
Contingent liabilities
-
-
-
-
WorkSafe NZ is taking legal action against Agricentre South Limited (Agricentre), a wholly owned
subsidiary, in relation to an accident in April 2016 at the workplace of a customer involving a tractor
owned by Agricentre.
As the legal process, which was initiated in March 2017, has not yet been finalised, the extent to which
Agricentre may be held responsible for the accident remains uncertain. Provision has been made in the
consolidated financial statements to cover the most likely extent of penalties the Court may impose.
32 Events after the reporting date
On 23 August 2018 a dividend was declared of 35 cents per share to be paid fully imputed on
15 October 2018 representing a total payment of $11.4 million.
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 CompanyLimited and its
Subsidiaries (the“Group”) on pages 9 to 35 which comprise the consolidated statement of financial position as at
30 June 2018, 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
financial position of the Group as at 30 June 2018 and its financial performance and cash flows for the year then
ended in accordance with New Zealand Equivalents to InternationalFinancial 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 Audit 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 (Revised) Code
of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no other relationship with, or interests 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.
Why the matter is significantHow our audit addressed the key audit matter
Inventory valuation and existence
As at 30 June 2018, inventory of $181m is held across
multiple locations. There are a number of risks that can
have a material impact on the inventory balance in the
consolidated financial statements, principally:
•the assessment of net realisable value of inventory,
which for used vehicles in particular can fluctuate as
a result of general economic conditions, new vehicle
sales and incentives, price paid on trade in and the
age, condition and configuration of vehicles;
•provision requirements for slow moving inventory as
a result of the factors noted above; and
•that inventory may not exist at year end due to either
fraud or error.
The inventory accounting policy is disclosed in note 8
in the consolidated financial statements.
We have:
•tested the cost of inventory purchases by reference
to a sample of supplier invoices or trade sale and
purchase agreements;
•assessed the risk around net realisable value of
inventory by comparing the carrying value of a
sample of vehicles held at balance date to post year-
end sales, or if not sold, the carrying value to used
car prices of similar product currently available for
sale in the market place;
•performed substantive and analytical procedures on
the Group’s vehicle and parts inventory reports, to
identify any issues in respect of valuation and slow-
moving inventory;
•confirmed the inventory balances funded by bailment
arrangements with finance companies; and
•attended year end stock takes at all dealerships and
observed the existence of new, used and
demonstrator vehicles, including those financed
through floor plan.
36
Why the matter is significantHow our audit addressed the key audit matter
Accuracy of revenue
•The Group has revenue of $904m. There are a
number of factors that could affect this reported
amount, including:
•Revenue recognition policies are appropriate and
consistently applied overall revenue transactions;
and
•Payment and delivery of the sold motor vehicles may
not have occurred before year end which would
result in revenue being overstated.
The revenue recognition accounting policy is disclosed
in note 1 in the consolidated financial statements.
We have:
•evaluated the Group’s recognition of revenue by
assessing the procedures and key controls that
Group management has in place to ensure that
appropriate revenue recognition policies have been
consistently applied; and
•performed in relation to sales cut off, detailed
substantive testing on sales recognised either side of
year end 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. This testing included
obtaining evidence of post year end receipts which
provided evidence as to validity of accounts
receivable at the year end.
Other Information
The Directors are responsible for all the other information. The other information comprises the Facts at a Glance,
Directors’ report, Chief Executive’s Report, Group Dealerships, Governance Statement, Disclosures as required
by the Companies Act 1993 and Disclosures as at 30 June as required by the New Zealand Stock Exchange
Listing Rules but does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
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 issued by the New Zealand Accounting Standards Board, and
for such internal control as those charged with governance determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using 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 consolidated financial statements is
located on the External Reporting Board’s websiteat: https://www.xrb.govt.nz/standards-for-assurance-
practitioners/auditors- responsibilities/audit-report-1/
37
Restriction on use of our report
This report is made solely to the Group’s shareholders, as a body. Our audit work has been undertaken so that
we might state to the Group’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 Group and its shareholders, as a body, for our audit work, for this report or
for the opinion we have formed.
