NZ Automotive full year results for FY2023
New Zealand Automotive
Investments Limited
102 Mays Road,
Onehunga,
Auckland, 1061
info@nzautomotiveinvestments.co.nz
nzautomotiveinvestments.co.nz
29 May 2023
Market announcement
NZX:NZA
FY23 results
Foundation reset brings improved profit in Q4
NZ Automotive Investments Limited (NZAI) (NZX:NZA) has today reported improved underlying earnings
for FY23, largely driven by significant increases in the last quarter to 31 March 2023.
Summary of key results
(Figures quoted are in NZ dollars. Comparisons are made against FY22.)
xRevenue and income: $82.7m, increased 25%
1
.
xVehicle sales: Up 6% to 8,367.
xUnderlying EBITDA
2
including finance income: $6.0m, up 26%.
xNet profit after tax (NPAT): $1.3m, down $1.3m (including $1.0m of restructuring FY23, $0.9m
non-recurring income FY22)
xUnderlying NPAT: $2.0m, up 18%.
xUnderlying earnings per share (EPS): 4.4 cents per share (cps) against 3.7cps for FY22.
The Company’s full year revenue and income increase of 25% to $82.7m was driven by a boost in sales
volumes against the same period last year, combined with inflationary uplift in the prices of vehicles sold.
While the New Zealand dealer to public used car market increased by 3% in the twelve months to 31
March 2023
3
, 2 Cheap Cars’ vehicle sales are up 6% for the year when compared with FY22.
Gross margins have notably improved in the last quarter on the back of optimised pricing and effective
promotional activity, as well as improved finance penetration. The full year contribution margin is up 18%
to $14.8m.
Operating costs (excluding non-recurring costs) have risen 2.3% to $8.8m, due to additional investment
in marketing. Management are strongly focused on controlling cost increases.
Underlying EBITDA including finance income increased 26% to $6.0m in HY23. Higher vehicle sales
volumes and improved vehicle margins in Q4 have contributed to the increase in underlying EBITDA
including finance income.
1
Includes interest income derived from NZ Motor Finance.
2
Excludes restructuring costs associated with board changes and other non-recurring consulting costs.
Underlying EBITDA and underlying NPAT are non-IFRS measures
.
3
Source: Autofile, dealer-to-public data.
Interest costs, including that associated with leases were up 58% on FY22, reflecting changes in the
official cash rate (OCR) and higher lending costs.
Non-recurring costs of $1.0m associated with significant changes at board and management level
included in FY23 and a one-off lease gain of $0.9m in FY22 has seen NPAT fall to $1.3m from $2.6m in
the previous corresponding period.
Underlying NPAT, excluding the non-recurring costs, increased by 18% to $2.0m in HY23. The profit in
the last quarter represented 40% of the total year’s profit.
Net operating cash flow excluding lending has improved to $10.9m, up from $0.6m for the same period
last year. This is largely due to EBITDA profit and reduced inventory levels resulting from shipping
constraints, coupled with more efficient stock management.
As at 31 March 2023, the Company is in compliance with all banking covenants and has cash of $3.8m,
no net debt and total equity of $16.2m.
NZAI has appointed UHY Haines Norton Sydney as its new auditors and agreed a replacement trade
finance facility for $5.0m with partner Finance Now with change over imminent. This will strengthen the
Company’s access to funds and improve cost of capital.
2 Cheap Cars
2 Cheap Cars grew its market share for the 12 months to 4.5%
4
, up from 4.4% in the same period last
year.
The business sold 8,367 vehicles in FY23 which is up 6% on the same period last year. Margin was
deliberately prioritised over volume as management refocused the sales strategy on margin expansion.
2 Cheap Cars continues to be well positioned to meet the increasing demand for electric and hybrid
vehicles (EV/HEVs). In FY23, the number of EV/HEVs sold as a proportion of total vehicle sales increased
to 41%, up 4% on last year.
Online vehicle sales lifted to 17% of total sales. Website development is planned to further improve the
customer journey, while increasing online sales and finance attachment.
Finance penetration rates decreased to 26% in FY23, down from 30% in FY22 due to the impacts form
Credit Contracts and Consumer Finance Act lending regulations and lifts in the official cash rate (OCR).
Disciplined focus from management saw the finance penetration improve to 29% in March 2023 and this
positive trend has continued with April 2023 achieving over 35%.
The Government’s Clean Car regime has constrained supply – and increased the cost – of used vehicles
into New Zealand across the industry. 2 Cheap Cars has a reliable source of used cars from Japan and
has increased prices to offset the cost pressure, consequently further supporting the Company’s strategic
focus on margin expansion.
Pricing and promotional activity has been optimised and the business has seen an uplift in margins in Q4,
resulting in enhanced profitability.
The vehicle import industry is currently experiencing shipping capacity constraints. To navigate these
difficulties, 2 Cheap Cars’ are using additional shipping suppliers.
2 Cheap Cars continues to be well regarded in the marketplace, receiving the highly commended used
4
Source: Autofile - based on 2 Cheap Cars’ vehicle sales as a proportion of dealer-to-public used cars sold in New
Zealand from 1 April 2022 and 31 March 2023.
car dealer award from the Readers Digest for 2023 to add to previous accolades.
NZ Motor Finance
The Board has taken the decision to focus on the core vehicle retailing business and to act as a finance
agent. As a result, the NZ Motor Finance loan book will remain in run down mode with the business
collecting the loan receivables and recouping investment.
NZ Motor Finance made a loss of $0.16m for the year, due to no new lending taking place since June
2023 and reversing a fair value gain generated through previous years’ lending.
The loan book reduced from $6.8m at 31 March 2022 to $3.9m at 31 March 2023. Loan book arrears are
being carefully managed by the business.
Dividend
As the Company transitions to deliver profitable growth, the Board has taken the prudent approach to
retain capital and no final dividend will be paid. The Company anticipates recommencing dividend
payments in HY24.
Outlook for FY24
With the foundations now reset, the Company is sharply focused on energising a more profitable vehicle
retail business, alongside stronger lucrative finance and insurance penetration rates.
2 Cheap Cars has a very clear value proposition and is seeing good demand for vehicles and finance
and insurance driven by immigration, the Government’s clean car regime, and the tightening economic
environment. The vehicles sold by 2 Cheap Cars fulfil a basic and essential need. Therefore, despite the
economic headwinds, the market segment is expected to remain buoyant.
Priorities to improve profitability:
• Gross margin expansion – Margin delivery will take priority over market share.
• EV/HEVs – Further leveraging our leadership position by supplying an unrivalled range of quality,
affordable vehicles.
• Supply chain – Focusing on a quality first approach, navigating shipping risks and progressing
insourcing some compliance for cost and control upsides.
• F&I – Finance and insurance acceleration plan is well underway, providing an incremental and
highly profitable stream.
• Three-year strategic property plan – focusing on retail locations where the 2 Cheap Cars scale
model works, providing opportunities for profitable growth.
• Increase in NPAT – Assuming favourable supply and trading conditions, NPAT expected to
double to between $3.8m and $4.2m by concentrating on gross margin expansion, prudent cost
management and increasing direct control of value chain.
CEO, Paul Millward said last quarter results, in particular, have been very encouraging.
“The Board and management are pleased to see solid progress being made having spent six months
resetting the foundations of 2 Cheap Cars. In the last three months to April 2023, the business has seen
markedly improved financial performance through gross margin expansion. The Company is now in a
good position to leverage its strengths, realise its considerable potential and grow shareholder value,’’ he
says.
Ends
This announcement has been authorised by NZAI Chair, Michael Stiassny.
For shareholder enquiries, please contact:
Paul Millward
CEO
Mobile: +64 27 448 6458
Email: paul.m@nzautomotiveinvestments.co.nz
About NZ Automotive Investments Limited (NZAI)
NZAI is an integrated automotive group operating throughout New Zealand via two subsidiaries:
Automotive Retail and Vehicle Finance. NZAI’s mission is to deliver quality cars and financing solutions
at the most affordable prices to the average New Zealander. Operating under the “2 Cheap Cars”
brand, its Automotive Retail company is one of the largest used vehicle sellers in New Zealand with 13
dealerships across the country. Its Vehicle Finance company operates under the “NZ Motor Finance”
brand. www.nzautomotiveinvestments.co.nz
---
FY23
results
Presentation
FULL
YEAR
FINANCIAL
RESULTS
TO
31
MARCH
2023
29
May
2023
NZ AUTOMOTIVE INVESTMENTS
1
IMPORTANT
NOTICE
&
DISCLAIMER
This presentation is given on behalf of NZ Automotive Investments Limited (NZAI) (NZX:NZA).Information in this presentation is for general information purposes only and is not an offer or invitation for subscription or purchase of, ora recommendation to invest in NZAI securities.The presentation should be read in conjunction with, and is subject to, NZAI’s latest set of financial statements for the period ended 31March 2023, released on the NZX.The presentation includes forward looking statements about NZAI and the environment that it operates in, which are subject touncertainties outside of NZAI’s control. NZAI’s results or performance may vary from these statements. Also included are statementsrelating to past performance, which should not be regarded as a reliable indicator of future performance.The presentation may contain information from third parties believed to be reliable, but no representations or warranties are made as tothe accuracy or completeness of such information.Non-GAAP and non-IFRS measures are used as management and the Board believe they provide useful information for readers toassist in the understanding of NZAI’s financial performance. Non-GAAP and non-IFRS measures do not have a standardised meaningand should not be viewed in isolation or be considered substitutes for measures reported in accordance with NZ IFRS. These measureshave not been independently
audited or reviewed.
All information presented is current at 31 March 2023, unless otherwise stated. All currency amounts are presented in NZ dollars, unlessotherwise stated.Authorised for release by the Board of Directors.
