The Colonial Motor Company Limited/Announcement

2020 Annual Report

Annual Report30 September 2020CMOConsumer Discretionary

102
nd
Annual Report 2020

BOARD OF DIRECTORS
J P (Jim) Gibbons, Chairman
Graeme D Gibbons
Matthew J Newman
Stuart B Gibbons
Ashley J Waugh
John W M Journee

CHIEF EXECUTIVE
COMPANY SECRETARY
FINANCE MANAGER
E-BUSINESS SYSTEMS

Graeme D Gibbons
Jack G Tuohy (acting)
Paul Stephenson
Alexander P Gibbons

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
Facsimile (04) 801-7279
E-mail address cmc@colmotor.co.nz
Website www.colmotor.co.nz

PROSPECTIVE DATES FOR 2021
Interim Half Year Report Late February
Interim Dividend 19 April
Preliminary Full Year Report Late August
Annual Report Late September
Final Dividend 18 October
Annual Meeting 5 November

Shareholder enquiries can be addressed to the Registered Office or directly to the Share Registry.

The Company is able to send shareholders e-mail notifications of the announcement of its preliminary half
year (in February) and full-year results (in August). To register for this service please send an e-mail to
cmc@colmotor.co.nz from the e-mail account you wish to receive the notifications with “Preliminary Results”
in the subject line.

1

Notice of 102
nd
Annual Meeting

Notice is hereby given that the 2020 annual meeting of shareholders of
The Colonial Motor Company Limited
will be held at
The Harbourside Function Venue, 4 Taranaki Street, Wellington
on Friday, 6 November 2020 starting at 12:00 midday

BUSINESS
1. Chairman’s introduction
2. Address from the Chairman
3. Shareholder discussion
4. Resolutions
To consider and, if thought fit, to pass the following resolutions
(see explanatory notes on the next page):
1. To re-elect Stuart Barnes Gibbons as a director of the Company
2. To re-elect Graeme Durrad Gibbons as a director of the Company
3. 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

A light lunch will be served following the meeting.

LOCATION

2

Explanatory Notes – relating to the annual meeting
Voting
All voting at annual meetings must be conducted by poll rather than by show of hands. Procedures for voting, the
appointment of proxies and representatives, vote counting and the announcement of the results are applied and disclosed
in detail.
Proxies and representatives
If you choose not to attend the meeting, a form is enclosed for you to complete to appoint a proxy or corporate
representative to vote on your behalf. Detailed guidance is provided on the form on how to complete it. Further copies
of the form may be obtained from the Company or downloaded from our website.
Resolutions
Each of the resolutions will be considered as a separate ordinary resolution. To be passed, an ordinary resolution
requires a simple majority of votes of shareholders entitled to vote and voting. Each share in the Company carries one
vote.
The Board supports passing all of the resolutions.
Re-election and election of directors
The Listing Rules require that a director must not hold office (without re-election) past the third annual meeting that
follows the director’s last election or 3 years, whichever is longer.
A director appointed by the Board must not hold office (without election) past the next annual meeting following the
director’s appointment.
Resolution 1
Stuart Barnes Gibbons was last re-elected as a director at the 2017 annual meeting. He is eligible and offers himself for
re-election.
Stuart was the Chief Executive / Dealer Principal of Stevens Motors Ltd until 1 July 2020 when the dealership was merged
with Capital City Motors Ltd. He is managing the property project for the new Lower Hutt hub facility and working on the
successful transition with the management team of the merged dealership.
If re-elected, the Board has determined that Stuart Gibbons will not be an independent director.
Resolution 2
Graeme Durrad Gibbons was last re-elected as a director at the 2018 annual meeting. He is eligible and offers himself
for re-election.
Graeme took up the role of Chief Executive in 1990 and became a director of the Company in 1995. He is a Director
and Chairman of all of the Company’s subsidiaries and was previously a Director of Motor Trade Finances Limited and
Chairman of its Audit Committee.
Resolution 3
Under section 200 of the Companies Act 1993, the auditor is automatically re-appointed each year unless ineligible or
replaced.
The fee paid to the auditor is disclosed in the annual report each year.

3

Facts at a glance

2016 2017 2018 2019 2020
Restated
Revenue ($000) 867,237 854,764 904,034 909,002 754,922
Trading profit after tax (excluding non-trading Items) ($000) 19,058 21,879 24,670 21,989 17,349
Profit after tax attributable to shareholders ($000) 21,330 22,111 24,909 21,830 21,828
Return on average shareholders’ funds
- trading profit after tax 12.2% 12.8% 13.1% 10.9% 8.0%
- profit attributable to shareholders 13.7% 12.9% 13.3% 10.8% 10.0%
Trading margin 2.2% 2.6% 2.7% 2.4% 2.3%
Earnings per share - trading profit after tax 58.3c 66.9c 75.5c 67.3c 53.1c
- profit attributable to shareholders 65.2c 67.6c 76.2c 66.8c 66.8c
Dividend per share 40.0c 44.0c 50.0c 45.0c 32.0c
Total dividends for the year ($000) 13,078 14,386 16,347 14,713 10,462
Shares on issue at reporting date 32.695m 32.695m 32.695m 32.695m 32.695m
Current ratio 1.5 1.5 1.4 1.4 1.5
Shareholders' equity as a percentage of total assets 52.0% 54.6% 48.3% 51.6% 59.2%
Net tangible asset backing per share $4.66 $5.15 $5.60 $6.02 $6.60
(after final dividend is paid)

Year’s 2016 to 2019 have been restated following the adoption of NZ IFRS 16 – Leases. See note 33 for more details.

4

Directors’ report
Your Directors have pleasure in presenting the 102
nd
annual report and audited consolidated financial statements of The
Colonial Motor Company Limited (CMC or Company) and its subsidiaries (Group) for the year ended 30 June 2020.
Revenue and profit
Revenue for the year was $754.9m. This is a 17% decrease on the previous year’s $909.0m reflecting the impact of the
Covid-19 lockdowns in the second half of the year and a general easing of the motor vehicle market.
The trading profit after tax for the year was $17.3m, down 21% 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 movements. It is also the reference point used by the
Board when considering dividends.
Profit for the year attributable to shareholders, was unchanged at $21.8m. This total profit includes a non-cash deferred
tax gain of $6.6m. This arises due to the legislated change to allow tax deductibility of depreciation on buildings as part
of the Government’s response to the Covid crisis and reverses a deferred tax loss of $6.4m recorded when deductibility
of building depreciation was ceased in 2010.
The analysis of the impact of the Covid crisis on the Group’s financial position at 30 June 2020 is covered on page 14.
All of the Group’s trading subsidiaries applied for and received the initial Government wage subsidy, receipt of which is
recorded in ‘other income’.
Statement of financial position
Total assets dropped slightly to $384.2m at year end (2019: $402.8m). Driven primarily by a reduction in inventory, current
assets were down by $32.2m. Total assets now includes $13.1m in respect of right of use assets held under leases.
The annual independent revaluation of the Group’s property brought about an increase in the revaluation reserve of $6.5m
(2019: $7.0m). Capital expenditure was focused on developing new and upgrading existing facilities in Cromwell,
Wanaka, Lower Hutt and South Auckland. At reporting date shareholders’ equity was $227.3m (2019: $207.8m).
Dividends
Dividends paid in respect of this year will total 32.0 cents per share (2019: 45.0 cents per share). Due to the uncertainty
caused by the Covid-19 pandemic, the proposed interim dividend of 15.0 cents per share was cancelled but a full year
dividend of 32.0 cents per share will be paid on 5 October 2020. The dividend will carry the maximum level of imputation
credits. The value of the distributions for this year will be $10.5m (2019: $14.7m) representing 60% (2019: 67%) of the
trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 3.
Directors
The independent Directors at 30 June 2020 and the date of this report were A J Waugh and J W M Journee.
The revised listing rules issued by NZX last year specify that a director must not hold office (without re-election) past the
third annual meeting following the director’s appointment or three years, whichever is longer. On that basis, the director
to retire this year is S B Gibbons. He is eligible and is seeking re-election at the forthcoming annual meeting. In order to
maintain the Company’s policy of rotating one-third of directors annually, G D Gibbons is eligible and is seeking re-election
at the annual meeting.
Director Fees
Non-Executive Directors took a voluntary reduction in fees of 20% during the April Covid-19 lockdown.
It has been the Board’s practise to review the fees paid to Directors, in total and to individuals, every two years. A review
was due this year but has been postponed for 12 months in recognition of the current economic environment.
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 50 to 55. A separate Governance Statement
is provided on pages 46 to 49 and a report on the CMC Group strategic direction on page 5.
Auditor
Michael Stewart, our audit partner at Grant Thornton, retires by way of ‘auditor rotation’ at the conclusion of the 2020
Annual Meeting.

For the Directors
24 September 2020

J P Gibbons A J Waugh
Chairman of the Board Chairman of the Audit & Compliance Committee

5

CMC Group strategic direction
Management of capital resources
The Group has a strong balance sheet, with significant shareholder equity and very few long term financial commitments.
The major assets on the balance sheet are property and inventory, with property funded by retained earnings and
inventory funded by short term borrowing (bank borrowing, at call deposits and bailment). There is minimal goodwill.
The Group owns most of its key operational properties. The Group does not have investment properties as such, as all
of the properties are occupied or intended to be occupied by the operational business units of the Group. Ownership
brings greater flexibility when tailoring facilities to the Group’s particular requirements. It provides security of tenure whilst
conversely enabling the Group to sell and relocate as needs arise without the constraints of a long term lease.
The Group seeks to pay regular dividends calculated at 60 - 70% of trading profit. The dividends have the maximum
imputation credits available to New Zealand shareholders. The remaining profit is reinvested in the business, either for
controlled growth or maintaining and reinvesting in the quality of the existing assets.
This investment or reinvestment may be in the form of establishing or acquiring a dealership business or in developing a
new property for use by a dealership or refurbishing and upgrading an existing dealership facility.
By adopting an approach to capital management of;
- paying 60 - 70% of trading profit as dividend
- not overly gearing up the balance sheet by taking on significant long term debt
- not going to the shareholders for more capital
the Group is able to provide controlled growth for shareholders without shareholder dilution.
Operational Model
CMC is the parent company for a group of motor vehicle dealerships – the success of these dealerships is CMC’s
lifeblood.
The CEO’s (Dealer Principals) of our subsidiary companies operate within a financial and operational mandate but have
wide discretion and local autonomy. Their role involves balancing the often conflicting demands of the franchisor,
customers, employees and profitability.
We consider each dealership business individually and the need for reinvestment and growth opportunities available.
The Group balances the need to change and adapt with an awareness that it has specific areas of expertise. The
operational expertise revolves around the franchise business model, as a franchisee in a local market area or on a
national basis. In this model the franchisor supplies the product (including Electric Vehicles in the near future) and brand
positioning, with the franchisee concentrating on promoting the brand and selling the product and service to the customer.
The model brings its own unique challenges and opportunities.
As a response to, and to enable success in a highly competitive and fragmented market place, particularly in metropolitan
areas, we have been moving to a ‘hub and spoke’ model. Here the main dealership facility, which encompasses all the
business’s array of activities – new and used vehicle sales, parts and service, is complemented by “service only” facilities
in customer convenient locations. This model is operational in South Auckland and is being introduced to greater
Wellington.
To be successful and grow a dealership, or establish a new one, we need to have management strength and depth and
a franchise opportunity that fits. Where we have existing property, or can provide a property solution, that enhances our
ability to take action. Ideally, we will grow by representing a new franchise partner in a number of locations rather than
as a one off.
With Southpac Trucks we have expanded over time from a small base by increasing the market share of the Kenworth
and DAF brands in a growing heavy truck industry which brings growing parts and service opportunities for the business
and their network of independent parts and service dealers.
The location of our dealerships span all of New Zealand and range from small to large, from single to multiple brands.
The major brands with significant representation are; light vehicles - Ford and Mazda; heavy trucks - Kenworth and DAF;
tractors - New Holland and Case IH.

6

Chief Executive’s report
This year has been challenging to a degree never envisaged or imagined. In our half year report on 19 February the
Chairman commented that “the current coronavirus outbreak had the potential to impact on revenue and profit”. The
unfolding of the Covid-19 crisis presented a ‘perfect storm’ that effectively stopped the world economy and New Zealand
in its tracks at enormous cost in almost every walk of life.
We are an employment centric business where wages are by far our most significant cost of operating and essentially all
our major costs are fixed in the short term. Nearly all of our dealerships were closed during lockdown, so turning off the
revenue tap had potentially catastrophic consequences. In our case, the short term panacea of the ‘band aid’
Government wage subsidy enabled our dealerships to maintain employment over what proved to be a traumatic three
months. The industry we operate in was down 90% year-on-year in April and down 51% in the March to May period.
During the lockdown period an exhaustive amount of effort went into exploring any and every way we could possibly get
back to business at any level. Even our two dealerships, that were significantly involved in servicing for essential
business, had to battle through a maze of bureaucracy to find a way they could ‘safely’ deliver that essential support. It
is a testament to the leadership and staff in the dealerships that they quickly adapted to the immediate constraints of
successfully operating within the various Covid levels. Consequently, we not only ‘lived to tell the tale’ but this put us in
a position to be able to capture the post-lockdown bounce back in the June and July period.
None of us are under any illusion that the so-called recovery in these past few months is anything but a short term
bounce. The real world economy we planned for back in April and May is out there and will present a challenging
environment going into 2021.
Our two primary light vehicle brands have struggled with market share in the passenger/SUV space. Mazda has
determined internationally to elevate their brand and not compete in the lower price market segments their products form
part of. In light commercial, Ford’s Ranger and Transit continue to go from strength to strength and are the cornerstone
of the Ford brand. However, despite Ford Focus being acclaimed as ‘NZ Car of the Year’ in 2019, Ford has struggled to
have the ‘right product at the right price’ in a passenger/SUV marketplace that is full of aggressive brands.
Southpac Trucks
The launch of the new Euro6 DAF truck range has been a major mission for the team at Southpac Trucks. These trucks
have introduced an extensive array of new ‘safety’ technology and required a top to bottom, in-depth education and
training programs at every level – from driver training to technicians over the length and breadth of New Zealand. The
Euro6 engine technology introduces a higher level of ‘clean and green’ than is required in New Zealand. The Team at
Southpac is dedicated to providing parts and service backup for the lifetime support of the products they sell.
Dealerships
As outlined at the half year, we have had a pipeline of dealership facility projects to complete. Many have been at their
peak activity this year, both during and post-lockdown.
The creation of a new Wellington region hub in Lower Hutt had its genesis when we sold the property in Taranaki Street
in 2015. It is now 2020 and we will exit this traditional home of the dealership next month. The lockdown has contributed
and made what was a transition plan with ‘wriggle room’ into a case of how long do we have to live in portacoms and
temporary off-site locations. On 1 July we merged the two dealerships – Capital City Motors and Stevens Motors –
bringing the ‘behind the scenes’ part of the business together. The physical bringing together of the Teams in the new
Lower Hutt hub facility will happen progressively over the October to December period, although even then completion
of some of the facility will roll over into 2021. Matthew Carman, CEO and Dealer Principal of Capital City Motors, is now
the CEO and DP of the combined business. Stuart Gibbons, the CEO/DP of Stevens Motors since 2002, is managing
the property project and working on the successful transition with the management team of the merged dealership.
In Tuam Street, Christchurch the project to incorporate the new ‘greenway’ through the middle of the facility is now well
underway. Completion of the new look dealership is expected at the end of the first quarter 2021. The service department
is operating in an off-site facility and the sales team, who have been living with portacoms since 2011, now have an
expanded ‘portacom village’ as the showroom has been vacated.