Grant Thornton New Zealand Audit Partnership
Michael Stewart
Partner, Audit
Grant Thornton New Zealand Audit Partnership
20 September 2018
Level 3, Grant Thornton House
134 Oxford Terrace
PO Box 2099
Christchurch 8140
New Zealand
T +64 (0)3 964 6824
F +64 (0)4 474 8509
38
39
Governance statement
CMC is a public company with its shares listed on the New Zealand Stock Exchange operated by NZX
Limited.
The board of directors 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 2017 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 2018
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
shares in CMC. All share trades by directors are reported to the market.
2. Board composition and performance
To ensure an effective board, there should be a balance of independence, skills, knowledge,
experience and perspectives.
The constitution specifies that there should be between five and seven directors. The Board contains a
mix of independent, executive and non-executive directors.
As vacancies arise, new Directors are identified by the nomination committee of the board and may
then be appointed by the board. Directors may also be nominated by shareholders. Directors who
have been appointed by the Board during the year must stand for election by the shareholders at the
next general meeting as must anyone nominated as a director.
The constitution specifies that at least one third of the directors must retire each year. Directors who
retire by rotation, and who remain eligible, may stand for re-election.
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 full board for final resolution. There are three standing
committees with specific written terms of reference.
40
Audit & Compliance Committee Members of the committee have relevant financial qualifications
and/or commercial experience. The Audit & Compliance Committee met five times during the reporting
year.
Comprising F R S Clouston (Chairman), D M Wood and A J Waugh, 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 Company;
maintain the independence of the external Auditor and review the external audit functions
generally; and
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 statutory auditor to complete a review of all dealerships every year for
maintenance of the standard of accounting practices and for compliance with the internal policies and
procedures. The Internal auditor regularly reports to the audit and compliance committee.
Remuneration Committee J P Gibbons, (Chairman) and F R S Clouston make up the remuneration
committee the purpose of which is to ensure that the Directors and senior executives are fairly and
reasonably rewarded for their individual contributions. The Remuneration Committee met once during
the reporting year. CMC’s policy is to review remuneration levels for directors and senior staff every
two years. Directors’ fees are being reviewed this year.
Management and director remuneration is disclosed in the annual report. CMC 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 the nominations
committee. During the year, the Nominations Committee started the process of identifying a suitable
replacement in anticipation of the upcoming retirement of a member of the Board.
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 that 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-li ne staff and experience
operations at first hand. Additional ad hoc meetings are held when necessary, sometimes by telephone
conference. During the year, the Board held ten meetings, eight in person and two by telephone
conference.
The board of directors issues three reports annually - a half year report, a preliminary result and a full
year report - to provide shareholders with the information they need to monitor their investment in the
Company. The CMC reports are designed to deliver that information in a clear, 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.
A condition of listing is that CMC complies with the listing rules issued by the Stock Exchange. These
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 Stock Exchange is generally
considered adequate notice. However, CMC has a policy of also communicating directly with its
shareholders whenever practical.
41
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 CMC’s annual reports including full details of
executive directors. Remuneration of other staff is also disclosed in the $10,000 bands specified in
company 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
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 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. 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,
workers, contractors and other visitors to its facilities. A group-wide workplace safety management
programme is operated with a health and 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 reports, considers health and safety issues at each of its meetings and experiences
first-hand the practicalities 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 twice a year and the
auditor attends Committee meetings at least three times a year. 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 primary 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.
42
8. Shareholder rights and relations
The Board should respect the rights of shareholders and foster relationships with shareholders that
encourage them to engage with the issuer.
The Board of Directors acts in a stewardship role on behalf of all shareholders. It approves the strategic
direction of the Company, 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 appointment of an external statutory auditor and
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 that specifies the administration of the
Company and the relationship between shareholders. Copies of the constitution are available from the
Company or can be downloaded from the Companies Office website.
Computershare Investor Services Limited maintains the register of shareholders.
43
Disclosures as required by the Companies Act 1993
(a) Directors’ 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:
J P Gibbons Director of Motor Trade Association and MTA Group Investments Limited.