2
NZ
AUTOMOTIVE
INVESTMENTS
|
HY23
INVESTOR
PRESENTATION
Agenda
2. Business overview |
Paul Millward, CEO
3. Financial results |
Haydn Marks, CFO
5. Outlook 6. Q+A
3
NZ AUTOMOTIVE INVESTMENTS | FY23 INVESTOR PRESENTATION
4. Business update |
Paul Millward, CEO
1. Chair address |
Michael Stiassny, Chair
FY23
Summary
of
key
results
Revenue and income
$
82.7
M
up
25% from $66m
4
*.
Underlying NPAT is a non-IFRS measure that excl
udes non-recurring costs including restructuring.
*
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
*
NPAT
$
1.3
M
down
($1.3m) from $2.6m
(includes $1.0m restructuring & non-recurring costs)
FY23 Underlying NPAT
$
2.0
M
up
18% from $1.7m
Dividend
0.0
CPS
down
from 3.1 cps
Underlying EPS
4.4
CPS
up
from 3.7 cps
$
10.9
M
up
$10.3m from $0.6m
Q4 UNDERLYING NPAT
$
0.8
M
up
(representing 40% of full
year profit)
RETAIL CONTRIBUTION MARGIN
$
3.8
M
up
18% quarter-on-quarter
Operating cash flow
– ex. lending
FY23
Business
overview
• Board reset the Company foundations to focus on core vehicle retail business.• Appointed commercially-focused CEO Paul Millward in January 2023. • Optimised pricing and promotion delivered gross
margin expansion in Q4 and improved underlying
profitability for FY23.
• Total vehicle sales up 6.1% for the year, c
apturing 4.5% dealer-to-public market share.
• Finance and insurance (F&I) penetration rates down for year – but improved to 29% in March 2023.• EV and HEV sales increased 65% to 41% of total sales.• Shipping constraints partially mitigated. • Affordable used car segment remained buoyan
t, despite difficult economic conditions.
5
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
6
Rebuild•
Developed clear, commercially
‐
focused road map
• Appointed new auditors•
Secured trade finance facility (change over imminent)
Singular focus• Vehicle retail business – 2 Cheap Cars• Decision taken to run down NZ Motor Finance loan book and act as finance agentPeople and culture• Recruited GM Retail – a new strategic sales position• Building capability in the team through targeted recruitment and training• Empowering a culture of
delivery
with reshaped KPIs rewarding value and profit delivery
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
Resetting
to
deliver
sustainable
profits
Improving
profitability
7
Improving gross margins are driving profit increase
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
+4%
+87%
Gross margins up from 17% to 21% in the past 3 months
.... driving improved profitability
Financial
results
8
NZ
AUTOMOTIVE
INVESTMENTS
|
HY23
INVESTOR
PRESENTATION
FY23
Financial
results
9
Compared with FY22:• Revenue and income up 29% to
$82.7m
, driven by
increased sales volumes and inflationary impacts.
• Contribution margin up by 18% to
$14.8m
and further
improving in Q4.
• Operating expenses up by 2% to
$8.8m
, due to
investment in marketing.
• Underlying EBITDA including finance income up by 26%
to
$6.0m
as a result of the sales volume increases and
gross margin expansion.
• Net profit after tax (NPAT) of
$1.3m
includes
restructuring and other non-recurring costs of $1.0m.
• Underlying NPAT increased 18% to
$2.0m
.
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
FY23
FY22
Change
Revenue and income
82.7
64.2
29%
Sundry income
0.0
1.7
(98%)
Total revenue and income
82.7
66.0
25%
Contribution margin
14.8
12.6
18%
Operating expenses
8.8
8.6
2%
Assignment of leases
‐
(0.9)
(100%)
Underlying EBITDA inc finance income
6.0
4.8
26%
Underlying EBITDA margin
7.3%
7.2%
0%
Non
‐
recurring
costs
/
(Income)
1.0
(0.9)
N/A
EBITDA inc. finance income
5.0
5.7
(11%)
D&A
2.1
1.8
20%
EBIT
2.9
3.9
(25%)
Net interest expense
1.1
0.7
58%
NPBT
1.8
3.2
(43%)
Tax
0.5
0.6
(12%)
NPAT
1.3
2.6
(50%)
Tax effect of other items
0.7
(0.9)
(178%)
Underlying NPAT
2.0
1.7
18%
Underlying NPAT margin
2.4%
2.6%
(0.2%)
EPS
2.8
5.7
(50%)
Underlying EPS
4.4
3.7
18%
FY23
Cash
flow
Compared with FY22:• Net cash flow (excluding
loan book lending) increased
by $10.3m to
$10.9m
on the back of EBITDA result and
reducing inventory levels.
• The loan book is in run down mode, resulting in a
$5.7m increase in operating
cash
flow.
• Total net operating cash flow improved by $16.1m to
$13.6m.
• No final dividend will be paid. The company anticipates
recommencing dividend payments in HY24, if prudent to do so.
10
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
Cash flow summary
FY23
FY22
Change
Net cash flow ex. loan book lending
10.9
0.6
10.3
Net loan book lending
2.7
(3.1)
5.7
Net operating cash flow
13.6
(2.5)
16.1
Investing cash flow
(0.2)
(0.4)
0.2
Financing cash flow
(13.5)
(1.5)
(12.0)
Net cash flow
(0.1)
(4.4)
4.3
Cash equivalents
3.7
3.8
(0.1)
NZD m
FY23
Financial
position
and
funding
Compared with
F
Y22:
• Inventory turnover improved, dropping
from 86 days to 57
days.
• Optimal inventory level expected to be $10.5m on current
footprint.
• Loan book reduced from $6.8m to
$3.9m
.
• Balance sheet remains solid with $3.8m in cash and zero
net debt.
• New $5m retail trade finance
facility with partner Finance
Now, in final stages of execution.
11
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
Balance sheet summary
FY23
FY22
Cash equivalents
3.8
3.8
Inventories
8.4
13.0
Loan receivables
3.9
6.8
Other assets
13.3
13.7
Total assets
29.3
37.3
Borrowings
0.9
11.8
Other liabilities
12.2
10.4
Total liabilities
13.1
22.2
Equity
16.2
15.1
NZD m
Business
update
12
NZ
AUTOMOTIVE
INVESTMENTS
|
HY23
INVESTOR
PRESENTATION
Our
strategy
1.
Supply chain
leadership
Expand our Hub car processing to unlock growthActively increase supply of affordable EV & HEVs.Leverage our scale to drive efficienciesExplore broader sourcing strategy
2.
Retail
footprint to winNational dealership footprint for wider reachClear property strategy to broaden reach and profitablyRefurbish and modernisedealershipsRelevant brand programme to connect
3.
Gross margin
expansionIncrease financial penetrationImplement and grow digital application and fulfilmentRight value proposition -availability, price and promotion to win locallyContinuing cost and value programme
4.
Digital to
deliver
Refine full end-to-end online buying processExecute on customer insightsDigital platform to “make it easy”
5.
Customer
experienceDeepen connection with 135k+ followers on social mediaInvest in customer care teamCapability investment for frontline staffFurther uplift in customer satisfactionDeliver customer value through partnerships
13
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
Progress made
Next steps
Business
update
2 CHEAP CARS
VEHICLE SALES AND REVENUE•
Total vehicle sales up 6%.
•
Revenue up 29% on the prior period.
•
Sales of digital origination accounted for 17% of total sales.
•
F&I penetration 26% for FY23.
March
2023 has seen acceleration to 29%.
PROCUREMENT•
Japanese-based team sourcing vehicles remains a competitive advantage.
•
Using additional shipping suppliers to mitigate reduction in vehicle supply.
PROCESSING CAPACITY•
New operational activities at the hub co
ntinue to add value – increasing speed to
yard and reducing costs.
CAPABILITY•
Newly created position – General Manager Retail – to extend and deepen sales
capability.
•
Strong focus on talent and capability development.
13
4.5%
17%
Dealerships
Digital sales
Cars sold in FY23Market share
8,367
14
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
*
Source: Autofile; based on 2 Cheap Cars’ vehicle sales
as a proportion of used cars sold (dealer-to-public)
between 1 April 2022 and 31 March 2023.
Growth
opportunity
Electric & hybrid electric vehicles (EV/HEVs)NZAI has a focused EV/HEV strategy and is well positioned to meet increasing demand
68,543
Electric vehicles on the road in NZ up 89% pa (Source: Ministry of Transport,
Dec 2022).
3,459
Number of EV/HEVs 2 Cheap Cars sold in FY23, an increase
of 65% on F
Y22
EV/HEV sales grow to 43% of total sales in Q4
15
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
Government’s Clean Car regime2 Cheap Cars in a credit position in FY23 with potential future opportunities.
Outlook
16
NZ
AUTOMOTIVE
INVESTMENTS
|
HY23
INVESTOR
PRESENTATION
Outlook
FY24
Action plan The Company is seeing demand for vehicles and finance and insurance remain strong, driven by its own clearer value proposition, immigration and the Government’s Clean Car regime. Vehicles sold by 2 Cheap Cars fulfil a basic and essential need. Therefore, despite the economic headwinds, the market segment is expected to remain buoyant. •
Gross margin expansion –
Margin delivery will take priority over market
share.
•
EV/HEVs
– Further leveraging our leadership position by supplying an
unrivalled range of quality,
affordable vehicles.
•
Supply chain
– Focusing on a quality first approach, navigating shipping risks
and progressing insourcing some compliance for cost and control upsides.
•
F&I
– Finance and insurance acceleration plan is well underway, providing an
incremental and highly profitable income stream.
•
Three-year strategic property plan –
Focusing on retail locations where the 2
Cheap Cars scale model works, providing opportunities for profitable growth.
•
Increase in NPAT
– NPAT expected to increase to $3.8m to $4.2m by
concentrating on gross margin expansion, prudent cost management and increasing direct control of value chain.
