A. P. EAGERS LIMITED ABN 87 009 680 013 Registered Office 80 McLachlan Street Fortitude Valley Q 4006 P.O. Box 199 Fortitude Valley Q 4006 Telephone (07) 3248 9455 Fax (07) 3248 9459 Email [email protected]25 August 2006 The Companies Announcements Office Australian Stock Exchange Limited Level 10 20 Bond Street SYDNEY NSW 2000 Dear Sirs A.P. EAGERS REPORTS STRONG HALF YEAR TRADING AND FORECASTS RECORD FULL YEAR PROFIT The Directors of A.P. Eagers Limited are pleased to report that the Group’s EBITDA for the half year ended 30 June 2006 before profit on sale of property was up 8.3% on the corresponding period last year and forecast a record full year before tax profit of $23 million (2005 - $20 million) and an after tax profit of $16 million (2005 - $13.9 million) subject to continued satisfactory trading conditions. FINANCIAL HIGHLIGHTS • Dealership trading performance up 12.6% • EBITDA (excluding property sale profit) up 8.3% to $20.2 million • Interim fully franked dividend of 19.0 cents per share declared (2005 - 18.0 cents) payable on 2 October 2006 • Net tangible assets per share $6.40 (2005 - $6.18) • 877 Eligible employees allocated $1,000 worth of free shares under the Employee Share Scheme (benefit of $872,000 fully expensed in first half result) OPERATIONAL HIGHLIGHTS • Acquired Bayside Honda and Kia dealership in February 2006 – trading above expectation • Acquired Brisbane Motor Auctions in March 2006 – trading above expectation • Frost Motor Group Darwin acquisition completed 14 August 2006 – expected to be earning accretive in year one • $10 million brand new facility for Toyota and Kia at Brendale completed August 2006 • $25 million brand new facility at North Lakes for Toyota, Ford and Honda on track for progressive completion late 2006 and early 2007 COMMENTARY Consolidated profit before tax for the half year ended 30 June 2006 was $12.065 million inclusive of $1.011 million property sale profit. (2005 - $13.405 million inclusive of $2.698 million property sale profit). Consolidated profit after tax was $8.445 million (2005 - $9.408 million). The result was achieved after fully expensing $872,000 in respect of the deemed benefit provided to eligible employees who received $1,000 worth of free shares in the Company under the Company’s Tax Exempt Share Plan. Second half results will not bear such a charge.
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A. P. EAGERS LIMITED ABN 87 009 680 013
Registered Office 80 McLachlan Street Fortitude Valley Q 4006 P.O. Box 199 Fortitude Valley Q 4006 Telephone (07) 3248 9455 Fax (07) 3248 9459 Email [email protected]
25 August 2006 The Companies Announcements Office Australian Stock Exchange Limited Level 10 20 Bond Street SYDNEY NSW 2000 Dear Sirs A.P. EAGERS REPORTS STRONG HALF YEAR TRADING AND FORECASTS RECORD FULL YEAR PROFIT The Directors of A.P. Eagers Limited are pleased to report that the Group’s EBITDA for the half year ended 30 June 2006 before profit on sale of property was up 8.3% on the corresponding period last year and forecast a record full year before tax profit of $23 million (2005 - $20 million) and an after tax profit of $16 million (2005 - $13.9 million) subject to continued satisfactory trading conditions. FINANCIAL HIGHLIGHTS • Dealership trading performance up 12.6% • EBITDA (excluding property sale profit) up 8.3% to $20.2 million • Interim fully franked dividend of 19.0 cents per share declared (2005 - 18.0 cents) payable on 2 October 2006 • Net tangible assets per share $6.40 (2005 - $6.18) • 877 Eligible employees allocated $1,000 worth of free shares under the Employee Share Scheme (benefit of
$872,000 fully expensed in first half result) OPERATIONAL HIGHLIGHTS • Acquired Bayside Honda and Kia dealership in February 2006 – trading above expectation • Acquired Brisbane Motor Auctions in March 2006 – trading above expectation • Frost Motor Group Darwin acquisition completed 14 August 2006 – expected to be earning accretive in year
one • $10 million brand new facility for Toyota and Kia at Brendale completed August 2006 • $25 million brand new facility at North Lakes for Toyota, Ford and Honda on track for progressive completion
late 2006 and early 2007 COMMENTARY Consolidated profit before tax for the half year ended 30 June 2006 was $12.065 million inclusive of $1.011 million property sale profit. (2005 - $13.405 million inclusive of $2.698 million property sale profit). Consolidated profit after tax was $8.445 million (2005 - $9.408 million). The result was achieved after fully expensing $872,000 in respect of the deemed benefit provided to eligible employees who received $1,000 worth of free shares in the Company under the Company’s Tax Exempt Share Plan. Second half results will not bear such a charge.