0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
84868890929496980002040608101214161820
Registrations
Calendar Year
Vehicle Registrations
New Vehicles
Used Imports

7

On 1 July this year, Team Hutchinson Ford acquired the business of Grey Ford in Greymouth and is operating the
business as a parts & service branch of the dealership.
In Cromwell the new facility for Agricentre South was completed this month and in Wanaka the new back-to-back service
facility, for both Macaulay Motors (Ford and Mazda) and Southern Lakes Motors (Mitsubishi and Nissan), will be opened
in October.
M.S. Motors has had a rollercoaster year, opening the Nelson KIA dealership in a leased facility on Rutherford Street
and then suffering a fire in the leased Ford workshop on Haven Road. The dealership will continue to operate service
from a temporary facility until the replacement workshop is built. The dealership also took over a Bridgestone Tyre centre
in Richmond.
At South Auckland Motors the brand@retail showroom and signage project, which took place as part of a major building
maintenance project, has just been completed. In Botany we are upgrading the property acquired several years ago to
turn it into a full sales and service operation for Southern Autos (Suzuki, Peugeot & Citroen). Also currently in planning
is a major upgrade to the South Auckland Motors (Ford and Mazda) location at Harris Road in Botany.
Brand@retail projects in Invercargill, New Plymouth and Waipukurau were completed, while those in Dunedin, Timaru,
Avon City and Masterton have been deferred.
Health & Safety
This year we have had one serious harm accident across the Group. It involved a broken elbow to an apprentice
technician.
The ongoing focus this year has been on improving the internal processes to actively manage risks and to better capture
and learn from any ‘near miss’ incidents. This entails undertaking in-depth, root cause investigations of any accident or
incident that was considered serious. A ‘near miss’ example this year involved our number one identified risk - vehicle
hoists. The root cause investigation outcomes flowed across the Group and also led back to the importer/distributor of
that brand of hoist having to modify their maintenance instructions.
We are in the process of moving our dealership health & safety processes from paper-based to a software system. The
outcome will be a more consistent approach to managing the process and capturing the necessary information at the
coal face. Reporting can then flow up and down within dealerships and across the Group to assist all levels in the chain
of responsibility to fulfil their obligations to provide a safe workplace.
Simply having a policy is not enough; living and breathing the policy and actively enforcing safe practices are key
requirements.
Cleaner, Greener, Safer
The pathway forward has been dimmed in the last year by the Covid crisis but even more by the confrontational way
some parts of the coalition Government has sought to bulldoze its way. This has occurred without first establishing a
level of public buy-in or working with the industry to find a practicable way to achieve the medium to longer term goal.
The current reality is that Europe’s CO
2
emission standards are dominating the world-wide vehicle manufacturers’
capacity to produce enough electrified vehicles that tick the boxes that enable these manufacturers to avoid punitive fines
in Europe.
Although New Zealand’s, predominance of renewable electricity is a prime candidate for electric vehicles, the economics
of such vehicles remains well beyond the average motorist. These vehicles remain essentially the preserve of corporate
fleets, luxury car buyers or the truly committed (regardless of cost). The open question world-wide is how much ‘subsidy’
and ‘no choice’ rules are necessary to move the needle. In Europe this takes the form of huge $ incentives, while
USA/Japan let the market decide.
An interesting recent reflection is that we, as a nation, need to ensure our road network (on which over 93% of freight is
carried) is first and foremost able to support our export industries. These industries continue to be fundamental to New
Zealand’s economic wellbeing and have become even more important to the country. Better roads are about safe and
efficient transport, regardless of whether the vehicle is a new electric vehicle, an existing internal combustion vehicle, a
future hydrogen fuelled truck, a public transport bus or a freight operator.
Training
Our dealerships are fully committed to the apprentice training program. Major changes to the Governments’ education
provider machinery that delivers these programs (Polytechs, Industry Training organisations), will provide a challenging
environment in ensuring the actual training of the apprentices remains front and centre of whatever new structure that
evolves. Collectively our dealerships are one of the largest participants in the motor industry training scheme.
Outlook
Never in our wildest dreams in the middle of lockdown would we have considered we could have climbed the ladder to
our June and full year result. This new financial year has started better than expected but.....it feels like only now we,
as a country, are starting to face economic reality without the open-ended financial backstop.
If there is one thing we can say about our business and the environment in which we operate, it is that ‘change’ is all
around us. It is not, can we or will we change but how well we will change in order to find the new pathway to success.

G D Gibbons
Chief Executive

8

Group dealerships

Company Name
Chief Executive /
Dealer Principal (DP)
Franchises Location Web address
Southpac Trucks Ltd Maarten Durent Kenworth & DAF
Heavy Trucks
Manukau City,
Hamilton, Rotorua,
Palmerston North
& Christchurch
www.spt.co.nz

South Auckland Motors
Ltd
Matthew Newman
Michael Tappenden
(DP)
Ford & Mazda Manukau City,
Auckland Airport,
Botany, Takanini
& Pukekohe
www.southaucklandmotors.co.nz

Southern Autos –
Manukau Ltd
Matthew Newman
Andrew Craw (DP)
Suzuki, Peugeot,
Citroen & Isuzu
Manukau City
& Botany
www.southernautos.co.nz

South Auckland Honda
Ltd
Matthew Newman
Andy Kimber (Agency Mgr.)
Honda Pukekohe www.honda.co.nz
Energy City Motors Ltd Russell Dempster Ford New Plymouth
& Hawera
www.energyford.co.nz

Energy Motors Ltd Shaun Biesiek (DP) Hyundai & Isuzu New Plymouth www.energyhyundai.co.nz
www.energymotorsisuzu.co.nz
Ruahine Motors Ltd David Wills Ford Waipukurau www.ruahinemotors.co.nz
The Hawkes Bay Motor
Company Ltd
Paul Bond (DP) Nissan &
Mahindra
Hastings www.hawkesbaynissan.co.nz

Fagan Motors Ltd Keith Allen Ford & Mazda
Suzuki & Kawasaki
Motorcycles
Masterton www.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 Taranaki Street,
Waterfront,
Porirua
& Kapiti
www.capitalcitymotors.co.nz

M.S. Motors (1998) Ltd Alan Kirby Ford Nelson www.nelsonford.co.nz

Nelson KIA
Service Lane
Bridgestone Tyres
Nelson
Richmond

www.nelsonkia.co.nz
Hutchinson Motors Ltd John Hutchinson Ford
Bridgestone Tyres
Christchurch
& Greymouth
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
Tim Rabbitte (DP)
Ford & Mazda Invercargill,
Queenstown
& Wanaka
www.macaulaymotors.co.nz

Southern Lakes Motors
Ltd
Grant Price
Richard Burns (DP)
Mitsubishi &
Nissan
Queenstown
& Wanaka
www.southernlakesmotors.co.nz

Agricentre South Ltd

Grant Price Case IH Tractors
& Kuhn
Implements
Invercargill, Gore,
Milton, Cromwell
& Ranfurly
www.agricentre.co.nz

New Holland,
Kubota Tractors &
Norwood Ag
Equipment
Invercargill & Gore

Yamaha
Motorcycles
Gore

The consolidated financial statements should be read in conjunction with the accompanying notes.
Comparatives have been restated following the adoption of NZ IFRS 16 – Leases. See note 33.
9

Consolidated statement of financial performance
for the year ended 30 June 2020

Notes
2020
$000
2019
$000
Restated
Revenue
Revenue 745,959 906,924
Other revenue 8,963 2,078
Total revenue 1 754,922 909,002
Trading expenses
Cost of products and services sold 609,316 757,262
Remuneration of staff 76,118 75,995
Depreciation and amortisation 6,289 5,955
Property occupation costs 4,017 4,548
Marketing, promotion and training 5,625 6,619
Other operating costs 22,342 19,347
Interest 3 4,600 5,681
Total trading expenses 2 728,307 875,407
Trading profit before tax 26,615 33,595
Taxation
Current tax 4 7,879 9,880
Deferred tax
4 132 53
Total tax on trading 8,011 9,933
Non-controlling interest 1,255 1,673
Trading profit after tax 17,349 21,989

Non-trading items
Fair value revaluation of property (2,040) (243)
Fair valuation of investments (57) (57)
Total non-trading items before tax (2,097) (300)
Taxation
Deferred tax
4 6,576 141
Non-trading items after tax 4,479 (159)
Profit attributable to shareholders 21,828 21,830
Profit for the year

Profit attributable to: Shareholders
Trading profit after tax 17,349 21,989
Non-trading items after tax 4,479 (159)
Total attributable to shareholders 21,828 21,830
Non-controlling interest 1,255 1,673
Profit for the year 6 23,083 23,503

Statistics per share

Basic and diluted earnings per share 7
Profit attributable to shareholders (cents) 66.8 66.8
Trading profit after tax (cents) 53.1 67.3
Dividends
Dividends (cents per share) 32.0 45.0
Total dividends ($’000) 10,462 14,713

Net tangible assets per share ($)
6.92 6.32

The consolidated financial statements should be read in conjunction with the accompanying notes.
Comparatives have been restated following the adoption of NZ IFRS 16 – Leases. See note 33.
10

Consolidated statement of comprehensive income
for the year ended 30 June 2020

Notes
2020
$000
2019
$000
Restated

Profit for the year 23,083 23,503
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Property revaluation reserve
Fair value movement 6,476 6,982
Deferred tax 4 515 53
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 785 (505)
Deferred tax 4 (220) 141
Total other comprehensive income for the year 7,556 6,671
Total comprehensive income for the year 30,639 30,174

Total comprehensive income for the year attributable to:
Shareholders 29,299 28,556
Non-controlling interest 1,340 1,618
Total comprehensive income for the year 30,639 30,174

Consolidated statement of changes in equity
for the year ended 30 June 2020

Notes
2020
$000
2019
$000
Restated

Total equity at beginning of the year 210,944 198,467
Comprehensive income
Profit for the year 23,083 23,503
Other comprehensive income 7,556 6,671
Total comprehensive income 30,639 30,174
Dividends paid to shareholders 22 (9,808) (16,347)
Dividends paid to non-controlling interest (975) (1,350)
Total equity at end of year 20 230,800 210,944

The consolidated financial statements should be read in conjunction with the accompanying notes.
Comparatives have been restated following the adoption of NZ IFRS 16 – Leases. See note 33.
11

Consolidated statement of financial position
at 30 June 2020

Notes
2020
$000
2019
$000
2018
$000
Restated Restated

Shareholders’ equity
Share capital 21 15,968 15,968 15,968
Retained earnings 146,936 134,916 129,433
Property revaluation reserve 64,021 57,030 49,995
Foreign exchange cash flow hedge reserve 385 (95) 214
Total shareholders’ equity 227,310 207,819 195,610

Non-controlling interest 3,490 3,125 2,857
Total equity 230,800 210,944 198,467

Current liabilities
Bank borrowings 25 19,235 35,856 41,550
At call deposits 24 27,389 24,008 21,588
Trade & other payables 12 42,505 46,813 50,449
Vehicle floorplan finance 23 42,851 58,613 61,386
Financial liabilities – credit contracts 14 1,403 1,773 2,779
Lease liabilities 15 1,813 1,668 1,486
Tax payable 2,682 1,836 5,001
Financial derivatives – foreign exchange 29 - 155 -
Total current liabilities 137,878 170,722 184,239

Non-current liabilities
Financial liabilities – credit contracts 14 2,379 2,759 3,025
Lease liabilities 15 13,175 14,798 15,015
Deferred tax 4 - 3,589 3,844
Total non-current liabilities 15,554 21,146 21,884

Total equity and liabilities 384,232 402,812 404,590

Current assets
Cash & bank accounts 13 16,995 7,182 10,251
Trade & other receivables 11 41,882 55,491 57,990
Inventory 8 139,291 168,329 181,022
Financial assets – credit contracts 14 1,379 1,740 2,734
Asset held for sale 9 345 - -
Financial derivatives – foreign exchange 29 630 - 350
Total current assets 200,522 232,742 252,347

Non-current assets
Financial assets – credit contracts 14 2,379 2,759 3,026
Intangible assets 16 1,028 1,028 1,028
Investments 18 2,382 2,442 2,497
Property, plant & equipment 9 161,109 148,725 130,470
Deferred tax 4 3,675 525 498
Right of use assets 15 13,137 14,591 14,724
Total non-current assets 183,710 170,070 152,243

Total assets 384,232 402,812 404,590

For the Directors

J P Gibbons
Chairman of the Board
A J Waugh
Chairman of the Audit & Compliance Committee

Authorised for issue on 24 September 2020

13

Notes to the consolidated financial statements
for the year ended 30 June 2020
Index to the notes
Note Page

Preparation of the consolidated financial statements

About the reporting entity 14
Statement of compliance 14
Basis of preparation 14
Critical accounting assumptions, estimates and judgements 14

Accounting policies
Impairment 16
Goods & services tax 16
Changes in accounting policies and accounting standards 16

Financial performance

The notes in this section explain the Group’s profit for the year and give more detail of items
that make up its revenue and expenses.

1 Revenue 17
2 Expenditure 17
3 Interest 18
4 Taxation 18
5 Segment report 19
6 Reconciliation of profit for the year with operating cash flows 20
7 Earnings per share 20
Financial position

This section describes the assets and liabilities the Group uses to generate profit including
its working capital.

8 Inventory 21
9 Property, plant and equipment 21
10 Christchurch greenway 23
11 Trade and other receivables 23
12 Trade and other payables 24
13 Cash and bank accounts 24
14 Credit contracts 25
15 Operating leases 26
16 Intangible assets 28
Investments

This section describes the corporate structure of the Group and how the results and balances
of the individual companies are combined into the consolidated financial statements.

