2023 Annual Report
103
rd
Annual Report 2021
2023
105
th
Annual Report
BOARD OF DIRECTORS
Ashley J Waugh, Chair
Graeme D Gibbons
Stuart B Gibbons
John W M Journee
Gillian D Watson
John O Hutchinson
CHIEF EXECUTIVE
GROUP MANAGER People, Process & Technology
GROUP MANAGER Finance
GROUP MANAGER Strategic Development
COMPANY SECRETARY
Alexander P Gibbons
June E Gibbons
Paul Stephenson
Stuart B Gibbons
Jack G Tuohy
AUDITOR
Grant Thornton New Zealand Audit Limited
(Partner Ryan Campbell)
BANKERS
ANZ Bank New Zealand Limited
Bank of New Zealand
Westpac New Zealand Limited
SHARE REGISTRY
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna, North Shore
Private Bag 92119
Auckland 1142
Website: www.computershare.co.nz/investorcentre
REGISTERED OFFICE AND
ADDRESS FOR SERVICE
Level 6
57 Courtenay Place
PO Box 6159
Wellington 6141
New Zealand
Telephone (04) 384-9734
E-mail address cmc@colmotor.co.nz
Website www.colmotor.co.nz
PROSPECTIVE DATES FOR 2024
Interim Half Year Report Late February
Interim Dividend 25 March
Preliminary Full Year Report Late August
Annual Report Late September
Final Dividend 7 October
Annual Meeting 8 November
Shareholder enquiries can be addressed to the Registered Office or directly to the Share Registry.
The Company is able to send shareholders e-mail notifications of the announcement and release of its half year (in
February) and full year results (in August) and of the Annual Report (in September). If you are not already receiving
these e-mail notifications then to register for this service you can send an e-mail to our Share Registry at ecomms@
computershare.co.nz from the e
-mail account you wish to receive the notifications to, with “Email Notifications” in
the subject line. You will need to record the full name your shares are held in and the relevant shareholder number
– you can find that number on your dividend statement or on the reverse side of your proxy form.
1
Notice of 105
th
Annual Meeting
Notice is hereby given that the 2023 annual meeting of shareholders of
The Colonial Motor Company Limited
will be held at
The Harbourside Function Venue, 4 Taranaki Street, Wellington
on Friday, 10 November 2023 commencing at 12:00 midday
BUSINESS
1. Chair’s introduction
2. Address from the Chair
3. Report from the Group Chief Executive
4. Shareholder discussion
5. Resolutions
To consider and if thought fit, to pass the following resolutions:
(see explanatory notes on the next page)
1. To re-elect Stuart Barnes Gibbons as a director of the Company.
2. To re-elect Graeme Durrad Gibbons as a director of the Company.
3. To authorise an increase in the annual remuneration payable to directors from
$305,000 to $330,000 with effect from 1 July 2023.
4. To record the on-going appointment of Grant Thornton as auditor and to authorise the
directors to fix the auditor’s remuneration.
6. General business
LOCATION
Cable Room
Harbourside
Function Centre
Museum of
New Zealand
Te Papa
Tongarewa
Circa
Michael
Fowler
Centre
Lagoon
2
Explanatory Notes – relating to the annual meeting
Voting
All voting at annual meetings must be conducted by poll. Procedures for voting, the appointment of proxies and
representatives, vote counting and the announcement of the results are applied and disclosed in detail.
Proxies, representatives and postal voting
If you choose not to attend the meeting, a form is enclosed for you to complete to appoint a proxy or corporate
representative to vote on your behalf. If you wish you can lodge a postal vote rather than a proxy vote.
Detailed guidance is provided on the form on how to complete it for either proxy or postal voting purposes. Further copies
of the form may be obtained from the Company or downloaded from our website.
Resolutions
Each of the resolutions will be considered as a separate ordinary resolution. To be passed, an ordinary resolution
requires a simple majority of votes of shareholders entitled to vote and voting. Each share in the Company carries one
vote.
The Board supports passing all of the resolutions.
Re-election and election of directors
The Listing Rules require that a director must not hold office (without re-election by shareholders) past the third annual
meeting that follows the director’s last election or 3 years, whichever is longer.
A director appointed by the Board must not hold office (without election by shareholders) past the annual meeting
following the director’s appointment.
Resolution 1
Stuart Barnes Gibbons was last re-elected as a director at the 2020 annual meeting. He is eligible and offers himself for
re-election.
Stuart was Chief Executive and Dealer Principal of Stevens Motors Ltd until 1 July 2020, when the dealership was merged
with Capital City Motors Ltd. He then managed the project for the development of the new Lower Hutt hub facility and
worked on the successful transition of the merged dealership with its management team. Stuart became a director of
the Company in 2014. He joined the Group Office in his current role of Group Manager Strategic Development in July
2022.
Resolution 2
Graeme Durrad Gibbons was last re-elected as a director at the 2020 annual meeting. He is eligible and offers himself
for re-election.
Graeme took up the role of Chief Executive of the Group in 1990 and became a director of the Company in 1995. He is
a Director of the Company’s subsidiary, Southpac Trucks Ltd and was previously a Director of Motor Trade Finance Ltd
and Chair of its Audit Committee. Graeme retired from the Chief Executive role at the end of September 2021, remaining
on the Board and as a member of the Audit & Compliance Committee.
Directors’ fees
Resolution 3
Every two years it has been the Board’s normal practice to review the fees paid to directors in total and individually. The
last review was undertaken in 2021.
Following the review of directors’ fees undertaken this year, which was based on market research from two independent
sources, the Board resolved to increase individual annual fees by between 4% and 7%. As a result, the total annual
fees payable will exceed the currently approved maximum of $305,000 set in 2021.
This resolution seeks shareholder approval to increase the maximum to $330,000.
Auditor re-appointment and remuneration
Resolution 4
Under section 200 of the Companies Act 1993, the auditor is automatically re-appointed each year unless ineligible or
replaced.
The fee paid to the auditor is disclosed in the annual report each year (refer page 17).
3
Facts at a glance
2019 2020 2021 2022 2023
Revenue ($000)
909,002
754,922
901,173 1,002,848 997,225
Trading profit after tax (excluding non-trading Items) ($000)
21,989 17,349 27,924
33,345
30,339
Profit after tax attributable to shareholders ($000)
21,830 21,828 24,833
33,183
27,848
Return on average shareholders’ funds
- trading profit after tax
10.9% 8.0% 11.4%
11.8%
9.9%
- profit attributable to shareholders
10.8% 10.0% 10.1%
11.7%
9.1%
Trading margin
2.4% 2.3% 3.1%
3.3%
3.0%
Earnings per share - trading profit after tax
67.3c 53.1c 85.4c
102.0c
92.8c
- profit attributable to shareholders
66.8c 66.8c 76.0c
101.5c
85.2c
Dividend per share
45.0c 32.0c 55.0c
62.0c
57.0c
Total dividends for the year ($000)
14,713 10,462 17,982 20,271 18,636
Shares on issue at reporting date (000)
32,695 32,695 32,695 32,695 32,695
Current ratio
1.4 1.5 1.4 1.6 1.4
Shareholders' equity as a percentage of total assets
51.6% 59.2% 58.6% 66.2% 56.7%
Net tangible asset backing per share
$6.02 $6.60 $7.60 $8.78 $9.05
(after final dividend is paid)
-
200
400
600
800
1,000
1,200
20192020202120222023
$ million
Revenue
Financial Year
-
5
10
15
20
25
30
35
20192020202120222023
$ million
Trading Profit after Tax
Financial Year
12.0%
9.3%
8.0%
9.0%
8.5%
8.7%
4.7%
9.5%
8.3%
9.1%
31.6%
10.6%
7.8%
21.0%
6.7%
10.0%
-22.2%
34.3%
3.4%
-9.6%
-25%
-15%
-5%
5%
15%
25%
35%
45%
2014201520162017201820192020202120222023
Percentage return on share price
at start of each year
Shareholder Returns
(Share price plus dividend)
refer to table on page 51
Gross dividend yield
Movement in share price
Average gross return over 10
years 14.0% p.a.
Financial Year
4
Directors’ report
Your Directors have pleasure in presenting the 105
th
annual report and audited consolidated financial statements of The Colonial
Motor Company Limited (CMC or Company) and its subsidiaries (Group) for the year ended 30 June 2023.
Revenue and profit
Revenue for the year was $997.2m. This is a 0.6% decrease on the previous year’s $1,002.8m reflecting a tightening economy
and reducing gross margins on vehicles. This year’s revenue compares to $901.2m in 2021 and $754.9m in 2020.
The trading profit after tax for the year was $30.3m, down 9% on last year’s $33.3m. Trading profit after tax is not specified
under Generally Accepted Accounting Practice but is a consistent measure of the underlying trading profitability of the Group
before valuation changes of assets and deferred tax movements. It is also the reference point used by the Board when
considering dividends.
Profit for the year attributable to shareholders was $27.8m, compared to $33.2m in 2022.
Statement of financial position
Total assets increased to $548.4m at year end (2022 : $458.2m). I nventory increased by $69.0m reflecting the slow normalisation
of the supply chain following Covid-19. Additions to Land & Buildings focused on the purchase of a new property in Palmerston
North and the refurbishment of existing sites in Christchurch, Rotorua and Gore. The annual independent revaluation of the
Group’s property portfolio brought about a total decrease of $5.2m of which $2.6m reduced the revaluation reserves. At the
reporting date, shareholders’ equity was $310.8m (2022: $303.3m).
Dividends
Dividends paid in respect of this financial year will total 57.0 cents per share (2022: 62.0 cents). An interim dividend of 15.0
cents was paid on 27 March 2023 and a final dividend of 42.0 cents will be paid on 2 October 2023. The dividend will carry the
maximum level of imputation credits. The value of the distributions for this financial year will be $18.6m (2022: $20.3m),
representing 61% (2022 : 61%) of the trading profit after tax.
Total shareholder returns over the past ten years are shown in the graph on page 3.
Directors
The independent Directors at 30 June 2023 and the date of this report were A J Waugh and J W M Journee.
The L isting Rules of the New Zealand Stock Exchange specify that a director must not hold office (without re-election) past the
third annual meeting following the director’s appointment or three years, whichever is longer. On that basis, the directors to retire
this year are G D Gibbons and S B Gibbons. They are eligible and are seeking re-election at the forthcoming annual meeting.
Directors fees
It has been the Board’s practice to review the fees paid to Directors, in total and to individuals, every two years. The last review
was undertaken in 2021. At that time the maximum fees payable was increased from $280,000 to $305,000. This was approved
by shareholders at the 2021 annual meeting.
Total fees paid in the year to 30 June 2023 were $300,932 (2022:
$295,548). Following the review of Directors’ fees in 2023, based on market research by two independent sources, the Board
has resolved to increase individual annual fees as follows:
Non-executive directors $63,700 from $59,500
Chairman of the Audit & Compliance Committee $70,070 from $65,450
Chairman of the Board $97,885 from $94,500
Based on the mix of Directors, the total annual remuneration will exceed the current approved maximum. A resolution seeking
consent to increase the limit to $330,000 will be considered at the upcoming annual meeting.
Director and company disclosures
Information required to be disclosed by the Directors and by the Company, to comply with the Companies Act 1993 and the
Listing Rules, is provided on pages 47 to 52. A separate Governance Statement is provided on pages 44 to 46 and a report on
the CMC Group operating strategy is on page 5.
13 September 2023
For the Directors
A J Waugh J W M Journee
Chair of the Board Chair of the Audit & Compliance Committee
On Page 4 replace this paragraph....
Revenue and profit
Revenue for the year was $997.2m. This is a 0.6% decrease on the previous year’s $1,002.8m reflecting a tightening
economy and reducing gross margins on vehicles. This year’s revenue compares to $901.2m in 2021 and $754.9m in
2020.
The trading profit after tax for the year was $30.3m, down 9% on last year’s $33.3m. Trading profit after tax is not specified
under Generally Accepted Accounting Practice but is a consistent measure of the underlying trading profitability of the
Group before valuation changes of assets and deferred tax movements. It is also the reference point used by the Board
when considering dividends.
Profit for the year attributable to shareholders was $27.8m, compared to $33.2m in 2022.
With the following...
Revenue and profit
Revenue for the year was $997.2m, a 0.6% decrease on the previous year’s $1,002.8m. This year’s revenue compares
to $901.2m in 2021 and $754.9m in 2020.
The trading profit after tax for the year was $30.3m, down 9% on last year’s $33.3m reflecting reduced gross margins on
vehicles and increased operating costs. Trading profit after tax is not specified under Generally Accepted Accounting
Practice but is a consistent measure of the underlying trading profitability of the Group before valuation changes of assets
and deferred tax movements. It is also the reference point used by the Board when considering dividends.
Profit for the year attributable to shareholders was $27.8m, compared to $33.2m in 2022.
Revenue for the year was $997.2m, a 0.6% decrease on the previous year’s $1,002.8m. This year’s revenue compares to
$901.2m in 2021 and $754.9m in 2020.
The trading profit after tax for the year was $30.3m, down 9% on last year’s $33.3m reflecting reduced gross margins on
vehicles and increased operating costs. Trading profit after tax is not specified under Generally Accepted Accounting Practice
but
is a consistent measure of the underlying trading profitability of the Group before valuation changes of assets and deferred
tax movements. It is also the reference point used by the Board when considering dividends.
Profit for the year attributable to shareholders was $27.8m, compared to $33.2m in 2022.
5
CMC Group operating strategy
Management of capital resources
The Group has a strong balance sheet, with significant shareholder equity and very few long term financial commitments.
The major assets on the balance sheet are property and inventory, with property funded by retained earnings and
inventory funded by short term borrowing (bank borrowing, at call deposits and bailment). There is minimal goodwill.
The Group owns most of its key operational properties. The Group does not have investment properties as such, as all
of the properties are occupied or intended to be occupied by our dealerships. Ownership brings greater flexibility when
tailoring facilities to the Group’s particular requirements. It provides security of tenure whilst conversely enabling the
Group to sell and relocate as needs arise without the constraints of a long term lease.
The Group seeks to pay regular dividends calculated at 60 - 70% of trading profit. The dividends have the maximum
imputation credits available to New Zealand shareholders. The remaining profit is reinvested in the business, either for
controlled growth or maintaining and reinvesting in the quality of the existing assets.
This investment or reinvestment may be in the form of establishing or acquiring a dealership business, or in developing
a new property for use by a dealership, or refurbishing and upgrading an existing facility.
By adopting an approach to capital management of:
- paying 60 - 70% of trading profit as dividend
- not overly gearing up the balance sheet by taking on significant long term debt
- not going to the shareholders for more capital
the Group is able to provide controlled growth for shareholders without shareholder dilution.
Operational Model
CMC is the parent company for a group of motor vehicle dealerships – the success of these dealerships is CMC’s
lifeblood.
The CEOs (Dealer Principals) of our subsidiary companies operate within a financial and operational mandate but have
wide discretion and local autonomy. Their role involves balancing the often conflicting demands of the franchisor,
customers, employees and profitability.
We consider each dealership business individually including its needs for reinvestment and growth opportunities.
The Group balances the need to change and adapt with an awareness that it has specific areas of expertise. The
operational expertise revolves around the franchise business model, as a franchisee in a local market area or on a
national basis. In this model the franchisor supplies the product and brand positioning, with the franchisee concentrating
on promoting the brand and selling the product and service to the customer. The model brings its own unique challenges
and opportunities.
As a response to, and to enable success in, a highly competitive and fragmented market place, particularly in metropolitan
areas, we have been moving to a ‘hub and spoke’ model. Here the main dealership facility, which encompasses all the
business’s array of activities – new and used vehicle sales, parts and service – is complemented by “service only” facilities
in customer convenient locations. This model is operational in South Auckland and Greater Wellington.
To be successful and grow a dealership, or establish a new one, we need to have management strength and depth and
also a franchise opportunity that fits. Where we have an existing property, or can provide a property solution, this
enhances our ability to take action. Ideally, we will grow by representing a new franchise partner in a number of locations
rather than as a one off.
With Southpac Trucks we have expanded over time by increasing the market position of the Kenworth and DAF brands
in an expanding heavy truck industry. This brings growing parts and service opportunities for that business and its
network of independent parts and service dealers.