17
NZ
AUTOMOTIVE
INVESTMENTS
|
FY23
INVESTOR
PRESENTATION
Q+A
18
NZ
AUTOMOTIVE
INVESTMENTS
|
HY23
INVESTOR
PRESENTATION
Thank
you
102
Mays
Road,
Onehunga,
Auckland
1061
www.nzautomotiveinvestments.co.nz
|
Ph:
+64
9
869
3330
19
---
Financial statements
For the year ended
31 March 2023
NZ automotive
investments limited
NZ AUTOMOTIVE INVESTMENTS LIMITED
Table of Contents
SectionPage(s)
Director's Report3
Consolidated Statement of Profit or Loss and Other Comprehensive Income4
Consolidated Statement of Changes in Equity5
Consolidated Statement of Financial Position6
Consolidated Statement of Cash Flows7
Notes to the Consolidated Financial Statements8 - 34
Audit Report35 - 38
Company Directory39
2
NZ AUTOMOTIVE INVESTMENTS LIMITED
Director's Report
For the Year ended 31 March 2023
Approved for and on behalf of the Board of Directors
Director
Director
28th of May 2023Date
The Board of Directors of NZ Automotive Investments Limited
present the consolidated financial statements of the Group
for the year ended 31 March 2023.
The Board of Directors of NZ Automotive Investments Limited
authorised the issue of these consolidated financial statements
on this 28 day of May 2023
3
NZ AUTOMOTIVE INVESTMENTS LIMITED
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 31 March 2023
NoteMAR 2023MAR 2022
$'000$'000
Revenue
Revenue and Income482,704 64,231
Sundry Income533 1,725
Expenses
Cost of sales(67,905) (51,680)
Administration expenses(3,265) (2,720)
Advertising expenses(1,738) (1,192)
Depreciation expenses(2,134) (1,779)
Employee benefits(4,105) (3,847)
Finance expenses8(1,090) (689)
Property expenses(680) (853)
Profit before Income Tax1,820 3,196
Income Tax Expense20(528) (602)
Profit for the period1,292 2,594
Other Comprehensive Income
Items that may be reclassified subsequently to profit or loss
Translation of foreign operations77 (90)
Total Other Comprehensive Income77 (90)
Total Comprehensive income for the Period1,369 2,504
Earnings per share
Basic earnings per share 100.03 0.06
Diluted earnings per share 100.03 0.06
The accompanying notes form part of these consolidated financial statements
4
NZ AUTOMOTIVE INVESTMENTS LIMITED
Consolidated Statement of Financial Position
As At 31 March 2023
MAR 2023MAR 2022
Note$'000$'000
Equity
Share Capital2339,344 39,365
Amalgamation Reserve(35,956) (35,956)
Foreign Currency Translation Reserve(8) (85)
Retained Earnings12,794 11,789
Total Equity16,174 15,113
Current Liabilities
Trade and Other Payables162,743 1,890
Employee Benefit liabilities19834 933
Borrowings22900 11,800
Income tax Payable91 -
Derivative financial liabilities1855 414
Related Party Payable2510 10
Lease liability171,856 1,484
Other Current Liabilities627 126
Total Current Liabilities7,116 16,657
Non-Current Liabilities
Lease Liability176,078 5,833
Total Non-Current Liabilities6,078 5,833
Total equity and liabilities29,368 37,603
Current assets
Cash and cash equivalents123,767 3,790
Trade and other receivables15669 739
Other current assets153,416 4,126
Income tax receivable- 288
Loans receivable141,767 2,954
Inventories138,377 13,008
Total current assets17,997
24,905
Non-current assets
Plant, property and equipment271,319 1,335
Intangible assets5 4
Loans receivable 142,142 3,870
Deferred tax asset20445 433
Right-of-use assets 177,461 7,056
Total non-current assets11,371 12,698
Total assets 29,368 37,603
Approved on behalf of the Board on 29th May 2022
DirectorDate28 May 2023
DirectorDate28 May 2023
The accompanying notes form part of these consolidated financial statements
5
NZ AUTOMOTIVE INVESTMENTS LIMITED
Consolidated Statement of Changes in Equity
For the Year Ended 31 March 2022
Share
Capital
Retained
Earnings
Foreign
Currency
Translation
Reserve
Amalgamation
Reserve
Total Equity/
(Accumulated
Losses)
$'000$'000$'000$'000$'000
Balance as at 1 April 202139,344 12,220 5 (35,956) 15,613
Profit for the Period- 2,594 - - 2,594
Translation of Foreign Operations- -(90) - (90)
Total Comprehensive Income for the Period- 2,594 (90) - 2,504
Share options recognised at fair value net of options lapsed2100021
Dividends paid- (3,025) - - (3,025)
Total transactions with owners of the Group21 (3,025) - - (3,004)
Balance as at 31 March 202239,365 11,789 (85) (35,956) 15,113
Balance as at 1 April 202239,365 11,789 (85) (35,956) 15,113
Profit for the Period- 1,292 - - 1,292
Translation of Foreign Operations- -77 - 77
Total Comprehensive Income for the Period- 1,292 77 - 1,369
Share options recognised at fair value net of options lapsed(21) - - (21)
Dividends paid- (287) - - (287)
Total transactions with owners of the Group(21) (287)
- - (308)
Balance as at 31 March 202339,344 12,794 (8) (35,956) 16,174
The accompanying notes form part of these consolidated financial statements
6
NZ AUTOMOTIVE INVESTMENTS LIMITED
Consolidated Statement of Cash Flows
For The Year Ended 31 March 2023
MAR 2023MAR 2022
$'000$'000
Cash flows from operating activities
Cash receipts from customers
82,768 65,068
Government Grants Received
31 351
Cash paid to suppliers and employees
(71,160) (63,047)
Interest received
130 26
Interest paid - retail operations
(700) (263)
Tax paid
(161) (1,570)
Net cash inflow from operating activities before Changes in
Operating Assets and Liabilities
10,908 565
Loan receivables advanced
(1,785) (6,576)
Proceeds from loan receivables
4,450 3,514
Net cash inflow / (outflow) from operating activities13,573 (2,497)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
138 242
Purchase of property, plant and equipment
(305) (656)
Net cash outflow from investing activities(167) (414)
Cash flows from financing activities
Dividend paid
(287) (3,025)
Interest paid - finance operations
(310) (187)
Principal elements of lease payments
(2,009) (1,645)
Trade finance advance / (repayments)
(10,900) 3,380
Net cash outflow from financing activities(13,506) (1,477)
Net decrease in cash and cash equivalents
(100) (4,388)
Cash and cash equivalents at beginning of period
3,790 8,267
Effect of exchange rate
77 (89)
Cash and cash equivalents at end of period3,767 3,790
The accompanying notes form part of these consolidated financial statements
7
Notes to the Financial Statements
1. Reporting entity
2. Basis of preparation
(a) Statement of compliance
(b) Basis of measurement
• Derivative financial instruments (Note 18)
• Loans receivable (Note 14)
(c) Functional and presentation currency
(d) Going Concern
(e) Critical accounting estimates and judgements
(f) Changes in accounting policies
None during the period.
(g) Changes in accounting estimates
None during the period.
(h) New and amended standards adopted by the group
The preparation of the consolidated financial statements, requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
NZ Automotive Investments Limited (the Company) is a company domiciled in New Zealand.
The Company is incorporated in New Zealand, registered under the Companies Act 1993 and is publicly traded on the
New Zealand Stock Exchange.
These consolidated financial statements comply with the requirements of the Companies Act 1993 and the Financial
Markets Conduct Act 2013.
These consolidated financial statements as at 31 March 2023 comprise the Company and its subsidiaries:
2 Cheap Cars Limited, NZ Motor Finance Limited, 2CC International Limited, 2 Cheap Rental Cars Limited and Car Plus
K.K. (collectively, the Group).
These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice
in New Zealand
(GAAP) and the requirements of the Financial Markets Conduct Act 2013.
These financial statements comply with New Zealand equivalents of International Financial Reporting Standards (NZ
IFRS). As such, they also comply with International Financial Reporting Standards (IFRS).
The consolidated financial statements have been prepared on the historical cost basis except that certain assets and
liabilities are measured at fair value where stated under their specific accounting policies.
These consolidated financial statements for the Group are presented in New Zealand dollars ($), which is the Group's
functional and the Group's presentation currency. All financial information presented has been rounded to the nearest
thousand dollars.
The Directors consider that the Group is a going concern and the consolidated financial statements have been prepared
on that basis.
The group has applied the following amendments for the first time for their annual reporting period commencing 1 April
2022:
- Property, plant and equipment: proceeds before intended use - Amendments to IAS 18
- Annual improvements to IFRS standards 2018-2020
- Onerous contracts - cost of fulfilling a contract - amendments to IFRS 3.
- Reference to the conceptual framework - amendments to IFRS 3.
Certain new accounting standards and amendments have been published that are not mandatory for 31 March 2023
reporting periods. These standards are not expected to have a material impact on the entity.
8
3. Significant Accounting Policies
Details of the Group’s significant accounting policies are provided below.
a) Basis of consolidation
Subsidiaries
Name
MAR 2023
MAR 2022
2 Cheap Cars LimitedNew Zealand
100%100%
NZ Motor Finance LimitedNew Zealand
100%100%
2CC International LimitedNew Zealand
100%100%
2 Cheap Rental Cars LimitedNew Zealand
100%100%
Car Plus K.KJapan100%100%
(b) Foreign currency
(i) Foreign currency transactions
(iii) Foreign currency non-monetary assets and liabilities
Foreign non-monetary assets and liabilities that are measured based on historical costs are translated using the exchange
rate at the date of the transactions. Any foreign currency difference arising due to translating to functional currency are
recognised in profit or loss.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that
control commences.
The consolidated financial statements present the results of the Company and its subsidiaries (“the Group”) as if they
formed a single entity. Intra-group transactions and balances are therefore eliminated in full.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The subsidiaries of NZ Automotive Investments Limited, all of which have been included in these consolidated financial
statements, are as follows:
Country of incorporation and
principal place of business
Proportion of
ownership interest
Transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the
transactions. Foreign currency differences arising from settlement at a different exchange rate are recognised in profit or
loss.
(ii) Foreign currency monetary assets and liabilities
At balance date, foreign monetary assets and liabilities are translated to the functional currency at the closing rate and
exchange variations are recognised in profit or loss.