17 Subsidiaries 29
18 Investments 29
Funding

This section describes the sources of funding the Group uses and how they are managed.

19 Capital management 30
20 Movements in equity 31
21 Share capital 32
22 Dividends 32
23 Vehicle floorplan finance 32
24 At call deposits 32
25 Bank borrowing 33
26 Financial instruments 33
27 Reconciliation of liabilities arising from financial activities 35
Managing risk

The notes in this section describe how the Group manages the financial risks that affect its
financial position and performance.

28 Financial risk management 36
29 Financial derivatives – foreign exchange 37
Other notes
30 Related party transactions 39
31 Contingencies 39
32 Events after the reporting date 39
33 Change in accounting standard 40

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 (FMCA 2013). Where an FMC Reporting Entity prepares consolidated financial
statements, parent company disclosures are not required and have therefore not been included in these
financial statements.
The Group is a Tier 1 for profit reporting entity as set out in the External Reporting Board’s Accounting
Standards Framework. The Colonial Motor Company Limited is a New Zealand registered company
listed on the New Zealand Stock Exchange.
The Group’s principal activity is operating franchised motor vehicle dealerships. There is a list of the
dealerships and the franchises they represent on page 8.
Statement of compliance

These consolidated financial statements have been prepared in accordance with Generally Accepted
Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting
Standards Board, Part 7 of the FMCA 2013 and the Companies Act 1993. They also comply with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
The consolidated financial statements were authorised for issue by the Directors on 24 September 2020.
Basis of preparation

The consolidated financial statements have been prepared
• on an historical cost basis, modified by the revaluation of certain assets and liabilities to fair value
through profit or loss, and
• on the assumption that the Group is a going concern
The consolidated financial statements are presented in New Zealand Dollars, which is the Group’s
functional and presentation currency, rounded to the nearest thousand dollars.
Critical accounting assumptions, estimates and judgements

The Group makes assumptions, estimates and judgements concerning the future. They are based on
historical experience and other factors including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates.
Estimates, judgements and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any future
periods affected.
Estimates and judgements that have a significant risk of causing a material adjustment to the carrying
amount of the assets and liabilities are detailed in the relevant notes of these consolidated financial
statements.
Covid-19
The Group has considered the impact of the Covid-19 pandemic and the Government’s response on
both the financial statements at 30 June 2020 and also the future trading prospects.
When the country went into level 4 lockdown on 25 March, the Group’s trading activities effectively
stopped. Although there was some sales and service activity in support of essential services, the
dealerships were effectively closed for four weeks. The Government wage subsidy helped the Group
pay staff through this period. Through the implementation of business continuity plans, all dealerships
were able to start trading again from 27 April. Although Group revenue is down year on year post 27
April, there continues to be demand for vehicles and servicing functions, albeit at lower than historic
levels.

15

The Group has made the following assessment of the impact of Covid-19 on the value of assets as at
30 June 2020.
Asset Assessment of impact on carrying value
Cash & bank No impact
Trade & other receivables Despite negative impacts on the general economy, there has been
no noticeable increase in unrecovered debts. The existing policy of
providing for 30% of the average over 90 day debt is considered
adequate
Inventory The policy on the valuation of inventory has been to value stock at
the lower of cost or net realisable value. Inventory at 30 June 2020
has been valued in the same way based on sales activity in May and
June. The anticipated heavy discounting of used vehicles and ex
rental cars impacting values has not arisen
Credit contracts As there is no concentration of credit risk due to the number of
debtors involved and, ultimately, if a problem with a particular debt
arose, the vehicle could be repossessed and sold, no additional
provisions are considered necessary
Goodwill Goodwill relates only to two dealerships. Both of these operations
continue to be profitable and are expected to remain so. Goodwill
has been tested in line NZ IAS 36 – Impairment of Assets and is not
considered to be impaired
Investments Investments are carried at fair value and have been valued at the
current share price
Property, plant & equipment Property was revalued at balance date by independent valuers. See
note 9 for further information
Other plant and equipment is held at cost less depreciation. There
is no evidence of impairment as they are a critical resource in the
Group’s trading activity
Right of use assets An assessment of the value of the right of use asset has been made,
in conjunction with the lease liability, and there is considered to be
no impairment of the value of the asset
Although revenue and profit before tax have been impacted by the Covid-19 pandemic and uncertainty
remains, the Group continues to trade profitably. In addition, the Group has access to bank lending
facilities and has remained within it’s banking covenants throughout the year. The Directors believe that
the going concern assumption continues to be valid.

16

Accounting policies

The accounting policies set out in these notes have been applied consistently to all periods presented
in these consolidated financial statements.

The following general accounting policies relate to the overall consolidated financial statements.
Policies specific to particular transactions or balances are detailed within each relevant note and are
highlighted by a solid blue bar:

Specific accounting policy

General accounting policies
Impairment

The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether
there is any objective evidence of impairment. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its estimated recoverable amount. Impairment losses directly reduce the
carrying amount of assets and are recognised as an expense in the consolidated statement of financial
performance.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing fair value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate of the time value of money and risks specific to that
asset.
In respect of all assets (except goodwill and intangibles with indefinite useful lives) an impairment loss
is reversed if there has been a change in the estimate used to determine the recoverable amount.

Goods & Services Tax

The consolidated financial statements are prepared net of Goods & Services Tax (GST) with the
exception of receivables and payables which are stated including GST.

Changes in accounting policies and accounting standards

There have been no changes in the existing accounting policies during the year.
Certain new accounting standards became effective for the Group from 1 July 2019. Further details on
the impact of these standards can be found in the following note:
NZ IFRS 16 – Operating leases – note 15
New standards, interpretations and amendments
At the date of authorisation of these consolidated 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. There are no new standards issued but not yet effective that will have a material
impact on the Group in future reporting periods.

17

Notes on financial performance
1 Revenue

Revenue from Contracts with Customers
When deciding whether to recognise revenue the Group undertakes the following:
1. Identifies the contract with the customer;
2. Identifies the performance obligations;
3. Determines the transaction price;
4. Allocates the transaction price to the performance obligations; and
5. Recognises revenue as the performance obligations are completed.
All of the revenue from contracts with customers arises from the sale of goods or services. The
transaction price is measured as the fair value of the consideration received or receivable and is net
of returns, trade allowances and rebates. All contracts are short term in nature.
For the supply of goods, the performance obligation is considered to be satisfied when control of the
goods has been passed to the buyer. This generally happens on delivery and revenue is recognised
at that time. Payment is usually required before the goods are delivered.
For the supply of services, performance obligations are considered satisfied when the service has
been completed. Revenue is recognised at that time. Payment is due on completion of the service.
The Group sells some products which have extended warranty or maintenance periods. These are
part of the price of the original goods or services and are not identified or treated separately. Any costs
incurred by the Group in respect of these services are recovered from the manufacturers providing
the extended warranties and maintenance agreements.
Other Revenue

Rental revenue arising from premises rental is accounted for on a straight line basis over the lease
term.
Interest comprises interest on funds invested and is recognised in profit or loss as it accrues using the
effective interest rate method. Subsidies received from the Government in respect of wage costs have
been recognised as revenue in the same period as the wage expenses to which they relate.

2020
$000
2019
$000
Revenue from
Sale of products 679,759 842,024
Sale of services 66,200 64,900
Total revenue from contracts with customers 745,959 906,924

Interest 6 7
Other revenue 8,957 2,071
Total other revenue 8,963 2,078

2 Expenditure

Expenditure in the consolidated statement of financial performance
includes:

2020
$000
2019
$000

Restated
Auditor’s remuneration
Audit fees – statutory audit 490 496
Other services - -
Total auditor’s remuneration 490 496
Operating lease expense 586 926
Directors’ fees 223 259
Bad debts written off 75 96
Donations 20 18
Contributions to retirement savings
CMC Workplace Savings Scheme 737 829
KiwiSaver 1,289 1,292
Increase/(decrease) in impairment allowance for:
Parts inventory obsolescence 410 153
Doubtful debts 22 8
Credit contracts (8) (12)

18

3 Interest

Interest expense comprises interest on deposits, vehicle floorplan finance, bank borrowings and bank
overdraft facilities.
See note 28 (b) for interest rate disclosures.
Interest costs are recognised using the effective interest rate method and expensed in the period they
are incurred.

4 Taxation
4(a) Tax expense
Income tax expense comprises current and deferred tax. Current tax is the tax payable on taxable
profit for the period using the existing tax rates.
Tax expense is recognised in the consolidated statement of financial performance except when it
relates to items recognised directly in the consolidated statement of comprehensive income.

2020
$000
2019
$000

Restated

Trading profit before tax 26,615 33,595
Non-trading items before tax (2,097) (300)
Profit before tax for the year 24,518 33,295
Expected tax charge at 28% 6,865 9,322
Tax adjustments for:
Non-deductible expenses 1,052 526
Tax exempt income (68) -
Changes in unrecognised temporary differences 24 38
Prior year adjustment 6 (6)
Actual current tax charge 7,879 9,880
Movement in deferred tax (6,444) (88)
Total tax expense 1,435 9,792
Effective current tax rate on trading profit 29.6% 29.4%
4(b) Deferred tax
The calculation of deferred tax uses the liability approach that recognises deferred tax assets and
liabilities based on differences between the accounting and tax values of specific items in the
consolidated statement of financial position.
Deferred tax assets and liabilities are carried:

• at the tax rates expected to apply when the assets are recovered or liabilities settled
• on the basis that the Group expects future profits to exceed any reversal of existing temporary
differences

The rules regarding the allowability for tax of depreciation on buildings changed in March 2020 and a
deduction can be claimed for these costs in future years. The impact on current tax payable will not
be seen until year ending 30 June 2021, however the deferred tax liability that was being carried for
these assets has been reversed and a deferred tax asset created.

19

Deferred tax asset/(liability)
2020
$000
2019
$000
Restated
At the beginning of the year (3,064) (3,346)
Movement through the consolidated statement of
financial performance

On trading profit (132) (53)
On non-trading property depreciation 6,576 141
Movement through property revaluation reserve 515 53
Movement through foreign currency cash flow hedge
reserve
(220) 141
At the end of the year 3,675 (3,064)

Deferred tax assets and liabilities are attributable to the following:
Trade and other payables 4,628 5,222
Trade and other receivables 27 21
Employee benefits 912 1,050
Inventories 770 667
Financial derivatives (176) 43
Impairment allowance for finance bad debts 7 10
Property, plant and equipment (3,678) (5,726)
Building depreciation rule change 1,185 (4,351)
Deferred tax asset/(liability) at the end of the year 3,675 (3,064)

Deferred tax on unused tax losses to be utilised against
future taxable profits

- -
4(c) Imputation credit account

2020
$000
2019
$000
Imputation credits available for use in subsequent
reporting periods

32,011 29,199

The New Zealand imputation regime enables tax credits to be attached to dividends paid to
shareholders as a method of avoiding double-taxation of company profits.

5 Segment report

The Group is structured so that each motor vehicle dealership is managed locally under the control of a
dealer principal who reports monthly to the Group Chief Executive. The Group Chief Executive is
considered to be the Chief Operating Decision Maker in terms of NZ IFRS 8 - Operating Segments. The
key measures used to assess dealership performance are revenue, trading profit before tax, trade
receivables and inventory.
Each of the trading subsidiaries enters into agreements in their own right with the New Zealand distributor
to sell and service specific brands of motor vehicle in a defined primary marketing area. As national
distributor of two brands of heavy trucks, Southpac Trucks Limited has equivalent agreements with the
international suppliers covering the whole country. Most of these agreements (called either dealer or
franchise agreements) do not have a specific duration. All of the dealer or franchise agreements contain
the right for the distributor/franchisor or the dealer to terminate the arrangements at short notice. Some
of these agreements have finite terms from one to three years, usually without automatic rights of renewal.
If a dealership or franchise agreement is terminated or not renewed there could be a detrimental effect
on the future financial performance of the Group.

20

The dealerships have similar economic characteristics, financial performance (as measured by their
gross profitability), products, services, processes, customers, methods of distribution and all operate in
the same regulatory environment. On that basis, all of the Group’s operating segments have been
aggregated into a single reporting segment to most appropriately reflect the nature and financial effects
of the business activities in which the Group engages and the economic environment in which it operates.
2020 2019
Restated
Operating
segment Corporate
Total
Group
Operating
segment Corporate
Total
Group
$000 $000 $000 $000 $000 $000
Revenue from customers 754,054 862 754,916 908,218 777 908,995
Depreciation & amortisation 4,030 2,259 6,289 4,087 1,868 5,955
Interest income 3 3 6 7 - 7
Interest expense 3,201 1,399 4,600 3,637 2,044 5,681
Trading profit before tax 23,483 3,132 26,615 29,546 4,049 33,595
Income tax 6,636 1,243 7,879 8,453 1,427 9,880
Total assets 222,852 161,380 384,232 255,242 147,570 402,812
Material non-cash items
Revaluation loss on property - 2,040 2,040 - 243 243
Deferred tax credit 68 (6,512) (6,444) 36 (124) (88)

6 Reconciliation of profit for the year with operating cash flows

2020
$000
2019
$000
Restated
Profit for the year 23,083 23,503
Adjustments for non-cash items
Depreciation and amortisation 6,289 5,955
Revaluation of property and investments 2,097 300
Cancellation of lease (18) -
Movement in
Impairment of credit contracts (10) (12)
Deferred tax (6,444) (88)
Movement in working capital
Trade & other payables (4,271) (3,615)
Tax payable 846 (3,165)
Trade & other receivables 13,611 2,497
Inventory 29,038 12,693
Net cash flow from operations 64,221 38,068

7 Earnings per share

2020
$000
2019
$000
Restated
Trading profit after tax 17,349 21,989
Profit after tax for the year attributable to shareholders 21,828 21,830

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 53.1 67.3
Profit after tax attributable to shareholders 66.8 66.8

Basic and diluted earnings per share are calculated by dividing the profit after tax attributable to
shareholders by the weighted average number of shares outstanding during the year.
There were no potentially dilutive ordinary shares outstanding at the reporting date (2019: none).

