Colonial Motor Company Limited, Annual Meeting 2025

28 October 2025

Colonial Motor Company Limited (CMO)

The company will hold its Annual Shareholders Meeting at 12 noon Friday 7 November 2025.

The location is The Harbourside Function Venue, 4 Taranaki Street, Wellington.

Company Overview

The company operates a number of motor vehicle dealerships across the country selling a wide range of brands. The major brands are light vehicles – Ford, Mitsubishi, and Mazda; heavy trucks – Kenworth and DAF; tractors and equipment- New Holland, Case IH and Kubota.

John Beveridge was appointed to the Board as an independent Director in April 2025.

Current Strategy

The strategy is to own and operate vehicle dealerships representing main brands across the country. The CEOs (Dealer Principals) of Colonial’s 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.

A ‘hub and spoke’ approach has been implemented for dealerships, with service centres in convenient locations linked to a core dealership. This is operational in Wellington and South Auckland.

The company is also focused on maintaining existing brand positions while seeking brand expansion in related areas. This has resulted in the addition of the JAC, BYD and Mahindra light vehicle brands.

From a financial perspective, the company owns most of its operational properties, although these are intended to support the business rather than as investment properties. Dividends are paid at between 60-70% of trading profits.

Previous Year Shareholder Meeting

NZSA recorded the following key items at last year’s annual shareholder meeting:

1. Revenue was up 2% in a flat market at just over $1 billion.
2. Difficult operating condition saw NPAT down 84% at $4.5 million.
3. The Chair commented there weren’t any green shoots to be seen.

The meeting report is available at this link.

Disclaimer

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Key

The following sections calculate an objective rating against criteria contained within NZSA policies.

Governance

NZSA assessment against its key policy criteria are summarised below.

Directors Fees: It is pleasing to note that following our comments last year the Directors Fee Pool is disclosed in the Annual Report along with the fee review policy and the amount paid to each Director.

There is no disclosure as to whether Directors are able to receive special exertion payments, however we note the heading “total remuneration” [emphasis added] in the payments table, implying that none were paid.

The total remuneration and the Fee Pool shown includes the value of a non-cash benefit, a motor vehicle, provided to the Chair – a treatment in line with NZSA policy.

The Constitution provides for retirement benefits, however the company offers clear disclosure that “There was no provision held at 30 June 2024 and no provisions will be required in the future.”  It appears this practise was discontinued some years ago and those Directors entitled have since retired.

Director Share Ownership:  We appreciate the clear disclosure that “The Company has no equity-based remuneration plan and does not require its directors to purchase or hold CMC shares.”

CEO Remuneration:  The company discloses its remuneration policy on its website, which includes an overview of the remuneration philosophy applicable to the company. The Remuneration Committee is responsible for implementing the policy.

Incentives: The CEO is paid a short-term incentive (STI) in cash.

NZSA encourages fulsome disclosure in relation to any incentive payments made to the CEO, including disclosure of measures (or measure ‘groups’), weightings, targets, and the level of achievement versus target for each component associated with any awards. This methodology is supported by the new NZX Remuneration Reporting Template.

The STI is based on the current years trading performance although no further details related to the level of achievement are disclosed. The award made represents 86% of the CEO’s base remuneration and allowances, but it is unclear as to the level of STI achievement this represents.

The company does not disclose the gender pay gap and CEO/employee remuneration ratio.

Golden Parachutes: In the interests of transparency, NZSA believes there should be explicit disclosure around the severance terms and notice periods associated with the CEO, including whether specific termination payments are offered.

Director Independence: With the appointment of John Beveridge, the Board comprises three Independent Directors, one being the Chair, and four Non-Independent Directors with CMO stating this “reflects the shareholder mix.”

While CMO is a widely held company, approximately 60% of the shares are held by members of the Gibbons family.

CMO notes that one of the “Dealer Principals” within one of its operating subsidiaries is always included on the Board, as a means of ensuring knowledge of market conditions.

NZSA’s position (as per the NZX Corporate Governance Code) is that there should be a majority of independent Directors to support the interests of minority shareholders. NZSA contends that as Directors are bound to act in the best interests of the company, the appointment of independent Directors that are unfettered by shareholding relationships creates no loss for major shareholders.