The location of our dealerships spans all of New Zealand and ranges from small to large and from single to multiple
brands. The major brands with significant representation are in light vehicles - Ford and Mazda; heavy trucks - Kenworth
and DAF; tractors - New Holland, Case IH and Kubota. We also take pride in our relationship with a range of other
brands we partner with across our dealership network.
6
Chief Executive’s report
People
While 2023 was less disruptive for our people at a dealership level than in the previous financial year, they continued to
be challenged on a number of fronts - by the remnants of an unpredictable international supply chain, a constrained
labour market and the inflationary environment. It is testament to their collective experience and loyalty (and to the
underlying ‘CMC culture’ we foster) that the Group can consistently deliver strong outcomes for customers and franchise
partners and with that, for shareholders. This year was no exception.
Commitment to our people, through their individual development and the preparation of our next generation of leaders,
remains a core focus across the Group. The existing industry training programmes run in tandem to our franchise
partners’ specific development courses. Added to this, the Group Office has expanded the CMC-specific leadership and
business management training for both junior and senior staff. These programmes focus on business excellence and
culture, as well as reinforcing the utilisation of health, safety and wellbeing tools. One of these tools, the Go Safe health
and safety application, will be showcased at the annual meeting in November. Long term success and shareholder
value go hand in hand with looking after our people, customers and franchise partners.
One of the success stories of CMC is staff retention and the contribution of long-serving staff members. This year we
wish farewell but never goodbye to Alan Kirby (CEO/DP of MS Motors – Nelson), who retires in December this year.
Alan has been with the Group for 17 years and has overseen the growth of MS Ford, the addition of Nelson Kia and an
increased footprint of the Bridgestone Tyre Centres in the wider Nelson region. With such generational change comes
new opportunities. Jimmy Banks, Fixed Operations Manager of Team Hutchinson Ford – Christchurch, has been with
the Group for over 22 years and will be taking up the challenge of leading MS Motors into the future.
Financial year 2023: hard fought, great result
The exceptional result of the 2022 financial year was always going to be a hard act to follow, especially with the
headwinds New Zealand faced. The cooling of the economy, gradual softening of demand and the significant increased
cost of doing business, all driven by the high-inflationary environment, were factors that challenged the business and
required our dealership management teams to adapt. The agricultural sector has felt these impacts most acutely. As a
result, our tractor dealerships will continue to face these headwinds until an upturn arrives. In contrast, the Southpac
truck business has a substantial ‘forward order’ book. The capacity to deliver finished trucks is the main constraint – a
frustrating problem but a better situation to be in than a lack of customers/sales.
In addition to the obstacles already mentioned, an unrelenting pipeline of compliance regulations and requirements, as
well as little warning of tinkering with the Clean Car Scheme fees, have all challenged the industry. Vehicle importers
scrambled to cope with sudden artificial spikes in demand and, through no fault of their own, suffered the consequences.
Vehicles already ‘in build’ or in transit incurred higher fees, with virtually no ability for the importer, dealer or customer to
respond. The most recent example was the haste to impose increased Clean Car Scheme fees that took effect from 1
July this year. All this achieved was to again pull forward demand, this time to 30 June. This resulted in record new
vehicle registrations for that month, followed by the inevitable slump in subsequent months.
Frustrations aside, the 2023 financial year has been another strong result for CMC that we can be collectively proud of
and an outstanding one in a weakening but still favourable market. As expected, trading profit after tax was down but
still represented the second highest trading profit on record.
Car dealerships
Demand and customer enquiry for light vehicles was more erratic than in the previous year, but by historical standards
remained strong overall. The brands with desirable light vehicle models continued to be in high demand and short supply.
The next generation Ford Ranger remained an example of a formidable class-leading vehicle. Unfulfilled demand from
the sales frenzy of the 2022 March quarter continued into the 2023 financial year, with a modest number of delayed new
vehicle deliveries carried over. Only remnants of Covid-19 restrictions remained, with our dealership teams relishing the
opportunity to take advantage of uninterrupted trading months, a luxury the country hadn't experienced in recent years.
Vehicle supply chains remain congested although, relatively speaking, manufacturing and international shipping have
steadily improved and a semblance of normality has returned to supply and demand within the marketplace. Increased
vehicle supply invariably places downward pressure on margins as the industry juggles to find its new equilibrium. Being
a vehicle retailer, we can only hope the lessons learned by the industry over the last few years are retained and applied
in future.
Further tightening of the Clean Car Schemes should continue to ensure the adoption of New Energy Vehicles (NEVs),
with many hybrid models soon to incur an emissions penalty due to the changes that came into effect on 1 July.
Electrified vehicles (EVs including Battery Electric, Plug-in Hybrid and pure Hybrids) in the Passenger and SUV segments
can now be considered mainstream in New Zealand (see chart below). As demand pressures ease, brands that fail to
deliver competitive models in the new energy space will find life increasingly difficult under the current Clean Car
Legislation. With such a wide array of powertrains available today, the challenge for our sales teams is ensuring
customers drive away in a vehicle that is suited to their needs, both in terms of function and residual value. Not all new
energy vehicles are created equal and pure BEVs, while progressively improving, have yet to solve the limitations
associated with payload and towing range.
7
The Company’s extensive capital works programme continues to back our franchise partners’ latest brand standards
through refurbishment of our dealerships. The Fagan Motors (Masterton) and Ruahine Motors (Waipukurau) rebuilds
are at varying stages of planning, with construction of the new Fagan Motors Ford and Mazda showroom finally scheduled
to be underway in 2024.
Thank you to those shareholders who participated in the dealership open day and visited the Team Hutchinson Ford and
Avon City Ford facilities in Christchurch where major redevelopments have been completed. We plan to host a second
shareholder open day in Auckland in the second half of 2024 and details of this will be made available closer to the time.
Other major projects completed this year were at Timaru Motors and Dunedin City Motors.
Tractor and Truck dealerships
Agricentre South performed well under increasingly adverse trading conditions as the 2023 financial year unfolded. A
weakening primary sector has faced a combination of high inflation, falling primary product returns, labour shortages and
increased costs for capital equipment. These have put the rural sector ‘on hold’ and resulted in challenging trading
conditions for Agricentre. The business has an experienced management team combined with a robust parts and service
operation that is well positioned to support the Otago/Southland region through the market downturn.
Agricentre has been successful in acquiring new territories in Mosgiel and Central Otago resulting from the end of the
distributor relationship between CB Norwoods and CNH Industrial (Case IH and New Holland). This expands our
representation of those brands within the Otago/Southland region. The construction of a joint Case IH/New Holland
dealership in Gore is nearing completion. While the outlook for the primary sector over the short term appears
constrained, facility expansion and new opportunities for Agricentre to represent both of these brands over the longer
term are bright.
The Southpac heavy truck dealership operations had another pleasingly solid year, with a pipeline of pent-up demand
still working its way through to customers. A market downturn in Southpac’s truck sector is not yet evident, although this
may be due to the constrained supply chain. Truck supply is freeing up, with units coming off the Kenworth and DAF
production lines in greater quantities. More importantly, they are finally working their way to New Zealand as shipping
capacity improves. This does stretch both Southpac’s internal and external bodybuilding capacity as we work through a
bulge in long awaited arrivals. These increased arrivals provide the potential for a strong 2024 financial year for
Southpac, together with the costs and risks associated with high inventory load over the short-term. The Southpac team
is geared up to meet the challenge of the year ahead.
Property
Our property portfolio was not immune to the weaker economy and the shift in property prices. The annual valuation
exercise at 30 June resulted in a reduction in total property values of $5m. Accounting standards determined that half of
this be taken as an adjustment to non-trading profit.
The large development project in Palmerston North, to support CMC’s heavy vehicle dealerships, continues to work its
way through the consenting and development process. The project remains a number of years away from completion.
κϳй
κςй
ϭй
Ϭ
ϮϬ͕ϬϬϬ
κϬ͕ϬϬϬ
ςϬ͕ϬϬϬ
ϮϬϮϬ ϮϬϮϭ ϮϬϮϮ ϮϬϮϯϮϬϮϬ ϮϬϮϭ ϮϬϮϮ ϮϬϮϯϮϬϮϬ ϮϬϮϭ ϮϬϮϮ ϮϬϮϯ
EĞǁsĞŚŝĐůĞZĞŐŝƐƚƌĂƚŝŽŶƐŝŶEĞǁĞĂůĂŶĚͲ:ƵŶĞzd
E s;ĞůĞĐƚƌŝĐ͕W, s͕ŚLJďƌŝĚ͕ŚLJĚƌŽŐĞŶͿ
/ ;ƉĞƚƌŽůͬĚŝĞƐĞůͿ
WĂƐƐĞŶŐĞƌ
^hs
>ŝŐŚƚŽŵŵĞƌĐŝĂů
^ŽƵƌĐĞ͗D/͕:ƵŶϮϯ
8
New Horizons
As disciplined observers of the wider automotive industry, part of the Executive Management’s strategic plan over the
last two years has been to seek out ‘scalable’ complementary opportunities to diversify the Group’s operations within our
core automotive skillset. That search took us to Hefei in China where we recently concluded an importing and distribution
partnership for the New Zealand market with the holding company of JAC Motors (JAC). JAC is a significant vehicle
manufacturer, with advanced EV technology and is a market leader for a number of commercial vehicle models in China.
While JAC has an extensive automotive portfolio, vehicles currently available in right hand drive are limited. The CMC
subsidiary, NZ Automotive Limited, has an immediate focus on the launch of commercial vehicles in JAC’s light-medium
truck segments.
At CMC we pride ourselves on being more than simply ‘fair-weather friends’ and it is not often we embark on a major
new venture. No different to any of our existing franchise partners, we look forward to welcoming JAC into the CMC
family of operations and in supporting the brand in New Zealand over the long-term.
We have also made some tough decisions in recognition of the changing automotive landscape. Our dealership in
Hawkes Bay (The Hawkes Bay Motor Company) has been sold. The operation had struggled more recently and the
logical conclusion was to exit. The transaction we were able to secure ensured the best outcome for the dealership’s
staff and allowed CMC to redeploy the capital resources to other Group operations. Where they chose to do so, staff
were taken on by the new owner or redeployed within the Group.
From September 1
st
2023, the Energy Motors business in New Plymouth exited the Hyundai and ISUZU franchises to
become the BYD dealer for the Taranaki region. This is an exciting opportunity with BYD who have become the leading
EV brand in sales across the world. We thank Hyundai and ISUZU for their support in the region and the dealership will
continue to work alongside both brands and their customers to ensure continuity of the parts and service operations until
a new dealer can be appointed.
Outlook
Directionally, we anticipate a deteriorating outlook for the domestic economy, driven by stubbornly high inflation. We will
experience this outlook in combination with slowing global economies, particularly in China, a market New Zealand has
become economically reliant on. The New Zealand economy is already experiencing a sustained downturn in our primary
sector and this directly impacts provincial dealerships and is unlikely to abate in the near-term.
Government spending has supported demand in an economy that has been struggling with supply constraints. We would
expect New Zealand to now face much needed fiscal discipline that will result in downward pressure on business
profitability. As a result, this would start to ease work force supply and wage pressures over the medium term.
At the time of writing, we are nearing the general election and that brings with it many unknowns. For the automotive
industry, there exists the potential for material changes to the Clean Car Scheme. The Scheme has dominated many
distributors’ strategic planning and driven artificial peaks and troughs in demand. As a result, dealerships are
experiencing a drop in enquiry as customers and the economy await the outcome. The New Zealand and global business
environments we operate in continue to change and they remain volatile. We cannot know what will come next, be it
pandemic, earthquake, cyclone or foreign war. We have become even more accustomed to adapting and working closely
with our customers, franchisors and industry partners.
This year the economic outlook may feel gloomy and the automotive industry is coming off a high, however there remain
positive opportunities for the Group. We have the advantage of proven leadership and well-established processes and
systems across our dealer network. Strong franchise partnerships, a customer-first focus and a decentralised
management approach are important foundations that empower our teams to adapt to changing market conditions at the
dealership level. We also have opportunities to pursue. While some of these ‘green shoots’ are unlikely to bear
substantive fruit in this financial year, the foundation that has been laid has the potential to grow the Group in the years
ahead. The Group Office team remain focused on maximising every opportunity that comes our way.
Thank you
CMC’s success is generated from the capability of our people and the mutually beneficial franchise partnerships we are
in, this combined with customers across New Zealand who we appreciate and cherish. The Company’s stable and
supportive shareholder base affords us the ability to work for the benefit of all stakeholders in an unrelenting pursuit of
long-term success. On behalf of the CMC team, we thank each of you for this continued support and together we can
look forward to meeting the challenges in an ever-changing world.