The Group has applied the same accounting policies and methods of computation in these financial statements as its
previous annual financial statements, except for those detailed in note 2(f) and (g) above.
In preparing the consolidated financial statements, all intercompany balances, transactions, unrealised gains and losses
resulting from intra-group transactions and dividends have been eliminated in full.
9
(c) Revenue
(i) Vehicles sold
(ii) Insurance policies
(iii) Sale of scrap parts
(iv) Commissions received (booking fee, sales, finance)
(v) Interest revenue calculated using the effective interest method
Performance obligations and timing of revenue recognition
Revenue is recognised when the control associated with a good or service (or in aggregate thereof) representing a distinct
performance obligation is transferred from the Group to the customer.
Where a single contract contains two or more distinct performance obligations, the total transaction price of the contract is
allocated between the separate performance obligations based on their stand-alone-sales-prices, and represents the
revenue to be recognised with respect to that separate performance obligation.
Revenue is recognised on an over-time basis subject to meeting specific criteria, otherwise, revenue is recognised at a
point-in-time , being the point that the customer obtains control of the good or service subject to various indicators.
Payment received from customers before revenue is recognised and presented as a “Contract liability” in the consolidated
statement of financial position.
Receivables resulting from revenue being recognised before the Company is able to contractually invoice for the goods or
services provided is recognised and presented as a “Other current asset” in the consolidated statement of financial
position.
The specific revenue recognition policies associated with the Group’s distinct performance obligations (as presented in
Note 4) are detailed below:
Revenue is recognised at a point-in-time, with the transfer of control determined as the point purchaser takes final
physical possession of the vehicle.
Commission revenue is recognised on an agent basis at a point-in-time , with the transfer of control determined at the
point the end customer enters into a signed insurance policy with the insurance provider (principal). As the uncertainty
associated with any commission clawbacks is resolved, previously deferred revenue recognised as contract liabilities is
released and recognised as revenue.
Revenue is recognised at a point-in-time, with the transfer of control determined as the point that the purchaser takes final
physical possession of the scrap parts.
Revenue is recognised on an agent basis at a point-in-time , with the transfer of control determined as the point the end
customer enters into a signed finance agreement with the finance provider (principal). As the uncertainty associated with
any commission clawbacks is resolved, previously deferred revenue recognised as contract liabilities is released and
recognised as revenue.
Interest revenue comprises interest on loans receivable and cash and cash equivalents. Interest revenue is recognised
based on the effective interest method.
Revenue is measured based on the consideration to which the Group expects to be entitled to, excluding amounts
collected on behalf of third parties and net of rebates, discounts and payments to customers that are not in consideration
for separate goods or services provided. This represents the fair value of total consideration payable, including both cash
and in the case of vehicles sold, any vehicle trade-ins.
Where the ultimate transaction price receivable is subject to variability (such as in the case of vehicle returns or
clawbacks on commissions) revenue is recognised only to the extent that it is highly probable that the revenue recognised
would not be subsequently reversed.
10
(d) Insurance contracts
NZ IFRS 17 Insurance contracts becomes effective for annual reporting periods commencing on or after 1 January 2023.
(e) Tax
(i)
(ii)temporary differences arising on the initial recognition of goodwill; and
(iii)
NZ IFRS 17 Insurance contracts provides a scope exception for certain contracts that provide waivers (forgiveness) of
loan balances upon the occurrence of specified events. Rather than accounting for these waivers as insurance contracts,
the scope exemptions permits the Group to elect to account for such loans entirely as financial instruments.
The Group has elected to apply this scope exemption. Further details of the accounting policy relating to Loans receivable
to which the scope exemption directly effects can be found in Note 7.
Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss, except to
the extent that they relate to items recognised directly in equity or in other comprehensive income. In such cases, the tax
is also recognised directly in equity or in other comprehensive income, respectively.
The Group recognises revenue on a net basis as an “Agent” (rather than on a gross basis as “Principal”) when
(i) it is not the party primarily responsible for fulfilling to provide goods or services to the end customer,
(ii) when it does not assume the (inventory) risk of the goods or services, and/or
(iii) it does not have discretion in setting the price payable by the end customer.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted
or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax
also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss,
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that the
timing of the reversal of the temporary differences is controlled by the Group and it is probable that they will not
reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,
using tax rates enacted or substantively enacted at the reporting date.
In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions
and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate
for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.
This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New
information may become available that causes the Group to change its judgement regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
11
(f) Employee benefits
(i) Short-term employee benefits
(ii) Defined contribution plans (Kiwisaver etc.)
(iii) Share-based payment arrangements
(g) Property, plant and equipment
(i) Recognition and measurement
Cost includes expenditure that is directly attributable to the acquisition of the asset.
(ii) Subsequent expenditure
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net
proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the
expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.
Liabilities for wages and salaries, including non-monetary benefits and accumulating annual leave that are expected to be
settled wholly within 12 months after the end of the period in which the employees render the related service are
recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts
expected to be paid when the liabilities are settled.
These include salaries and wages accrued up to the reporting date and annual leave earned, but not yet taken at the
reporting date. The Group recognises a liability and an expense for bonuses where they are contractually obliged or
where there is a past practice that has created a constructive obligation.
Contributions to defined contribution plans are recognised in the consolidated statement of profit or loss and other
comprehensive income in the year to which they relate.
Equity Settled Transactions.
The Group has provided benefits to key management personnel in the form of share-based payments, whereby
employees render services in exchange for shares or rights over shares (equity settled transactions). The cost of these
equity-settled transactions with employees is measured by reference to the fair value benefit of the equity instruments at
the date at which they are granted. In valuing equity-settled transactions, conditions linked to the price of the shares of NZ
Automotive Investments (NZX:NZA - market conditions) are considered where applicable. The cost of equity-settled
transactions is recognised, together with a corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become
fully entitled to the award (the vesting date).
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment
losses.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent
that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
12
(iii) Depreciation
The useful lives and depreciation method used for significant items of property, plant and equipment are as follows:
Leasehold improvements
6.7% - 20.0% SL
Furniture and fittings 6.3% - 50.0% SL
Motor vehicles 10.0% - 50.0% SL
Computer equipment 20.0% - 100% SL
Workshop equipment 10.0% - 50.0% SL
Depreciation methods, useful lives and residual values are reviewed at reporting date and adjusted if appropriate.
(h) Inventories
Vehicles acquired via trade-in from car sales with customers are initially measured at their trade-in date fair value.
(i) Financial instruments
The Group recognises financial instruments when it becomes a party to the contractual provisions of the instrument.
(i) Financial assets – classification and subsequent measurement
At Amortised cost
Impairment allowances for Trade receivables
Impairment allowances for Loans receivable
Are recognised based on a forward-looking expected credit loss (“ECL”) model. The methodology used to determine the
amount of the allowance is based on whether there has been a significant increase in credit risk since initial recognition of
the financial asset.
For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month
expected credit losses along with gross interest income are recognised (“Stage 1”).
For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest
income are recognised (“Stage 2”). The Group assumes that the credit risk on a financial asset has increased significantly
if it is more than 30 days past due.
Financial assets are classified based on whether their repayments represent solely payments of principal and interest
(SPPI), and whether the instrument is held to collect those repayments, and/ or to be sold.
These financial assets represent those held to collect SPPI, and include: Trade and other receivables; Loans receivable
(those that do not include waiver clauses); Cash and cash equivalents (including cash in hand, deposits held at call with
banks).
These financial assets are subsequently measured at amortised cost using the effective interest rate method, less
impairment.
Are recognised based on the simplified approach within NZ IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses. On confirmation that the trade receivable will not be collectible, the gross carrying value of
the asset is written off against the associated impairment allowance.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an
item of property, plant and equipment.
Inventories are measured at the lower of cost and net realisable value with due allowance for any damaged and obsolete
stock items. The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in
acquiring the inventories and other costs incurred in bringing them to their existing location and condition.
Financial instruments are initially measured at fair value. For those financial instruments that are classified as amortised
cost this includes directly attributable transaction costs. For those financial instruments classified as at fair value through
profit or loss, any directly attributable transaction costs are expensed in profit or loss as incurred. Financial liabilities are
measured net of transaction costs.
For plant and equipment, depreciation is based on the cost of an asset less its residual value. Significant components of
individual assets that have a useful life that is different from the remainder of those assets are depreciated separately.
13
- significant financial difficulty of the borrower;
- a breach of contract, such as a default or being more than 90 days past due;
- it is probable that the borrower will enter bankruptcy or other financial reorganisation.
Impairment allowances for Cash and cash equivalents
Balances held with “investment grade” counterparties a significant increase in credit risk is deemed not be present.
At Fair value through profit or loss (non-derivatives)
Accordingly, these balances are classified and measured subsequently as at fair value through profit or loss.
At Fair value through profit or loss (derivatives)
(ii) Financial liabilities - classification and subsequent measurement
At Amortised cost
Includes; Trade and other payables; Borrowings; Lease liabilities.
These financial liabilities are subsequently measured at amortised cost using the effective interest rate method.
At Fair value through profit or loss (derivatives)
(iii) Derecognition of financial assets and financial liabilities
Financial assets
Repayments of these loans are recognised as reductions in the carrying amount, with fair value gains or losses at each
reporting date recognised in profit or loss.
Financial liabilities are classified as at fair value through profit or loss if it is held-for-trading, it is a derivative or it is
designated as such on initial recognition, otherwise the it is classified as At Amortised cost.
Derivatives financial liabilities represent “out of the money” derivative contracts that are classified and measured
subsequently as At Fair value through profit or loss, with fair value gains or losses at each reporting date recognised in
profit or loss.
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or
it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially
all of the risks and rewards of ownership and it does not retain control of the financial asset.
Derivatives financial assets represent “in the money” derivative contracts that are classified and measured subsequently
as at fair value through profit or loss, with fair value gains or losses at each reporting date recognised in profit or loss.