A. P. EAGERS LIMITED ABN 87 009 680 013
Registered Office 80 McLachlan Street Fortitude Valley Q 4006 P.O. Box 199 Fortitude Valley Q 4006 Telephone (07) 3248 9455 Fax (07) 3248 9459 Email [email protected]
Group sales revenue for the period was $572.8 million, up $37.9 million on the previous corresponding period. New vehicles sales of 11,624 units for the six months were 896 units lower than in 2005 reflecting lower sales to government and rental car fleets. Higher margin retail unit sales increased from 57.3% of total unit sales to 64%. Despite the economic pressure faced by the Industry through increased petrol prices and interest rate rises, overall operating margin has been improved with the Group’s used vehicle segment benefiting substantially from productivity initiatives introduced during the period. The division also benefited from the recently acquired auction house, Brisbane Motor Auctions, now operating from improved facilities on a 5.2 hectare site at Pinkenba which is also being developed as the Group’s major pre-delivery centre for its Central and South Brisbane operations. Construction of a new impressive facility for Torque Toyota and a new (factory allocated) Torque Kia franchise at Brendale was completed and opened mid August 2006 whilst the equally exciting facilities for Torque Toyota, Torque Ford and Torque Honda (new factory allocated franchise) at North Lakes are progressing well for staged completion late 2006 and early 2007. As previously advised, the Group’s substantial property portfolio will be independently valued at the end of 2006 in line with the Group’s policy of showing land and buildings at fair value, based on annual assessment by the Directors supported by periodic, but at least triennial valuations by external independent valuers. Land and buildings were last independently valued on 31 December 2003. The acquisition of the Frost Motor Group in Darwin on 14 August 2006 cements the Group’s foothold on the Darwin motor vehicle retail market following its acquisition of Bridge Toyota in May last year. The Frost Ford franchise has been renamed Hidden Valley Ford whilst the other dealership franchises; Subaru, Porsche and Proton will operate under the Stuart Motor Group banner. This acquisition enables the Group to operate its Darwin businesses as a cluster group which provides additional operational benefits. In line with its previously stated policy, the Group continues to actively assess growth opportunities and is pleased to announce a capital raising by way of a fully underwritten, non-renounceable one for eight rights issue with top-up facility to raise $19.6 million. In conjunction with the rights issue the Company will also make an underwritten placement of $6.4 million to raise in total $26 million. A prospectus covering both raisings will today be lodged with the Australian Securities and Investments Commission (ASIC). Yours faithfully A.P. Eagers Limited
Martin A Ward Chief Executive Officer For further information please contact Mr Martin Ward on (07) 3248 9455
Appendix 4D Half year report
+ See chapter 19 for defined terms 30/6/2003 Appendix 4D Page 1
Appendix 4D
Half year report
1. Company details Name of entity
A.P.Eagers Limited ABN or equivalent company reference
Half year ended (‘current period’) Half year ended (‘previous period’)
87 009 680 013
30 June 2006 30 June 2005
2. Results for announcement to the market $A’000’s 2.1 Revenues from ordinary activities
up 7.2% to 574,214
2.2 Profit (loss) from ordinary activities after tax attributable to members
down 10.2% to 8,445
2.3 Net profit (loss) for the period attributable to members
down 10.2% to 8,445
2.4 Dividends Amount per security Franked amount per security
Interim dividend declared 19.0¢
19.0¢
2.5 +Record date for determining entitlements to the dividend.