A P Gibbons
Chief Executive
9
Group dealerships
Company Name
Chief Executive /
Dealer Principal
Franchises Location Web address
Southpac Trucks Ltd Maarten Durent Kenworth & DAF
Heavy Trucks
Manukau City,
Hamilton, Rotorua,
New Plymouth,
Palmerston North &
Christchurch
www.spt.co.nz
South Auckland Motors Ltd Michael Tappenden Ford & Mazda Manukau City, Auckland
Airport, Botany, Takanini
& Pukekohe
www.southaucklandford.co.nz
www.southaucklandmazda.co.nz
Southern Autos – Manukau Ltd Andrew Craw Suzuki, Peugeot,
Citroen & Isuzu
Manukau City & Botany www.southernautos.co.nz
Energy City Motors Ltd Russell Dempster Ford New Plymouth & Hawera www.energyford.co.nz
Energy Motors Ltd Russell Dempster Hyundai & Isuzu New Plymouth www.energyhyundai.co.nz
www.energymotorsisuzu.co.nz
Ruahine Motors Ltd David Wills Ford Waipukurau www.ruahinemotors.co.nz
Fagan Motors Ltd Keith Allen Ford & Mazda
Mahindra
Suzuki & Kawasaki
Motorcycles
Masterton www.faganford.co.nz
www.faganmazda.co.nz
www.fagansuzuki.co.nz
Capital City Motors Ltd Matthew Carman Ford & Mazda Lower Hutt,
Wellington, Porirua &
Kapiti
www.capitalcityford.co.nz
www.capitalcitymazda.co.nz
M.S. Motors (1998) Ltd Alan Kirby Ford Nelson
www.msford.co.nz
Nelson KIA
Service Lane
Bridgestone Tyres
Nelson
Richmond
Motueka & Richmond
www.nelsonkia.co.nz
Hutchinson Motors Ltd John Hutchinson Ford
Bridgestone Tyres
Christchurch &
Greymouth
Christchurch & Hornby
www.thf.co.nz
Avon City Motors Ltd John Luxton Ford Christchurch & Rangiora www.avoncityford.co.nz
Avon City Motorcycles Ltd John Luxton Suzuki & BMW
Motorcycles
Mahindra
Christchurch
www.avoncity.co.nz
Timaru Motors Ltd Wayne Pateman Ford & Mazda Timaru www.timaruford.co.nz
www.timarumazda.co.nz
Dunedin City Motors Ltd Robert Bain Ford & Mazda Dunedin, Oamaru
& Alexandra
www.dcford.co.nz
www.dcmazda.co.nz
Macaulay Motors Ltd Grant Price
Tim Rabbitte (DP)
Ford & Mazda
Mahindra
Invercargill, Queenstown
& Wanaka
www.macaulayford.co.nz
www.macaulaymazda.co.nz
Southern Lakes Motors Ltd Grant Price
Richard Burns (DP)
Mitsubishi & Nissan Queenstown & Wanaka www.southernlakesmotors.co.nz
Agricentre South Ltd
Grant Price Case IH Tractors &
Kuhn Implements
Invercargill, Gore, Milton,
Cromwell & Ranfurly
www.agricentre.co.nz
New Holland, Kubota
Tractors & Other Ag
Equipment
Invercargill, Gore &
Cromwell
Yamaha Motorcycles Gore
10
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of financial performance
for the year ended 30 June 2023
Notes
2023
$000
2022
$000
Revenue
Revenue 995,303 999,032
Other revenue 1,922 3,816
Total revenue 1 997,225 1,002,848
Trading expenses
Cost of products and services sold 801,918 815,425
Remuneration of staff 93,831 90,648
Depreciation and amortisation 8,171 8,082
Property occupation costs 4,144 3,964
Marketing, promotion and training 6,919 6,056
Other operating costs 27,891 24,901
Interest 3 9,253 4,401
Total trading expenses 2 952,127 953,477
Trading profit before tax 45,098 49,371
Taxation
Current tax 4 12,732 14,166
Deferred tax
4 (90) (178)
Total tax on trading 12,642 13,988
Non-controlling interest 2,117 2,038
Trading profit after tax 30,339 33,345
Non-trading items
Fair value revaluation of property (2,626) (420)
Fair valuation of investments (6) 68
Total non-trading items before tax (2,632) (352)
Taxation
Deferred tax
4 141 190
Non-trading items after tax (2,491) (162)
Profit attributable to shareholders 27,848 33,183
Profit for the year
Profit attributable to: Shareholders
Trading profit after tax 30,339 33,345
Non-trading items after tax (2,491) (162)
Total attributable to shareholders 27,848 33,183
Non-controlling interest 2,117 2,038
Profit for the year 29,965 35,221
Statistics per share
Basic and diluted earnings per share 7
Profit attributable to shareholders (cents) 85.2 101.5
Trading profit after tax (cents) 92.8 102.0
Dividends
Dividends (cents per share) 57.0 62.0
Total dividends ($000) 18,636 20,271
Net tangible assets per share ($)
9.47 9.25
11
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
for the year ended 30 June 2023
Notes
2023
$000
2022
$000
Profit for the year 29,965 35,221
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Property revaluation reserve
Fair value movement (2,584) 23,982
Deferred tax 4 3,111 (675)
Items that will be reclassified subsequently to profit or loss when
specific conditions are met
Cash flow hedge reserve
Movement in fair value of hedge derivatives (1,096) 3,903
Deferred tax 4 307 (1,093)
Total other comprehensive income for the year (262) 26,117
Total comprehensive income for the year 29,703 61,338
Total comprehensive income for the year attributable to:
Shareholders 27,704 58,879
Non-controlling interest 1,999 2,459
Total comprehensive income for the year 29,703 61,338
Consolidated statement of changes in equity
for the year ended 30 June 2023
Notes
2023
$000
2022
$000
Total equity at beginning of the year 307,840 265,834
Comprehensive income
Profit for the year 29,965 35,221
Other comprehensive income (262) 26,117
Total comprehensive income 29,703 61,338
Dividends paid to shareholders 21 (20,271) (17,982)
Dividends paid to non-controlling interest (1,350) (1,350)
Total equity at end of year 19 315,922 307,840
12
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of financial position
at 30 June 2023
Notes
2023
$000
2022
$000
Shareholders’ equity
Share capital 20 15,968 15,968
Retained earnings 179,460 171,883
Property revaluation reserve 113,831 113,304
Foreign exchange cash flow hedge reserve 1,514 2,185
Total shareholders’ equity 310,773 303,340
Non-controlling interest 5,149 4,500
Total equity 315,922 307,840
Current liabilities
Borrowings 24 21,511 8,732
At call deposits 23 31,327 31,076
Trade & other payables 11 74,368 47,423
Vehicle floorplan finance 22 51,994 28,443
Financial liabilities – credit contracts 13 452 956
Lease liabilities 14 2,038 2,027
Tax payable 4,716 5,044
Total current liabilities 186,406 123,701
Non-current liabilities
Bank borrowings 24 26,230 6,000
Financial liabilities – credit contracts 13 757 920
Lease liabilities 14 19,103 19,752
Total non-current liabilities 46,090 26,672
Total equity and liabilities 548,418 458,213
Current assets
Cash & cash equivalents 12 9,854 11,844
Trade & other receivables 10 47,460 39,200
Inventory 8 205,977 137,020
Financial assets – credit contracts 13 443 942
Financial derivatives – foreign exchange 28 2,475 3,571
Total current assets 266,209 192,577
Non-current assets
Financial assets – credit contracts 13 757 920
Intangible assets 15 1,028 1,028
Investments 17 1,350 1,356
Property, plant & equipment 9 251,959 238,170
Deferred tax 4 7,916 4,267
Right of use assets 14 19,199 19,895
Total non-current assets 282,209 265,636
Total assets 548,418 458,213
For the Directors
A J Waugh
Chair of the Board
J W M Journee
Chair of the Audit & Compliance Committee
Authorised for issue on 13 September 2023
13
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
for the year ended 30 June 2023
Notes
2023
$000
2022
$000
Operating cash flows
Receipts from customers 988,714 1,008,488
Interest received 22 108
Dividends received 90 202
Payments to suppliers and employees (976,739) (922,003)
Interest paid (9,253) (4,401)
Income taxes paid (13,059) (15,139)
Net operating cash flows 6 (10,225) 67,255
Investing cash flows
Proceeds from sale of property, plant & equipment 427 372
Proceeds from sale of investments 396 1,264
Purchase of property, plant & equipment (25,750) (24,154)
Net investing cash flows (24,927) (22,518)
Financing cash flows
Movement in borrowings 56,662 (24,888)
Repayment of lease liabilities (2,130) (2,181)
Increase/(decrease) in deposits 251 (1,228)
Dividends paid to shareholders (21,621) (19,332)
Net financing cash flows 33,162 (47,629)
Net change in cash held (1,990) (2,892)
Cash at beginning of year 11,844 14,736
Cash at end of year 12 9,854 11,844
-
14
Notes to the consolidated financial statements
for the year ended 30 June 2023
Index to the notes
Note Page
Preparation of the consolidated financial statements
About the reporting entity 15
Statement of compliance 15
Basis of preparation 15
Critical accounting assumptions, estimates and judgements 15
General accounting policies
Impairment 16
Goods & services tax 16
Changes in accounting policies and accounting standards 16
Financial performance
The notes in this section explain the Group’s profit for the year and give more detail of items
that make up its revenue and expenses.
1 Revenue 17
2 Expenditure 17
3 Interest 18
4 Taxation 18
5 Segment report 19
6 Reconciliation of profit for the year with operating cash flows 20
7 Earnings per share 20
Financial position
This section describes the assets and liabilities the Group uses to generate profit including
its working capital.
8 Inventory 21
9 Property, plant and equipment 21
10 Trade and other receivables 23
11 Trade and other payables 24
12 Cash and cash equivalents 24
13 Credit contracts 25
14 Leases 26
15 Intangible assets 28
Investments
This section describes the corporate structure of the Group and how the results and balances
of the individual companies are combined into the consolidated financial statements.
16 Subsidiaries 29
17 Investments 29
Funding
This section describes the sources of funding the Group uses and how they are managed.
18 Capital management 30
19 Movements in equity 31
20 Share capital 32
21 Dividends 32
22 Vehicle floorplan finance 32
23 At call deposits 33
24 Borrowings 33
25 Financial instruments 34
26 Reconciliation of liabilities arising from financial activities 36
Managing risk
The notes in this section describe how the Group manages the financial risks that affect its
financial position and performance.
27 Financial risk management 37
28 Financial derivatives – foreign exchange 38
29 Dealership franchise agreements 39
Other notes
30 Related party transactions 40
31 Contingencies 40
32 Events after the reporting date 40
15
Notes on the preparation of the consolidated financial statements
About the reporting entity
The financial statements presented are for The Colonial Motor Company Limited (the Company) and its
subsidiaries (the Group). The Company is an FMC Reporting Entity under the Financial Markets
Conduct Act 2013 (FMCA 2013). Where an FMC Reporting Entity prepares consolidated financial
statements, parent company disclosures are not required and have therefore not been included in these
financial statements.
The Group is a Tier 1 for profit reporting entity as set out in the External Reporting Board’s Accounting
Standards Framework. The Colonial Motor Company Limited is a New Zealand registered company
listed on the New Zealand Stock Exchange.
The Group’s principal activity is operating franchised motor vehicle dealerships. There is a list of the
dealerships and the franchises they represent on page 9.
Statement of compliance
These consolidated financial statements have been prepared in accordance with Generally Accepted
Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS)
issued by the New Zealand Accounting
Standards Board, Part 7 of the FMCA 2013 and the Companies Act 1993. They also comply with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
The consolidated financial statements were authorised for issue by the Directors on 13 September 2023.
Basis of preparation
The consolidated financial statements have been prepared
• on an historical cost basis, modified by the revaluation of certain assets and liabilities to fair value
through profit or loss and other comprehensive income, and
• on the assumption that the Group is a going concern
The consolidated financial statements are presented in New Zealand Dollars, which is the Group’s
functional and presentation currency, rounded to the nearest thousand dollars.
Critical accounting assumptions, estimates and judgements
The Group makes assumptions, estimates and judgements concerning the future. They are based on
historical experience and other factors including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates.
Estimates, judgements and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any future
periods affected.
Estimates and judgements that have a significant risk of causing a material adjustment to the carrying
amount of the assets and liabilities are detailed in the relevant notes of these consolidated financial
statements.
16
Notes on accounting policies
The accounting policies set out in these notes have been applied consistently to all periods presented
in these consolidated financial statements.
The following general accounting policies relate to the overall consolidated financial statements.
Policies specific to particular transactions or balances are detailed within each relevant note and are
highlighted by a solid blue bar as indicated below:
Specific accounting policy
General accounting policies
Impairment
The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether
there is any objective evidence of impairment. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its estimated recoverable amount. Impairment losses directly reduce the
carrying amount of assets and are recognised as an expense in the consolidated statement of financial
performance.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing fair value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate of the time value of money and risks specific to that
asset.
In respect of all assets (except goodwill and intangibles with indefinite useful lives) an impairment loss
is reversed if there has been a change in the estimate used to determine the recoverable amount.
Goods & Services Tax
The consolidated financial statements are prepared net of Goods & Services Tax (GST) with the
exception of receivables and payables which are stated including GST.
Changes in accounting policies and accounting standards
There have been no changes in the existing accounting policies during the year.
No new accounting standards which became effective from 1 July 2022 were considered to be material
for the Group.
New standards, interpretations and amendments
At the date of authorisation of these consolidated financial statements, certain new interpretations to
existing standards have been published but are not yet effective and have not been adopted early by
the Group.
All pronouncements will be adopted in the first accounting period beginning on or after the effective date
of the new standard. There are no new standards issued but not yet effective that will have a material
impact on the Group in future reporting periods.
17
Notes on financial performance
1 Revenue
Revenue from Contracts with Customers
All of the revenue from contracts with customers arises from the sale of goods or services. The
transaction price is measured as the fair value of the consideration received or receivable and is net of
returns, trade allowances and rebates. All contracts are short term in nature.
For the supply of goods, the performance obligation is considered to be satisfied when control of the
goods has been passed to the buyer. This generally happens on delivery and revenue is recognised at
that time. Payment is usually required before the goods are delivered.
For the supply of services, performance obligations are considered satisfied when the service has been
completed. Revenue is recognised at that time. Payment is due on completion of the service.
The Group sells some products which have extended warranty or maintenance periods. These are part
of the price of the original goods or services and are not identified or treated separately. Any costs
incurred by the Group in respect of these services are recovered from the manufacturers providing the
extended warranties and maintenance agreements.
Other Revenue
Rental revenue arising from premises rental is accounted for on a straight line basis over the lease term.
Interest comprises interest on funds invested and is recognised in
the statement of financial
performance as it accrues using the effective interest rate method. Subsidies received from the
Government in respect of wage costs have been recognised as revenue in the same period as the wage
expenses to which they relate.
2023
$000
2022
$000
Revenue from
Sale of products 914,319 926,432
Sale of services 80,984 72,600
Total revenue from contracts with customers 995,303 999,032
Interest 22 108
Other revenue 1,900 3,708
Total other revenue 1,922 3,816
2 Expenditure
Expenditure in the consolidated statement of financial performance
includes:
2023
$000
2022
$000
Auditor’s remuneration
Audit fees – statutory audit 544 494
Other services 1 -
Total auditor’s remuneration 545 494
Operating lease expense 261 548
Directors’ fees 301 295
Bad debts written off 88 39
Donations 42 39
Contributions to retirement savings
CMC Workplace Savings Scheme 916 842
KiwiSaver 1,782 1,668
Increase/(decrease) in impairment allowance for:
Parts inventory obsolescence 150 41
Used stock provision (480) 696
Doubtful debts 62 (12)
Credit contracts (5) (7)
18
3 Interest
Interest expense comprises interest on deposits, vehicle floorplan finance, borrowings and bank
overdraft facilities.
See note 27 (b) for interest rate disclosures.
Interest costs are recognised using the effective interest rate method and expensed in the period they
are incurred.
4 Taxation
4(a) Tax expense
Income tax expense comprises current and deferred tax. Current tax is the tax payable on taxable
profit for the period using the existing tax rates.
Tax expense is recognised in the consolidated statement of financial performance except when it
relates to items recognised directly in the consolidated statement of comprehensive income.
2023
$000
2022
$000
Trading profit before tax 45,098 49,371
Non-trading items before tax (2,632) (352)
Profit before tax for the year 42,466 49,019
Expected tax charge at 28% 11,890 13,726
Tax adjustments for:
Non-deductible expenses 834 334
Tax exempt income (207) (71)
Changes in unrecognised temporary differences 215 177
Actual current tax charge 12,732 14,166
Movement in deferred tax (231) (368)
Total tax expense 12,501 13,798
Effective current tax rate on trading profit before tax 28.2% 28.7%
Effective current tax rate on profit before tax 30.0% 28.9%
4(b) Deferred tax
The calculation of deferred tax uses the liability approach that recognises deferred tax assets and
liabilities based on differences between the accounting and tax values of specific items in the
consolidated statement of financial position.
Deferred tax assets and liabilities are carried:
• at the tax rates expected to apply when the assets are recovered or liabilities settled
• on the basis that the Group expects future profits to exceed any reversal of existing temporary
differences
19
Deferred tax asset
2023
$000
2022
$000
At the beginning of the year 4,267 5,667
Movement through the consolidated statement of
financial performance
On trading profit 90 178
On non-trading property depreciation 141 190
Movement through property revaluation reserve 3,111 (675)
Movement through foreign currency cash flow hedge
reserve
307 (1,093)
At the end of the year 7,916 4,267
Deferred tax assets and liabilities are attributable to the following:
Trade and other payables 6,053 6,221
Trade and other receivables 27 10
Employee benefits 1,501 1,587
Inventories 1,175 1,041
Financial derivatives (693) (1,000)
Impairment allowance for finance bad debts 2 4
Property, plant and equipment (5,376) (5,570)
Building depreciation rule change 5,227 1,974
Deferred tax asset at the end of the year 7,916 4,267
4(c) Imputation credit account
2023
$000
2022
$000
Imputation credits available for use in subsequent
reporting periods
48,232 46,003
The New Zealand imputation regime enables tax credits to be attached to dividends paid to
shareholders as a method of avoiding double-taxation of company profits.
5 Segment report
The Group is structured so that each motor vehicle dealership is managed locally under the control of a
dealer principal who reports monthly to the Group Chief Executive. The Group Chief Executive is
considered to be the Chief Operating Decision Maker in terms of NZ IFRS 8 - Operating Segments. The
key measures used to assess dealership performance are revenue, trading profit before tax, trade
receivables and inventory.
The dealerships have similar economic characteristics, financial performance (as measured by their
gross profitability), products, services, processes, customers, methods of distribution and all operate in
the same regulatory environment. On that basis, all of the Group’s operating segments have been
aggregated into a single reporting segment to most appropriately reflect the nature and financial effects
of the business activities in which the Group engages and the economic environment in which it operates.
2023 2022
Operating
segment Corporate
Total
Group
Operating
segment Corporate
Total
Group
$000 $000 $000 $000 $000 $000
Revenue from customers 996,257 946 997,203 1,002,223 517 1,002,740
Depreciation & amortisation 5,103 3,068 8,171 5,229 2,853 8,082
Interest income 22 - 22 108 - 108
Interest expense 5,430 3,823 9,253 2,948 1,453 4,401
Trading profit before tax 43,368 1,730 45,098 47,869 1,502 49,371
Income tax 12,161 571 12,732 13,713 453 14,166
Total assets 298,193 250,225 548,418 224,249 233,964 458,213
Material non-cash items
Revaluation loss on
property
- (2,626) (2,626) - (420) (420)
Deferred tax credit 100 131 231 336 32 368
20
6 Reconciliation of profit for the year with operating cash flows
2023
$000
2022
$000
Profit for the year 29,965 35,221
Adjustments for non-cash items
Depreciation and amortisation 8,171 8,082
Revaluation of property and investments 2,632 352
Cancellation of lease - (11)
Movement in
Impairment of credit contracts (7) (7)
Deferred tax (231) (368)
Movement in working capital
Trade and other payables 26,926 (7,349)
Tax payable (482) (972)
Trade and other receivables (8,242) 5,950
Inventory (68,957) 26,357
Net cash flow from operations (10,225) 67,255
7 Earnings per share
2023
$000
2022
$000
Trading profit after tax 30,339 33,345
Profit after tax for the year attributable to shareholders 27,848 33,183
Weighted average number of shares on issue – see note 20
Basic and diluted earnings per share on
Cents per
share
Cents per
share
Trading profit after tax 92.8 102.0
Profit after tax attributable to shareholders 85.2 101.5
Basic and diluted earnings per share are calculated by dividing the profit after tax attributable to
shareholders by the weighted average number of shares outstanding during the year.