F R S Clouston Chairman of Titan Cranes Limited and Titan Group Limited.
D M Wood Chairman of Mercy Healthcare Auckland Limited.
A J Waugh Director of Fonterra Co-operative Group Limited and Seeka Limited.
(b) Remuneration of directors
Remuneration and all other benefits received by the directors who held office during the year ended 30
June 2018 are disclosed pursuant to section 211(1)(f) of the Act as follows
Directors’ fees
2018
$
Total remuneration
2018
$
Total remuneration
2017
$
J P Gibbons (Chairman) 84,500 109,134 149,134
F R S Clouston 56,650 56,650 56,650
G D Gibbons - 1,148,454 1,045,848
S B Gibbons - 287,060 270,781
M J Newman - 883,053 893,238
D M Wood 51,500 51,500 51,500
A J Waugh 51,500 51,500 51,500
Remuneration for the Chairman, additional to directors’ fees, include the provision of a motor vehicle.
F R S Clouston was elected Chairman of the Audit & Compliance Committee in November 2013 and
received additional directors’ fees commensurate with the 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 2018 as disclosed above. No other employee of the
Company, or of any Group subsidiary, retains or receives any remuneration or other benefits as a direct
or.
The remuneration package of the Group Chief Executive (who is also a director) has in the year to 30
June 2018 a fixed component (including salary, motor vehicle and superannuation contributions) of
$415,134. (2017: $415,134) and an annual short term incentive component based on the current year’s
trading profit performance of $733,320 (2017: $630,714). There are no long term incentives or share
schemes in place.
Dealer Principals/CEOs of subsidiary companies receive a profit performance component o
f their
remuneration based on their dealership profit. The remuneration received by M J Newman and S B
Gibbons as executives is shown for the twelve months to 30 June 2018 and includes a short term profit
performance component of $618,422 and $108,229 respectively (2017: $628,607 for M J Newman and
$97,450 for S B Gibbons).
In accordance with clause 28.4 of its constitution, the Company may provide for directors retirement
benefits. The total provided at 30 June 2018 was $253,500 (2017: $253,500). Directors appointed after
1 May 2004 are not eligible to receive a retirement allowance unless authorised by shareholder resolution.
As permitted in 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.
44
(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.
(d) Share dealings by directors
Directors have disclosed under Section 148(2) of the Act the following acquisition of a relevant interest in
shares in the Company between 1 July 2017 and 31 August 2018.
Director
Number of shares
acquired/ (disposed)
Date of transaction
Price per
share
Type of interest
M J Newman 5,000 23 August 2017 $7.92 Beneficial
J P Gibbons (24,000) 16 May 2018 Off-market Non-beneficial
Directors disclosed no other transactions in the shares of the Company during the period.
(e) Composition of the Board
All 7 of the Directors and the 13 officers (direct reports to the Group Chief Executive) at the reporting date
were male (2017: 7 Directors male, 13 officers, male).