29 September 2006
2.6 Brief explanation of any of the figures in 2.1 to 2.4 above necessary to enable the figures to be
understood. Net Profit after tax is down 10.2% due to the lower level of profit on non-trading property sales in 2006 compared to 2005. EBITDA (before profit on sale of property) for the 2006 half year is up 8.3% on the previous corresponding period.
3. NTA backing
Current period
Previous corresponding period
Net tangible asset backing per +ordinary security
$6.40
$6.18
Appendix 4D Half year report
+ See chapter 19 for defined terms 30/6/2003 Appendix 4D Page 2
4.1 Control gained over entities N/A
Name of entity (or group of entities)
Date control gained
Contribution of such entities to the reporting entity’s profit/ (loss) from ordinary activities during the period (where material).
$
Profit(loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period.
$
4.2 Loss of control over entities N/A
Name of entity (or group of entities)
Date control lost
Contribution of such entities to the reporting entity’s profit/ (loss) from ordinary activities during the period (where material).
$
Consolidated profit/(loss) from ordinary activities of the controlled entity (or group of entities) whilst controlled during the whole of the previous corresponding period (where material).
$
5 Dividends
Individual dividends per security
Date dividend is payable
Amount per security
Franked amount per security at 30% tax
Amount per security of
foreign source
dividend
Interim dividend: Current year 02/10/2006
19.0¢
19.0¢
Nil¢
Previous year
26/09/2005
18.0¢
18.0¢
Nil¢
Appendix 4D Half year report
+ See chapter 19 for defined terms 30/6/2003 Appendix 4D Page 3
6 Dividend Reinvestment Plans The +dividend or distribution plans shown below are in operation. The A.P.Eagers Limited Dividend Reinvestment Plan The last date(s) for receipt of election notices for the +dividend or distribution plans
5.00pm on 29 September 2006
7 Details of associates and joint venture entities N/A Name of associate/joint venture Reporting entity’s percentage
holding Contribution to Net profit/(loss) (where material)
Current Period
Previous corresponding period
Current Period $’000
Previous corresponding period $’000
Auto Group Limited Nil 18.68% Nil 249
Group’s aggregate share of associates’ and joint venture entities’ profits/(losses) (where material):
Current period $A'000
Previous corresponding period - $A'000
Profit/(loss) from ordinary activities before tax
Income tax on ordinary activities
Profit/(loss) from ordinary activities after tax
Extraordinary items net of tax
Net profit/(loss)
Adjustments
Share of net profit/(loss) of associates and joint venture entities
Appendix 4D Half year report
+ See chapter 19 for defined terms 30/6/2003 Appendix 4D Page 4
8 Foreign entities N/A For foreign entities, details of origin of accounting standards used in compiling the report (e.g. International etc.)
9. If the accounts are subject to audit dispute or qualification, details are described below
Sign here: ............................................................ Date: ..25 August 2006..........................
A.P. EAGERS LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT
1
Your Directors present their report on the consolidated entity consisting of A.P. Eagers Limited and the entities it controlled at the end of, or during, the half year ended 30 June 2006. Directors The following persons were directors of A.P. Eagers Limited during the whole of the half year and up to the date of this report: B W Macdonald, N G Politis, and A J Love. Mr M A Ward was appointed a Director on 6 March 2006 and continues in office at the date of this report. Mr D A Aitken was a director from the beginning of the financial year until his retirement on 31 March 2006. Review of Operations Consolidated sales revenues and results are set out below:
Franchised Operations: New vehicle departments 349,046 354,584 2,052* 3,274 Used vehicle departments 118,767 86,204 359* (455) Parts departments 77,637 69,441 3,433 2,917 Service departments 27,350 24,677 2,176* 2,443 Other unallocated revenue 1,414 965 - - 574,214 535,871 8,020 8,179 Internal interest and rental charges 6,850* 5,030 Operating contribution 14,870 13,209 Net unallocated expenses (3,816) (2,502) Net profit before tax and profit on sale of property 11,054 10,707 Profit on sale of property 1,011 2,698 Profit before tax 12,065 13,405 Tax expense (3,620) (3,997) Net profit after tax 8,445 9,408
* Internal rental amounts charged to operating dealerships were increased in 2006 to more accurately represent the commercial rental
market. This predominantly impacted the Group’s new, used and service segments with only the new vehicle segment declining on a like for like basis.