There were no potentially dilutive ordinary shares outstanding at the reporting date (2022: none).
21
Notes on financial position
8 Inventory
New and used vehicles are valued at the lower of cost or net realisable value. Parts, accessories,
workshop stocks, fuels and gases are recognised at cost, using where applicable, the first in first out
method. Cost includes expenditure incurred in acquiring the inventory and bringing it to the existing
location and condition. Due allowance has been made for obsolete and slow moving stock.
Inventory, particularly of vehicles, is reviewed on a transaction by transaction basis as part of normal
commercial trading. Estimates and judgement are required to ensure that carrying values do not exceed
net realisable values at the reporting date.
Parts inventory is reviewed regularly for slow-moving or obsolete stock. At each reporting date an
impairment allowance is recognised based on the age of stock and historical evidence of inventory held
for a similar timeframe. The movement in the parts obsolescence allowance is as a result of a
combination of the realisation and scrapping of aged stock during the reporting period.
2023
$000
2022
$000
Vehicles 167,057 107,998
Parts, accessories, workshop fuels and gases 42,909 32,670
Impairment allowance (3,989) (3,648)
Total inventory 205,977 137,020
Total inventory write-down including parts, parts obsolescence and vehicles (160) 864
9 Property, plant & equipment
Land & buildings
Land and buildings owned by the Group are categorised as property, plant & equipment because they
are owned specifically for use in the revenue generating operations of its subsidiaries.
All land and buildings, other than properties held for sale (if any), were independently valued at reporting
date by Quotable Value Limited to comply with Property Institute New Zealand Professional Practice
Standards and International Valuation Standards.
All property has been classified as level 2 in the fair value hierarchy specified in NZ IFRS 13 – Fair Value
Measurement because there is an observable active market for these type of assets.
All property was valued at its highest and best use by applying a direct sales comparison approach,
which derives fair values by comparing the property to similar assets that have recently sold on the open
market.
Any revaluation surplus is credited to the property revaluation reserve unless it reverses a revaluation
decrease for the same asset previously recognised in profit or loss. In that case, the surplus is credited
to profit or loss to the extent of the decrease previously charged. Any revaluation deficit is recognised
through profit or loss unless it directly offsets a previous surplus in the same asset in the property
revaluation reserve.
Other property, plant & equipment
Property, plant & equipment other than land and buildings are carried at cost less accumulated
depreciation and impairment losses. Cost includes all expenditure that is directly attributable to the
acquisition of the asset. Software that is integral to the functionality of the related equipment is
capitalised as part of the asset.
Depreciation
Land is not depreciated. The economic life of buildings has been assessed at between 33 and 100
years and buildings are depreciated accordingly. Any accumulated depreciation on buildings at
revaluation date is eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset.
Other plant and equipment has been depreciated over its estimated useful life on an accounting basis
that the Group considers best reflects the decline in the economic service potential of each class of
assets. The general rate bands are shown below:
Furniture, fittings and equipment 7.5 – 60% of Diminishing Value
Service vehicles 18 – 36% of Diminishing Value
Carrying values and depreciation rates are reviewed at each reporting date to ensure depreciation
rates are appropriate.
22
Land &
buildings
Furniture,
fittings &
equipment
Service
vehicles Total
$000 $000 $000 $000
Cost or fair value at 30 June 2021 103,543 29,050 6,807 139,400
Accumulated depreciation - (19,583) (4,161) (23,744)
Revaluation 80,963 - - 80,963
Net book value at 30 June 2021 184,506 9,467 2,646 196,619
Additions 20,769 2,785 621 24,175
Disposals (59) (323) (112) (494)
Depreciation (2,697) (2,165) (830) (5,692)
Movement in revaluation 23,562 - - 23,562
Net book value at 30 June 2022 226,081 9,764 2,325 238,170
Cost or fair value at 30 June 2022 121,556 28,944 6,217 156,717
Accumulated depreciation - (19,180) (3,892) (23,072)
Revaluation 104,525 - - 104,525
Net book value at 30 June 2022 226,081 9,764 2,325 238,170
Additions 17,276 2,668 5,807 25,751
Disposals (161) (117) (383) (661)
Depreciation (3,011) (2,163) (916) (6,090)
Movement in revaluation (5,211) - - (5,211)
Net book value at 30 June 2023 234,974 10,152 6,833 251,959
Comprised of:
Cost or fair value at 30 June 2023 138,651 30,753 10,918 180,322
Accumulated depreciation - (20,601) (4,085) (24,686)
Revaluation 96,323 - - 96,323
Net book value at 30 June 2023 234,974 10,152 6,833 251,959
2023
$000
2022
$000
Revaluation deficit recognised as non-trading items through the statement
of financial performance (2,626) (420)
Capital work in progress included in the value of land & buildings at
reporting date. Capital work in progress is not subject to depreciation until
completed and brought into use 3,156 4,063
Capital commitments
Commitments to the future acquisition of new dealership facilities and
development projects to existing facilities 1,075 2,637
If land and buildings were measured at cost the carrying value would be $138,651k (2022: $121,556k)
23
10 Trade and other receivables
2023
$000
2022
$000
Trade receivables 42,059 37,319
Impairment allowance for expected credit losses (98) (36)
41,961 37,283
Other receivables 4,536 1,631
Prepayments 963 286
Total trade and other receivables 47,460 39,200
Bad debts written off in year 88 39
The net carrying value of trade receivables and prepayments is considered to be their fair value.
The Group has adopted the simplified model of recognising lifetime expected credit losses as detailed
in NZ IFRS 9 – Financial Instruments, as none of the trade or other receivables contain a significant
financing component.
In measuring expected credit losses, the trade receivables have been assessed on a collective basis
as they share similar credit risks. Expected loss rates are based on historic trading patterns over the
last 5 years adjusted for anticipated changes in the 12 months following reporting date.
The items included in other receivables do not share the same credit risks as trade receivables and no
credit loss is expected to arise.
Trade receivables are written off as bad debts when there is no expectation of recovery.
On the above basis the expected credit loss of trade receivables is as follows:
2023
$000
2022
$000
Expected credit loss rate 0.23% 0.10%
Gross carrying amount 42,059 37,319
Expected credit loss 98 36
Movements in the loss allowance are as follows:
Balance at 1 July 36 48
Allowance recognised in the statement of financial
performance 62 (11)
Allowance recovered - (1)
Balance at 30 June 98 36
24
11 Trade and other payables
Trade and other payables are stated at amortised cost.
Employee benefits
The Group provides for benefits accruing to employees for:
• salaries and wages earned but not yet paid
• annual leave accrued but not yet taken
• short-term incentives arising from contractual obligations or when it is probable that the incentives
will be paid and they can be reliably measured
Trade and other payables are all due within one year.
2023
$000
2022
$000
Trade payables 52,670 28,827
Employee benefits 9,738 9,091
Other payables 11,960 9,505
Total trade and other payables 74,368 47,423
12 Cash and cash equivalents
2023
$000
2022
$000
Bank accounts in funds 9,854 11,844
Net cash and cash equivalents 9,854 11,844
These balances include all cash and cash equivalents.
Bank overdrafts are payable at call.
The Company guarantees the amounts owing by its subsidiaries under overdraft facilities and the
subsidiaries guarantee the indebtedness of the Company.
Aggregate limit on bank overdrafts 6,635 6,835
25
13 Credit contracts
Dealerships arrange finance for customers to buy vehicles with a number of finance companies. Before
the customers enter into the finance agreements, information is gathered and provided to the finance
companies to check that customers meet their creditworthiness, affordability and
other criteria.
Dealerships make the initial loans to the customer but instantaneously assign them to the finance
company.
Credit contracts with Motor Trade Finance Limited
Credit contracts with Motor Trade Finance Limited (MTF) differ from the other finance companies. MTF
retains the right of recourse to the dealership if a particular customer defaults on their payments.
Accounting for the MTF credit contracts results in creating a receivable from the customer (which is
collected by MTF due to the assignment) and an equal and opposite liability for the amount that may
become payable to MTF if the customer defaults. In the normal course of business, the receivable and
liability for each finance deal reduce in parallel as customers make routine repayments.
The financial liabilities under credit contracts at reporting date consist of the outstanding balances on
customers’ accounts. The movement in the liability is detailed in note 26.
Financial receivables – credit contracts
There is a risk if customers fail to make the necessary repayments that the receivable will not be
recoverable and the liability will remain payable to MTF. Factors that mitigate
this risk include:
• credit checks that are carried out when the finance is arranged
• timely credit control practices
• the number of outstanding loans means there is no concentration of credit risk on a restricted
number of debtors
• security over the vehicles that are financed so that, if other measures fail, the vehicles can be
repossessed and sold to offset bad debts
Bad debts
If customers default and the sale proceeds of the vehicle do not cover the outstanding balance, the
deficit is recognised as an expense in the statement of financial performance.
Impairment
The balances are routinely reviewed for impairment and an allowance is made for amounts that are
unlikely to be recovered. The impairment allowance is calculated as a percentage of net amounts
outstanding under the credit contracts based on historic trading patterns.
Amounts owed by customers are recoverable over a number of years. To determine the percentage
used for the impairment allowance, estimates are based on historical data for contracts in default.
Financing agreements outstanding at reporting date that have been assigned to MTF with recourse
have the following repayment schedule:
2023
$000
2022
$000
Up to 1 year 452 956
1 to 2 years 437 494
2 to 3 years 244 324
3 to 4 years 61 80
4 to 5 years 15 22
Total 1,209 1,876
Impairment allowance (9) (14)
Carrying value of receivables 1,200 1,862
Number of credit contracts 74 123
Value of impaired accounts written off in the year ($000) - -
Actual arrears past due at 30 June ($000) 3 12
Arrears as a percentage of total 0.26% 0.66%
Total value of accounts in arrears at 30 June ($000) 38 135
Accounts in arrears as a percentage of total 3.15% 7.21%
26
The amounts payable by customers under the financial assets – credit contracts, including future
interest, have the following repayment profile, which is the maximum amount the Group may be required
to pay if subject to recourse under its contractual obligations.
2023
$000
2022
$000
Less than 1 year 549 1,103
1 to 2 years 493 562
More than 2 years 347 460
Total 1,389 2,125
14 Leases
At the start of a contract the Group assesses whether the contract is, or contains, a lease being the right
to control the use of an identified asset for a period of time in exchange for consideration. With the
exception of low value assets and short term leases, at the start date of the lease the Group recognises
a right of use asset, representing the right to use the underlying asset, and a lease liability, representing
the obligation to make lease payments.
The right of use asset is initially measured at cost comprising the lease liability recognised, any initial
direct costs including lease payments made before the commencement date, less any incentives. Right
of use assets are then depreciated on a straight line basis over the shorter of the lease term or the
estimated useful life of the assets. The Group also assesses the impairment of the right of use asset
when such indicators exist.
The lease liability is recognised from the start date of the lease measured at the present value of lease
payments to be made over the life of the lease. When calculating the present value of lease payments,
the Group uses its incremental borrowing rate at the commencement date of the lease as the interest
rate implicit in the lease is not determinable. After the commencement date, the amount of the lease
liability is increased to reflect the addition of interest charges and reduced for the lease payments made.
The carrying amount of lease liabilities is remeasured if there is a change in the terms of the lease (for
example a change in the length of the lease or a change in the lease payments). The term of the lease
includes any rights of renewal where there is a reasonable level of certainty that the lease will be
renewed.
Lease payments on low value assets or short term leases (less than 12 months) are recognised as an
expense on a straight line basis over the lease term.
The Group has leases for dealership facilities, including showrooms, workshops, office space and
storage areas at a number of sites across the country and for office accommodation in Wellington. With
the exception of short term leases and leases on low value assets, each lease is reflected on the
statement of financial position as a right of use asset and an associated lease liability. Property leases
have original terms up to 24 years and most have rights to renew exercisable at the option of the Group.
The majority of leases allow for a market rent increase when renewals are exercised and some have
annual inflation increases.
The following table summarises the Group’s leasing activities:
Number
leased
Range of
remaining
terms (years)
Average
remaining
term (years)
Number with
renewal options
Number with
rent reviews
Dealership
facilities
28
1 – 17
7 24 24
Office
building
1 7 7 1 1
27
The value of right of use assets by type is summarised below:
Dealership
facilities
Office
building Total
$000 $000 $000
At 1 July 2021 14,618 1,208 15,826
Additions 6,459 - 6,459
Depreciation (2,117) (139) (2,256)
Disposals (134) - (134)
Right of use assets at 30 June 2022 18,826 1,069 19,895
Additions 2,660 - 2,660
Depreciation (2,093) (139) (2,232)
Disposals (1,124) - (1,124)
Total right of use assets at 30 June 2023 18,269 930 19,199
Lease liabilities are presented as current or non-current liabilities based on the maturity date of the
underlying lease. The maturity of lease liabilities is as follows:
Within
one
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
5 to 10
years
Over 10
years
$000 $000 $000 $000 $000 $000 $000
2023
Lease liability 2,038 1,988 1,968 1,929 1,902 6,965 4,351
Finance charge 703 629 557 484 409 1,182 271
2022
Lease liability 2,027 1,877 1,773 1,804 1,825 7,235 5,238
Finance charge 653 592 537 482 426 1,342 393
Interest costs for the year on lease liabilities was $705k (2022: $649k). This has been included in
interest in the statement of financial performance.
A number of leases have right to renew options exercisable by the lessee. The Group has included all
of these renewal options in the right of use asset with the exception of four properties which are sub-
leased and exercise of the renewal is subject to the head lease.
The Group has a number of properties which are leased on terms which have less than 12 months to
run. The cost of these leases was $261k (2022: $548k) for the year and has been included in property
occupation costs in the statement of financial performance. At 30 June 2023 the total commitment on
these leases was $98k (2022: $145k).
The Group owns some properties that are not completely occupied by Group companies and the space
is leased to third parties. The leases are negotiated under normal commercial arrangements with
varying terms, escalation clauses and renewal conditions and without undue restrictions. Rent of
$917k (2022: $690k) has been included in other revenue. The rent is receivable during the non-
cancellable periods of these leases according to the following schedule.
Lease receivables
2023
$000
2022
$000
Within one year 1,009 890
Between one and two years 787 863
Between two and five years 812 1,490
Over five years 61 258
Total operating lease receivables 2,669 3,501
28
15 Intangible assets
Intangible assets consist of goodwill.
Goodwill is recognised on acquisitions of subsidiaries or purchases of business assets and represents
the excess of the acquisition costs over the fair value of the individually identified acquired assets and
liabilities at acquisition date.
Goodwill relates to the acquisition of business assets which have no foreseeable limit to the period over
which they are expected to generate cash inflows for the Group. As such they are considered to have
an indefinite useful life.
The value of intangibles is compared with the “value in use” of the affected dealerships, being South
Auckland Motors Ltd and Dunedin City Motors Ltd, which have been identified as the cash generating
units associated with the intangibles. Impairment of the intangible assets is recognised if there is
considered to be a permanent reduction in the “value in use”.
Impairment testing calculations require the use of estimates and assumptions. The calculations of “value
in use” are based on the actual results for the past five reporting periods together with the projected
results for the next five reporting periods. It was assumed that there would be an initial reduction in
profitability from the levels seen in 2023 as the economy contracts followed by a stabilisation at a level
consistent with historic returns.
Key assumptions relate to the general economic outlook, the size of the new and used vehicle industries
and the performance of the Group’s business units in this environment.