21

Notes on financial position
8 Inventory

New and used vehicles are valued at the lower of cost or net realisable value. Parts, accessories,
workshop stocks, fuels and gases are recognised at cost, using where applicable, the first in first out
method. Cost includes expenditure incurred in acquiring the inventory and bringing it to the existing
location and condition. Due allowance has been made for obsolete and slow moving stock.
Inventory, particularly of vehicles, is reviewed, on a transaction by transaction basis, as part of normal
commercial trading. Estimates and judgement are required to ensure that carrying values do not exceed
net realisable values at the reporting date.
Parts inventory is reviewed regularly for slow-moving or obsolete stock. At each reporting date an
impairment allowance is recognised based on the age of stock and historical evidence of inventory held
for a similar timeframe. The movement in the parts obsolescence allowance is as a result of a
combination of the realisation and scrapping of aged stock during the reporting period.

2020
$000
2019
$000
Vehicles 118,067 146,925
Parts, accessories, workshop fuels and gases 24,179 24,162
Impairment allowance (2,955) (2,758)
Total inventory 139,291 168,329

Total inventory write-down including parts, parts obsolescence and vehicles 689 432

9 Property, plant & equipment

Land & buildings
Land and buildings owned by the Group are categorised as property, plant & equipment because they
are owned specifically for use in the revenue generating operations of its subsidiaries.
All land and buildings, other than properties held for sale (if any), were independently valued at reporting
date by QV Asset & Advisory to comply with Property Institute New Zealand Professional Practice
Standards and International Valuation Standards.
All property has been classified as level 2 in the fair value hierarchy specified in NZ IFRS 13 – Fair Value
Measurement because, although there is an active and open market for commercial properties, each
property is unique in its location, size, age and condition.
All property was valued at its highest and best use by applying a direct sales comparison approach,
which derives fair values by comparing the property to similar assets that have recently sold on the open
market.
Any revaluation surplus is credited to the property revaluation reserve unless it reverses a revaluation
decrease for the same asset previously recognised in profit or loss. In that case, the surplus is credited
to profit or loss to the extent of the decrease previously charged. Any revaluation deficit is recognised
through profit or loss unless it directly offsets a previous surplus in the same asset in the property
revaluation reserve.
Other property, plant & equipment
Property, plant & equipment other than land and buildings are carried at cost less accumulated
depreciation and impairment losses. Cost includes all expenditure that is directly attributable to the
acquisition of the asset. Software that is integral to the functionality of the related equipment is
capitalised as part of the asset.
Depreciation
Land is not depreciated. The economic life of buildings has been assessed at between 33 and 100
years and buildings are depreciated accordingly. Any accumulated depreciation on buildings at
revaluation date is eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset.
Other plant and equipment has been depreciated over its estimated useful life on an accounting basis
that the Group considers best reflects the decline in the economic service potential of each class of
assets. The general rate bands are shown below:
Furniture, fittings and equipment 7.5 – 60% of Diminishing Value
Service vehicles 18 – 36% of Diminishing Value

22

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 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
Additions 12,566 2,868 1,474 16,908
Disposals (614) (111) (352) (1,077)
Depreciation (1,775) (1,695) (845) (4,315)
Movement in revaluation 6,739 - - 6,739
Net book value at 30 June 2019 137,858 8,055 2,812 148,725

Cost or fair value at 30 June 2019 82,775 24,482 5,769 113,026
Accumulated depreciation - (16,427) (2,957) (19,384)
Revaluation 55,083 - - 55,083
Net book value at 30 June 2019 137,858 8,055 2,812 148,725
Additions 10,363 2,327 936 13,626
Disposals (454) (124) (288) (866)
Depreciation (2,094) (1,814) (907) (4,815)
Movement in revaluation 4,439 - - 4,439
Net book value at 30 June 2020 150,112 8,444 2,553 161,109

Comprised of:
Cost or fair value at 30 June 2020 90,870 25,992 5,896 122,758
Accumulated depreciation - (17,548) (3,343) (20,891)
Revaluation 59,242 - - 59,242
Net book value at 30 June 2020 150,112 8,444 2,553 161,109

2020
$000
2019
$000

Revaluation deficit recognised as non-trading items through profit or loss (2,040) (243)

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 6,599 2,535

Capital commitments
Commitments to the future acquisition of new dealership facilities and
development projects to existing facilities 8,251 3,948

If land and buildings were measured at cost the carrying value would be $90,870k (2019: $82,775k).

A number of properties are being held as part of the Wellington Hub development in Lower Hutt. At the
balance date some of these properties were demolished or partially demolished as part of the upgrade
of the site. Valuations of the assets reflected their condition at that date and contributes to the charge in
the statement of financial performance.

In December 2019, a decision was made to sell a residential property in Waipukurau. At that date
depreciation on the property was stopped and the asset transferred out of non-current assets. At balance
date the house has been valued at the expected selling price of $358k less costs to sell of $13k. During
the year the asset generated revenue of $6k and incurred costs of $16k.

23

10 Christchurch greenway

The dealership property occupied by Team Hutchinson Ford on Tuam Street in Christchurch is owned
by the Group and is in the city’s Southern Frame designated area. An east-west greenway is being
constructed through the centre of the dealership. In April 2018 agreement was reached with Crown
authorities for the Group to grant an easement in perpetuity across the site for the construction of the
greenway. The agreement involved:
1. a cash settlement to meet the cost of demolishing part of the workshop and remodelling the
remaining buildings to accommodate the business over a split site, and;
2. acquisition of an adjacent area of land to replace part of the land taken by the greenway.
Initial recognition of the agreement created an asset for the full value of the settlement receivable from
the Crown ($7.555m) based on the reasonable expectation that the agreement was legally binding and
all conditions imposed on the parties would be met. At the same time a liability for the same amount
was established in recognition of the Group’s future performance obligations to clear the land and make
changes to existing buildings in order to continue its business.
At the reporting date, the outstanding receivable, included in Other Receivables, represents further
payments due to be received from the Crown on completion of particular events defined in the
agreement and the value of the land to be acquired. The balance of the performance obligations,
included in Other Payables, reflects the remainder of the settlement that has yet to be allocated to
particular elements of the work to be completed. This includes compensation for the loss in capital value
of the land as a result of granting the easement that will divide, what is currently a single contiguous
area of land, into two separate titles.
The lump sum settlement made in 2018 includes an unspecified amount of compensation for “injurious
affection”, a legal term given to the disruption and additional operational costs that are likely to be
incurred during the creation of the greenway. The amount of the compensation for injurious affection
will only be measurable upon completion of the capital works. Provision has been made within deferred
tax for the anticipated tax effects associated with putting the greenway in place.

2020 2019
$000 $000

Other Receivables
Balance at 1 July 2,555 3,555
Payments received - (1,000)
Balance at 30 June – note 11 2,555 2,555

Performance obligation
Balance at 1 July 6,360 7,031
Expenditure incurred (956) (671)
Balance at 30 June – note 12 5,404 6,360

11 Trade and other receivables

2020
$000
2019
$000
Trade receivables 37,449 52,408
Impairment allowance for expected credit losses (97) (75)
37,352 52,333
Other receivables – greenway agreement note 10 2,555 2,555
Other receivables 1,819 447
Prepayments 156 156
Carrying value of trade and other receivables 41,882 55,491

Bad debts written off in year 75 96

The net carrying value of trade receivables and prepayments is considered to be their fair value.

24

The Group has adopted the simplified model of recognising lifetime expected credit losses as detailed
in NZ IFRS 9 – Financial Instruments, as none of the trade or other receivables contain a significant
financing component.
In measuring expected credit losses, the trade receivables have been assessed on a collective basis
as they share similar credit risks. Expected loss rates are based on historic trading patterns over the
last 5 years adjusted for anticipated changes in the 12 months following reporting date.
The items included in other receivables do not share the same credit risks as trade receivables and no
credit loss is expected to arise.
Trade receivables are written off as bad debts when there is no expectation of recovery.

On the above basis the expected credit loss of trade receivables is as follows:

2020
$000
2019
$000
Expected credit loss rate 0.25% 0.14%
Gross carrying amount 37,449 52,408
Expected credit loss 97 75

Movements in the loss allowance are as follows:
Balance at 1 July 75 67
Allowance recognised in profit or loss 30 31
Allowance reversed (8) (23)
Balance at 30 June 97 75

12 Trade and other payables

Trade and other payables are stated at amortised cost.
Employee benefits
The Group provides for benefits accruing to employees for:

• salaries and wages earned but not yet paid
• annual leave accrued but not yet taken
• short-term incentives arising from contractual obligations or when it is probable that the incentives
will be paid and they can be reliably measured

Trade and other payables are all due within one year.

2020
$000
2019
$000
Trade payables 22,182 25,473
Employee benefits 8,143 8,364
Other payables – performance obligation note 10 5,404 6,360
Other payables 6,776 6,616
Total trade and other payables 42,505 46,813

13 Cash and bank accounts

2020
$000
2019
$000
Bank accounts in funds 16,995 7,384
Bank accounts in overdraft - (202)
Net cash and bank accounts 16,995 7,182

These balances include all cash and cash equivalents.
Bank overdrafts are payable at call.
The Company guarantees the amounts owing by its subsidiaries under overdraft facilities and the
subsidiaries guarantee the indebtedness of the Company.
Aggregate limit on bank overdrafts 6,835 6,835

25

14 Credit contracts

Dealerships arrange finance for customers to buy vehicles with a number of finance companies. Before
the customers enter into the finance agreements, information is gathered and provided to the finance
companies to check that customers meet their creditworthiness, affordability and other criteria.
Dealerships make the initial loans to the customer but instantaneously assign them to the finance
company.
Credit contracts with Motor Trade Finance Limited (MTF) differ from the other finance companies. MTF
retains the right of recourse to the dealership if a particular customer defaults on their payments.
Accounting for the MTF credit contracts results in creating a receivable from the customer (which is
collected by MTF due to the assignment) and an equal and opposite liability for the amount that may
become payable to MTF if the customer defaults. In the normal course of business, the receivable and
liability for each finance deal reduce in parallel as customers make routine repayments.
The financial liabilities under credit contracts at reporting date consist of the outstanding balances on
customers’ accounts. The movement in the liability is detailed in note 27.
Financial receivables – credit contracts
There is a risk if customers fail to make the necessary repayments that the receivable will not be
recoverable and the liability will remain payable to MTF. Factors that mitigate this risk include:
• credit checks that are carried out when the finance is arranged
• timely credit control practices
• the number of outstanding loans means there is no concentration of credit risk on a restricted
number of debtors
• security over the vehicles that are financed so that, if other measures fail, the vehicles can be
repossessed and sold to offset bad debts
Bad debts
If customers default and the sale proceeds of the vehicle do not cover the outstanding balance, the
deficit is recognised as an expense in 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 based on historic trading patterns.

Amounts owed by customers are recoverable over a number of years. To determine the percentage
used for the impairment allowance, estimates are based on historical data for contracts in default.

Financing agreements outstanding at reporting date that have been assigned to MTF with recourse
have the following repayment schedule:
2020
$000
2019
$000
Up to 1 year 1,403 1,773
1 to 2 years 1,145 1,461
2 to 3 years 696 818
3 to 4 years 396 379
4 to 5 years 142 101
Total 3,782 4,532
Impairment allowance (24) (33)
Carrying value of receivables 3,758 4,499

Number of credit contracts 231 289
Value of impaired accounts written off in the year ($000) - -
Actual arrears past due at 30 June ($000) 36 24
Arrears as percentage of total 0.95% 0.54%
Total value of accounts in arrears at 30 June ($000) 547 392
Accounts in arrears as % of total 14.46% 8.65%

26

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.
2020
$000
2019
$000
Less than 1 year 1,719 2,134
1 to 2 years 1,337 1,679
More than 2 years 1,371 1,426
Total 4,427 5,239

15 Operating leases

The new accounting standard, NZ IFRS 16 – Leases, was adopted by the Group with effect from 1
July 2019.

At the start of a contract the Group assesses whether the contract is, or contains, a lease being the
right to control the use of an identified asset for a period of time in exchange for consideration. With
the exception of low value assets and short term leases, at the start date of the lease the Group
recognises a right of use asset, representing the right to use the underlying asset, and a lease liability,
representing the obligation to make lease payments.

The right of use asset is initially measured at cost comprising the lease liability recognised, any initial
direct costs including lease payments made before the commencement date, less any incentives.
Right of use assets are then depreciated on a straight line basis over the shorter of the lease term or
the estimated useful live of the assets. The Group also assesses the impairment of the right of use
asset when such indicators exist.

The lease liability is recognised from the start date of the lease measured at the present value of lease
payments to be made over the life of the lease. When calculating the present value of lease payments,
the Group uses its incremental borrowing rate at the commencement date of the lease as the interest
rate implicit in the lease is not determinable. After the commencement date, the amount of the lease
liability is increased to reflect the addition of interest charges and reduced for the lease payments
made. The carrying amount of lease liabilities is remeasured if there is a change in the terms of the
lease (for example a change in the length of the lease or a change in the lease payments). The term
of the lease includes any rights of renewal where there is a reasonable level of certainty that the lease
will be renewed.

Lease payments on low value assets or short term leases (less than 12 months) are recognised as an
expense on a straight line basis over the lease term.

Prior to 1 July 2019, the right of use assets and commitments under operating leases were not
recognised in the financial statements. All payments under operating leases were expensed to profit
or loss over the term of the lease.
When adopting the new standard at 1 July 2019, the Group has elected to recognise the right of use
asset and the lease liability from the start date of each lease. Further details of the impact on the
comparatives can be found in note 33.

The Group has leases for dealership facilities, including showrooms, workshops, office space and
storage areas at a number of sites across the country and for office accommodation in Wellington.
With the exception of short term leases and leases on low value assets, each lease is reflected on the
balance sheet as a right of use asset and an associated lease liability. Property leases have terms up
to 31 years and most have rights to renew exercisable at the option of the Group. The majority of
leases allow for a market rent increase when renewals are exercised and some have annual inflation
increases.
The following table summarises the Group’s leasing activities:

Number
leased
Range of
remaining
terms (years)
Average
remaining
term (years)
Number with renewal
options
Number
with rent
reviews
Dealership
facilities
24 1-16 6 21 22
Office
building
1 10 10 1 1

27

The value of right of use assets by type is summarised below:

Dealership
facilities
Office
building Total

$000 $000 $000
At 1 July 2019 13,104 1,487 14,591
Additions 351 - 351
Disposals (83) - (83)
Depreciation (1,582) (140) (1,722)

Total right of use assets 11,790 1,347 13,137
Lease liabilities are presented as current or non-current liabilities based on the maturity date of the
underlying lease. The maturity of lease liabilities is as follows:

Within
one
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
5 to 10
years
Over
10
years
$000 $000 $000 $000 $000 $000 $000
Lease liability 1,813 1,693 1,377 1,224 982 4,944 2,955
Finance charge 567 497 437 385 340 1,095 308

Interest costs for the year on lease liabilities was $640k. This has been included in interest in the
statement of financial performance.
A number of leases have right to renew options exercisable by the lessee. The Group has included all
of these renewal options in the right of use asset with the exception of one property which is sub-
leased and exercise of the renewal is subject to the head lease. The Group has no commitment to
leases that are yet to commence.
The Group has a number of properties which are leased on terms which have less than 12 months to
run. The cost of these leases was $586k for the year and has been included in property occupation
costs in the statement of financial performance. At 30 June 2020 the total commitment on these leases
was $226k.