Group revenue increased 7.2% to $574.2 million with operating contribution for the six months to 30 June 2006 improving from $13.2 million in 2005 to $14.9 million. Whilst recent acquisitions provided both additional revenue and earnings, existing operational earnings also increased on a like for like basis. The operating contribution of $14.9 million (2005 - $13.2 million) was achieved after fully expensing the deemed benefit of $872,000 received by eligible employees who were allocated $1,000 worth of free shares under the Company’s Tax Free Employee Share Scheme. New vehicle unit sales were 896 units lower than in the previous corresponding period reflecting lower sales to Government and rental car fleets. Higher margin retail unit sales increased from 57.3% of total unit sales to 64%. Operating contribution from the used vehicle segment improved markedly to $359,000 (2005 – loss of $455,000) benefiting substantially from productivity initiatives introduced during the period. The division also benefited from the recently acquired auction house, Brisbane Motor Auctions which has traded above expectations.
A.P. EAGERS LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT
2
Earnings from the Parts and Service segments were in line with expectations with both segments contributing solid performances. The following table outlines the Group’s half year results compared to the previous corresponding period. Half year ended 30 June 2006
$’000 2005
$’000 % Change
Incr / (Decr) Sales revenue 572,800 534,906 7.1 Other revenue 1,414 965 46.5 Total revenue 574,214 535,871 7.2 EBITDA (before profit on sale of properties) 20,209 18,653 8.3 Depreciation / amortisation expense (2,898) (2,484) 16.7 EBIT (before profit on sale of properties) 17,311 16,169 7.1 Borrowing expenses (6,257) (5,462) 14.6 Operating profit before tax and profit on sale of properties 11,054 10,707 3.2 Profit on sale of properties 1,011 2,698 (62.5) Profit before tax 12,065 13,405 (10.0) Tax expense (3,620) (3,997) (9.4) Net profit after tax 8,445 9,408 (10.2) Basic earnings per share – cents 37.9 43.6 (13.1) Net tangible assets per share - $ 6.40 6.18 3.6 Auditor’s Independence Declaration A copy of the Auditor’s independence declaration as required under Section 307c of the Corporations Act 2001 is attached. Rounding of amounts to nearest thousand dollars: The Company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report and Financial Report. Amounts in the Directors’ Report and Financial Report have been rounded off to the nearest thousand dollars in accordance with that Class Order. This report is made in accordance with a resolution of the Directors.
M A Ward Director Brisbane 25 August 2006
A.P. Eagers Limited ABN 87 009 680 013
Interim Financial Report
30 June 2006
0
A.P. EAGERS LIMITED
Directors' Declaration
In the directors' opinion:
(a) the financial statements and notes set out on pages 2 to 8 are in accordance withthe Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001and other mandatory professional reporting requirements ; and
(ii) giving a true and fair view of the consolidated entity's financial positionat 30 June 2006 and of its performance, as represented by the resultsof its operations, changes in equity and its cash flows, for the half-yearended on that date; and
(b) there are reasonable grounds to believe that A.P. Eagers Limited will be able topay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the directors.
M A WardDirector
Brisbane - 25 August 2006
1
A.P. EAGERS LIMITED
Consolidated Income Statement For the half-year ended 30 June 2006
Half-year Half-year
2006 2005
$'000 $'000
Sales revenue 572,800 534,906
Cost of sales (493,028) (467,058)
Gross profit 79,772 67,848
Other income 1,414 965
Profit on sale of properties 1,011 2,698
Employee benefits expense (36,921) (30,245)
Borrowing expenses (6,257) (5,462)
Depreciation and amortisation expenses (2,898) (2,484)
Other expenses (24,056) (20,164)
Share of net profits of associate accounted for using the equity method - 249
Profit before income tax 12,065 13,405
Income tax expense (3,620) (3,997)
Profit attributable to members of A.P. Eagers Limited 8,445 9,408
Earnings per share for profit attributable to the ordinaryequity holders of the company
Basic earnings per share (cents per share) 37.9 43.6Diluted earnings per share (cents per share) 37.1 43.6
The above consolidated income statement should be read in conjunction with the accompanying notes.