(f) Remuneration of employees
During the year to 30 June 2018 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 Number of employees Remuneration Number of employees
$ 2018 2017 $ 2018 2017
100,000 - 110,000 45 29 290,001 - 300,000 1 1
110,001 - 120,000 26 22 310,001 - 320,000 2 -
120,001 - 130,000 15 21 320,001 - 330,000 - 1
130,001 - 140,000 10 9 350,001 - 360,000 - 1
140,001 - 150,000 13 10 360,001 - 370,000 1 1
150,001 - 160,000 9 8 380,001 - 390,000 - 1
160,001 - 170,000 8 4 400,001 - 410,000 - 1
170,001 - 180,000 7 5 420,000 - 430,000 1 -
180,001 - 190,000 4 4 460,001 - 470,000 - 1
190,001 - 200,000 5 9 470,001 - 480,000 2 1
200,001 - 210,000 5 5 480,001 - 490,000 - 1
210,001 - 220,000 4 2 490,001 - 500,000 1 -
220,001 - 230,000 1 4 500,001 - 510,000 1 -
230,001 - 240,000 2 1 520,001 - 530,000 1 -
240,001 - 250,000 2 1 560,001 - 570,000 - 1
250,001 - 260,000 - 3 570,001 - 580,000 1 1
260,001 - 270,000 2 - 1,160,001 - 1,170,000 - 1
270,001 - 280,000 - 2 1,740,001 - 1,750,000 1 -
280,001 - 290,000 1 1
Total 171 152
45
Disclosures as at 30 June as required by the New Zealand Stock Exchange Listing
Rules
(a) Director independence
The following directors were Independent Directors at reporting date:
F R S Clouston
A J Waugh
The following directors were not Independent Directors at reporting date:
J P Gibbons
G D Gibbons
D M Wood
M J Newman
S B Gibbons
(b) Directors’ relevant interests at 30 June 2018
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
2018 2017 2018 2017 2018 2017
G D Gibbons 1,737,849 1,737,849 1,300,825 1,300,825 104,250 104,250
J P Gibbons 1,421,081 1,421,081 1,035,849 1,059,849 513,270 513.270
S B Gibbons 1,910,578 1,910,578 176,087 176,087 6,151 6,151
M J Newman 20,000 15,000 - - - -
D M Wood 20,000 20,000 168,426 168,426 578,120 578,120
A J Waugh 4,450 4,450 - - 376 376
(c) Substantial security holders
As required by section 26 the Securities Markets Act 1988, the substantial security holders as at 31
August 2018 (from whom a notice under the Act had been received and the date of each such notice)
were as follows:
Date Shares %
P C Gibbons
27 March 2017 2,232,341 6.83
J P Gibbons
4 October 2013 2,646,084 8.09
S B Gibbons
16 September 2010 2,031,263 6.21
G D Gibbons
27 March 2017 1,865,032 5.70
Issued and fully paid capital as at 30 June 2018 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 the Securities Markets Act 1988 (sections 4 & 5). No shares
have been counted more than once in the determination of Substantial Security Holders.
A number of shares identified under JP Gibbons are also jointly held or have trustees in common with
NL, BR Gibbons and PL Bennett.
A number of shares identified under SB Gibbons are also jointly held or have trustees in common with
AD Gibbons and LB Rogerson.
A number of shares identified under GD Gibbons are also jointly held or have trustees in common with
AK Gibbons, SD & DM Wood, RD Gibbons, AD & GV Beaumont, DD & BW Harrison and GD &
IW Watson.
46
(d) Distribution of shareholders and shareholdings
This distribution information reflects the position as at 31 August 2018.
Number of shareholders Number of shares
Number % Number %
1 - 999 276
17.3
136,055
0.4
1,000 - 9,999 987
61.7
3,178,194
9.7
10,000 - 99,999 277
17.3
6,796,817
20.8
100,000 - 999,999 56
3.5
17,386,671
53.2
1,000,000 + 4
0.2
5,196,885
15.9
Total
1,600 100.0 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
%
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 18/04/16 13.0 55.6 9.0 130.0 185.6 29.9
17/10/16 27.0
2016 $6.20 18/04/16 13.0 45.8 8.0 45.0 90.8 15.8
19/10/15 20.0
2015 $5.75 20/04/15 13.0 48.7 9.3 55.0 103.6 19.9
20/10/14 22.0
2014 $5.20 04/04/14 13.0 47.3 12.0 125.0 172.3 43.6
21/10/13 21.0
Note: Yields are calculated on the share price at the beginning of each year. The share price at 30 June
2013 was $3.95.