The Group owns some properties that are not completely occupied by Group companies and the space
is leased to third parties. The leases are negotiated under normal commercial arrangements with
varying terms, escalation clauses and renewal conditions and without undue restrictions. Rent of
$696k has been included in other revenue. The rent is receivable during the non-cancellable periods
of these leases according to the following schedule.
Operating lease receivables
2020
$000
2019
$000

Within one year 480 439
Between one and two years 266 301
Between two and five years 304 230
Over five years 192 -
Total operating lease receivables 1,242 970

28

16 Intangible assets

Intangible assets consist of goodwill.
Goodwill is recognised on acquisitions of subsidiaries or purchases of business assets and represents
the excess of the acquisition costs over the fair value of the individually identified acquired assets and
liabilities at acquisition date.

Goodwill relates to the acquisition of business assets which have no foreseeable limit to the period over
which they are expected to generate cash inflows for the Group. As such they are considered to have
an indefinite useful life.
The value of intangibles is compared with the “value in use” of the affected dealerships, which have
been identified as the cash generating units associated with the intangibles. Impairment of the intangible
assets is recognised if there is considered to be a permanent reduction in the “value in use”.

Impairment testing calculations require the use of estimates and assumptions. The calculations of “value
in use” are based on the actual results for the past five reporting periods together with the projected
results for the next five reporting periods. It was assumed that there would be no real growth during the
period of the forecasts and that the results for the initial part of the period would continue to be impacted,
in some way, by the economic downturn from the Covid-19 pandemic.
Key assumptions relate to the general economic outlook, the level of the new and used vehicle industries
and the performance of the Group’s business units in this environment.
The discount rate used in completing the cash flow forecast to assess value in use was 8.4%
(2019: 9.1%).
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 2020. There was no indication of impairment
below their carrying amount (2019: $Nil).
2020 2019
Goodwill $000 $000
Balance at 1 July 1,028 1,028
Impairment loss during the year - -
Balance at 30 June 1,028 1,028

Cost 1,028 1,028
Accumulated amortisation and impairment - -
Balance at 30 June 1,028 1,028

29

Notes on investments
17 Subsidiaries

Subsidiaries are entities controlled by the Company. Control requires the investor to have exposure or
rights to variable returns and the ability to affect those returns through power over the investee. The
financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases. Intra-group balances, and any revenue and
expenses from intra-group transactions, are eliminated in preparing the consolidated financial
statements.
Non-controlling interests in the results and equity of subsidiaries are shown separately in each of the
consolidated financial statements. They represent the portion of the profit or loss, other comprehensive
income and net assets of subsidiaries that are not held by the Group based on their respective ownership
interests.

All subsidiaries are 100% owned (2019: 100%), with the exception of Southpac Trucks Limited which is
85% owned (2019: 85%). All subsidiaries have a reporting date of 30 June. All Group companies are
registered in New Zealand. Subsidiary companies operate as motor vehicle dealerships and related or
incidental activities. The Company provides administrative and financial services to the subsidiaries as
well as leasing them, at market rates, many of the properties they occupy.
Trading subsidiaries
Agricentre South Ltd, Avon City Motorcycles Ltd, Avon City Motors Ltd, Capital City Motors Ltd,
Dunedin City Motors Ltd, Energy City Motors Ltd, Energy Motors Ltd, Fagan Motors Ltd, Hutchinson
Motors Ltd, M.S. Motors (1998) Ltd, Macaulay Motors Ltd, Ruahine Motors Ltd, South Auckland
Honda Ltd, South Auckland Motors Ltd, Southern Autos – Manukau Ltd, Southern Lakes Motors Ltd,
Southpac Trucks Ltd, Stevens Motors Ltd, The Hawkes Bay Motor Company Ltd and Timaru Motors
Ltd.
Non-trading subsidiaries
Advance Agricentre Ltd, Avery Motors Ltd, Capital City Paint & Panel Ltd, Central Lakes Automotive
Ltd, East City Ford Ltd, Jeff Gray Ltd, Metro Motors (Porirua) Ltd, Metro Training Services Ltd,
Panmure Motors Ltd, Papakura Ford Ltd, Pukekohe Motors Ltd, Queenstown Motors Ltd,
South Auckland Ford Ltd, Southland Tractors Ltd, Tower Motors (2012) Ltd and
Trucks South Ltd.

Non-controlling interest
Southpac Trucks Ltd operates branches and service agencies throughout New Zealand and its principal
place of business is Auckland. The summarised financial position and cash flows at the reporting date
were as follows:

2020
$000
2019
$000

Restated
Shareholders’ equity 22,082 19,577
Total liabilities 69,088 84,263
Total equity and liabilities 91,170 103,840
Total assets 91,170 103,840
Net cash flows from:
Operating activities 15,406 21,422
Investing activities (520) (2,446)
Financing activities (14,224) (20,398)
Net movement in cash held 662 (1,422)
Opening cash balance 1,191 2,613
Closing cash balance 1,853 1,191

18 Investments

2020
$000
2019
$000
Shares in Motor Trade Finance Limited (MTF) 2,381 2,439
Other 1 3
Total investments 2,382 2,442
MTF shares are traded in a quoted but restricted market and are categorised as level 2 in the fair value
hierarchy set out in NZ IFRS 13 – Fair Value Measurement.
Shares are carried at fair value with changes in value recognised through profit or loss.

30

Notes on funding
19 Capital management

The Group’s capital includes share capital, retained earnings and property revaluation reserves.
The Group’s policy is to maintain a strong capital base to ensure that it continues as a going concern,
to maintain investor, supplier and market confidence and to sustain future development of the business.
The Board regularly monitors future capital requirements and costs to maintain an appropriate balance
of shareholders’ equity and debt. The Group generally maintains the capital structure by setting a
sustainable level of dividends.
The Group issues call debt securities and maintains relationships with a number of financial institutions
to ensure that adequate debt facilities are available to meet short to medium term strategic cash flow
requirements and as a buffer for unexpected events. The Group complied with all of the financial
covenants incorporated in the bank borrowing facilities (note 25) and the at call deposit trust deed (note
24) at the reporting date and at 30 June 2019. 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 2020
or 30 June 2019.

31

20 Movements in equity

Share
capital
(Note 21)
Property
revaluation
reserve
Foreign
exchange
cash flow
hedge
reserve
Retained
earnings
Total
attributable
to share-
holders
Non-
controlling
interest
Total
equity
$000 $000 $000 $000 $000 $000 $000
Balance at 30 June 2018 15,968 49,995 214 130,698 196,875 2,871 199,746
Amendments - Leases
Depreciation and amortisation - - - (6,921) (6,921) (90) (7,011)
Property occupation costs - - - 9,901 9,901 135 10,036
Interest - - - (4,737) (4,737) (65) (4,802)
Deferred tax - - - 492 492 6 498
At 30 June 2018 - restated 15,968 49,995 214 129,433 195,610 2,857 198,467
Dividends paid - note 22 - - - (16,347) (16,347) (1,350) (17,697)
Total transactions with
shareholders
- - - (16,347) (16,347) (1,350) (17,697)
Profit for the year - - - 21,830 21,830 1,673 23,503
Other comprehensive income
Property revaluation reserve
Fair value movement - 6,982 - - 6,982 - 6,982
Deferred tax - 53 - - 53 - 53
Foreign exchange cash flow
hedge reserve

Fair value movement - - (429) - (429) (76) (505)
Deferred tax - - 120 - 120 21 141
Total comprehensive income - 7,035 (309) 21,830 28,556 1,618 30,174
Balance at 30 June 2019 15,968 57,030 (95) 134,916 207,819 3,125 210,944
Dividends paid - note 22 - - - (9,808) (9,808) (975) (10,783)
Total transactions with
shareholders
- - - (9,808) (9,808) (975) (10,783)
Profit for the year - - - 21,828 21,828 1,255 23,083
Other comprehensive income
Property revaluation reserve
Fair value movement - 6,476 - - 6,476 - 6,476
Deferred tax - 515 - - 515 - 515
Foreign exchange cash flow
hedge reserve

Fair value movement - - 667 - 667 118 785
Deferred tax - - (187) - (187) (33) (220)
Total comprehensive income - 6,991 480 21,828 29,299 1,340 30,639
Balance at 30 June 2020 15,968 64,021 385 146,936 227,310 3,490 230,800

Reserves
The property revaluation reserve arises on the revaluation of land and buildings. Where revalued land
or buildings are sold, the portion of the revaluation reserve that relates to the asset and is effectively
realised, is transferred directly to retained earnings.
The foreign exchange cash flow hedge reserve comprises the cumulative balance of adjustments to
uncompleted transactions that qualify as effectively hedged under NZ IFRS 9 – Financial Instruments.

32

21 Share capital

All shares on issue are fully paid-up and have no par value.
All ordinary shares:
• have equal voting rights
• share equally in dividends
• would share equally in any surplus on winding up
2020
$000
2019
$000
Share capital 15,968 15,968

Thousands
of shares
Thousands
of shares
Number of ordinary shares authorised and on issue 32,695 32,695
Weighted average number of ordinary shares on issue 32,695 32,695

22 Dividends

2020
$000
2019
$000
Date paid Cents per share
Final for the previous year 21 October 2019 30.0 9,808 11,443
Interim for the current year - 4,904
Dividends paid during the year 9,808 16,347

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.
Liabilities under bailment agreements are due for payment within the next 12 months.
2020
$000
2019
$000
Total vehicle floorplan finance 42,851 58,613

24 At call deposits

The Company offers for subscription unsecured call debt securities (Deposits) that are repayable on
demand. Acceptance of Deposits is restricted to shareholders, employees and their associates.
At reporting date the Deposits were constituted by, issued under and described in, a trust deed dated
13 September 2016 between the Company, its Guaranteeing Subsidiaries (as therein defined) and
Public Trust as supervisor for the holders of Deposits (the Depositors). Under the terms of the trust
deed the Guaranteeing Subsidiaries unconditionally guarantee, jointly and severally, the repayment
of the deposits together with interest thereon by the Company and by each of the other Guaranteeing
Subsidiaries. The governance documents, including a product disclosure statement, are available on
the Disclose Register.
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 2020 was 2.30% (2019: 3.25%).

33

2020
$000
2019
$000
Deposits 27,389 24,008

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”.

During the year, the facility limit with BNZ was increased by $5m.
2020
$000
2019
$000
Bank borrowing 19,235 35,856

Combined facility limits 65,000 60,000

26 Financial instruments

Financial instruments primarily comprise cash at bank, receivables, payables, credit contracts, forward
exchange contracts, shares in companies, borrowings and loans.

Financial assets and liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A
financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Except for trade receivables that do not contain a financing component and are measured at
transaction price, all financial assets are initially measured at fair value adjusted for transaction costs
(where applicable).

Financial assets, other than those designated and effective as hedging instruments, are classified into
the following categories:
• amortised cost
• fair value through profit or loss
• fair value through other comprehensive income
The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset
Measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are
not designated as fair value through profit or loss):
• the assets are held to collect contractual cash flows
• the contractual terms of the assets give rise to cash flows that are only payments of principal
and interest
After initial recognition, the assets are measured at amortised cost using the effective interest rate
method. Discounting is ignored where the effect of discounting is not material.

34

Financial assets at fair value through profit or loss
Financial assets that are held under a different model than ‘held to collect’ or ‘held to collect and sell’
and assets whose cash flows are not solely payments of principal and interest are accounted for as
fair value through profit or loss. All derivative financial instruments fall into this category, except for
those designated and effective as hedge instruments. This category also contains any equity
investments.

Assets in this category are all measured at fair value with gains or losses recognised in profit or loss.
The fair values of the assets in this category are determined by reference to an active market or using
an alternative valuation technique where no market exists.

Financial assets at fair value through other comprehensive income
The Group had no financial assets in this category at 30 June 2020.

Impairment of financial assets
Recognition of credit losses is not dependent on identifying a credit loss event but instead considers
a broader range of information when assessing credit risk including past events, current conditions
and reasonable forecasts that could affect the expected collectability of future cash flows. In applying
this approach, distinction is made between:

• financial instruments that have not deteriorated significantly in credit quality since initial
recognition, or that have a low credit risk (Stage 1)
• financial instruments that have deteriorated in credit quality since initial recognition and whose
credit risk is not low (Stage 2)
• financial instruments that have objective evidence of impairment at the reporting date

Twelve month expected credit losses are recognised for Stage 1 instruments while lifetime expected
credit losses are recognised for Stage 2 instruments. Measurement of expected credit losses is
determined by a probability weighted assessment of the credit losses over the life of the instrument.

The Group makes use of a simplified approach in accounting for trade receivables. See note 11 for
more information.

Measurement of financial liabilities
Financial liabilities are initially measured at fair value and, where applicable, adjusted for transaction
costs. Subsequently, financial liabilities are measured at amortised cost using the effective interest
method except for derivative financial instruments that are designated and effective as hedging
instruments (see note 29).