For those that are determined to be credit impaired (in default), lifetime expected credit losses along with interest income
on a net basis are recognised (“Stage 3”). The Group considers a financial asset to be in default when the financial asset
is more than 90 days past due, as well as observable evidence with respect to:
- granting to the borrower a concession for economic or contractual reasons relating to the borrower’s financial difficulty;
that the Group would not consider otherwise; or
When determining whether there has been a significant increase in credit risk since initial recognition of the financial
asset, and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and
available without undue cost or effort.
This includes both qualitative and quantitative information and analysis, based on the Group’s historical experience and
informed credit assessment and includes forward looking information.
The gross carrying amount of Loans receivable is written off when the Group has no reasonable expectation of recovering
the balance in its entirety or a portion thereof.
These financial assets represent Loans receivable (that include waiver clauses). In applying the scope exemption in NZ
IFRS 17 Insurance Contracts to these contracts, such that they are accounted for as financial assets in their entirety, the
presence of the waiver clauses results in repayments not representing SPPI. Loans receivable includes loans on which
customers voluntarily elect to opt for additional Asset Waiver and/or Income Waiver products which are offered by the
Group.
14
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
(iv) Impairment of non-financial assets
(j) Share capital
Ordinary shares
(k) Goods and services tax
With the exception of trade payables and receivables, all items are stated exclusive of Goods and Services Tax.
(l) Reserves
Amalgamation reserve
(m) Leases
• Leases of low value assets; and
• Leases with a duration of 12 months or less.
The estimated recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in
use. Value in use is determined by estimating future cash flows from the use and ultimate disposal of the asset and
discounting these to their present value using a pre-tax discount rate that reflects current market rates and the risks
specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
A cash-generating unit is the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of the other assets or groups of assets.
Impairment losses are reversed when there is a change in the estimate used to determine the recoverable amount and
there is an indication that the impairment loss has decreased or no longer exists. An impairment loss is reversed only to
the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised. All impairment losses are reversed through profit
or loss, other than those related to goodwill.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
The amalgamation reserve represents the difference between the fair value of consideration paid and the carrying amount
of net assets in a business combination where the acquirer and acquiree are controlled by the same (ultimate) party
(business combination under common control).
All leases in which the Group is a lessee are accounted for by recognising a Right-of-use asset and a Lease liability
except for:
Payments associated with all leases of low-value assets and short-term leases of equipment and vehicles are recognised
on a straight-line basis as an expense in profit or loss.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration
paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets and inventories, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment
losses directly reduce the carrying amount of assets and are recognised in profit or loss.
The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability
are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
15
(i) Initial measurement
Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the Lease liability also includes:
• amounts expected to be payable under any residual value guarantee;
• Lease payments made at or before commencement of the lease;
• Initial direct costs incurred; and
(ii) Subsequent measurement
(iii) Remeasurement 0
(iv) Modifications to lease agreements
Increases in scope:
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of
the modification:
• If the renegotiation results in one or more additional assets being leased for an amount commensurate with the stand-
alone price (i.e. market rate) for the additional rights-of-use obtained, the modification is accounted for as a separate
lease in accordance with the above policy.
• In all other cases (whether that is an extension to the lease term, or one or more additional assets being leased), the
lease liability is remeasured using the revised discount rate applicable on the modification date, with the right-of-use asset
being adjusted by the same amount.
• any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination
option being exercised.
Right-of-use assets are initially measured at the amount of the Lease liability, reduced for any lease incentives received,
and increased for:
• The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the
leased asset (typically make-good provisions on buildings).
Subsequent to initial measurement Lease liabilities increase as a result of interest charged at a constant rate on the
balance outstanding and are reduced for lease payments made.
Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining
economic life of the asset if, rarely, this is judged to be shorter than the lease term. Right-of-use assets are also subject to
impairment assessment at reporting date.
When the Group revises its determination of the use (or non-use) of renewal and/or termination options, the carrying
amount of the lease liability is adjusted to reflect the payments to make over the revised term, which are discounted at the
revised discount rate.
The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent
on a rate or index is revised, however this is discounted at the original discount rate.
In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised) lease term.
For changes in lease payments as a result of COVID-19, the carrying value of lease liabilities is revised and discounted at
the original discount rate, with a corresponding adjustment to profit or loss (variable lease payment).
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not
readily determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate,
however in such cases the initial present value determination assumes that the variable element will remain unchanged
throughout the lease term.
• the exercise price of any purchase option granted in favour of the Group if it is reasonable certain to assess that option;
16
Decreases in scope:
The right-of-use asset is adjusted by the same amount.
(n) Government grants
(o) Finance income and finance expenses
Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Finance expenses comprise interest expense on borrowings.
(p) Intangible assets
The estimated useful lives for the current and comparative periods are as follows:
- Trademarks 10 years
Amortisation methods and useful lives are reviewed at each reporting date and adjusted if appropriate.
(q) Cash and cash equivalents
Finite Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the
date that they are available for use.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three
months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the
consolidated statement of financial position.
• Both the carrying amount of the lease liability and right-of-use asset are reduced by the same proportion to reflect the
partial of full termination of the lease with any difference recognised in profit or loss.
Grants that compensate the Group for expenses incurred are recognised as income in profit or loss on a systematic basis
in the periods in which the associated expenses are recognised.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments
over the renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date.
17
Notes to and Forming part of the Consolidated the Financial Statements
4. Revenue from Contracts with Customers
MAR 2023MAR 2022
$'000$'000
Sale of cars74,902 56,653
Fair value gain/(loss) on revaluation(222)
8
Contractual income earned on loans at fair value through profit or loss508 762
Interest on bank accounts, short term deposits and investments693 463
Agent commissions received
- Interest agent commissions4,427 4,132
- Insurance agent commissions2,396 2,213
Total revenue from contracts with customers82,704 64,231
Timing of transfer of goods and services
Point of sale income82,564 64,204
Over time income139 27
Total Revenue82,704 64,231
5. Sundry Income
MAR 2023MAR 2022
$'000$'000
Gain/(loss) on sale of property, plant and equipment2 6
Government grants received
1
37 351
Consideration for reassignment of leases
2
- 1,085
Other(6)283
Total sundry income33 1,725
1
During the period the Group received government grants in the form of COVID-19 related Wage subsidies from the New Zealand
Government.
2
The Group received consideration from an external party for the assignment of two leased properties.
18
6. Segment reporting
Description of segments
Reportable segments have been identified as follows:
Operating Segments
As at 31 March 2023
Automotive RetailFinanceTotal
$'000$'000$'000$'000$'000
Revenue including interest81,990 909 1,979 (2,174) 82,704
Sundry Income(22) 3 50 2 33
Cost of sale(68,871) 2 (1,008) 1,972 (67,905)
Interest expense - finance- (222) - - (222)
Operating expense(8,112) (510) (3,299) 1 (11,920)
Operating profit4,985 181 (2,278) (199) 2,689
Dividend received- - 287 (287) -
Interest expense - trading(781) (336) (7) 255 (869)
Net profit before tax4,204 (155) (1,998) (231) 1,820
As at 31 March 2022Automotive RetailFinanceTotal
$'000$'000$'000$'000$'000
Revenue including interest63,381 1,185 2,547 (2,882) 64,231
Sundry Income1,681 16 28 - 1,725
Cost of sale(52,649) - (1,567) 2,536 (51,680)
Interest expense - finance- (90) - - (90)
Operating expense(7,208) (674) (2,690) 181 (10,391)
Operating profit5,205 437 (1,682) (165) 3,795
Dividend received
- - 3,025 (3,025) -
Interest expense - trading(361) (441) - 203 (599)
Net profit before tax4,844 (4) 1,343 (2,987) 3,196
Management has determined the operating segments based on the components of the Group that engage in business activities,
which have discrete financial information available and whose operating results are regularly reviewed by the Group's chief operating
decision maker. The chief operating decision maker has been identified as the Board of Directors. The Board of Directors makes
decisions about how resources are allocated to the segments and assesses their performance. Geographically the Group's business
activities are located in New Zealand.
Other
Entities
Inter-entity
transactions
Other
Entities
Inter-entity
transactions
19
7. Determination of fair values
Carrying
Fair value
31 March 2023NoteAmount(level 3)
$'000$’000
Assets
Cash and cash equivalents123,767 3,767
Trade receivables at amortised cost15669 669
Other receivables153,416 3,416
Loans receivable - Amortised Cost142,240 2,248
Loans receivable - Fair Value through Profit or Loss141,769 1,769
Total11,862 11,870
Current Liabilities
Trade and Other Payables162,743 2,743
Borrowings22900 900
Derivative financial liabilities1855 55
Related Party Payable2510 10
Total3,708 3,708
CarryingFair value
31 March 2022NoteAmount(level 3)
$'000$’000
Assets
Cash and cash equivalents123,790 3,790
Trade receivables at amortised cost15739 739
Other receivables154,126 4,126
Loans receivable - Amortised Cost143,456 3,673
Loans receivable - Fair Value through Profit or Loss143,442 3,442
Total15,553 15,770
Current Liabilities
Trade and Other Payables161,890 1,890
Borrowings2211,800 11,800
Derivative financial liabilities18414 414
Related Party Payable2510 10
Total14,114 14,114
Borrowings relate to facilities that are repaid within a short timeframe.
Refer to Note 14 for fair value measurement information regarding Loans receivable.
Face value versus carrying amounts
The fair value of financial assets and liabilities, together with the carrying amounts shown in the Consolidated
Statement of Financial Position, are as follows.
The carrying amount of cash and cash equivalents, trade and other receivables and trade and other payables has been determined
to be a reasonable approximation of the fair value of the financial instrument given the short-term nature of these financial
instruments.