The discount rate used in completing the cash flow forecast to assess value in use was 10.5%
(2022: 10.2%).
Management considers that any reasonable change in a key assumption used in the determination of
the value in use would not cause the carrying amount of goodwill to exceed the recoverable amount.
The value of intangible assets was reviewed at 30 June 2023. There was no indication of impairment
below their carrying amount (2022: $Nil).
2023 2022
Goodwill $000 $000
Balance at 1 July 1,028 1,028
Impairment loss during the year - -
Balance at 30 June 1,028 1,028
Cost 1,028 1,028
Accumulated amortisation and impairment - -
Balance at 30 June 1,028 1,028
29
Notes on investments
16 Subsidiaries
Subsidiaries are entities controlled by the Company. Control requires the investor to have exposure or
rights to variable returns and the ability to affect those returns through power over the investee. The
financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases. Intra-group balances, and any revenue and
expenses from intra-
group transactions, are eliminated in preparing the consolidated financial
statements.
Non-controlling interests in the results and equity of subsidiaries are shown separately in each of the
consolidated financial statements. They represent the portion of the profit or loss, other comprehensive
income and net assets of subsidiaries that are not held by the Group based on their respective
ownership interests.
All of the shares in The Hawkes Bay Motor Company Limited were sold in October 2022. The loss made
by the company up to the date of sale has been included in the consolidated financial statements but
was not material to the Group.
All subsidiaries are 100% owned (2022: 100%), with the exception of Southpac Trucks Limited which is
85% owned ( 2022: 85%). All subsidiaries have a reporting date of 30 June. All Group companies are
registered in New Zealand. Subsidiary companies operate as motor vehicle dealerships and related or
incidental activities. The Company provides administrative and financial services to the subsidiaries as
well as leasing them, at market rates, many of the properties they occupy.
Trading subsidiaries
Agricentre South Ltd, Avon City Motorcycles Ltd, Avon City Motors Ltd, Capital City Motors Ltd,
Dunedin City Motors Ltd, Energy City Motors Ltd, Energy Motors Ltd, Fagan Motors Ltd, Hutchinson
Motors Ltd, M.S. Motors (1998) Ltd, Macaulay Motors Ltd, Ruahine Motors Ltd, South Auckland
Motors Ltd, Southern Autos – Manukau Ltd, Southern Lakes Motors Ltd, Southpac Trucks Ltd and
Timaru Motors Ltd.
Non-trading subsidiaries
Agricentre Ltd, Avery Motors Ltd, Capital City Paint & Panel Ltd, Central Lakes Automotive Ltd, East
City Ford Ltd, Jeff Gray Ltd, The Motor Company Ltd, Centennial Motors Ltd, Panmure Motors Ltd, KB
Ford Ltd (
formerly Papakura Ford Ltd), CMC Motors Ltd, Queenstown Motors Ltd, South Auckland Ford
Ltd, EV Trucks Ltd (
formerly South Auckland Honda Ltd), Southland Tractors Ltd, Stevens Motors Ltd,
CMC Motor Group Ltd and Trucks South Ltd.
Non-controlling interest
Southpac Trucks Ltd operates branches and service agencies throughout New Zealand and its principal
place of business is Auckland. The summarised financial position and cash flows at the reporting date
were as follows:
2023
$000
2022
$000
Shareholders’ equity 33,525 29,075
Total liabilities 106,159 64,004
Total equity and liabilities 139,684 93,079
Total assets 139,684 93,079
Net cash flows from:
Operating activities (186) 47,088
Investing activities (1,582) (4,116)
Financing activities 2,830 (44,237)
Net movement in cash held 1,062 (1,265)
Opening cash balance 1,092 2,357
Closing cash balance 2,154 1,092
17 Investments
2023
$000
2022
$000
Shares in Motor Trade Finance Limited (MTF) 1,349 1,355
Other 1 1
Total investments 1,350 1,356
MTF shares are traded in a quoted but restricted market and are categorised as level 2 in the fair value
hierarchy set out in NZ IFRS 13 – Fair Value Measurement.
Shares are carried at fair value with changes in value recognised through the statement of financial
performance.
30
Notes on funding
18 Capital management
The Group’s capital includes share capital, retained earnings and property revaluation reserves.
The Group’s policy is to maintain a strong capital base to ensure that it continues as a going concern,
to maintain investor, supplier and market confidence and to sustain future development of the business.
The Board regularly monitors future capital requirements and costs to maintain an appropriate balance
of shareholders’ equity and debt. The Group generally maintains the capital structure by setting a
sustainable level of dividends.
The Group issues call debt securities and maintains relationships with a number of financial institutions
to ensure that adequate debt facilities are available to meet short to medium term strategic cash flow
requirements and as a buffer for unexpected events. The Group complied with all of the financial
covenants incorporated in the borrowing facilities (note 24) and the at call deposit trust deed (note 23)
at the reporting date and at 30 June 2022. There are no other externally imposed capital requirements.
There has been no change in the Group’s management of capital during the years ended 30 June 2023
or 30 June 2022.
31
19 Movements in equity
Share
capital
(Note 20)
Property
revaluation
reserve
Foreign
exchange
cash flow
hedge
reserve
Retained
earnings
Total
attributable
to share-
holders
Non-
controlling
interest
Total
equity
$000 $000 $000 $000 $000 $000 $000
Balance at 30 June 2021 15,968 89,997 (204) 156,682 262,443 3,391 265,834
Dividends paid - note 21 - - - (17,982) (17,982) (1,350) (19,332)
Total transactions with
shareholders
- - - (17,982) (17,982) (1,350) (19,332)
Profit for the year - - - 33,183 33,183 2,038 35,221
Other comprehensive income
Property revaluation reserve
Fair value movement - 23,982 - - 23,982 - 23,982
Deferred tax - (675) - - (675) - (675)
Foreign exchange cash flow
hedge reserve
Fair value movement - - 3,318 - 3,318 585 3,903
Deferred tax - - (929) - (929) (164) (1,093)
Total comprehensive income - 23,307 2,389 33,183 58,879 2,459 61,338
Balance at 30 June 2022 15,968 113,304 2,185 171,883 303,340 4,500 307,840
Dividends paid - note 21 - - - (20,271) (20,271) (1,350) (21,621)
Total transactions with
shareholders
- - - (20,271) (20,271) (1,350) (21,621)
Profit for the year - - - 27,848 27,848 2,117 29,965
Other comprehensive income
Property revaluation reserve
Fair value movement - (2,584) - - (2,584) - (2,584)
Deferred tax - 3,111 - - 3,111 - 3,111
Foreign exchange cash flow
hedge reserve
Fair value movement - - (932) - (932) (164) (1,096)
Deferred tax - - 261 - 261 46 307
Total comprehensive income - 527 (671) 27,848 27,704 1,999 29,703
Balance at 30 June 2023 15,968 113,831 1,514 179,460 310,773 5,149 315,922
Reserves
The property revaluation reserve arises on the revaluation of land and buildings. Where revalued land
or buildings are sold, the portion of the revaluation reserve that relates to the asset and is effectively
realised, is transferred directly to retained earnings.
The foreign exchange cash flow hedge reserve comprises the cumulative balance of adjustments to
uncompleted transactions that qualify as effectively hedged under NZ IFRS 9 – Financial Instruments.
32
20 Share capital
All shares on issue are fully paid-up and have no par value.
All ordinary shares:
• have equal voting rights
• share equally in dividends
• would share equally in any surplus on winding up
2023
$000
2022
$000
Share capital 15,968 15,968
Thousands
of shares
Thousands
of shares
Number of ordinary shares authorised and on issue 32,695 32,695
Weighted average number of ordinary shares on issue 32,695 32,695
21 Dividends
2023
$000
2022
$000
Date paid Cents per share
Final for the previous year 3 October 2022 47.0 15,367 13,078
Interim for the current year 27 March 2023 15.0 4,904 4,904
Dividends paid during the year 20,271 17,982
For details of the final dividend for the current year, see note 32.
22 Vehicle floorplan finance
When not purchased outright, new vehicles are funded by bailment arrangements, which represent a
financial liability, accounted for at amortised cost. The vehicles are initially included in inventory at the
same value.
Most of the subsidiaries have bailment facilities with finance companies to provide funding for new
vehicles. The main finance company is UDC Finance Limited
. Under these facilities the finance
companies own the vehicles that are placed in the control of the subsidiaries as bailees and are available
to display for sale to the public in the dealerships. The subsidiaries pay bailment fees (similar to interest)
for the use of the vehicles. The bailment agreements are subject to financial limits. The vehicles are
purchased from the finance companies when they are sold to customers.
If the subsidiaries breach the bailment agreements, the finance companies retain the right to repossess
and sell the vehicles and the subsidiaries must meet any shortfall of the sale proceeds from the purchase
price of the vehicles.
Liabilities under bailment agreements are due for payment within the next 12 months.
2023
$000
2022
$000
Total vehicle floorplan finance 51,994 28,443
33
23 At call deposits
The Company offers for subscription unsecured call debt securities (Deposits) that are repayable on
demand. Acceptance of Deposits is restricted to shareholders, employees and their associates.
At reporting date the Deposits were constituted by, issued under and described in, a trust deed dated
13 September 2016 between the Company, its Guaranteeing Subsidiaries (as therein defined) and
Public Trust as supervisor for the holders of Deposits (the Depositors). Under the terms of the trust
deed the Guaranteeing Subsidiaries unconditionally guarantee, jointly and severally, the repayment
of the deposits together with interest thereon by the Company and by each of the other Guaranteeing
Subsidiaries. The governance documents, including a product disclosure statement, are available on
the Disclose Register.
Interest is payable on Deposits at rates that vary from time to time as disclosed to the Depositors on
the application form or as subsequently notified to Depositors in writing. The interest rate applicable
at 30 June 2023 was 5.75% (2022: 3.25%).
2023
$000
2022
$000
Deposits 31,327 31,076
Maximum amount of deposits on offer 40,000 40,000
24 Borrowings
The Group has wholesale facilities with BNZ, ANZ and Westpac, three highly respected international
registered trading banks. The facility with ANZ has two components, one with a maturity date of March
2024 and one with a maturity date of June 2024. All of the facility has been treated as current. The
facilities with BNZ and Westpac have a maturity date of March 2025 and have been treated as non-
current. The facilities are used to finance working capital and are drawn and repaid as required. During
the year the combined facility limits were increased by $15m to $85m.
Wholesale bank borrowing is transacted only by the Company. Its indebtedness is guaranteed by its
trading subsidiaries to the full extent of the facilities.
The agreements with each of the banks are very similar and require the Group to meet financial criteria
based on ratios derived from its financial statements. The Group also pledges to the banks not to grant
security over any of its assets i.e. a “negative pledge”.
During the year, the Company entered into a finance agreement with UDC Finance Limited to fund
the purchase of new vehicles. Unlike the bailment arrangements described in note 22, the vehicles
are not held as inventory for resale but are loaned to a third party under a separate agreement. The
Company is the registered owner and the vehicles are included as fixed assets. As the loans are taken
against each individual vehicle, which are replaced every six months, they have been classified as
current. Interest is paid monthly and the loans are secured against the value of the vehicles. The
facility limit is $7m.
2023
$000
2022
$000
Bank borrowing 16,457 8,732
Vehicle borrowing 5,054 -
Borrowing – current 21,511 8,732
Bank borrowing - non current 26,230 6,000
Combined bank facility limits 85,000 70,000
Vehicle financing facility limit 7,000 -
34
25 Financial instruments
Financial instruments primarily comprise cash at bank, receivables, payables, credit contracts, forward
exchange contracts, shares in companies, borrowings and loans.
Financial assets and liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A
financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Except for trade receivables that do not contain a financing component and are measured at
transaction price, all financial assets are initially measured at fair value adjusted for transaction costs
(where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into
the following categories:
• amortised cost
• fair value through profit or loss
• fair value through other comprehensive income
The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset
Measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are
not designated as fair value through profit or loss):
• the assets are held to collect contractual cash flows
• the contractual terms of the assets give rise to cash flows that are only payments of principal
and interest
After initial recognition, the assets are measured at amortised cost using the effective interest rate
method. Discounting is ignored where the effect of discounting is not material.
Financial assets at fair value through profit or loss
Financial assets that are held under a different model than ‘held to collect’ or ‘held to collect and sell’
and assets whose cash flows are not solely payments of principal and interest are accounted for as
fair value through profit or loss. All derivative financial instruments fall into this category, except for
those designated and effective as hedge instruments. This category also contains any equity
investments.
Assets in this category are all measured at fair value with gains or losses recognised in the statement
of financial performance. The fair values of the assets in this category are determined by reference to
an active market or using an alternative valuation technique where no market exists.
Financial assets at fair value through other comprehensive income
The Group had no financial assets in this category at 30 June 2023.
35
Impairment of financial assets
Recognition of credit losses is not dependent on identifying a credit loss event but instead considers a
broader range of information when assessing credit risk including past events, current conditions and
reasonable forecasts that could affect the expected collectability of future cash flows. In applying this
approach, distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition,
or that have a low credit risk (Stage 1)
• financial instruments that have deteriorated in credit quality since initial recognition and whose credit
risk is not low (Stage 2)
• financial instruments that have objective evidence of impairment at the reporting date
Twelve month expected credit losses are recognised for Stage 1 instruments while lifetime expected credit
losses are recognised for Stage 2 instruments. Measurement of expected credit losses is determined by a
probability weighted assessment of the credit losses over the life of the instrument
The Group makes use of a simplified approach in accounting for trade receivables. See note 10 for more
information.
Measurement of financial liabilities
Financial liabilities are initially measured at fair value and, where applicable, adjusted for transaction costs.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except
for derivative financial instruments that are designated and effective as hedging instruments (see note 28).
Financial instruments by category
2023 2023 2022 2022
$000 $000 $000 $000
Fair value
through
profit or loss
Amortised
cost
Fair value
through
profit or loss
Amortised
cost
Assets
Cash and bank accounts - 9,854 - 11,844
Trade and other receivables - 46,497 - 38,914
Credit contracts - 1,200 - 1,862
Shares in companies 1,350 - 1,356 -
Financial derivatives – foreign exchange 2,475 - 3,571 -
Financial
liabilities at
amortised cost
Financial
derivatives at
fair value
Financial
liabilities at
amortised
cost
Financial
derivatives
at fair
value
Liabilities
Bank borrowings 42,687 - 14,732 -
Vehicle financing 5,054 - - -
At call deposits 31,327 - 31,076 -
Trade and other payables 62,408 - 37,918 -
Lease liabilities 21,141 - 21,779 -
Vehicle floorplan finance 51,994 - 28,443 -
Credit contracts 1,209 - 1,876 -
Financial derivatives – foreign exchange - - - -
36
26 Reconciliation of liabilities arising from financing activities
Movements in liabilities from financing activities during the year were as follows:
At 1 July
2022 Cash flows
Non-cash
changes
At 30 June
2023
$000 $000 $000 $000
Bank borrowing – note 24 14,732 27,955 - 42,687
Vehicle financing – note 24 - 5,054 - 5,054
At call deposits – note 23 31,076 251 - 31,327
Vehicle floorplan finance – note 22 28,443 23,551 - 51,994
Total short term borrowings 74,251 56,811 - 131,062
Credit contracts – note 13
Short term 956 - (504) 452
Long term 920 - (163) 757
Lease liabilities – note 14
Short term 2,027 11 - 2,038
Long term 19,752 (649) - 19,103
Total liabilities arising from financing
activities 97.906 56,173 (667) 153,412
At 1 July
2021 Cash flows
Non-cash
changes
At 30 June
2022
$000 $000 $000 $000
Bank borrowing – note 24 12,197 2,535 - 14,732
At call deposits – note 23 32,304 (1,228) - 31,076
Vehicle floorplan finance – note 22 55,866 (27,423) - 28,443
Total short term borrowings 100,367 (26,116) - 74,251
Credit contracts – note 13
Short term 1,142 - (186) 956
Long term 1,666 - (746) 920
Lease liabilities – note 14
Short term 2,041 (14) - 2,027
Long term 15,607 4,145 - 19,752
Total liabilities arising from financing
activities 120,823 (21,985) (932) 97.906
37
Notes on managing risk
27 Financial risk management
27 (a) Credit risk
Financial instruments which potentially subject the Group to concentrations of credit risk consist
principally of bank balances, deposits, receivables and credit contracts.