Financial instruments by category
2020 2020 2019 2019
$000 $000 $000 $000
Restated

Fair value
through
profit or loss
Amortised
cost
Fair value
through
profit or loss
Amortised
cost
Assets
Cash and bank accounts - 16,995 - 7,182
Trade and other receivables - 41,726 - 55,335
Credit contracts - 3,758 - 4,499
Shares in companies 2,382 - 2,442 -
Financial derivatives – foreign exchange 630 - - -

Financial
liabilities at
amortised
cost
Financial
derivatives
at fair value
Financial
liabilities at
amortised
cost
Financial
derivatives
at fair
value
Liabilities
Bank borrowings 19,235 - 35,856 -
At-call deposits 27,389 - 24,008 -
Trade and other payables 30,325 - 33,837 -
Lease liabilities 14,988 - 16,466 -
Vehicle floorplan finance 42,851 - 58,613 -
Credit contracts 3,782 - 4,532 -
Financial derivatives – foreign exchange - - - 155

35

27 Reconciliation of liabilities arising from financing activities

Movements in liabilities from financing activities during the year were as follows:

At 1 July
2019 Cash flows
Non-cash
changes
At 30 June
2020

$000 $000 $000 $000

Restated

Bank borrowing – note 25 35,856 (16,621) - 19,235

At call deposits – note 24 24,008 3,381 - 27,389

Vehicle floorplan finance – note 23 58,613 (15,762) - 42,851

Total short term borrowings 118,477 (29,002) - 89,475

Credit contracts – note 14

Short term 1,773 - (370) 1,403

Long term 2,759 - (380) 2,379

Lease liabilities – note 15

Short term 1,668 145 - 1,813

Long term 14,798 (1,623) - 13,175

Total liabilities arising from financing
activities 139,475 (30,480) (750) 108,245

36

Notes on managing risk
28 Financial risk management

28 (a) Credit risk
Financial instruments which potentially subject the Group to concentrations of credit risk consist
principally of bank balances, deposits, receivables and credit contracts.
The carrying amounts of financial assets represents the Group’s maximum credit exposure.
The Group places its cash and short term investments with high credit quality financial institutions (as
determined by independent credit rating agencies) and limits the amount of credit exposure to any one
financial institution.
The Group performs credit evaluations on all customers requiring credit and generally does not require
collateral or other security to support financial instruments with credit risk.
Concentrations of credit risk with respect to accounts receivable are limited due to the large number of
customers included in the Group’s customer base.
The rate of impairment of amounts receivable under credit contracts (note 14) is low. If the incidence of
recourse requiring balances to be written off were to increase by 0.1% it would increase the annual
amount written off through profit or loss by $0.01m (2019: $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. The specific rates that the Group was exposed to during
the year were:
2020 2019
Bank overdrafts 5.00% - 10.50% 5.23% - 10.50%
At call deposits 2.30% - 3.15% 3.25%
Bank borrowing facilities 1.65% - 3.15% 2.78% - 3.15%

Bank borrowings are unsecured and fall within the agreed committed facility requirements in place with
the Group’s bankers. These facilities have maturity dates ranging from March 2021 to March 2023 and
are expected to be renewed in the normal course of business. The facilities can be drawn on or repaid
at any time and interest rates are variable. The carrying value of these loans is considered to be the fair
value.
Interest rate sensitivity
The effect of a movement of 1% in interest rates would be to change finance costs in profit or loss and
equity by $0.466m per annum (2019: $0.598m).

28 (c) Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual payment obligations. The Group
monitors its cash on an ongoing basis to ensure it has sufficient credit facilities to meet its obligations.
The Group obtains funding for its operations from several sources. In addition to its shareholders’ funds
(made up of share capital and reserves), funding is also provided by depositors through the at call
deposit scheme and from banks and other financial institutions.
Financial liabilities in the form of at 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
the Group may not be able to continue to pay suppliers and staff or repay depositors.

If the finance companies were to withdraw the bailment facilities described in note 23 or were unable to
fund as many vehicles as required, the Group would have to seek alternative methods of funding the
vehicles. This could involve bailment agreements with other providers or additional bank funding to
purchase the vehicles outright. The consequences could include increased costs and disruption to the
supply of new vehicles for sale.

37

28 (c) Liquidity risk (continued)

The Group mitigates its funding risk by adopting prudent financial management practices (such as
closely monitoring its cash flows and regularly checking compliance with the financial ratios) and by
maintaining open and honest relationships with the banks and finance companies.
The extent of the bank facilities is disclosed in note 25 and bailment facilities in note 23.

28 (d) Foreign currency risk
The Group enters into fixed rate foreign exchange contracts to create cash flow hedges for the purchase
of trucks on a contract-by-contract basis with firm customer orders and for units ordered for stock. Other
short term transactions are covered by forward exchange contracts and accounted for at that rate.
The principal values (stated in New Zealand Dollars) of forward exchange contracts entered into and
outstanding at each reporting date were denominated in the following currencies. All forward exchange
contracts have value dates of less than 12 months.

Currency
2020
$000
2019
$000
Australian Dollars (AUD 21.49m) 22,403 24,501
Euros (EUR 2.39m) 4,150 10,938
Total 26,553 35,439

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 2020 or 30 June 2019.

29 Financial derivatives – foreign exchange

Foreign exchange asset / (liability)
2020
$000
2019
$000
Balance at 1 July (155) 350
Movement during the year through
Other comprehensive income 785 (505)
Profit or loss - -
Balance at 30 June 630 (155)

The Group uses forward currency contracts to hedge its foreign currency risks. Such derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when the fair value is negative.

For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the
exposure to variability in cash flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an
unrecognised firm commitment.

At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which it wishes to apply hedge accounting and the risk management objective and
strategy for undertaking the hedge.

The documentation includes identification of the hedging instrument, the hedged item, the nature of the
risk being hedged and how the Group assesses whether the hedging relationship meets the hedge
effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the
hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the
following effectiveness requirements:

• there is ‘an economic relationship’ between the hedged item and the hedging instrument
• the effect of credit risk does not ‘dominate the value changes’ that result from that economic
relationship
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the Group actually hedges and the quantity of the hedging instrument that the
Group actually uses to hedge that quantity of hedged item

38

Hedges that meet all the qualifying criteria for hedge accounting all fall into one category of hedge and
are accounted for as described below:

Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in Other Comprehensive
Income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in profit
or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the
hedging instrument and the cumulative change in fair value of the hedged item. The Group continues
to designate all of the forward contracts as hedging instruments.

The amounts accumulated in Other Comprehensive Income are accounted for depending on the nature
of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition
of a non-financial item such as inventory, the amount accumulated in equity is removed from the
separate component of equity and included in the initial cost or other carrying amount of inventory.

39

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:

2020
$000
2019
$000
Short term benefits (including salary, incentives, profit share, use of motor
vehicles and other benefits) 6,521 6,982
Post-employment benefits (including contributions to retirement savings
schemes) 221 238
Share related benefits - -
Total remuneration benefits 6,742 7,220

Key management personnel includes current Directors (executive and non-executive), key management
at the group office and chief executives of all trading subsidiaries.
Some key management personnel have funds on deposit with the Company by way of its unsecured at
call debt securities – note 24 – on the same terms and conditions as all other depositors.
Also see remuneration of Directors on page 51 and remuneration of employees on page 52.

The CMC Group Workplace Savings Scheme
The Company is the sponsoring employer of the CMC Group Workplace Savings Scheme (the Scheme)
which is a defined contribution scheme. It is categorised as an employer-related restricted workplace
savings scheme registered under the FMCA 2013.
The Company ceased to be the trustee of the Scheme when a new trust deed was registered on
18 November 2016 but continues to provide administrative services to the Scheme and received fees
of $0.086m during the year (2019: $0.069m).
The Scheme holds 162,196 (2019: 162,196) ordinary shares in the Company representing 3.1% (2019:
4.6%) of its total assets. The Company is a related party to the Scheme and FMCA limits investments
in related parties to 5% of total assets.
All transactions between key management personnel, the Scheme and Group companies were in the
normal course of business and provided on arm’s length commercial terms.

31 Contingencies

2020
$000
2019
$000
Contingent assets
Contingent liabilities
-
-
-
-

The Group has provided guarantees to PACCAR Australia Pty Limited in respect of obligations owed to
that company. The guarantee is in proportion to the shareholding in Southpac Trucks Limited and the
maximum exposure for the Group is $1.3m.

32 Events after the reporting date

On 1 July 2020, the trading operations of Capital City Motors Limited and Stevens Motors Limited were
merged into one operation under Capital City Motors Limited. From that date Stevens Motors Limited
became a non-trading subsidiary. On the same date, the assets and business of a dealership in
Greymouth, Grey Ford, were acquired by Hutchinson Motors Limited.

On 12 August 2020, the Government re-introduced restrictions on business and leisure activities in
response to a re-emergence of Covid-19. All dealerships continued to trade normally except for those
in the Auckland region, who operated a restricted service until the restriction level was reduced on 30
August. Restrictions were further eased for the Auckland region from 23 September. The rest of the
country had moved to the lowest alert level as of 21 September.

40

On 25 August 2020 a dividend of 32.0 cents per share was declared to be paid fully imputed on
5 October 2020, representing a total payment of $10.5 million.

On 1 September 2020, UDC Finance Limited, through which vehicle bailment facilities are obtained,
was sold by ANZ Bank New Zealand Limited to the Shinsei Bank Group of Japan.

On 9 September 2020, the Product Disclosure Statement for the at call deposit scheme was updated
and the maximum amount of deposits on offer increased by $10m to $40m.

33 Change in accounting standard

The new accounting standard on leases, NZ IFRS 16 – Leases, was adopted by the Group from 1 July
2019. All leases held at that date, previously treated as operating leases, were brought into the
statement of financial position, with the exception of leases on low value assets or those with a remaining
term of less than 12 months. The Group elected to take the full retrospective approach and recognise
the right of use asset and the lease liability from the original start date of each lease. Prior periods have
been restated to recognise the adoption of the standard.

Lease liabilities were measured at the present value of the future lease payments discounted using the
Group’s incremental borrowing rate at the start date of the lease. The right of use asset was measured
at an amount equal to the lease liability as there were no prepaid or accrued lease payments before
the start date of the leases or any incentives. Payments were discounted using the Group’s weighted
average incremental borrowing rate at the start date of each lease. These rates varied between 3.0%
and 7.1%.

Lease liabilities are being repaid over the term of the lease, with a charge being recognised in the
statement of financial performance based on the Group’s borrowing rate at the start of the lease. Right
of use assets are being depreciated on a straight line basis over the term of the lease. The term of the
lease includes all rights of renewal where there is a reasonable certainty that the right will be renewed.
The Group has benefited from the use of hindsight when determining the term of the lease and
included rights of renewal that have already been exercised.

As a result of bringing the value of leases onto the statement of financial position, the Group has also
recognised the impact of these transaction on deferred tax. At the start date of each lease a deferred
tax asset is recognised for the value of the lease liability and a deferred tax liability recognised for the
value of the right of use asset. The deferred tax asset reduces as the lease liability is repaid and the
deferred tax liability reduces as the asset is depreciated.

The impact of these changes on the financial statements is as follows:

As
previously
treated
$000
Adjustments
$000
Restated
$000
Consolidated statement of financial performance

For the year ended 30 June 2019

Depreciation and amortisation 4,371 1,584 5,955
Property occupation costs - rent 6,723 (2,175) 4,548
Interest 4,992 689 5,681
Trading profit before tax 33,693 (98) 33,595
Taxation – deferred tax 80 (27) 53
Trading profit after tax 22,060 (71) 21,989
Profit attributable to shareholders 21,901 (71) 21,830
Profit for the year 23,574 (71) 23,503

Consolidated statement of comprehensive income
For the year ended 30 June 2019
Profit for the year 23,574 (71) 23,503
Total comprehensive income for the year 30,245 (71) 30,174

41

As
previously
treated
$000
Adjustments
$000
Restated
$000
Consolidated statement of financial position
At 30 June 2019
Shareholders’ equity 209,155
Depreciation and amortisation (8,487)
Property occupation costs - rent 12,051
Interest (5,420)
Deferred tax movement 520
209,155 (1,336) 207,819
Non-controlling interest 3,139 (14) 3,125
Total equity at end of year 212,294 (1,350) 210,944

Lease liabilities - current - (1,668) (1,668)
Lease liabilities - non current - (14,798) (14,798)
Deferred tax asset - 525 525
Fixed assets - right of use asset - 14,591 14,591

Consolidated statement of cash flows
For the year ended 30 June 2019
Net operating cash flows 36,582
Property occupation costs - rent 2,175
Interest (689)
36,582 1,486 38,068

Net investing cash flows (15,905)
Purchase of right of use assets (1,451)
(15,905) (1,451) (17,356)

Net financing cash flows (23,746)
Proceeds from lease liabilities 1,451
Repayment of lease liabilities (1,486)
(23,746) (35) (23,781)

Statistics per share
Profit attributable to shareholders (cents) 67.0
Depreciation and amortisation (4.8)
Property occupation costs - rent 6.6
Interest (2.1)
Deferred tax 0.1
67.0 (0.2) 66.8

Trading profit after tax (cents) 67.5
Depreciation and amortisation (4.8)
Property occupation costs - rent 6.6
Interest (2.1)
Deferred tax 0.1
67.5 (0.2) 67.3

42

Grant Thornton New Zealand Audit
Partnership

L3, Grant Thornton House
134 Oxford Terrace
PO Box 2099
Christchurch 8140
T +64 3 379 9580
F +64 3 366 3720
www.grantthornton.co.nz

To the Shareholders of The Colonial Motor Company Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of The Colonial Motor Company Limited (the “Company”)
and its subsidiaries (the “Group”) on pages 9 to 41 which comprise the consolidated statement of financial
position as at 30 June 2020, 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 2020 and its financial performance and cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (“NZ IFRS”)
issued by the New Zealand Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued
by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of
our report. We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand)
issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance
with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group.

Independent Auditor’s Report

43

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 audit matter is significant How our audit addressed the key audit matter
Inventory valuation and existence
As at 30 June 2020, inventory of $139m 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 (including
COVID-19), 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 and note is
disclosed on page 21.

In obtaining sufficient appropriate audit
evidence we:
• 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, to used car prices
of similar products 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 verified the existence of new, used and
demonstrator vehicles, including those financed
through floor plan.
Accuracy of revenue
The Group has revenue of $755m. There are
a number of factors that could affect this
reported amount, including:
• Whether revenue recognition policies are
appropriate and consistently applied
across all 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.

In obtaining sufficient appropriate audit
evidence we:
• 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 in accordance with NZ
IFRS 15; 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 the validity of accounts
receivable at the year end.

44

Why the audit matter is significant How our audit addressed the key audit matter
Initial application of the new IFRS 16 –
Leases standard
The new IFRS 16 Leases standard came
into effect for reporting periods commencing
on or after 1 January 2019 and has been
implemented in the financial year under
audit.
The Group has elected to apply IFRS 16
under the full retrospective approach.
Therefore, the prior reporting period
presented is restated, and the cumulated
impact of the first adoption of the standard
presented as at 1 July 2018.
IFRS 16 modifies the accounting treatment
of operating leases at inception, with the
recognition of a right of use asset on the
leased asset and of a liability for the lease
payments over the lease contract term.
Due to the judgements applied and the
significance of impact to the consolidated
financial statements, we consider this a key
audit matter.
The operating lease accounting policy and
note is disclosed on page 26 and the impact
of the change in accounting standard is
disclosed on page 40.