2
A.P. EAGERS LIMITED
Consolidated Balance SheetAs at 30 June 2006
30 June 31 December
2006 2005
$'000 $'000 Current Assets Cash 8,806 4,494 Receivables 50,204 46,471 Inventories 164,842 156,593 Other 705 1,498Total Current Assets 224,557 209,056
Non-Current AssetsAvailable for sale financial assets 6,673 6,673 Property, plant and equipment 191,647 187,886 Intangibles 24,042 23,131Total Non-Current Assets 222,362 217,690
Total Assets 446,919 426,746
Current Liabilities Payables 30,305 28,122 Interest-bearing liabilities - Bailment 131,796 122,278 Interest-bearing liabilities - Other 6,000 4,000 Current tax liabilities 1,530 1,884 Provisions 4,971 4,367 Other 4,335 4,118Total Current Liabilities 178,937 164,769
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
3
A.P. EAGERS LIMITED
Consolidated Statement of Changes in EquityFor the half-year ended 30 June 2006
Half-year Half-year
2006 2005
$'000 $'000
Total equity at the beginning of the half-year 161,039 149,436
Adjustments on adoption of AASB 1:First-time Adoption of Australian Equivalents to International Financial Reporting Standards :
Reversal of goodwill amortisation to retained profits (notes 7(i) and 7(ii)) - 596Net income recognised directly in equity - 596
Profit for the half-year 8,445 9,408
Total recognised income for the half-year attributable to members of A.P.Eagers Limited 8,445 10,004
Transactions with equity holders in their capacity as equity holders:
Contribution of equity 1,579 2,365Dividends paid (note 3) (4,458) (4,087)Performance rights and other executive staff share scheme 626 -
(2,253) (1,722)
Total equity at the end of the half-year 167,231 157,718
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
4
A.P. EAGERS LIMITED Consolidated Cash Flow StatementFor the half-year ended 30 June 2006
Half-year Half-year
2006 2005
$'000 $'000
Cash flows from operating activities
Receipts from customers 626,107 579,032 Payments to suppliers and employees (603,428) (560,765)
22,679 18,267 Dividends received 520 452 Interest received 190 61 Borrowing costs (6,269) (5,486) Income taxes paid (3,974) (3,027) Rental revenue received 211 271 Other revenue received 518 150
Net cash inflow from operating activities 13,875 10,688
Cash flows from investing activities
Payment for purchase of business (note 5) (2,593) (12,639) Proceeds from sale of property, plant and equipment 4,882 10,773 Payments for property, plant and equipment (10,101) (10,339)
Net cash (outflow) from investing activities (7,812) (12,205)
Cash flows from financing activities
Proceeds from borrowings 2,000 15,000 Repayment of borrowings - (3,000) Dividends paid (3,751) (1,722)
Net cash inflow (outflow) from financing activities (1,751) 10,278
Net increase in cash and cash equivalents 4,312 8,761
Cash and cash equivalents at the beginning of the half-year 4,494 (2,178)
Cash and cash equivalents at the end of the half-year 8,806 6,583
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
5
A.P. EAGERS LIMITED Notes to the Consolidated Financial Statements 30 June 2006
1. Basis of preparation of half-year financial report
This general purpose financial report for the interim half-year reporting period ended 30 June 2006 has been prepared in accordance with Accounting Standard AASB 134:Interim Financial Reporting and theCorporations Act 2001
This interim financial report does not include all the notes of the type normally included in the annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2005 and any public announcements made by A. P. Eagers Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.
The accounting policies adopted are consistent with those of the previous year and corresponding interim reporting period.