47
Fifty largest shareholdings as at 31 August 2018
Shares %
AD & SB Gibbons & LB Rogerson 1,677,507 5.1
Florence Theodosia Gibbons 1,287,037 3.9
Peter Craig Gibbons (Trust) 1,173,642 3.6
Peter Craig Gibbons 1,058,699 3.2
JP & BR Gibbons & PL Bennett 683,550 2.1
NL, BR & JP Gibbons & PL Bennett (Estate RC Gibbons Deceased) 664,006 2.0
RJ Field & AJ Palmer 600,000 1.8
Graeme Durrad Gibbons 564,207 1.7
MI & C Louisson & RM Carruthers 563,777 1.7
PL & LC Bennett & JP Gibbons 543,794 1.7
BR & CM Gibbons & PL Bennett 528,971 1.6
Diana Durrad Harrison 523,628 1.6
Gillian Durrad Watson 507,619 1.6
Robert Durrad Gibbons 507,480 1.6
Sara Durrad Wood 506,919 1.6
Alison Durrad Beaumont 497,004 1.5
JP & DM Gibbons & PL Bennett 492,055 1.5
MA Gibbons, AK Cook & PJ Clark 474,348 1.5
JG, J & CG Harrison 458,317 1.4
Citibank Nominees (New Zealand) Limited 381,734 1.2
Nancy Lucy Gibbons 375,710 1.1
May Alice Gibbons 355,196 1.1
RD Gibbons, SD Wood & GD Gibbons 354,810 1.1
CG, AE & JG Harrison 335,244 1.0
JG, KS, SKE & J Bale 324,244 1.0
Hart Capital Partners Ltd 312,895 1.0
RB & JG Tait & IJ Craig 310,000 1.0
AE Romans 303,661 1.0
Rebecca Hope Wilson 300,478 0.9
Leanne Barnes Rogerson 281,410 0.9
SH Majors, RH & SJ Wilson 268,556 0.8
AD & GV Beaumont & GD Gibbons 259,203 0.8
David Grindell 254,000 0.8
K Enright & C Louisson 251,876 0.8
CM Louisson & N Tarsa 241,804 0.7
Stuart Barnes Gibbons 233,071 0.7
GD & AK Gibbons & SD Wood 209,203 0.6
Maldon Hector Whitwell 195,000 0.6
T A Pegler 188,306 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
CMC Workplace Savings Scheme Trustee Ltd 162,196 0.5
DD & BW Harrison & GD Gibbons 159,203 0.5
GD & IW Watson & GD Gibbons 159,203 0.5
SD & DM Wood & GD Gibbons 159,203 0.5
Judith Gibbons Bale 147,929 0.5
HA Louisson, CJ Warren & JA Piper 140,870 0.4
MC Durrentijdt, J T vanGaal & KD Trustees Ltd 140,000 0.4
I F Michie 135,730 0.4
A F Peake 132,480 0.4
Total of fifty largest shareholdings
20,749,980 63.6
Total shares on issue
32,694,632 100.0
A number of the registered shareholders may hold shares as nominee(s) on behalf of other parties.
48
Today the CMC Group’s core business is the operation of twelve Ford
dealerships each holding a franchise in its own right from the Ford
Motor Company of NZ Ltd. Seven of these dealerships also hold
Mazda franchises. CMC, through Southpac Trucks, is the NZ
distributor and retailer of Kenworth and DAF heavy duty trucksand in
Southland/Otago, Agricentre South retails New Holland, Case IH and
Kubota tractors and equipment.
The Colonial Motor Company originated from William Black’s coach-
building 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.
The ninestoried building at 89 CourtenayPlace, 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.
Forthe 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 1974 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 and now 2017 have all seen 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 was the Ford NZ decision to first sell its NZ tractor distribution
to Norwoods and then later to close its distribution of heavy trucks in
New Zealand.
Most of the CMC company 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.
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.
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.
More recent additions to CMC include Case IH tractors in Southland
and Otago, Suzuki motorbikes in Christchurch and Masterton,
Hyundai cars and Isuzu light commercials in New Plymouth, Nissan
cars in Hastings and Kia cars in Nelson. In 2014, Jeff Gray BMW and
MINI with four dealerships in Christchurch, Wellington, Palmerston
North and Hastings were added but the businesses were sold in
November 2016. A new dealership was established in South
Auckland, selling Citroen, Peugeot and Isuzu light commercials.
The current major shareholdings in CMC are with individual
decendants 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
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
100
TH
ANNUAL REPORT 2018
The Directors of The Colonial Motor Company Limited present its 100
th
annual report covering the year to 30 June 2018.
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 4 384 9734 or e-mail cmc@colmotor.co.nz.
The report will also be available for download from the Company’s
website www.colmotor.co.nz
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.
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