20
The sensitivity analysis of a reasonably possible change in one significant unobservable input, holding other inputs constant,
of level 3 financial instruments is provided below:
Significant unobservable inputsIncreasesDecreasesIncreasesDecreases
$’000$’000$’000$’000
Discount rate used
(+/- 5%)106 (97)76 (70)
Default provision used
(+/- 5%)94 (94)68 (68)
Waiver provision rate used
(+/- 5%)68 (68)49 (49)
8. Finance Expenses
NoteMAR 2023MAR 2022
$'000$'000
Interest expense on financial liabilities measured at amortised cost(715)(263)
Interest expense on lease liabilities17(310)(189)
Other(66)(237)
Finance Expenses(1,090)(689)
9. Key operating expenses
Key operating expenses includes the following:NoteMAR 2023MAR 2022
$'000
$'000
Audit fees(104)(87)
Depreciation - property, plant and equipment27(211)(204)
Depreciation - right-of-use assets17(1,924)(1,574)
Employee benefit expenses - excluding direct wages included in cost of sale
Wages and salaries, Including kiwisaver contributions(2,673)(2,620)
Expenses related to restructuring business
3
(977) -
Expenses related to reassignment of leases - (200)
Profit or loss
Other comprehensive income
(net of tax)
3 The business incurred non-recurring restructuring costs of $0.98m associated with significant changes at board and management
level during the year.
21
10. Earnings Per Share
Basic earnings per share (EPS) is calculated by dividing the profit attributable to shareholders of the Group by the weighted average
number of ordinary shares on issue during the year, excluding shares held as treasury stock.
Diluted earnings per share assumes conversion of all dilutive potential ordinary shares in determining the denominator.
MAR 2023MAR 2022
Numerator $'000
$'000
Profit for the period
1,292
2,594
Denominator
Weighted average number of shares
45,554,500
45,554,500
EPS basic
0.03 0.06
EPS Diluted
0.03 0.06
11. Dividends
MAR 2023MAR 2022
$'000
$'000
Final Dividend
287 2,296
Interim Dividend
- 729
Total287 3,025
12. Cash and Cash Equivalents
Cash and cash equivalents in the Consolidated Statement of Financial Position comprise cash at bank and short term deposits
with an original maturity of three months or less which are subject to an insignificant risk of changes in value.
Held withCredit RatingInterestInterestMAR 2023MAR 2022
Credit Rating31 Mar 202331 Mar 2022$'000
$'000
31 Mar 2023
Cash at BankASB Bank &AA- & A-4.61%0.11%3,767
3,790
Mitsui Bank
As cash and cash balances are held with counterparties with “investment grade” credit ratings, there is not deemed to be a significant
increase in credit risk associated with the Group’s Cash and cash equivalents balance. Credit rating is as per Standard & Poor.
Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are
repayable with 24 hours’ notice with no loss of interest. See note 3(q) for the group’s other accounting policies on cash and cash
equivalents.
13. Inventories
MAR 2023MAR 2022
$'000
$'000
Gross stock on hand8,664 13,334
Inventory provision(288) (326)
Total inventories8,377 13,008
22
14. Loans Receivable
Fair value through
Opening balance (1 Apr 2021)Amortised Costprofit and loss Total
Gross carrying value829 2,998 3,827
Less: Impairment allowance (24) - (24)
Total Loans receivable805 2,998 3,803
Movements during the period
Advances of loans to customers 3,611 2,677 6,288
Repayments of loans by customers(1,273) (2,241) (3,514)
Movement in accrued interest288 - 288
Movement in Impairment Allowance(49) - (49)
Fair value gain/(loss) on revaluation- 8 8
Total Movements2,577 444 3,021
Gross carrying value3,455 3,442 6,897
Less: Impairment allowance (73) - (73)
Total Loans receivable3,382 3,442 6,824
Closing balance (31 March 2022)
Current portion1,343 1,684 3,027
Non-current portion2,112 1,758 3,870
Less: Impairment allowance (73) - (73)
Total Loans receivable3,382 3,442 6,824
Fair value through
Opening balance (1 Apr 2022)Amortised Costprofit and loss Total
Gross carrying value3,455 3,442 6,897
Less: Impairment allowance (73) - (73)
Total Loans receivable3,382 3,442 6,824
Movements during the period
Advances of loans to customers 622 707 1,329
Repayments of loans by customers(2,292) (2,158) (4,450)
Movement in accrued interest456 - 456
Movement in Impairment Allowance(28) - (28)
Fair value gain/(loss) on revaluation- (222) (222)
Total Movements(1,242) (1,673) (2,915)
Gross carrying value2,241 1,769 4,010
Less: Impairment allowance (101) - (101)
Total Loans receivable2,140 1,769 3,909
Closing balance (31 March 2023)
Current portion1,029 839 1,868
Non-current portion1,212 930 2,142
Less: Impairment allowance (101) - (101)
Total Loans receivable2,140 1,769 3,909
The effective interest rate on Loans receivable at Amortised cost are 9.95% - 17.95%. (2021: 15.95% - 17.95%)
23
Gross financeNet finance
receivablereceivables
$'000$'000$'000
31 Mar 2023
Current2%3,316 (46) 3,270
Past due up to 30 days7%427 (11) 416
Past due 30 - 60 days17%144 (12) 131
Past due 60 - 90 days27%7 (2) 5
91 days and over53%116 (30) 86
4.6%4,010 (101)3,909
31 Mar 2022
Current2%6,528 (29)6,499
Past due up to 30 days2%211 (8)203
Past due 30 - 60 days2%56 (8)48
Past due 60 - 90 days2%71 (18)53
91 days and over2%31 (10)21
2%6,897 (73)6,824
MAR 2023MAR 2022
$'000
$'000
Movement in the impairment provisions:
Specific impairment provision
Opening balance(73) (24)
Impairment Movement through profit or loss(46) (49)
Amounts written off17 -
(102)(73)
Loans receivable measured at fair value (financial instruments that include waiver based clauses) are modelled at fair value and
include an effective default risk impairment rate of 4.6% (2022: 2%), collection costs of 1% and a discount rate of 11.1% which are
factored into the inputs of the valuation.
Loans Receivable measured at amortised cost (financial assets which represent solely payments of principal and interest) have been
impaired at 4.6% (2022: 2%), using the expected credit loss model.
The impairment rate used is higher than the current actual current rate of impairment, which stood at 0.51% at 31 March 2023 (31
March 2022: 0.05%). Consideration was made with reference to additional default risks that could be caused from the effects that
COVID-19 could have on borrowers ability to repay debt and was taken into account when determining the impairment rate.
The following table details the risk profile of the Group’s provision matrix for loan receivables collectively assessed for impairment.
The provision disclosed relates to loans assured at amortised cost only. Provision on loans valued at fair value are included in the fair
value gain or loss.
Collective
impairment
provision
Expected
loss rate
24
15. Trade and other Receivables
MAR 2023MAR 2022
$'000
$'000
Trade receivables538 461
Less: Impairment allowance(83)(42)
Net trade receivables455 419
Lease deposits and bonds214 320
Trade receivables at amortised cost669 739
Trade receivables generally have terms of 30 days and are interest free. Trade receivables of a short-term duration are not discounted.
These financial assets are subsequently measured at amortised cost using the effective interest rate method, less impairment.
Prepayments3,146 3,797
Other current assets271 329
Other current assets3,416 4,126
16. Trade and other payables
MAR 2023MAR 2022
$'000
$'000
Trade payables2,210 1,319
Financial liabilities At Amortised cost2,210 1,319
Contract liabilities152 207
Other payables381 364
Total trade and other payables2,743 1,890
Trade payables generally have terms of 30 days and are interest free. Trade payable of a short-term duration are not discounted.
25
17. Leases
The Group leases a number of properties and equipment in the jurisdiction from which it operates.
(i) Right of use AssetsMAR 2023MAR 2022
$'000
$'000
Opening Balance7,056 6,246
Additions and modifications2,406 4,958
Less:
Depreciation(1,924)(1,574)
Terminations(78)(2,574)
Closing Balance7,461 7,056
(ii) Lease Liabilities
Opening Balance7,317 6,603
Additions and modifications2,402 4,958
Interest310 189
Gain on changes to leases(12)(154)
Less:
Terminations(78)(2,574)
Repayments(2,009)(1,645)
COVID Relief - (45)
Effects of movements in exchange rates3 (15)
Closing Balance7,934 7,317
Current portion1,856 1,484
Non-current portion6,078 5,833
Total lease liabilities7,934 7,317
(iii) Balance sheet and cash flow statementMAR 2023MAR 2022
$'000
$'000
Carrying amount of RoU asset (by asset class)
• Premises7,461 7,056
• Equipment- -
Total cash outflow related to leases (principal repayments)(2,009)(1,645)
Total cash outflow related to leases (interest)(310)(189)
(i) Variable lease payments
(ii) Lease term – use of renewal and termination options
(i) Amounts recognised in the financial statements
(ii) Short-term lease expense (excluding leases of 1 year or less) being $75,150 (2022: $400,186).
As standard industry practice, several of the Groups property leases are subject to periodic CPI increases and/or market rent
reviews. A 1% increase in these payments would result in an additional $20,090 (2022: $16,510) cash outflow compared to the
current period’s cash outflow. (2022: 1%)
The Group’s property leases typically include renewal and termination options. The Group must assess whether it reasonably
expects (or not) to exercise these when determining the lease term.
As at 31 March 2023, there is no leases where the group has assessed it does not reasonably expect to exercise all available
renewal options, resulting in potential future lease payments not currently being included in the lease liability recognised for these
leases:
These are all leases that exclude 1 month or less in duration, which management have assessed do not qualify as a lease under NZ
IFRS16 leases and have not been capitalised as a result.