2 Segment information
Primary reporting - Business segment
Half-year 2006New UsedCars Cars Parts Service Eliminations Consolidated
ResultsSegment result 3,274 (455) 2,917 2,443 8,179Internal interest & rental charges 1,473 1,292 1,139 1,126 5,030Segment contribution 4,747 837 4,056 3,569 13,209Share of net profit of equity accounted investment 187Profit on sale of properties 2,698Unallocated corporate expenses (2,689)Profit before income tax 13,405
6
A.P. EAGERS LIMITED Notes to the Consolidated Financial Statements (continued)30 June 2006
Half-year Half-year
2006 2005
$'000 $'0003 Dividends
Ordinary sharesDividends provided for or paid during the half-year 4,458 4,087
Dividends not recognised at the end of the half-yearSince the end of the half-year the directors have declared the payment of aninterim dividend of 19 cents (2005 - 18 cents) per fully paid ordinary share, fullyfranked based on tax paid at 30%. The aggregate amount of the interim dividend expected to be paid on 2 October 2006 out of retained profitsat the end of the half-year, but not recognised as a liability, is 4,261 3,925
Shares Shares $'000 $'000Issues of ordinary shares duringthe half-year
Employee share plan * 113,133 - 872 - Dividend reinvestment plan issues 97,185 347,948 707 2,365
210,318 347,948 1,579 2,365
* Issued free to eligible employees but expensed in income statement in accordance with Australian AccountingStandard AASB2: Share-based Payment
5 Business combinations
Half-year 2006
On 27 February 2006, the Group acquired the business of Bayside Honda and Kia from the administrators and receivers of Auto Group Cleveland Pty Limited. The Group also reached agreement with the receivers of Auto Group Auctions (Qld) Pty Limited to acquire the assets of Auto Group's Brisbane based motor vehicle auction business. The acquired businesses contributed revenue of $29.7 million and net profit after tax of $253,000 for the period 27 February 2006 to 30 June 2006. If the acquisition had occurred on 1 January 2006, the consolidatedentity's revenue and profit after tax for the half-year ended 30 June 2006 would have been $593,982,000 and$8,571,000 respectively.
$'000Purchase consideration:
Cash paid 2,493Direct costs relating to acquisition 100
2,593
Fair value of net identifiable assets acquired:Inventories 1,625Plant & equipment 229Provision for employee benefits (672)Deferred tax assets 224Other assets 276 1,682
Goodwill 911
7
A.P. EAGERS LIMITED Notes to the Consolidated Financial Statements (continued)30 June 2006
5 Business combinations (continued)
Half-year 2005
On 6 May 2005 the group acquired the assets and liabilities of a Toyota dealership in Darwin trading as Bridge Toyota.The acquired business contributed revenue $16.7 million and net profit after tax of $421,000 to the group for the period 6 May 2005 to 30 June 2005. If the acquisition had occurred on 1 January 2005, the consolidated entity's revenue and profit after tax for the half-year ended 30 June 2005 would have been $564,542,000 and $9,694,000 respectively.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:$'000
Purchase consideration:Cash paid 12,609Direct costs relating to acquisition 30
12,639Fair value of net identifiable assets acquired:
Inventories 2,977Plant and equipment 1,276Prepayments 250Unearned income (302)Provision for employee benefits (636)Deferred tax assets 191Provision for warranties (23) 3,733
Goodwill 8,906
6 Contingent liabilities
There has been no change in contingent liabilities since the last annual reporting date.
7 Events occuring after balance sheet date
(i) On 14 August 2006 the Group acquired the trading assets, including of land and buildings, of Frost Motors inDarwin for approximately $13.5 million. The Frost Ford franchise has been renamed Hidden Valley Ford whilst theother dealership franchises; Subaru, Porsche and Proton will operate under the Stuart Motor Group banner.The acquired businesses are expected to contribute annual turnover in excess of $40 million.
(ii) The Group entered into a contract to purchase a parcel of land at North Lakes adjacent to existing Groupproperty for $3,750,000.
(iii) The Group is undertaking a capital raising by way of a fully underwritten, non-renounceable one for eight rightsissue with "top up" facility to raise $19.6 million. In conjunction with the rights issue the company will also makean underwritten placement of $6.4 million to raise in total $26 million. The prospectus covering both raisings willbe lodged with the Australian Securities and Investments Commission (ASIC) on 25 August 2006.