In obtaining sufficient appropriate audit
evidence we:
• Obtained an understanding of the Group’s
leasing arrangements and processes
implemented in adoption of IFRS 16;
• Considered the completeness of lease data with
reference to audit work performed over lease
commitments as disclosed in the 2019
consolidated financial statements and
consideration of evidence obtained through site
visits at each dealership;
• Considered the integrity and accuracy of the
lease calculations by reperforming calculations
and agreeing a representative sample of leases
to supporting documentation;
• Assessed the appropriateness of discount rates
applied and recalculated a representative
sample; and
• Determined if disclosures contained within the
consolidated financial statements relating to
leases, including the implementation of IFRS 16
complies with the requirements of the financial
reporting standards.
Information Other than the Financial Statements and Auditor’s Report thereon
The Directors are responsible for 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 2020 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.

45

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 financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
A further description of the auditor’s responsibilities for the audit of the financial statements is located on the
External Reporting Board’s website at: https://www.xrb.govt.nz/assurance-standards/auditors-
responsibilities/audit-report-1/
Restriction on use of our report
This report is made solely to the Company’s Shareholders, as a body. Our audit work has been undertaken so
that we might state to the Company’s Shareholders, as a body, those matters which we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and 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

M Stewart
Partner
Christchurch

25 September 2020

46

Governance statement

The Colonial Motor Company Limited (CMC or Company) is a public company with its shares listed on
the New Zealand Stock Exchange (NZX) operated by NZX Limited.
CMC’s Board of Directors (Board) is committed to maintaining high standards of governance by
implementing a framework of structures, practices and processes that it considers appropriate and
effective. CMC’s corporate governance policies and procedures and its board and committee charters,
which document the framework, have been approved by the Board. Components of the system of
governance are reviewed from time to time.
This statement sets out how these measures meet the recommendations made in the NZX Corporate
Governance Code 2019 and the requirements of the NZX Main Board Listing Rules. The Board’s view
is that the corporate governance structures, practices and processes have followed these
recommendations and requirements in the year to 30 June 2020.
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 and Officers are reported to the market and Director’s
trades are disclosed in annual reports.
2. Board composition and performance
To ensure an effective board, there should be a balance of independence, skills, knowledge,
experience and perspectives.
The Company’s constitution specifies that there should be between five and seven directors. The Board
contains a mix of two independent and four executive and non-executive directors who are not
independent, which reflects the shareholder mix. Information about each Director regarding their
experience, length of service, independence, ownership interests and meeting attendance is disclosed
in the annual report.
As vacancies arise, new directors are identified by the Nominations Committee of the Board and then
must stand for election by the shareholders at the next annual meeting. A person identified by the
Nominations Committee can be appointed as a director by the Board during the year but then must
stand for election at the next general meeting. A person can also be nominated by shareholders and
stand for election as a director at an annual meeting.
The constitution specifies that a director cannot serve (without re-election) past the third annual meeting
following their appointment or three years, whichever is longer.
3. Board committees
The board should use committees where this will enhance its effectiveness in key areas, while still
retaining board responsibility.
Where additional detailed supervision or consideration is required, the Board establishes committees
that operate by making recommendations to the Board for final resolution. There are three standing
committees with specific written terms of reference.

47

Audit and Compliance Committee: Members of the Committee have relevant financial qualifications
and/or commercial experience. The Committee met five times during the reporting year, with all its
members present at each meeting.
Comprising A J Waugh (Chairman), J W M Journee and J P Gibbons, the Committee meets regularly
with management, the internal auditor and the external auditor to:
• review the adequacy of controls to identify and manage areas of potential risk and to safeguard
the assets of the Group
• maintain the independence of the external auditor and review the external audit functions
generally
• evaluate the processes to ensure that financial records and accounting policies are properly
maintained in accordance with statutory requirements and financial information provided to
shareholders and the Board is accurate and reliable.
Management is delegated the responsibility for developing, maintaining and enforcing the system of
internal controls. The same basic set of controls is applied across the Group. Monthly reports from
each dealership form a key element of the financial control mechanism. An internal auditor works in
conjunction with the external auditor to complete a review of all dealerships every year to ensure
maintenance of the standard of accounting practices and for compliance with the internal policies and
procedures. The internal auditor regularly reports to the Committee.
Remuneration Committee: J P Gibbons (Chairman) and A J Waugh make up this Committee, the
purpose of which is to ensure the Directors and senior executives are fairly and reasonably rewarded
for their individual contributions. The Committee met once during the reporting year. CMC’s policy is
to review remuneration levels for directors and senior staff every two years. Directors’ fees were last
reviewed in 2018 but due to the Covid-19 economic environment, fees will not be reviewed again until
2021.
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 this Committee.
There were no Director changes during the reporting year, so no Committee meeting was required.
4. Reporting and disclosure
The board should demand integrity in financial and non-financial reporting and in the timeliness and
balance of corporate disclosures.
The Board schedules at least eight meetings each year to monitor the progress of management on
achieving the targets and objectives the Board has set. The Board usually meets in Wellington but at
least once a year it holds a meeting at a dealership in order to meet front-line staff and experience
operations at first hand. Additional ad hoc meetings are held when necessary, sometimes by telephone
conference. During the reporting year the Board held 13 meetings, six with all of the Directors physically
present and seven with differing blends of telephone call or video conference and a number of Directors
able to physically attend.
The Board of Directors issues three reports annually - a Half Year Report, a Preliminary Result and an
Annual Report - to provide shareholders with the information they need to monitor their investment in
the Company. The CMC reports are designed to deliver that information in a clear and concise manner.
The reports are mailed to all shareholders and are available for download from CMC’s website
(www.colmotor.co.nz). Shareholders may register to receive the interim and preliminary reports
electronically.
In the reporting period CMC also made two additional disclosures to shareholders and on the NZX
during and following the Covid-19 lockdown.
A condition of listing is that CMC complies with the listing rules issued by the NZX. The rules include
the requirement to continuously disclose market sensitive information. The market acts in the position
of all current and potential shareholders and disclosure via the NZX is generally considered adequate
notice. However, CMC also has a policy of communicating directly with its shareholders whenever
practical.

48

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 for
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 from the internal auditor. Management provides the
Committee with an annual internal management and regulatory compliance summary report.
Health & Safety: CMC is committed to providing healthy and safe environments for all its customers,
employees, contractors and other visitors to its facilities. A comprehensive group-wide workplace safety
management programme is operated with a Health 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 regular detailed reports, considers health and safety issues at each of its meetings
and experiences first-hand the practicalities of maintaining a healthy and safe workplace during its
regular dealership visits.
7. Auditors
The board should ensure the quality and independence of the external audit process.
The role of the external auditor is to report to shareholders on the truth and fairness of the financial
statements prepared by management, authorised by the Board and included in the annual report.
The audit partner and the chairman of the Audit and Compliance Committee meet at least twice a year,
the auditor attends Committee meetings at least three times a year and the audit partner attends annual
meetings. The scope of discussions is not limited but includes issues identified during audits, audit
planning and staffing and the extent of non-audit work by the audit firm. The 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.
8. Shareholder rights and relations
The board should respect the rights of shareholders and foster constructive relationships with
shareholders that encourage them to engage with the issuer.
The Board acts in a stewardship role on behalf of all shareholders. It approves the strategic direction
of the Group, oversees the management of its capital resources, monitors its performance and
compliance, ensures its assets are safeguarded and its workplaces are safe.
Shareholders meet in person at annual meetings to:
• consider the Company’s financial performance and financial position
• elect or re-elect directors

49

• record the appointment of an external statutory auditor
• set the maximum level of director remuneration following reviews in alternate years. The actual
amount paid to each director is disclosed in annual reports.
The shareholders adopted the current constitution in 2004 which specifies the administration of the
Company and the relationship with shareholders. Copies of the constitution are available from the
Company or can be downloaded from the New Zealand Companies Office website. The requirements
of the NZX Listing Rules are incorporated by reference into the constitution.
CMC maintains a website through which shareholders and interested stakeholders can communicate
with the Company.
Computershare Investor Services Limited maintains the register of shareholders.

50

Disclosures as required by the Companies Act 1993

(a) Directors’ profile and interests
In relation to sections 140 and 211(1)(e) of the Act, no Director has declared any interest in a related party
transaction with the Company during the year. The Company has received the following general
disclosures of interest pursuant to section 140(2) of the Act that remain in place at the date of this report:

James Picot Gibbons, BCA (Hons), CA
Lower Hutt

Jim has worked in the motor vehicle industry throughout his career. After graduating he was employed
as a dealership accountant in 1974. He has since occupied many different roles within the Company’s
dealerships. Immediately before retiring from full-time employment, he was dealer principal at Energy
City Ford in New Plymouth, a position he had held for many years.

Jim has been a Director since 1992 and has been Chairman since 2011. He is a Director of all of the
Company’s subsidiaries. Jim is a life member of the Motor Trade Association and was a Director of
MTA and MTA Group Investments Limited until 2019.

Graeme Durrad Gibbons, BCom, CA
Lower Hutt

After gaining a commerce degree at Otago University, Graeme began his career with Ford New Zealand
and join the CMC Group in 1984. He took up the role of Chief Executive in 1990 and became a Director
of the Company in 1995.

Graeme is a Director and Chairman of all of the Company’s subsidiaries. He was previously a Director
of Motor Trade Finances Limited and Chairman of its Audit Committee.

Matthew James Newman, BA
Auckland

Matthew is the Chief Executive Officer of the Group’s largest car dealership, South Auckland Motors
(Ford and Mazda), Southern Autos – Manukau, (Suzuki Citroen, Peugeot and Isuzu) and South
Auckland Honda (Honda). He joined the Group in 1986 having previously worked for Ford New Zealand
and became Dealer Principal of South Auckland Motors in 1991. Matthew is a past chairman of the
Ford Dealer Council and also of Counties Manukau Rugby Union. Matthew became a Director in
November 2013.

Stuart Barnes Gibbons
Lower Hutt

Stuart first joined the Group in 1982 as an apprentice technician in Morrinsville. He was the Chief
Executive / Dealer Principal of Stevens Motors, Lower Hutt, a position he held from 2002 until Stevens
Motors was merged with Capital City Motors on 1 July 2020. Stuart is managing the property project
for the new Lower Hutt hub facility and working on the successful transition with the management team
of the merged dealership. Stuart is the immediate past Chairman of the Ford Dealer Council. Stuart
became a Director in July 2014.

Ashley James Waugh, BBS
Te Awamutu

Ashley has experience in the dairy industry in New Zealand and Australia, with senior roles with the NZ
Dairy Board (now Fonterra) and as Chief Executive of National Foods Australia. Early in his career,
Ashley was marketing manager of Ford in New Zealand and Ford Lio Ho in Taiwan. He is currently a
Director of Seeka Limited. Ashley became a Director in November 2015.

John William Michael Journee, BCom
Auckland

John has held various senior executive positions in the retail industry in New Zealand and Australia
including with Noel Leeming and The Warehouse. He is currently a director of The Warehouse Group
Limited, The Warehouse Group Investments Limited and Farmlands Co-operative Society Limited and
member of the Quantiful Limited Advisory Board. John became a Director in December 2018.

51

(b) Remuneration of directors
Remuneration and all other benefits received by the directors who held office during the year ended 30
June 2020 are disclosed pursuant to section 211(1)(f) of the Act as follows:

Directors’ fees
2020
$
Total remuneration
2020
$
Total remuneration
2019
$
J P Gibbons (Chairman) 88,008 112,642 114,134
A J Waugh 56,680 56,680 54,500
G D Gibbons - 879,829 1,073,359
S B Gibbons - 274,215 219,605
M J Newman - 612,989 643,788
J W M Journee (appointed Dec 2018) 53,591 53,591 31,792
D M Wood (retired Nov 2019) 24,979 24,979 57,679

Remuneration for the Chairman, additional to directors’ fees, includes the provision of a motor vehicle.
D M Wood was Chairman of the Audit and Compliance Committee and received additional directors’ fees
commensurate with the position until his retirement in November 2019. A J Waugh was elected Chairman
of the Audit and Compliance Committee in December 2019 and has received the additional fees from that
date. Non-executive Directors took a voluntary fee reduction of 20% during the April Covid lockdown.
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 2020 as disclosed above. No other employee of the
Company or of any Group subsidiary retains or receives any remuneration or other benefits as a director.
The remuneration package of the Group Chief Executive, G D Gibbons (who is also a director), has in the
year to 30 June 2020 a fixed component (including salary, motor vehicle and superannuation
contributions) of $415,134 (2019: $415,134) and an annual short term incentive component based on the
current year’s trading profit performance of $464,695 (2019: $658,225). There are no long term incentives
or share schemes in place.
Dealer Principals/Chief Executive Officers of subsidiary companies receive a profit performance
component of their remuneration based on their dealership profit. The remuneration received by
M J Newman as an executive is shown for the twelve months to 30 June 2020 and includes a short term
profit performance component of $374,714 (2019: $377,657). Similarly, the remuneration of S B Gibbons
as an executive is shown for the twelve months to 30 June 2020 and includes a short term profit
component of $88,326 (2019: $39,274).
In accordance with clause 28.4 of its constitution, the Company may provide for director retirement
benefits. The total provided at 30 June 2020 was $268,500 (2019: $268,500). Directors appointed after
1 May 2004 are not eligible to receive a retirement allowance unless authorised by shareholder resolution.
As permitted by clause 29.4 of the Company’s constitution, an insurance policy is in place in relation to
directors and officers liability. The policy ensures that generally directors will incur no monetary loss as
a result of actions they undertake as directors. Certain actions are specifically excluded, such as incurring
penalties and fines that may be imposed in respect of breaches of the law.

(c) Use of company information by directors

During the year the Board did not receive any requests from directors to use Company information
provided to them in their capacity as an officer or employee that would not otherwise have been available
to them.

52

(d) Share dealings by directors

Directors have disclosed under Section 148(2) of the Act the following acquisitions and disposal of a
relevant interest in shares in the Company between 1 July 2019 and 31 August 2020.