26
18. Derivative financial instruments
19. Employee benefit liabilities
MAR 2023MAR 2022
$'000
$'000
Liability for annual leave560 730
Wages payables274 203
Total834 933
20. Income tax
(a) Income tax recognised in profit or loss and other comprehensive incomeMAR 2023MAR 2022
$'000
$'000
Income tax recognised in profit or loss
Current tax540 558
Deferred tax(12)44
Total income tax expense528 602
(b) Reconciliation of income tax expense
MAR 2023MAR 2022
Income tax recognised in profit or loss$'000
$'000
Profit before income tax expense1,820 3,196
Tax expense at the domestic tax rate (28%)510 895
Permanent differences52 (278)
Timing differences(35)(43)
Intergroup eliminations(4)21
Effects of tax rate in foreign jurisdictions6 7
Income tax expense528 602
(c) Deferred tax
MAR 2023MAR 2022
Income tax recognised in profit or loss$'000
$'000
Balance at the beginning of the period433 477
Current period movement12 (44)
Deferred tax asset445 433
Made Up Of:
Deferred tax asset2,411 2,399
Deferred tax liability(1,966)(1,966)
Net balance as per above445 433
Forward contracts were taken out during the year to provide cover for risks that could potentially arise from foreign currency
fluctuations in the buying & selling of inventories. If the contracts are realised at fair market value at balance date, this would result in
a foreign exchange loss on derivatives of $55k as at 31 March 2023 (31 March 2022: Foreign exchange loss of $414k).
27
Deferred tax assets are attributable to the following:MAR 2023MAR 2022
$'000
$'000
Inventory provision81 91
Employee benefits143 179
Doubtful debt51 32
Others - 7
Contract liabilities37 51
Lease liabilities2,215 2,039
Right-of-use asset(2,082)(1,966)
Total445 433
21. Imputation Credits
MAR 2023MAR 2022
$'000
$'000
Imputation credits at 1 April(3,595)(3,461)
New Zealand Tax payments, net of refunds(142) (1,310)
Imputation credits attached to dividends received - -
Imputation credits attached to dividends paid112 1,176
(3,625) (3,595)
The imputation credits are available to shareholders of the group:
- Through the company
- Through subsidiaries
22. Borrowings
MAR 2023MAR 2022
$'000
$'000
Motor Vehicle Finance Credit Facility900 3,800
Retail Trade Finance Facility - 8,000
Total Trade finance facility900 11,800
The Retail Trade Finance Facility was due to expire on 30 April 2023 and the Motor Vehicle Finance Credit Facility will expire on
1 October 2023. Post balance date, a new retail trade finance facility is close to being in place. See note 30, Subsequent events for
further details. The Company was in compliance with all covenants throughout the year.
28
23. Share capital
MAR 2023MAR 2022
Number of Ordinary Shares
Opening balance45,554,500 45,554,500
Total issued and authorised capital45,554,500 45,554,500
Dollar value of Ordinary SharesMAR 2023MAR 2022
$'000
$'000
Opening balance39,365 39,344
Share Option Scheme(21)21
Total issued and authorised capital39,344 39,365
24. Share-based payment arrangements
31 March 2023
The share option programme has become non active as at 31 March 2023 with the departure of the previous CEO.
31 March 2022
Refer accounting Policy in Note 3 (f)
This Programme is active as at 31 March 2022.
Tranche
Average ESOP ValueVesting DateContractual life
Tranche 10.31 1 October 2021175,000 30 September 20243 years
Tranche 20.13 1 October 2021150,000 30 September 20243 years
Tranche 30.62 1 October 202194,230 30 September 20243 years
419,230
The Vesting Conditions are linked to Profitability, Share price and Liquidity in publicly traded shares of NZ Automotive investments.
The Fair Value of the options was determined using a Monte Carlo option pricing model.
Each option entitles the holder to subscribe for one ordinary share in the group, for nil consideration, in the event that certain
performance hurdles are met and they remain employed by the Company at the end of the performance period
The significant inputs in the model were share price at grant date of $0.83, Annual Volatility of 41.6% and an
annual Risk free rate of 1.52%.
All issued shares are fully paid and have no par value. The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the Group and rank equally with regard to the Group’s residual
assets.
On 1 October 2021 the group established a share option programme that entitles key management personnel to purchase shares in
the group. Under this programme holders of vested options are entitled to purchase shares at a pre-determined rate at the grant
date. The programme is limited to select key management personnel approved by the board.
Grant DateNumber of Instruments
29
25. Related parties
Identity of related parties
The group has a related party relationship with its key management personnel being the Directors and Executive Officers.
Key management personnel
MAR 2023MAR 2022
$'000
$'000
Short-term employee benefits1,460 1,496
Defined contribution plans33 45
Termination benefits250 -
Total key management personnel remuneration1,743 1,541
Transactions with related parties
MAR 2023MAR 2022MAR 2023MAR 2022
$'000
$'000
$'000
$'000
Eugene Williams10 - -
Yusuke Sena - - 10 10
- 10 10 10
Transactions for the period
Key management personnel represent the Board of Directors, and the Senior Leadership team including the Managing Directors,
Chief Executive Officer and Chief Financial Officer.
Balance outstanding at balance
date
30
26. Financial instruments - risk management
Through its operations, the Group is exposed to the following financial risks:
(a) Credit risk
(b) Market risk
(c) Liquidity risk
(d) Currency risk
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial asset fails to meet their contractual obligations.
The Group’s exposure to credit risk is represented by the carrying amount of cash and cash equivalents and investments.
The Group only holds cash and cash equivalents and investments with financial institutions that are independently determined credit
ratings of “A” or higher.
The Group has an Audit & Risk Committee that monitors credit risk as part of its wider duties.
Cash and cash equivalents held with financial institutions are presented in the table below:
31 March 2023Credit rating * Cash and cash InvestmentsTotal
equivalents
$’000$’000$’000
ASB BankAA-3,491 - 3,491
Mitsui BankA-276 - 276
3,767 - 3,767
31 March 2022Credit rating * Cash and cash InvestmentsTotal
equivalents
$’000$’000$’000
ASB BankAA-3,705 - 3,705
Mitsui BankA-185 - 85
3,790 - 3,790
* Standard & Poor’s
Interest rates on interest bearing cash and cash equivalents and investments range between 0.86% - 4.61% (2022: 0.11% - 0.86%).
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group’s finance function. The Board receives monthly reports from the
Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the
objectives and policies it sets. The Group’s internal finance team also review the risk management policies and processes and report
their findings to the Audit Committee.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Groups
competitiveness and flexibility. Further details regarding these policies as they relate to the specific financial risks that the Group is
exposed to are set out below.
31
(b) Market risk
Market risk arises from the Group’s:
- Use of interest-bearing borrowings (interest rate risk); and
- Purchases in foreign currencies (foreign currency exchange risk).
i. Interest rate risk
ii. Foreign currency exchange risk
There are open forward exchange contracts of $5.2m at the end of the reporting period (2022: $6.3m).
The net foreign exchange loss recognised for the year was $0.32m (2022: $0.78m loss).
(c) Liquidity risk
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:
Up toBetween 3Between 1Between 2Over 5 yearsTotal
As at 31 March 20233 months and 12 monthsand 2 yearsand 5 years$’000$’000
$’000$’000$’000$’000
Trade and other payables2,357 339 20 27 - 2,743
Borrowings900 - - - - 900
Lease liabilities486 1,370 1,357 3,240 1,481 7,934
Total3,743 1,709 1,377 3,267 1,481 11,577
Up toBetween 3Between 1Between 2Over 5 yearsTotal
As at 31 March 20223 months and 12 monthsand 2 yearsand 5 years$’000$’000
$’000$’000$’000$’000
Trade and other payables1,809 26 48 7 - 1,890
Borrowings11,800 - - - - 11,800
Lease liabilities380 1,104 1,409 2,620 1,804 7,317
Total13,989 1,130 1,457 2,627 1,804 21,007
The Group does not apply hedge accounting to these transactions, and they are classified as held for trading for accounting
purposes and are accounted for at fair value through profit or loss. They are presented as current assets or liabilities to the extent
they are expected to be settled within 12 months after the end of the reporting period. They are considered level 2 fair value
measurements being based on the present value of future cash flows based on the forward exchange rates at the reporting date.
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting
its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To
achieve this the Group maintains a monthly forecast on its future cash position to ensure it can meet financial obligations when they
fall due.
The Board receives monthly financial statements which include statements of financial position, performance and cash flows, as well
as budge/forecast variance reports, to ensure it holds or will hold cash equivalents to meet its obligations.
Interest rate risk is the risk that the fair value or future cash flows of a financial instruments will fluctuate because of changes in
market interest rates.
The Group is exposed to fair value interest rate risk from its fixed / variable rate borrowing and lease liabilities, with rates between
9.4% - 3.75% (2022: 3.3% - 3.75%).
The Group currently does not have any sales transactions denominated in foreign currencies, however the Group has purchases
transactions denominated in foreign currencies.
During the current reporting period the Group has purchased used cars with purchase prices denominated in foreign currencies
(YEN).
To mitigate foreign exchange risk on significant purchases, the Group enters into forward exchange contracts to match the timing
and amount of payments due. Derivatives are initially recognised at fair value on the date a derivative contract is entered int
o, and
they are subsequently remeasured to their fair value at the end of each reporting period.
32
27. Property, plant and equipment
LeaseholdMotorFurniture andComputerWorkshopTotal
improvementsvehiclesfittingsequipmentequipment
Cost$’000$’000$’000$’000$’000$’000
Balance at 1 April 2022
511 593 644 578 112 2,438
Additions125 26 102 44 8 305
Disposals
‐ (94)(28)(12)(4)(138)
Balance at 31 March 2023636 525 718 610 117 2,605
Accumulated depreciation
Balance at 1 April 2022
(115)(238)(297)(429)(24)(1,103)
Depreciation
(43)(52)(42)(59)(14)(211)
Disposals
‐ 15 2 1 1 19
Effect of exchange rate - 9 - - - 9
Balance at 31 March 2023(158)(266)(337)(487)(38)(1,286)
Net Book Value
As at 31 March 2023477 259 381 123 79 1,319
The Group has reviewed each items of property, plant and equipment and no impairment charge was recognised for the year ended
31 March 2023 (March 2022: Nil).
LeaseholdMotorFurniture andComputerWorkshopTotal
improvementsvehiclesfittingsequipmentequipment
Cost$’000$’000$’000$’000$’000$’000
Balance at 1 April 2021
706 349 602 519 62 2,238
Additions213 255 70 68 50 656
Disposals(408)(11)(28)(9) - (456)
Balance at 31 March 2022511 593 644 578 112 2,438
Accumulated depreciation
Balance at 1 April 2021(212)(181)(273)(382)(14)(1,062)
Depreciation(42)(66)(35)(51)(10)(204)
Disposals139 4 11 4 - 158
Effect of exchange rate - 5 - - - 5
Balance at 31 March 2022(115)(238)(297)(429)(24)(1,103)
Net Book Value
As at 31 March 2022396 355 347 149 88 1,335
Depreciation Methodology
The group recognises depreciation on a Straight line basis.