The carrying amounts of financial assets represents the Group’s maximum credit exposure.
The Group places its cash and short term investments with high credit quality financial institutions (as
determined by independent credit rating agencies) and limits the amount of credit exposure to any one
financial institution.
The Group performs credit evaluations on all customers requiring credit and generally does not require
collateral or other security to support financial instruments with credit risk.
Concentrations of credit risk with respect to accounts receivable are limited due to the large number of
customers included in the Group’s customer base.
The rate of impairment of amounts receivable under credit contracts (note 13) is low. If the incidence of
recourse requiring balances to be written off were to increase by 1% it would increase the annual amount
written off through profit or loss by $0.01m (2022: $0.02m).
27 (b) Interest rate risk
The Group is not exposed to any specific interest rate risk other than normal interest rate movements
on a daily basis in the New Zealand market. The specific rates that the Group was exposed to during
the year were:
2023 2022
Bank overdrafts 9.42% - 18.70% 5.95% - 15.10%
At call deposits 3.25% - 5.75% 1.80% - 3.25%
Borrowing and bailment facilities 3.70% - 9.20% 1.69% - 5.45%
Bank borrowings are unsecured and fall within the agreed committed facility requirements in place with
the Group’s bankers. These facilities have maturity dates ranging from March 2024 to March 2025 and
are expected to be renewed in the normal course of business. The facilities can be drawn on or repaid
at any time and interest rates are variable. Vehicle financing loans are secured against the vehicle and
have terms of less than one year. The loans are drawn on or repaid as the vehicles to which they relate
are returned and replaced. The interest rate is variable. The carrying value of all loans is considered to
be the fair value.
Interest rate sensitivity
The effect of a movement of 1% in interest rates would be to change finance costs in the statement of
financial performance and equity by $0.79m per annum (2022: $0.46m).
27 (c) Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual payment obligations. The Group
monitors its cash on an ongoing basis to ensure it has sufficient credit facilities to meet its obligations.
The Group obtains funding for its operations from several sources. In addition to its shareholders’ funds
(made up of share capital and reserves), funding is also provided by depositors through the at call
deposit scheme and from banks and other financial institutions.
Financial liabilities in the form of at c all deposits are repayable at call. Trade and other payables fall
due within one year. The potential repayment profile of amounts due under financial liabilities – credit
contracts is provided in note 13.
There is a risk that the banks may reduce or withdraw the facilities or will be unable to provide the level
of funding required. The Group would then be required to obtain alternative funding which could cost
more. If no alternative funding was available, the consequences would disrupt cash flows and potentially
the Group may not be able to continue to pay suppliers and staff or repay depositors.
If the finance companies were to withdraw the bailment facilities described in note 22 or were unable to
fund as many vehicles as required, the Group would have to seek alternative methods of funding the
vehicles. This could involve bailment agreements with other providers or additional bank funding to
purchase the vehicles outright. The consequences could include increased costs and disruption to the
supply of new vehicles for sale.
38
27 (c) Liquidity risk (continued)
The Group mitigates its funding risk by adopting prudent financial management practices (such as
closely monitoring its cash flows and regularly checking compliance with the financial ratios) and by
maintaining open and honest relationships with the banks and finance companies.
The extent of the financing facilities is disclosed in note 24 and floorplan facilities in note 22.
27 (d) Foreign currency risk
The Group enters into fixed rate foreign exchange contracts to create cash flow hedges for the purchase
of trucks on a contract-by-contract basis with firm customer orders and for units ordered for stock. Other
short term transactions are covered by forward exchange contracts and accounted for at that rate.
The principal values (stated in New Zealand Dollars) of forward exchange contracts entered into and
outstanding at each reporting date were denominated in the following currencies.
Currency
2023
$000
2022
$000
Australian Dollars (AUD 147.0m) 162,117 156,247
Euros (EUR 48.7m) 84,798 102,047
Total 246,915 258,294
Due to the close association between foreign currency commitments for imported goods, their selling
price and the underlying forward exchange contracts, it is estimated that any change in the New Zealand
Dollar exchange rates against the above currencies would have had minimal impact on the result and
equity for the year ended 30 June 2023 or 30 June 2022.
28 Financial derivatives – foreign exchange
Foreign exchange asset/(liability)
2023
$000
2022
$000
Balance at 1 July 3,571 (332)
Movement during the year through
Other comprehensive income (1,096) 3,903
Statement of financial performance - -
Balance at 30 June 2,475 3,571
The Group uses forward currency contracts to hedge its foreign currency risks. Such derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when the fair value is negative.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the
exposure to variability in cash flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an
unrecognised firm commitment.
At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which it wishes to apply hedge accounting and the risk management objective and
strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item, the nature of the
risk being hedged and how the Group assesses whether the hedging relationship meets the hedge
effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the
hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the
following effectiveness requirements:
• there is ‘an economic relationship’ between the hedged item and the hedging instrument
• the effect of credit risk does not ‘dominate the value changes’ that result from that economic
relationship
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the Group actually hedges and the quantity of the hedging instrument that the
Group actually uses to hedge that quantity of hedged item
39
Hedges that meet all the qualifying criteria for hedge accounting all fall into one category of hedge and
are accounted for as described below:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in Other Comprehensive
Income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the
statement of financial performance. The cash flow hedge reserve is adjusted to the lower of the
cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged
item. The Group continues to designate all of the forward contracts as hedging instruments.
The amounts accumulated in Other Comprehensive Income are accounted for depending on the nature
of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition
of a non-financial item such as inventory, the amount accumulated in equity is removed from the
separate component of equity and included in the initial cost or other carrying amount of inventory.
29 Dealership franchise agreements
Each of the trading subsidiaries enters into agreements in their own right with the New Zealand
distributor to sell and service specific brands of motor vehicle in a defined primary marketing area. As
national distributor of two brands of heavy trucks, Southpac Trucks Limited has equivalent agreements
with the international suppliers covering the whole country. Most of these agreements (called either
dealer or franchise agreements) do not have a specific duration. All of the dealer or franchise
agreements contain the right for the distributor/franchisor or the dealer to terminate the arrangements
at short notice. Some of these agreements have finite terms from one to three years, usually without
automatic rights of renewal. If a dealership or franchise agreement is terminated or not renewed there
could be a detrimental effect on the future financial performance of the Group.
The Group manages and mitigates this risk through stable and profitable operating businesses that
deliver on franchise objectives in conjunction with a customer first approach. In addition, strong
relationships with brand partners, at both the Group and dealership levels, focuses on delivering
mutually beneficial long term outcomes to further manage this risk.
40
Other notes
30 Related party transactions
The Group has related party transactions with key management personnel and the CMC Group
Workplace Savings Scheme.
Management personnel
Transactions with key management personnel were:
2023
$000
2022
$000
Short term benefits (including salary, incentives, profit share, use of motor
vehicles and other benefits) 8,888 9,302
Post-employment benefits (including contributions to retirement savings
schemes) 278 508
Share related benefits - -
Total remuneration benefits 9,166 9,810
Key management personnel includes current Directors (executive and non-executive), key management
at the group office and chief executives of all trading subsidiaries.
Some key management personnel have funds on deposit with the Company by way of its unsecured at
call debt securities – note 23 – on the same terms and conditions as all other depositors.
Also see remuneration of Directors on page 48 and remuneration of employees on page 49.
The CMC Group Workplace Savings Scheme
The Company is the sponsoring employer of the CMC Group Workplace Savings Scheme (the Scheme)
which is a defined contribution scheme. It is categorised as an employer-related restricted workplace
savings scheme registered under the FMCA 2013.
The Company ceased to be the trustee of the Scheme when a new trust deed was registered on
18 November 2016 but continues to provide administrative services to the Scheme and received fees
of $0.09m during the year (2022: $0.08m).
The Scheme holds 148,196 (2022: 162,196) ordinary shares in the Company representing 4.2% (2022:
4.9%) of its total assets. The Company is a related party to the Scheme and FMCA limits investments
in related parties to 5% of total assets. The Scheme sold 14,000 shares in August 2022 to stay within
the 5% limit.
All transactions between key management personnel, the Scheme and Group companies were in the
normal course of business.
31 Contingencies
There were no contingent assets or liabilities at 30 June 2023 (2022: $Nil).
The Group has provided guarantees to PACCAR Australia Pty Limited in respect of obligations owed to
that company. The guarantee is in proportion to the shareholding in Southpac Trucks Limited and the
maximum exposure for the Group is $1.3m.
32 Events after the reporting date
On 17 August 2023, the Group signed a term sheet from the Bank of New Zealand to increase the limit
on their loan facility from $30m to $50m. The facility is on the same terms as the existing agreement
and expires in March 2025.
On 22 August 2023, a dividend of 42 .0 cents per share was declared to be paid fully imputed on
2 October 2023, representing a total payment of $13.7 million.
41
Independent auditor’s report
To the Shareholders of The Colonial Motor Company Limited
Report on the audit of the consolidated financial statements
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (“ISAs (NZ)”)
issued by the New Zealand Auditing and Assurance Standards Board (“NZAASB”). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with Professional
and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International
Independence Standards) (New Zealand) issued by the NZAASB and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our Firm also carried out services with respect to verification of voting results at the annual general meeting.
Subject to certain restrictions, partners and employees of our firm may also deal with the Group on normal
terms within the ordinary course of trading activities of the business of the Group. These matters have not
impaired our independence as auditor of the Group. The Firm has no other relationship with, or interest in,
the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Opinion
We have audited the consolidated financial statements of The Colonial Motor Company Limited (the
“Company”) and its subsidiaries (the “Group”) on pages 10 to 40 which comprise the consolidated statement
of financial position as at 30 June 2023, and the consolidated statement of financial performance,
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at 30 June 2023 and its consolidated financial
performance and cash flows for the year then ended in accordance with New Zealand Equivalents to
International Financial Reporting Standards (“NZ IFRS”) issued by the New Zealand Accounting Standards
Board.
Independent auditor’s report
To the Shareholders of The Colonial Motor Company Limited
Report on the audit of the consolidated financial statements
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (“ISAs (NZ)”)
issued by the New Zealand Auditing and Assurance Standards Board (“NZAASB”). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with Professional
and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International
Independence Standards) (New Zealand) issued by the NZAASB and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our Firm also carried out services with respect to verification of voting results at the annual general meeting.
Subject to certain restrictions, partners and employees of our firm may also deal with the Group on normal
terms within the ordinary course of trading activities of the business of the Group. These matters have not
impaired our independence as auditor of the Group. The Firm has no other relationship with, or interest in,
the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Opinion
We have audited the consolidated financial statements of The Colonial Motor Company Limited (the
“Company”) and its subsidiaries (the “Group”) on pages 10 to 40 which comprise the consolidated statement
of financial position as at 30 June 2023, and the consolidated statement of financial performance,
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at 30 June 2023 and its consolidated financial
performance and cash flows for the year then ended in accordance with New Zealand Equivalents to
International Financial Reporting Standards (“NZ IFRS”) issued by the New Zealand Accounting Standards
Board.
42
Why the matter is significant How our audit addressed the key audit matter
Recognition of revenue from contracts with
customers
The Group has recognised revenue from contracts
with customers of $997m for the financial year. The
accounting policies for recognition of revenue and the
breakdown of revenue from different performance
obligations are set out in note 1.
Revenue from the sale of products is recognised
when the control of the vehicle has passed to the
customer which is normally at the time of delivery of
the vehicle.
We have raised this as a key audit matter due to the
large number of transactions throughout the reporting
period and risk that revenue transactions have been
recorded in the incorrect period based on the date of
recording the transaction compared to when control
of the vehicle has been transferred to the customer.
In obtaining sufficient and appropriate audit evidence we:
• evaluated the Group’s recognition of revenue by
assessing the processes that management has in place
to ensure that appropriate revenue recognition policies
have been consistently applied in accordance with NZ
IFRS 15 Revenue from contracts with customers.
• Tested a sample of sales transactions on either side of
the reporting date to substantiate that the appropriate
conditions of the relevant contracts had been satisfied,
that the control of the vehicle had passed to the
customer and therefore revenue was recognised in the
correct period.
Other information
The Directors are responsible for the other information. The other information comprises the information in
the Annual Report which accompanies the consolidated financial statements and audit report.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements, or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Directors’ responsibilities for the consolidated financial statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with NZ IFRS, 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.
43
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the financial statements is located on the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards/assurance-standards/auditors-responsibilities/audit-report-1/
Restriction on use of our report
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken
so that we might state to the Company’s shareholders, as a body, those matters which we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as
a body, for our audit work, for this report or for the opinion we have formed.
Grant Thornton New Zealand Audit Limited
Ryan Campbell
Auckland
15 September 2023
44
Governance statement
The Colonial Motor Company Limited (CMC or Company) is a public company with its shares listed on
the New Zealand Stock Exchange (NZX) operated by NZX Limited.
CMC’s Board of Directors (Board) is committed to maintaining high standards of governance by
implementing a framework of structures, practices and processes that it considers appropriate and
effective. CMC’s corporate governance policies and procedures and its board and committee charters,
which document the framework, have been approved by the Board. Components of the system of
governance are reviewed from time to time.
This statement sets out how these measures meet the recommendations made in the NZX Corporate
Governance Code 1 April 2023 and the requirements of the NZX Main Board Listing Rules. The Board’s
view is that the corporate governance structures, practices and processes have, with stated exceptions,
followed these recommendations and requirements in the year to 30 June 2023.
The Group is organised so that each motor vehicle dealership is incorporated as a subsidiary company
that is managed locally. The CEO of each Group company reports to the Group Chief Executive. Each
dealership also has a direct relationship with the franchisor(s) that it represents.
1. Code of ethical behaviour
Directors should set high standards of ethical behaviour, model this behaviour and hold management
accountable for these standards being followed throughout the organisation.
The Board ensures that, consistent with its history and industry standing, CMC conducts its dealings
with all stakeholders with integrity and respect. It maintains a directors’ manual including a code of
ethics that extends to all staff and sets out definitive standards of behaviour. In particular, Directors
take care to comply with rules requiring disclosure of positions and occupations they have outside of
CMC that may involve a conflict of interest.
The Company has a securities trading policy that complies with prevailing legislation. It requires full
disclosure by directors and senior executives, both before and after buying and selling CMC shares.
All share trades by directors and senior executives are reported to the market and Director’s trades are
disclosed in the Annual Report (page 49).
The Company has a protected disclosures (whistle blower) policy to comply with prevailing practice to
protect employees who make disclosures of information about serious wrongdoing within the Group.
2. Board composition and performance
To ensure an effective board, there should be a balance of independence, skills, knowledge, experience
and perspectives.
The Board operates under a written charter which sets out the roles and responsibilities of the Board
and distinguishes them between the respective roles and responsibilities of the Board and
Management.
The Company’s constitution specifies that there should be between five and seven directors – there are
currently six. The Board contains a mix of two independent directors and four executive and non-
executive directors who are not independent, which reflects the shareholder mix. The Board chair is
an independent director who is not the Group Chief Executive. Information about each director
regarding their experience, length of service, independence, ownership interests and meeting
attendance is disclosed in the Annual Report (page 47).
As vacancies arise, new directors are identified by the Nominations Committee of the Board. A person
identified by the Nominations Committee can be appointed as a director by the Board during the year
but then must stand for election at the next annual meeting. A person can also be nominated by
shareholders and stand for election as a director at an annual meeting. The terms of appointment of
each newly appointed director are provided to the individual in writing.
The constitution specifies that a director cannot serve (without re-election) past the third annual meeting
following their appointment or three years, whichever is longer.
3. Board committees
The board should use committees where this will enhance its effectiveness in key areas, while still
retaining board responsibility.
Where additional detailed supervision or consideration is required, the Board establishes committees
that operate by making recommendations to the Board for final resolution. There are three standing
committees with written terms of reference.
Audit & Compliance Committee: Members of the Committee have relevant financial qualifications
and/or commercial experience. It met five times during the reporting year, with all its members present
at each meeting, bar a single absence.