Board Composition:  The Annual Report does not include a skills matrix that attributes the skills of individual directors to demonstrate how they contribute to the governance of the company, although it acknowledges that it “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.” NZSA maintains that a summary of this skills matrix should be disclosed to shareholders as a means of demonstrating the value of the current Board (we believe this is also in the interests of directors).

We note that CMO has only one female Director, Gillian Watson (the company notes she is their first female director). While it is difficult to assess the skills of Directors in the absence of any meaningful disclosure, Directors appear to have appropriate functional experience related to the motor vehicle industry. We are uncertain as to the extent of thought or opinion diversity given that most Directors are non-independent, and many are from the Gibbons family.

Director Tenure:  NZSA looks for evidence of ongoing succession or ‘staggered’ appointment dates that reduce the risks associated with effective knowledge transfer in the event of succession. We also prefer a term maximum of 9-12 years, unless there are exceptional circumstances that may apply.

We note Graeme Gibbons has served since 1995. He is a member of the Gibbons family – collectively the largest shareholder. Notwithstanding our comments above, NZSA respects the involvement and unique role of founder-family shareholders on a company’s Board. 

All other Directors have been appointed between 2014 and 2025, evidencing ongoing succession management processes.

ASM Format: Colonial Motor Company Limited is holding a physical meeting. NZSA prefers a hybrid meeting (i.e., physical, and virtual) as a way of promoting shareholder engagement while maximising participation. We recognise the long-standing ‘family’ tradition of this shareholder meeting, however almost 70% of NZX listed hold hybrid meetings and a virtual meeting would allow those unable to attend in Wellington and those who live outside the city to participate. There are several low-cost options available to facilitate a virtual meeting.

Independent Advice for the Board & Risk Management:  NZSA looks for evidence, through disclosures, that a Board has access to appropriate internal and external expertise to support board assurance activities. We also look for evidence that Boards are across their risk management responsibilities.

Directors can seek independent advice with the approval of the Chair. The Annual Report notes that the internal audit function reports to the Audit Committee. It is not clear if other internal assurance roles have unfettered access to the Board.

There is good disclosure and discussion around financial risks, although minimal disclosure around strategic or business risks and their mitigations, although some disclosure is provided in Note 29 of the accounts as to risks associated with dealership franchise management. A limited statement of risk management processes is described in Governance Note 6 of the Annual Report. The Annual Report includes a Climate Statement. 

Audit

NZSA assessment against its key policy criteria are summarised below.

Audit Independence:  Good disclosure.

Audit Rotation:  The company ensures the Lead Audit Partner is rotated at 5 years as required by the NZX Listing Rules. There is no disclosure as to the tenure of the current audit firm. NZSA also expects disclosure of the appointment dates of the Lead Audit Partner and Audit Firm in the Annual Report to improve transparency for investors.

Environmental Sustainability

Overall approach: FY2025 marks Colonial Motor Company’s (CMC) second year reporting under the New Zealand Climate Standards. The Climate Statement covers the required areas which are; who oversees climate matters, how climate risks are identified and managed, how climate affects the business strategy, and what is being measured and targeted and notes a phased approach allowed by the standards, so some items (e.g., anticipated financial impacts, Scope 3 emissions, and trend analysis) are deferred this year. Overall, CMC’s FY2025 climate reporting is still in its early stages: it meets structural requirements but falls short of NZSA expectations on targets, a transition roadmap, and Scope 3.

Sustainability Governance: Climate governance is the responsibility of the full board; climate issues are regularly on the agenda. Management has role-based responsibilities and reports to the board when relevant; the board seeks external subject-matter advice as needed. However, there is no disclosed or referenced board sustainability/ESG skills matrix, so the board’s climate capability is unclear. Additionally, there is no dedicated sustainability sub-committee disclosed; oversight remains with the whole board. This falls short of NZSA expectations on disclosed board capability and dedicated governance focus.

Strategy and Impact: CMC integrates climate considerations into its business model and Transition Plan. It collaborates with customers and suppliers on low-emission initiatives, assessing emissions alongside other risks and returns in investment decisions. The company reports no material physical climate impacts in FY2025; transitional developments occurred but did not have a significant financial impact. In 2025, consultants modelled future climate risk to CMC’s owned property portfolio, and CMC suggests this will guide site redevelopment and capital allocation. Detailed financial impact and sensitivity analysis are deferred under NZCS2 adoption provisions.