33
28. Notes supporting statement of cash flows
Reconciliation of Profit after tax with Net Cash Flow from Operating Activities
MAR 2023
MAR 2022
$'000
$'000
Net Profit for the year1,292 2,594
Non-cash / Non-operating items:
Depreciation of property, plant and equipment2,134 1,779
Amortisation of intangible fixed assets
Loss/(gain) on sale of property, plant and equipment(2)(6)
Foreign exchange77 (90)
Income tax expense528 602
Finance expense(255)277
-
-
2,482 2,562
Movements in working capital:
(Increase)/decrease in trade and other receivables3,982 (3,669)
Increase/(decrease) in trade and other payables1,346 (1,298)
(Increase)/decrease in Inventory4,631 (1,116)
9,960 (6,083)
Cash generated from operations13,734 (927)
Income taxes paid(161)(1,570)
Net cash flows from operating activities13,573 (2,497)
29. Contingent liabilities
ASB Bank Limited has given a guarantee to the landlord on behalf of the Group to secure premises.
The maximum guarantee is for $1,316,959 (March 2022: $1,643,000).
30. Subsequent events
The retail trade finance facility with ASB was due to expire on 30 April and has been extended until 31 May 2023 to provide the
business time to execute a new trade facility. At the date of signing the financial statements, the Company was in the final stages of
executing a new retail trade facility agreement with Finance Now, with a limit of $5.0m.
There are no other significant events have occurred subsequent to balance date. (2022: None)
34
Level 11 | 1 York Street | Sydney | NSW | 2000
GPO Box 4137 | Sydney | NSW | 2001
t: +61 2 9256 6600 | f: +61 2 9256 6611
sydney@uhyhnsyd.com.au
www.uhyhnsydney.com.au
An association of independent Ƃ rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting Ƃ rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
Passion beyond numbers
I
ndependent Auditor’s Report
To the Shareholders of NZ Automotive Investments Limited
Opinion
I have audited the consolidated financial statements of NZ Automotive Investments Limited (“the
Company”) and its subsidiaries (“the Group”), which comprise:
•the consolidated statement of financial position as at 31 March 2023;
•the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then
ended; a
nd
•t
he notes to the consolidated financial statements including a summary of significant
accounting policies.
I am a partner with UHY Haines Norton Chartered Accountants Sydney (the Firm) and I have used the
staff and resources of the Firm to perform the audit of the Group.
In my opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 31 March 2023, and its consolidated
financial performance and its consolidated 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
I conducted my audit in accordance with International Standards on Auditing (New Zealand) (“ISAs
(NZ)”) issued by the New Zealand Auditing and Assurance Standards Board. My responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of my report.
I am 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 I have fulfilled my other ethical
responsibilities in accordance with these requirements and the IESBA Code.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
opinion.
Other than in my capacity as auditor, neither myself, the firm or the firm’s staff have no relationship
with, or interests in, the Group.
Key Audit Matters
Key audit matters are those matters that, in my professional judgement, were of most significance in
my audit of the consolidated financial statements of the current year. These matters were addressed
An association of independent Ƃ rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting Ƃ rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
Passion beyond numbers
in the context of my audit of the consolidated financial statements as a whole, and in forming my
opinion thereon, and I do not provide a separate opinion on these matters.
Why the audit matter is significant How my audit addressed the key audit matter
Revenue recognition
The Group has recognised revenue of
$83m (FY 2022: $ 64m) (Note 4). NZAI
Group’s net sales comprises revenue
from the sale of cars, insurance agent
commissions and finance agent
commissions.
Revenue is recognised when the control
associated with a good or service (or in
aggregate thereof) representing a
distinct performance obligation is
transferred from the Group to the
customer.
There are a number of factors that could
affect this reported amount, including
the risk for revenue recognition policies
being incorrectly applied or recognised
in an incorrect period. This presents a
key audit matter due to the financial
significance and nature of net sales in
the financial statements.
To address the risk associated with revenue
recognition, the following audit procedures were
carried out:
•Evaluated the design of management's internal
controls related to revenue recognition.
•Reviewed revenue recognition policies for
appropriateness and compliance with relevant
accounting standards.
•Selected a sample of transactions and
inspected supporting sales documentation,
cash received and assessed whether all criteria
related to revenue recognition has been met
before being recognised as revenue.
•Reviewed credit notes posted after year end to
ascertain revenue recognition during the year.
•Performed revenue cut off procedures by
selecting revenue samples before and after
year end and testing whether cut off on
revenue was accurate.
•Performed analytical procedures by comparing
average gross margins by make of the cars on
a year on year basis, and by analysing the
movement of gross margins relative to the
prior period and on a monthly basis.
•Reviewed manual revenue journals as part of
the journal entry testing process.
•Assessed the reasonability and completeness
of the revenue related disclosures to ensure
compliance with the requirements of the
accounting standards.
Valuation of loan receivables with
waiver clauses
Loan receivables have been classified
into those with waiver clauses and those
without. The Group has recognised loan
receivables with waiver clauses at fair
value through profit of loss at $ 1.8m (FY
2022: $ 3.4m) (Note 14). There was a fair
value loss on revaluation recognised
through profit or loss of $ 222k (FY 2022:
gain of $ 8k) (Note 4 and 14). Accounting
policies relevant to loan receivables
To address the risk associated with the valuation of the
waiver loan receivables at fair value through profit or
loss, the following audit procedures were carried out:
•Evaluated the design of key controls related to
valuation of loan receivables.
•Reviewed the loan receivables measurements
policies for appropriateness and compliance
with relevant accounting standards.
•Performed substantive procedures by selecting
a sample of loans, agreed key information to
supporting documentation and recalculated
the closing fair value amount.
An association of independent Ƃ rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting Ƃ rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
Passion beyond numbers
have been disclosed under Note 3(d),
3(i), 7 and 14.
The Group has early adopted NZ IFRS 17
Insurance Contracts and applied the
scope exemption allowing them to
measure the loan receivables that
include waiver clauses as financial assets
in their entirety at fair value through
profit or loss. Repayments of the loans
are recognised as reductions in carrying
amount, with any fair value gains or
losses at each reporting date recognised
in profit or loss.
The determination of the fair value for
loan receivables with waiver clauses
requires management judgment and
continuous monitoring.
•Assessed the reasonability and accuracy of
management’s fair value model, ensuring the
valuation is in compliance with the
requirements of the relevant accounting
standards.
•Assessed the reasonability of key management
estimates and judgements by recalculating the
balance using independently sourced inputs
relating to key assumptions (including discount
rate, default provision rate, asset and income
waiver provision, etc).
•Assessed the reasonability and completeness
of the loan receivables related disclosures to
ensure compliance with the requirements of
the relevant accounting standards.
I
nformation Other than the Consolidated Financial Statements and Auditor’s Report thereon
The Directors are responsible for the other information. The other information comprises the annual
report. The annual report is expected to be made available to me after the date of this auditor’s report.
My opinion on the consolidated financial statements does not cover the other information and I do
not and will not express any form of audit opinion or assurance conclusion thereon.
In connection with my audit of the consolidated financial statements, my responsibility is to read the
other information identified above when it becomes available and, in doing so, consider whether the
other information is materially inconsistent with the consolidated financial statements or my
knowledge obtained in the audit, or otherwise appears to be materially misstated.
When I read the annual report, if I conclude that there is a material misstatement therein, I am
required to report that fact.
Directors’ Responsibilities for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with NZ IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
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.
An association of independent Ƃ rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting Ƃ rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
Passion beyond numbers
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
My objective is to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the consolidated financial
statements is located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/.
This description forms part of my auditor’s report.
Restriction on use of my report
This report is made solely to the Group’s shareholders, as a body. My audit work has been undertaken
so that I might state to the Group’s shareholders, as a body those matters which I am required to state
to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, I do
not accept or assume responsibility to anyone other than the Group and the Group’s shareholders, as
a body, for my audit work, for this report or for the opinion I have formed.
Vikas Gupta
Audit Partner - UHY Haines Norton Chartered Accountants Sydney
Signed at Sydney, Australia on 28 May 2023
NZ AUTOMOTIVE INVESTMENTS LIMITED
Company Directory
Nature of Business
Used automotive vehicle retailer and motor vehicle finance provider
Registered Office
102 Mays Road
Onehunga
Auckland 1061
Head Office
102 Mays Road
Onehunga
Auckland 1061
Directors
Michael Stiassny (Appointed 21 August 2022)
Gordon Shaw (Appointed 21 August 2022)
Yusuke Sena
Bankers
ASB Bank
Solicitors
Lowndes Jordan
Independent Auditors
UHY Haines Norton Sydney
Share Register
Computershare
39
---
Results announcement
Results for announcement to the market
Name of issuer NZ Automotive Investments Limited
Reporting Period 12 months to 31 March 2023
Previous Reporting Period 12 months to 31 March 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$82,704 28.8%
Total Revenue $82,737 25.4%
Net profit/(loss) from
continuing operations
$1,292 -50.2%
Total net profit/(loss) $1,369 -45.3%
Interim Dividend
Amount per Quoted Equity
Security
$0.00000000
Imputed amount per Quoted
Equity Security
$0.00000000
Record Date
Dividend Payment Date
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.35 $0.32
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to accompanying Company announcement
Authority for this announcement
Name of person authorised to
make this announcement
Paul Millward, CEO
Contact person for this
announcement
Haydn Marks, CFO
Contact phone number 0212211040
Contact email address haydnmarks@nzautomotiveinvestments.co.nz
Date of release through MAP 28/05/2023
Unaudited financial statements accompany this announcement.
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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