The Committee comprises J W M Journee (Chair and independent director), A J Waugh (independent
director), G D Watson (non-executive director) and G D Gibbons (non-executive director). It meets
regularly with Management, the internal auditor and the external auditor to:
45
• review the adequacy of controls to identify and manage areas of potential risk and to safeguard the
assets of the Group
• maintain the independence of the external auditor and review the external audit functions generally
• evaluate the processes to ensure that financial records and accounting policies are properly
maintained in accordance with statutory requirements and financial information provided to
shareholders and the Board is accurate and reliable
Management is delegated the responsibility for developing, maintaining and enforcing the system of
internal controls. The same basic set of controls is applied across the Group. Monthly reports from
each dealership form a key element of the financial control mechanism. An internal auditor works in
conjunction with the external auditor to complete a review of all dealerships every year to ensure
maintenance of the standard of accounting practices and for compliance with the internal policies and
procedures. The internal auditor regularly reports to the Committee.
Remuneration Committee: A J Waugh (Chair) and G D Gibbons make up this Committee, the
purpose of which is to ensure the directors and senior executives are fairly and reasonably rewarded
for their individual contributions. The Committee meets at least three times during the repo
rting year.
The Company’s policy is to review remuneration levels for directors and senior staff every two years.
Directors’ fees were last reviewed in May 2023. Director and Management remuneration is disclosed
in the Annual Report (page 40). The Company has no equity-based remuneration plan and does not
require its directors to purchase or hold CMC shares.
Nominations Committee: This Committee has the task of identifying potential directors with skills that
are complementary to the needs of the Company and the Board. All Directors serve on this Committee.
The Committee utilises a skills matrix to determine ‘best fit and skill set’ to ensure the Company retains
the cross-section of abilities required for a balanced board. The Company does not currently have a
formal written diversity policy.
Takeover protocols: The Board has adopted a Takeover Response Manual that establishes protocols
to assist Directors and Management with their response to unexpected takeover activity. The Manual
summarises the key aspects of preparation and sets out governance, conflict and communication
protocols for takeover response.
4. Reporting and disclosure
The board should demand integrity in financial and non-financial reporting and in the timeliness and
balance of corporate disclosures.
The Board schedules at least eight meetings each year to monitor the progress of Management on
achieving the targets and objectives the Board has set. The Board usually meets in Wellington but at
least once a year it holds a meeting at a dealership in order to meet front-line staff and experience
operations at first hand. Additional ad hoc meetings are held when necessary. During the reporting
period, the Board held 11 meetings through a mix of physical attendance, telephone and video
conference. All Directors attended each meeting, bar a single absence from one physical meeting and
one from a video conference meeting.
The Board of Directors issues three reports annually – a Half Year Report, a Preliminary Full Year
Results Report and an Annual Report – to provide shareholders with the information they need to
monitor their investment in the Company. These reports are designed to deliver that information in a
clear and concise manner. The reports are mailed to all shareholders and are available for download
from CMC’s website (www.colmotor.co.nz). Shareholders may register to receive the Half Year and
Preliminary Full Year reports electronically and approximately 75% of shareholders receive them in this
way. In the reporting period, the Company also made three additional disclosures on NZX in relation
to guidance and on the retirement and appointment of directors.
A condition of listing is that the Company complies with the Listing Rules issued by NZX. The rules
include the requirement to continuously disclose market sensitive information. The market acts in the
position of all current and potential shareholders and disclosure via the NZX is generally considered
adequate notification to all. However, CMC also has a policy of communicating directly with its
shareholders whenever practical.
The Company does not report on specific ESG measures outside of this Governance Statement but
will be making the first required climate related disclosures in the 2024 Annual Report.
5. Remuneration
The remuneration of directors and executives should be transparent, fair and reasonable.
As stated above, remuneration of directors and senior executives is considered by the Remuneration
Committee. During its assessments, the Committee generally refers to independent survey reports to
provide suitable market-related benchmarks. The actual amounts paid to directors are disclosed in the
Company’s Annual Reports, including full details for executive directors (page 48).
Remuneration of other staff is also disclosed in the $10,000 bands specified in company disclosure
legislation (page 49).
46
The packages of the Group Chief Executive and senior staff are made up of fixed and variable
components. The variable portions include only short-term incentives. There are no long-term
incentives or share schemes in place. The variable elements are based on dealership profit and
comprise higher proportions of the total than are seen in the general market. Participation in the
financial performance provides a strong incentive for success. The Group has a proud record of staff
retention, particularly at senior levels.
6. Risk management
Directors should have a sound understanding of the material risks faced by the issuer and how to
manage them. The board should regularly verify that the issuer has appropriate processes that identify
and manage potential and material risks.
The range of tools used to mitigate risk includes elements of corporate governance outlined in this
Statement, the system of internal controls and management reporting and accountability. The Board
reviews the Group insurance programme annually and as needs arise and, with the assistance of an
external insurance broker, assesses which risks to insure.
The Audit & Compliance Committee has particular responsibility for internal audit on which it receives
regular reports from the internal auditor. Management provides the Committee with a comprehensive
annual internal management and regulatory compliance summary report.
During the annual strategic planning review (and periodically throughout the year), the Board and
Management review the ‘whole of business’ risk matrix which has captured the short and long-term
risks for the Group.
Health & Safety: CMC is committed to providing healthy and safe environments for all its employees,
customers, contractors and other visitors to its facilities. A comprehensive group-wide workplace safety
management programme (known as GoSafe) is operated, with a Health & Safety Committee active at
each subsidiary. The Group Health and Safety Manager maintains and is continually improving the
Group’s workplace health and safety systems (both electronic and manual) that are based on a
comprehensive policy and procedures manual and are subject to independent external audits. The
Board receives regular detailed reports, considers health and safety issues at each of its meetings and
experiences first-hand the practicalities of maintaining a healthy and safe workplace during its regular
dealership visits.
7. Auditors
The board should ensure the quality and independence of the external audit process.
The role of the external auditor is to report to shareholders on the truth and fairness of the financial
statements prepared by Management, authorised by the Board and included in the Annual Report.
The audit partner and the Chair of the Audit & Compliance Committee meet at least twice a year, the
auditor attends Committee meetings at least three times a year and the audit partner attends the
Company’s annual meetings. The scope of discussions is not limited but includes issues identified
during audits, audit planning and staffing and the extent of non-audit work carried out by the audit firm.
The lead audit partner is changed periodically to provide a fresh perspective and to ensure greater
independence. Fees paid to the auditors are disclosed in the Annual Report.
8. Shareholder rights and relations
The board should respect the rights of shareholders and foster constructive relationships with
shareholders that encourage them to engage with the issuer.
The Board acts in a stewardship role on behalf of all shareholders. It approves the strategic direction
of the Group, oversees the management of its capital resources, monitors its performance and
compliance, ensures its assets are safeguarded and its workplaces are safe.
Shareholders meet in person at annual meetings to:
• consider the Company’s financial performance and financial position
• elect or re-elect directors
• record the on-going appointment of the external auditor and to authorise the audit remuneration
• set the maximum level of director remuneration following reviews in alternate years. The actual
amount paid to each director is disclosed in Annual Reports (page 48).
The shareholders adopted the current constitution in 2004, which specifies the administration of the
Company and the relationship with shareholders. Copies of the constitution are available from the
Company or can be downloaded from the New Zealand Companies Office website. The requirements
of the Listing Rules are incorporated by reference into the constitution.
CMC maintains a website through which shareholders and interested stakeholders can communicate
with the Company and access financial and operational information. Computershare Investor Services
Limited maintains the register of shareholders.
47
Disclosures as required by the Companies Act 1993
(a) Director profiles and interests
In relation to sections 140 and 211(1)(e) of the Act, no director has declared any interest in a related party
transaction with the Company during the year. The Company has received the following general
disclosures of interest pursuant to section 140(2) of the Act that remain in place at the date of this report:
Ashley James Waugh, BBS
Te Awamutu
Ashley has experience in the dairy industry in New Zealand and Australia, with senior roles with the NZ
Dairy Board (now Fonterra) and as Chief Executive of National Foods Australia. Early in his career,
Ashley was marketing manager of Ford in New Zealand and Ford Lio Ho in Taiwan. He is currently a
director of Seeka Limited and chair of its Audit Committee. Ashley became a director in November
2015.
Graeme Durrad Gibbons, BCom, CA
Lower Hutt
After gaining a commerce degree at Otago University, Graeme began his career with Ford New Zealand
and then joined the CMC Group in 1984. He took up the role as the Group’s Chief Executive in 1990
and became a director of the Company in 1995. Graeme retired as Chief Executive on 30 September
2021. He was previously a director of Motor Trade Finance Limited and chair of its Audit Committee.
Stuart Barnes Gibbons
Lower Hutt
Stuart joined the Group in 1982 as an apprentice technician in Morrinsville. He was appointed Chief
Executive and Dealer Principal of Stevens Motors, Lower Hutt in 2002 and held the position until
Stevens Motors was merged with Capital City Motors on 1 July 2020. Stuart managed the property
project for the Lower Hutt hub facility up to its completion. In July 2022, he took up the Group Office
role of Group Manager: Strategic Development. Stuart is a past Chair of the Ford Dealer Council. He
became a director in July 2014.
John William Michael Journee, BCom
Auckland
John has held various senior executive positions in the retail industry in New Zealand and Australia,
including with Noel Leeming and The Warehouse. He is currently a director of The Warehouse Group
Limited, Farmlands Co-operative Society Limited and West Auckland Trust Services Limited and is a
member of the Data Insights Group Limited Advisory Board. John became a director in December 2018.
Gillian Durrad Watson, BA
Auckland
Gillian has a business background in the real estate industry and has worked in production management
in the television industry. She is a significant shareholder who has had a life-long focus and interest in the
Company and in September 2021 became CMC’s first female Director.
John Ormond Hutchinson
Christchurch
John is currently the Chief Executive and Dealer Principal of Team Hutchinson Ford in Christchurch, a
role he took over in September 2006. He joined Team Hutchinson in 1994 in vehicle sales after working
in the UK at Credit Suisse First Boston and running his own business in Christchurch. John is a current
member and past president of the Ford Dealer Council. He became a director in September 2022.
48
(b) Remuneration of directors
Remuneration and all other benefits received by the directors who held office during the year ended 30
June 2023 are disclosed pursuant to section 211(1)(f) of the Act as follows:
Directors’ fees
2023
$
Total remuneration
2023
$
Total remuneration
2022
$
A J Waugh (Chair) 94,500 119,500 100,924
G D Gibbons 59,500 59,500 330,412
S B Gibbons - 178,289 185,650
J W M Journee 65,450 65,450 62,766
G D Watson 59,500 59,500 49,583
J O Hutchinson - 641,912 -
J P Gibbons - - 331,150
M J Newman 21,982 21,982 845,572
Remuneration for the Chair historically includes the provision of a motor vehicle with the estimated value
of this benefit recorded in total remuneration. The Board has agreed a change in policy to also include
this allowance to the Chair within Directors fees when determining the maximum limit that receives
shareholder approval.
J W M Journee is Chair of the Audit & Compliance Committee and receives additional fees commensurate
with that position. M J Newman retired as a director on 11 November 2022 and the fees disclosed above
are to that date.
Executive Directors do not receive directors’ fees for acting as a director of the Company or of any
subsidiary. Executive Directors acting in their capacity as employees of the Company or of a subsidiary
received total remuneration including salary, incentives, superannuation contributions, use of a motor
vehicle and other benefits in the year ended 30 June 2023 as disclosed above. No other employee of the
Company or of any Group subsidiary retains or receives any remuneration or other benefits as a director.
There are no long term incentives or share schemes in place.
Dealer Principals/Chief Executive Officers of subsidiary companies receive a profit incentive in their
remuneration based on their dealership’s profit. J O Hutchinson was appointed as a director from 1
September 2022. The remuneration received by J O Hutchinson as an executive, as disclosed above, is
for the 10 months to 30 June 2023 and includes a short-term profit incentive component of $449,143. T he
remuneration of S B Gibbons as an executive is shown for the 12 months to 30 June 2023 and has no
short-term profit component (2022: $Nil).
In accordance with clause 28.4 of its constitution, the Company may provide for director retirement
benefits. There was no provision held at 30 June 2023. Directors appointed after 1 May 2004 are not
eligible to receive a retirement allowance unless authorised by shareholder resolution. There are currently
no payments to be made under clause 28.4 of the constitution.
As permitted by clause 29.4 of the Company’s constitution, an insurance policy is in place in relation to
directors and officers liability. The policy ensures that, generally, directors will incur no monetary loss as
a result of actions they undertake as directors. Certain actions are specifically excluded, such as incurring
penalties and fines that may be imposed in respect of breaches of the law.
(c) Use of company information by directors
During the year the Board did not receive any requests from any director to use Company information
provided to them in their capacity as an officer or employee that would not otherwise have been available
to them.
49
(d) Share dealings by directors
Directors have disclosed under Section 148(2) of the Act the following acquisitions of a relevant interest
in shares in the Company between 1 July 2022 and 31 August 2023.
Director
Number of shares
acquired
Date of transaction
Price per
share
Type of interest
S B Gibbons 31,000 1 September 2022 $9.80 Beneficial
G D Gibbons 25,000 1 September 2022 $9.80 Non-beneficial
G D Gibbons 986 2 September 2022 $9.83 Associated
S B Gibbons 55,000 20 March 2023 $9.00 Beneficial
G D Gibbons 6,500 23 March 2023 $9.00 Associated
G D Gibbons 10,000 29 March 2023 $9.00 Beneficial
G D Gibbons 65,000 29 March 2023 $9.00 Non-beneficial
G D Gibbons 15,000 29 March 2023 $9.00 Non-beneficial
G D Watson 15,000 29 March 2023 $9.00 Non-beneficial
Directors disclosed no other transactions in the shares of the Company during the period.
(e) Composition of the Board
At the reporting date, five Directors were male and one female. Of the 18 Group officers, there was one
female officer and the rest were male (2022: 5 Directors – male and 1 female, 17 officers – 16 male and
1 female).
(f) Remuneration of employees
During the year to 30 June 2023 the number of employees in the Group, not being directors of The
Colonial Motor Company Limited, who received remuneration (including salary, incentives,
superannuation contributions, use of a motor vehicle and other benefits) which exceeded $100,000 were
as follows:
Remuneration
Number of
employees
Remuneration
Number of
employees
$ 2023 2022 $ 2023 2022
100,001 - 110,000 51 39 330,001 - 340,000 - 1
110,001 - 120,000 44 25 340,001 - 350,000 1 1
120,001 - 130,000 35 26 350,001 - 360,000 - 1
130,001 - 140,000 18 24 360,001 - 370,000 - 2
140,001 - 150,000 19 15 370,001 - 380,000 1 1
150,001 - 160,000 14 11 380,001 - 390,000 1 -
160,001 - 170,000 17 13 430,001 - 440,000 2 1
170,001 - 180,000 9 11 450,001 - 460,000 - 2
180,001 - 190,000 8 6 470,001 - 480,000 1 -
190,001 - 200,000 8 6 510,001 - 520,000 - 1
200,001 - 210,000 7 6 530,001 - 540,000 - 1
210,001 - 220,000 1 3 540,001 - 550,000 1 -
220,001 - 230,000 7 8 620,001 - 630,000 - 1
230,001 - 240,000 5 2 630,001 - 640,000 1 -
240,001 - 250,000 2 2 670,001 - 680,000 - 1
250,001 - 260,000 4 7 750,001 - 760,000 - 1
260,001 - 270,000 4 1 760,001 - 770,000 1 -
270,001 - 280,000 1 1 780,001 - 790,000 2 -
280,001 - 290,000 1 2 800,001 - 810,000 - 1
290,001 - 300,000 3 1 1,270,001 - 1,280,000 - 1
300,001 - 310,000 - 1 1,470,001 - 1,480,000 - 1
310,001 - 320,000 2 - 1,620,001 - 1,630,000 1 -
320,001 - 330,000 - 1
Total 272 228
Total full time equivalent employees 1,057 1,022
The remuneration package of the Group Chief Executive, A P Gibbons, in the year to 30 June 2023 was
$783,970 comprising
a fixed component (including salary, motor vehicle and superannuation
contributions) of $363,651 and an annual short term incentive component of $420,319 based on the
current year’s trading performance.