Director

Number of shares
acquired/ (disposed)
Date of transaction

Price per
share
Type of interest

M J Newman 4,500 15 October 2019 $8.75 Beneficial
J P Gibbons
(1)
(375,710) 9 March 2020 Nil Associated
J P Gibbons 90,237 9 March 2020 Nil Beneficial
J P Gibbons 90,237 9 March 2020 Nil Non-beneficial
J P Gibbons 15,000 9 March 2020 Nil Associated
J P Gibbons 15,000 9 March 2020 Nil Associated
S B Gibbons

12,927 30 March 2020 $5.50 Beneficial
S B Gibbons

12,073 31 March 2020 $5.40 Beneficial
J P Gibbons 3,994 1 April 2020 $5.04 Beneficial
J P Gibbons 5,872 1 April 2020 $5.01 Beneficial
A J Waugh 500 2 April 2020 $5.02 Beneficial
A J Waugh 1,000 2 April 2020 $5.12 Beneficial
A J Waugh 2,415 2 April 2020 $5.20 Beneficial
S B Gibbons 4,271 14 April 2020 $5.50 Beneficial
S B Gibbons 450 15 April 2020 $5.50 Beneficial
S B Gibbons 15,000 1 May 2020 $5.70 Beneficial

(1)
Distribution from the Estate of Nancy Lucy Gibbons.
Directors disclosed no other transactions in the shares of the Company during the period.
(e) Composition of the Board
All 6 of the Directors and the 13 officers (direct reports to the Group Chief Executive) at the reporting date
were male (2019: 7 Directors - male, 13 officers - male).
(f) Remuneration of employees
During the year to 30 June 2020 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
$ 2020 2019 $ 2020 2019
100,001 - 110,000 53 50 290,001 - 300,000 1 -
110,001 - 120,000 32 27 310,001 - 320,000 1 3
120,001 - 130,000 19 21 330,001 - 340,000 1 -
130,001 - 140,000 18 13 340,001 - 350,000 - 1
140,001 - 150,000 17 14 360,001 - 370,000 1 3
150,001 - 160,000 11 14 370,001 - 380,000 1 -
160,001 - 170,000 2 8 380,001 - 390,000 1 1
170,001 - 180,000 7 1 390,001 - 400,000 1 -
180,001 - 190,000 4 4 430,001 - 440,000 1 -
190,001 - 200,000 5 6 460,001 - 470,000 - 1
200,001 - 210,000 6 6 470,001 - 480,000 1 1
210,001 - 220,000 4 4 490,001 - 500,000 1 -
220,001 - 230,000 2 3 510,001 - 520,000 - 1
230,001 - 240,000 2 2 530,001 - 540,000 - 1
240,001 - 250,000 2 1 590,001 - 600,000 - 1
250,001 - 260,000 1 - 720,001 - 730,000 - 1
260,001 - 270,000 1 - 730,001 - 740,000 1 -
270,001 - 280,000 2 - 1,130,001 - 1,140,000 1 -
280,001 - 290,000 - 2 1,430,001 - 1,440,000 - 1
Total 200 191
Total full time equivalent employees 965 997

53

Disclosures as at 30 June 2020 as required by the New Zealand Stock Exchange
Listing Rules

(a) Director independence

The following directors were Independent Directors at the reporting date:
A J Waugh
J W M Journee
The following directors were not Independent Directors at the reporting date:
J P Gibbons
G D Gibbons
M J Newman
S B Gibbons

(b) Directors’ relevant interests at 30 June 2020
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
2020 2019 2020 2019 2020 2019
G D Gibbons 1,737,849 1,737,849 1,300,825 1,300,825 104,520 104,520
J P Gibbons 1,521,184 1,421,081 1,126,086 1,035,849 167,560 513,270
S B Gibbons 1,975,299 1,930,578 176,087 176,087 6,151 6,151
M J Newman 30,000 25,500 - - - -
A J Waugh 8,365 4,450 - - 376 376
J W M Journee 2,613 2,613 - - - -

(c) Substantial Security Holders
As required by section 293 of the Financial Markets Conduct Act 2013, the Substantial Security Holders
as at 31 August 2020 (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 2020 was made up of 32,694,632 ordinary shares. The
above disclosures include voting securities arising by reason of joint holdings, powers of attorney and
directorships as specifically required by section 280(1) of the Financial Markets Conduct Act 2013. No
shares have been counted more than once in the determination of Substantial Security Holders.
A number of shares identified under J P Gibbons are also jointly held or have trustees in common with
D M Gibbons, B R Gibbons and P L & L C Bennett.
A number of shares identified under S B Gibbons are also jointly held or have trustees in common with
A D Gibbons and L B Rogerson.
A number of shares identified under G D Gibbons are also jointly held or have trustees in common
with A K Gibbons, S D & D M Wood, R D Gibbons, A D & G V Beaumont, D D & B W Harrison and
G D & I W Watson.

54

(d) Distribution of shareholders and shareholdings
This distribution information reflects the position as at 31 August 2020.
Number of shareholders Number of shares
Number % Number %
1 - 999 303 19.0 139,144 0.5
1,000 - 9,999 962 60.5 3,148,170 9.6
10,000 - 99,999 265 16.6 6,709,003 20.5
100,000 - 999,999 57 3.6 17,436,709 53.3
1,000,000 + 4 0.3 5,261,606 16.1
Total 1,591 100.0 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
%
2020
(1)
$6.85 20/04/20 - - 4.7 (195.0) (153.3) (17.4)
21/10/19 30.0 41.7
2019 $8.80 15/04/19 15.0 69.4 8.7 81.0 150.4 18.8
15/10/18 35.0
2018 $8.00 16/04/18 15.0 63.9 8.5 50.0 113.9 15.2
17/10/17 31.0
2017 $7.50 18/04/17 13.0 55.6 9.0 130.0 185.6 29.9
17/10/16 27.0
2016 $6.20 18/04/16 13.0 45.8 8.0 45.0 90.8 15.8
19/10/15 20.0

Note: Yields are calculated on the share price at the beginning of each year. The share price at 30 June
2015 was $5.75.
(1)
Due to the effects on the Company’s business of the Covid-19 nation-wide level 4 lockdown, the interim dividend of 15.0 cps,
that had been declared to be paid on 20 April 2020, was cancelled.

55

Fifty largest shareholdings as at 31 August 2020

Shares %
AD & SB Gibbons & LB Rogerson 1,742,228 5.3
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 & DM Gibbons & PL Bennett 783,653 2.4
BR & JP Gibbons & PL Bennett (Estate RC Gibbons) 664,006 2.0
PL & LC Bennett & JP Gibbons 634,030 1.9
BR & CM Gibbons & PL Bennett 627,208 1.9
RJ Field & AJ Palmer 600,000 1.8
Graeme Durrad Gibbons 564,207 1.7
MI & C Louisson & RM Carruthers 563,777 1.7
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 396,695 1.2
Hart Capital Partners Limited 357,841 1.1
May Alice Gibbons 355,196 1.1
RD Gibbons, SD Wood & GD Gibbons 354,810 1.1
CG & JG Harrison 335,244 1.0
EA Romans 325,482 1.0
KS, SKE & J Bale 324,244 1.0
RB & JG Tait & IJ Craig 310,006 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 252,000 0.8
K Enright & C Louisson 251,366 0.8
CM Louisson & N Tarsa 241,804 0.7
Stuart Barnes Gibbons 233,071 0.7
GD & AK Gibbons & SD Wood 209,203 0.6
Maldon Hector Whitwell 200,000 0.6
MC Duurentijdt, JT van Gaal & KD Trustees Limited 190,000 0.6
TA Peglar 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 Limited 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
Estate of Judith Gibbons Bale 147,929 0.5
HA Louisson, CJ Warren & JA Piper 140,870 0.4
IF Michie 135,730 0.4
Anita Forbes Peake 132,480 0.4
FT Gibbons & ST Wilson 122,413 0.4

Total of fifty largest shareholdings 20,984,204 64.2
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.

Today the CMC Group’s core business is the operation of Ford
dealerships each holding a franchise in its own right from the Ford
Motor Company of NZ Ltd. Seven of these dealerships also hold Mazda
franchises. CMC, through Southpac Trucks, is the NZ distributor and
retailer of Kenworth and DAF heavy duty trucks and in
Southland/Otago, Agricentre South retails New Holland, Case IH and
Kubota tractors and equipment.
The Colonial Motor Company originated from William Black’s
coachbuilding factory which started operations in 1859 at 89
Courtenay Place, Wellington. In 1881 it was taken over by Rouse &
Hurrell, who expanded the business with new three storied premises
calling it Rouse & Hurrell’s Empire Steam and Carriage Works. This
partnership was formed into a limited liability company in 1902 with Mr
Edward Wade Petherick the first Secretary of the Company. The Ford
Motor Car Agency was taken up in 1908 and in August 1911 a new
name “The Colonial Motor Company Limited” was registered.
On Ford Canada’s recommendation a dominant shareholding and
control was acquired by Mr Charles Corden Larmour and the sale of
this majority holding and control to Mr Hope Gibbons and his family
interests was concluded in April 1918 after negotiations in 1916. At
that time there were 17 Authorised Ford Dealers in New Zealand of
which 10 were in the South Island. In 1919 the Company restructured
with a new memorandum and articles but the 1911 name was retained
and remains the same today. 2018 marked the company’s 100th
Annual Report.
The nine storied building at 89 Courtenay Place, designed by architect
J M Dawson to Ford plans, opened as the tallest Wellington
construction in 1922. It was the first motor vehicle assembly plant in
New Zealand - vehicles starting in boxes at the top and driving out
completed at the bottom. The Company later built assembly plants at
Fox Street, Parnell, Auckland and Sophia Street, Timaru. This was the
age of the Model T with Ford market share reaching a peak of 27% in
1926. The ‘CMC’ Building was sold in 2005.
In 1936, Ford Motor Company of New Zealand Limited established an
assembly plant at Seaview, Lower Hutt, and took over the distribution
of Ford products in New Zealand. CMC then concentrated on the retail
side of the business, operating the retail garages it then owned. The
1930's and 1940's were a time of survival with the depression, excess
stock of new product, and then no new vehicles available during the
war years and petrol rationing until 1950. Service became the key to
remaining in business.
Shortly after the end of the war the supply of new vehicles was
resumed and the 30 years up to 1980 saw the Group consolidate. The
Dealer organisation that developed proved to be one of the best retail
motor groups in New Zealand. Over this period nearly every
Dealership was either rebuilt, fully refurbished or relocated and new
Dealerships were opened in East, West and South Auckland to cater
for Auckland growth.
CMC was listed on the NZ Stock Exchange in 1962.
For the 50 years up to 1987, New Zealand had import licensing, local
assembly of vehicles and heavy additional sales taxes to control
overseas funds. The new vehicle industry under this regime peaked in
1973 and again in 1984 at 123,000 units. The dismantling of controls
and the arrival of second hand imports from Japan saw the industry
fall to just 66,500 new vehicles in 1992. It wasn’t until 2014, 30 years
later, that the new vehicle industry again reached the level seen in
1984. 2015, 2016, 2017 and 2018 all saw record industry sales.
The late 1980’s and all through the 1990’s was a period of change and
adaptation. Over a decade most smaller Ford dealerships either
closed down or merged with their neighbours. This resulted in fewer,
but larger, Ford dealerships. CMC closed or sold its smaller
dealerships and acquired others to expand its city and provincial
locations. Nelson was acquired during this period. Compounding the
changes 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 with locations in
Invercargill, Gore, Milton, Cromwell and Ranfurly.
In 1994 CMC acquired a major interest in Southpac Trucks, the NZ
distributor for Kenworth and Foden (since retired) and more recently,
DAF, heavy duty trucks which are all part of the USA based PACCAR
organisation. Southpac Trucks has since grown into a major player in
the NZ heavy truck industry with locations in Manukau City, Hamilton,
Rotorua, Palmerston North and Christchurch together with a
nationwide network of independent parts & service dealers.

Guinness Peat Group plc (GPG) made a takeover offer for CMC in
October 1995. Among the sellers who enabled GPG to acquire 33.9%
were some original Gibbons Family shareholders. As part of a plan to
maximise value to shareholders, Directors resolved to rationalise the
Company's non-dealership property holdings, repay the surplus funds
to shareholders and focus the Company on its core motor trade
activities.

In June 1997, GPG sold its shares to the MBM Group of Malaysia. Over
the following years, MBM sold down its holding in CMC, with many of
the shares acquired by members of the Gibbons family. MBM sold its
final block of 24.9% to a large number of individuals in 2003, resulting
in the addition of 300 shareholders to CMC.

In 1999, CMC's Auckland Dealerships joined with Ford Motor Company
and three other Ford dealerships to form Auckland Auto Collection
Limited (AACL). This move represented the biggest change in the Ford
franchise arrangements in New Zealand for over 60 years. During
1999, this new business acquired the Mazda Dealerships in Auckland
and Mazda Motors joined CMC and Ford as a shareholder. From 2002,
the business operated as three Ford and Mazda dealerships - North
Harbour, John Andrew and South Auckland. CMC sold its shareholding
back to AACL in May 2005 and, in return, acquired the South Auckland
Dealership.

On 16 June 2003, Ford Motor Company celebrated its centennial and
the production of the original Model A Fordmobile with CMC and its
forebears having been actively involved with Ford for 95 of those 100
years. In celebration of this long relationship, a history of the
Company's operations and activities, "Ford Ahead", was written and
published by Roger Gardner.

During the 2000’s CMC also acquired the Mazda franchises in
Invercargill, Dunedin, Timaru, Wellington, Lower Hutt and Masterton.
These were run as dual dealerships with the existing Ford dealerships.
The policy of adding Mazda to Ford dealerships ended when Ford USA
sold its interest in Mazda Japan in 2009.

It has been part of the Company's philosophy and success to own
property sites from which its retail subsidiary companies operate.

In 2014 CMC acquired Jeff Gray BMW & MINI with locations in
Wellington, Christchurch, Palmerston North and Hastings. The
business was subsequently sold in November 2016.

In recent years CMC has increased its franchise representation in a
number of locations as separate dealerships or aligned with existing
businesses and now includes: Suzuki, Nissan, Kia, Honda cars,
Hyundai, Isuzu Utes, Peugeot, Citroen, Mahindra; Suzuki, Kawasaki,
Yamaha & BMW motorcycles.

Details of the Group’s current dealerships, locations and franchises
represented are detailed on page 8 in the report.

The current major shareholdings in CMC are individual descendants of
Hopeful & Jessie Gibbons, who collectively hold over 60% of the
Company shares. There are also many descendants of the original
1902 subscribers to the Rouse & Hurrell Carriage Building Company
Limited who remain shareholders today.

Throughout the Company's history, change has always been with us
and our ability to adapt in good times and in bad has ensured ongoing
wellbeing and prosperity. As well, it has always been recognised that
dedicated, skilled and enthusiastic people have been, and will
continue to be, the key to the Company's future.

---

PO Box 6159
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

102
nd
ANNUAL REPORT 2020

The Directors of The Colonial Motor Company Limited present its
102
nd
annual report covering the year to 30 June 2020.
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

J G Tuohy
Acting Company Secretary
The Colonial Motor Company Limited

Preliminary result & dividend Notice of Change in Director’s Interest

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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