50
Disclosures as at 30 June 2023 as required by the New Zealand Stock Exchange
Listing Rules
(a) Director independence
The following directors were Independent Directors at the reporting date:
A J Waugh
J W M Journee
The following directors were not Independent Directors at the reporting date:
G D Gibbons
S B Gibbons
G D Watson
J O Hutchinson
(b) Directors’ relevant interests at 30 June 2023
Shares in which the
director has a beneficial
interest solely or jointly
Shares in which the
director has a non-
beneficial interest
Shares held by
associated person of the
director
2023 2022 2023 2022 2023 2022
G D Gibbons 680,656 670,656 2,579,467 2,474,467 192,006 184,520
S B Gibbons 2,061,299 1,975,299 650,435 650,435 6,151 6,151
A J Waugh 9,758 9,758 - - 376 376
J W M Journee 2,613 2,613 - - - -
G D Watson 614,069 614,069 369,810 354,810 105,000 105,000
J O Hutchinson 49,619 n/a - n/a 895 n/a
(c) Substantial Product Holders
As required by section 293 of the Financial Markets Conduct Act 2013, the Substantial Product Holders
as at 31 August 2023 (from whom a notice under the Act had been received and the date of each such
notice) were as follows:
Date Shares %
J P Gibbons 21 October 2020 2,079,599 6.36
S B Gibbons 11 March 2021 2,625,734 8.03
G D Gibbons 22 March 2021 3,145,123 9.62
Issued and fully paid capital as at 30 June 2023 was made up of 32,694,632 ordinary shares. The
above disclosures include voting securities arising by reason of joint holdings, powers of attorney and
directorships as specifically required by section 280(1) of the Financial Markets Conduct Act 2013. No
shares have been counted more than once in the determination of Substantial Product Holders.
A number of shares identified under J P Gibbons are also jointly held or have trustees in common with
D M Gibbons and P L & L C Bennett.
A number of shares identified under S B Gibbons are also jointly held or have trustees in common with
A D Gibbons & L B Rogerson, J H Smith & A F Peake and M A Gibbons & A K Cook.
A number of shares identified under G D Gibbons are also jointly held or have trustees in common with
A K Gibbons & S D Wood, S D & D M Wood, R D Gibbons & S D Wood, A D & G V Beaumont, D D &
B W Harrison and G D & I W Watson.
51
(d) Distribution of shareholders and shareholdings
This distribution information reflects the position as at 31 August 2023.
Individual shareholding Number of shareholders Number of shares
Number % Number %
1 - 999 350 21.7 149,282 0.4
1,000 - 9,999 945 58.5 3,065,326 9.4
10,000 - 99,999 256 15.9 6,695,303 20.5
100,000 - 999,999 61 3.8 19,574,381 59.9
1,000,000 + 2 0.1 3,210,340 9.8
Total 1614 100.0 32,694,632 100.0
(e) Five year summary of shareholder return on investment - 30 June year ended
Year
Share
price Dividends paid - cps
Gross
dividend
Change
in share
Total
gross
Gross
shareholder
at 30
June
Date Net Gross yield
%
price
cps
return
cps
return
%
2023 $8.60 27/03/23 15.0 86.1 9.1 (91.0) (4.9) (0.5)
03/10/22 47.0
2022 $9.51 28/03/22 15.0 76.4 8.3 31.0 107.4 11.7
04/10/21 40.0
2021 $9.20 29/03/21 15.0 65.3 9.5 235.0 300.3 43.8
05/10/20 32.0
2020
(1)
$6.85 20/04/20 - 41.7 4.7 (195.0) (153.3) (17.4)
21/10/19 30.0
2019 $8.80 15/04/19 15.0 69.4 8.7 80.0 150.4 18.8
15/10/18 35.0
Note: Yields are calculated on the share price at the beginning of each year. The share price at 30 June
2018 was $8. 00.
(1)
Due to the effects on the Group’s business of the Covid-19 nationwide level 4 lockdown, the interim dividend of 15.0 cps, that
had been declared to be paid on 20 April 2020, was cancelled.
52
Fifty largest shareholdings as at 31 August 2023
Shares %
1 AD & SB Gibbons & LB Rogerson 1,828,228 5.6
2 Florence Theodosia Gibbons 1,382,112 4.2
3 JP & DM Gibbons & PL Bennett 878,056 2.7
4 BR & CM Gibbons & PL Bennett 682,208 2.1
5 Graeme Durrad Gibbons 680,656 2.1
6 PL & LC Bennett & JP Gibbons 649,030 2.0
7 Diana Durrad Harrison 630,078 1.9
8 Robert Durrad Gibbons 623,930 1.9
9 Gillian Durrad Watson 614,069 1.9
10 Sara Durrad Wood 613,369 1.9
11 AD & GV Beaumont & GD Gibbons 605,215 1.8
12 Alison Durrad Beaumont 603,454 1.8
13 MI & C Louisson & RM Carruthers 563,777 1.7
14 JP & DM Gibbons & PL Bennett 512,055 1.6
15 GD & AK Gibbons & SD Wood 510,012 1.6
16 MA Gibbons, AK Cook & SB Gibbons 474,348 1.5
17 JG, J & CG Harrison 458,317 1.4
18 Citibank Nominees (New Zealand) Limited 426,499 1.3
19 GD & IW Watson & GD Gibbons 369,810 1.1
20 RD Gibbons, SD Wood & GD Gibbons 369,810 1.1
21 SD & DM Wood & GD Gibbons 369,810 1.1
22 May Alice Gibbons 355,196 1.1
23 DD & BW Harrison & GD Gibbons 354,810 1.1
24 Hart Capital Partners Limited 348,784 1.0
25 CG & JG Harrison 335,244 1.0
26 RB & JG Tait & IJ Craig 325,006 1.0
27 KS, SKE & J Bale 324,244 1.0
28 E A Romans 323,482 1.0
29 Rebecca Hope Wilson 300,478 0.9
30 Leanne Barnes Rogerson 281,410 0.9
31 SH Majors, RH & SJ Wilson 268,556 0.8
32 Accident Compensation Corporation 256,956 0.8
33 David Grindell 252,000 0.8
34 K Enright & C Louisson 251,366 0.8
35 CM Louisson & N Tarsa 241,804 0.7
36 Stuart Barnes Gibbons 233,071 0.7
37 Pauline Lucy Bennett 223,138 0.7
38 MC Duurentijdt, JT van Gaal & KD Trustees Limited 215,983 0.6
39 Bruce Robert Gibbons 201,372 0.6
40 James Picot Gibbons 199,860 0.6
41 CG & AJ Harrison & JA Flygenring & P&M Trustees No 2 Limited 188,118 0.6
42 JH Smith, AF Peake & SB Gibbons 176,087 0.5
43 CMC Workplace Savings Scheme Trustee Limited 148,196 0.5
44 KS, SK & MG Bale 147,929 0.5
45 Helen Ailsa Louisson 140,870 0.4
46 Ian Forbes Michie 135,730 0.4
47 June Elsie Gibbons 132,542 0.4
48 Andrew Robert Gibbons 132,414 0.4
49 GH & FT Gibbons & SJ Wilson 122,413 0.4
50 JO Young 120,835 0.4
Total of fifty largest shareholdings 20,582,737 62.9
Total shares on issue 32,694,632 100.0
Today the CMC Group’s core business is the operation of Ford
dealerships each holding a franchise in its own right from the Ford
Motor Company of NZ Ltd. A number of these dealerships also hold
Mazda franchises. CMC, through Southpac Trucks, is the NZ
distributor and retailer of Kenworth and DAF heavy duty trucks and in
Southland/Otago, Agricentre South retails New Holland, Case IH and
Kubota tractors and equipment.
The Colonial Motor Company originated from William Black’s
coachbuilding factory which started operations in 1859 at 89
Courtenay Place, Wellington. In 1881 it was taken over by Rouse &
Hurrell, who expanded the business with new three storied premises
calling it Rouse & Hurrell’s Empire Steam and Carriage Works. This
partnership was formed into a limited liability company in 1902 with Mr
Edward Wade Petherick the first Secretary of the Company. The Ford
Motor Car Agency was taken up in 1908 and in August 1911 a new
name “The Colonial Motor Company Limited” was registered.
On Ford Canada’s recommendation a dominant shareholding and
control was acquired by Mr Charles Corden Larmour and the sale of
this majority holding and control to Mr Hope Gibbons and his family
interests was concluded in April 1918 after negotiations in 1916. At
that time there were 17 Authorised Ford Dealers in New Zealand of
which 10 were in the South Island. In 1919 the Company restructured
with a new memorandum and articles but the 1911 name was retained
and remains the same today. 2018 marked the company’s 100th
Annual Report.
The nine storied building at 89 Courtenay Place, designed by architect
J M Dawson to Ford plans, opened as the tallest Wellington
construction in 1922. It was the first motor vehicle assembly plant in
New Zealand - vehicles starting in boxes at the top and driving out
completed at the bottom. The Company later built assembly plants at
Fox Street, Parnell, Auckland and Sophia Street, Timaru. This was the
age of the Model T with Ford market share reaching a peak of 27% in
1926. The ‘CMC’ Building was sold in 2005.
In 1936, Ford Motor Company of New Zealand Limited established an
assembly plant at Seaview, Lower Hutt, and took over the distribution
of Ford products in New Zealand. CMC then concentrated on the retail
side of the business, operating the retail garages it then owned. The
1930's and 1940's were a time of survival with the depression, excess
stock of new product, and then no new vehicles available during the
war years and petrol rationing until 1950. Service became the key to
remaining in business.
Shortly after the end of the war the supply of new vehicles was
resumed and the 30 years up to 1980 saw the Group consolidate. The
Dealer organisation that developed proved to be one of the best retail
motor groups in New Zealand. Over this period nearly every
Dealership was either rebuilt, fully refurbished or relocated and new
Dealerships were opened in East, West and South Auckland to cater
for Auckland growth.
CMC was listed on the NZ Stock Exchange in May 1962.
For the 50 years up to 1987, New Zealand had import licensing, local
assembly of vehicles and heavy additional sales taxes to control
overseas funds. The new vehicle industry under this regime peaked in
1973 and again in 1984 at 123,000 units. The dismantling of controls
and the arrival of second hand imports from Japan saw the industry
fall to just 66,500 new vehicles in 1992. It wasn’t until 2014, 30 years
later, that the new vehicle industry again reached the level seen in
1984. 2015, 2016, 2017 and 2018 all saw record industry sales.
The late 1980’s and all through the 1990’s was a period of change and
adaptation. Over a decade, most smaller Ford dealerships either
closed down or merged with their neighbours. This resulted in fewer
but larger Ford dealerships. CMC closed or sold its smaller
dealerships and acquired others to expand its city and provincial
locations. Nelson was acquired during this period. Compounding the
changes were the international decisions of Ford Motor Company to
sell its tractor and heavy truck businesses which resulted in Ford in NZ
ceasing to import both products.
Most of the CMC dealership tractor departments were closed, with the
exception of Southland. This business has since grown to become
Agricentre South Ltd, retailing New Holland & Kubota tractors in
Southland and Case IH tractors in Southland / Otago with locations in
Invercargill, Gore, Milton, Cromwell and Ranfurly.
In 1994 CMC acquired a major interest in Southpac Trucks, the NZ
distributor for Kenworth and Foden (since retired) and more recently,
DAF, heavy duty trucks which are all part of the USA based PACCAR
organisation. Southpac Trucks has since grown into a major player in
the NZ heavy truck industry with locations in Manukau City, Hamilton,
Rotorua, New Plymouth, Palmerston North and Christchurch together
with a nationwide network of independent parts & service dealers.
Guinness Peat Group plc (GPG) made a takeover offer for CMC in
October 1995. Among the sellers who enabled GPG to acquire 33.9%
were some original Gibbons Family shareholders. As part of a plan to
maximise value to shareholders, Directors resolved to rationalise the
Company's non-dealership property holdings, repay the surplus funds
to shareholders and focus the Company on its core motor trade
activities.
In June 1997, GPG sold its shares to the MBM Group of Malaysia. Over
the following years, MBM sold down its holding in CMC, with many of
the shares acquired by members of the Gibbons family. MBM sold its
final block of 24.9% to a large number of individuals in 2003, resulting
in the addition of 300 shareholders to CMC.
In 1999, CMC's Auckland Dealerships joined with Ford Motor Company
and three other Ford dealerships to form Auckland Auto Collection
Limited (AACL). This move represented the biggest change in the Ford
franchise arrangements in New Zealand for over 60 years. During
1999, this new business acquired the Mazda Dealerships in Auckland
and Mazda Motors joined CMC and Ford as a shareholder. From 2002,
the business operated as three Ford and Mazda dealerships - North
Harbour, John Andrew and South Auckland. CMC sold its shareholding
back to AACL in May 2005 and, in return, acquired the South Auckland
Dealership.
On 16 June 2003, Ford Motor Company celebrated its centennial and
the production of the original Model A Fordmobile with CMC and its
forebears having been actively involved with Ford for 95 of those 100
years. In celebration of this long relationship, a hi
story of the
Company's operations and activities, "Ford Ahead", was written and
published by Roger Gardner.
During the 2000’s CMC also acquired the Mazda franchises in
Invercargill, Dunedin, Timaru, Wellington, Lower Hutt and Masterton.
These were run as dual dealerships with the existing Ford dealerships.
The policy of adding Mazda to Ford dealerships ended when Ford USA
sold its interest in Mazda Japan in 2009.
It has been part of the Company's philosophy and success to own
property sites from which its retail subsidiary companies operate.
In 2014 CMC acquired Jeff Gray BMW & MINI with locations in
Wellington, Christchurch, Palmerston North and Hastings. The
business was subsequently sold in November 2016.
In recent years CMC has increased its franchise representation in a
number of locations as separate dealerships or aligned with existing
businesses and now includes: Suzuki, Nissan, Kia, Hyundai, Isuzu
Utes, Peugeot, Citroen, Mahindra; Suzuki, Kawasaki, Yamaha & BMW
motorcycles.
Details of the Group’s current dealerships, locations and the franchises
they represent are detailed on page 9 in the report.
Greenhouse gas emissions are now driving the power source for
vehicles away from fossil fuel and the internal combustion engine to
clean sources – electricity, hydrogen, bio fuel or others yet-to-be
identified.
The current major shareholdings in CMC are individual descendants of
Hopeful & Jessie Gibbons, who collectively hold over 60% of the
Company shares. There are also many descendants of the original
1902 subscribers to the Rouse & Hurrell Carriage Building Company
Limited who remain shareholders today.
Throughout the Company's history, change has always been with us
and our ability to adapt in good times and in bad has ensured ongoing
wellbeing and prosperity. As well, it has always been recognised that
dedicated, skilled and enthusiastic people have been, and will
continue to be, the key to the Company's future.
---
PO Box 6159
Wellington
New Zealand 6141
DX SP21009
Level 6
57 Courtenay Place
Wellington 6011
Telephone: 04 384-9734
Email: cmc@colmotor.co.nz
Website: www.colmotor.co.nz
105
th
ANNUAL REPORT 2023
The Directors of The Colonial Motor Company Limited present its 105
th
Annual Report covering the year to 30 June 2023.
The report is being mailed to all shareholders.
Additional copies are available on request from the Company at PO
Box 6159 Wellington 6141 or telephone +64 (0)4 384 9734 or e-mail
to cmc@colmotor.co.nz.
The report can also be downloaded from the Company’s website
www.colmotor.co.nz .
J G Tuohy
Company Secretary
The Colonial Motor Company Limited
22 September 2023
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- MFT — Mainfreight Limited: Mainfreight Annual Report for the year ended 31 March 20232023-06-26
“BOARD OF DIRECTORS Board of Directors Bruce Plested, FCA, Chairman Don Braid, Group Managing Director The Hon. Richard Prebble, BA, LLB (Hons), CBE Bryan Mogridge, BSc, ONZM Simon Cotter, BCom, MAppFin, F Fin Catherine Parsons, BCom, CA REGISTERED & ADMINISTRATION OFFIC…”
- CNU — Chorus Limited: Chorus FY23 results, annual report & sustainability report2023-08-20
“Annual Report 202293 Disclaimer This annual report: • May contain forward looking statements. These statements are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond Chorus’ contr…”
- 2CC — 2 Cheap Cars Group Limited: Annual report 20232023-06-28
“6766 Annual Report For The Year Ended 31 March 2023. STATEMENT OF CORPORATE GOVERNANCE Continued STATEMENT OF CORPORATE GOVERNANCE Continued Key RiskDescription of RiskMitigation Regulatory RiskThe Company’s importation costs on vehicle purchases have increased in FY23 since…”