Risk and Opportunity: CMC discloses exposure to physical risks across its largely owned property portfolio, such as extreme precipitation, wind, and flood from rainfall. It also discloses transition risks due to reliance on ICE-vehicle activity, while also engaging in hybrid/EV segments. These risks and opportunities are incorporated into strategic risk processes.

Metrics and Targets: CMC reports FY2025 Scope 1 and Scope 2 emissions, with FY2024 comparatives and an intensity metric of 2.92 tCO₂e per $1m revenue. No emissions reduction targets are set, and there is no climate-linked remuneration. CMC states that Scope 3 will be reported from the June 2026 year-end, and the methodology and boundaries are not disclosed.

Assurance: CMC obtained limited assurance over FY2025 Scope 1 and Scope 2 emissions (McHugh & Shaw Ltd; opinion available via the company’s CRD webpage). This aligns with NZSA’s current stance that limited assurance is suitable while data quality and capability develop; however, NZSA notes that this remains partial because Scope 3 is neither reported nor assured in FY2025.

Ethical and Social

NZSA assessment against its key policy criteria are summarised below.

Whistleblowing:  Good disclosure.

Political Donations:  NZSA expects an explicit disclosure in the Annual Report as to whether political donations can be made.

Financial & Performance

The Colonial Motor Company’s share price rose from $6.90 to $7.94 (as of 14^th October 2025) over the last 12 months – a 15% increase. This compares favourably with the NZX 50 which rose 5% in the same period. The capitalisation of CMO is $260m placing it 61^st out of 115 companies on the NZX by size and makes it a mid-sized company.

¹ per share figures based off actual shares at balance date (not weighted average)

2025 was a better year for CMO, and if the share price activity is anything to go by, 2026 is also expected to be a good year.  Revenues were down 1% to $1,001m, but operating expenses were contained which led to a flat trading profit of $27.8m.

NPAT increased by 304% to $18.3m, however last year’s figure was adversely affected by a non-trading tax deductibility item to the tune of $13.3. We commented on this last year. EPS were $0.561 and places CMO on a mid-range PE of 14. Although a strong result, this profit and associated EPS is still well short of levels seen in 2022 and 2023.

The company remains in good financial condition, with the current ratio at 1.51 and the short-term debt we commented on last year has dropped to $26.5m ($62.6m). The debt equity ratio also decreased to and interest expenses were contained at $14.1m

Operating cashflows will be lumpy as the company has fluctuated its inventory levels. Inventory levels were slightly down, and as a result of this and other working capital changes and solid operational performance, operating cashflows were positive at $46.3m. This equates to $1.39 if calculated in cents per share.

On the back of this performance the company maintained its dividends of $0.35 per share. Dividends are fully imputed.

NTA per share increased to $9.53 and the shares trade at a 17% discount to NTA. This raises some interesting questions, including whether the company should liquidate its assets and distribute proceeds to shareholders. NZSA believes it is genuinely puzzling as to the level of discount applicable to a company trading in such a positive manner.

Page 8 of the annual report provides a brief outlook statement where the CEO states: “Cautious optimism would best describe the outlook, especially given the array of automotive segments the Group operates within”.

Shares are widely held by diverse group of individuals, many part of the Gibbons family. The top 50 shareholders comprise 62.4% of total shares on issue.

Resolutions

John Journee was appointed to the Board in December 2018. He 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 and Chair-elect of The Warehouse Group Limited, a Director of Farmlands Co-operative Society Limited, and a member of the Data Insights Group Limited Advisory Board.

We will vote undirected proxies IN FAVOUR of this resolution.

John Hutchinson was appointed to the Board in September 2022. He is currently the Chief Executive and Dealer Principal of Team Hutchinson Ford in Christchurch. He joined Team Hutchinson Ford in 1994 in vehicle sales and became Dealer Principal in September 2006. Previous to joining the dealership, John had worked in the UK at Investment Bank, Credit Suisse First Boston, then ran his own business in Christchurch. He is a current member and past president of the Ford Dealer Council.

We will vote undirected proxies IN FAVOUR of this resolution.

John Beveridge was appointed to the Board 29 April 2025. And is therefore required to offer himself for election. His corporate career included senior management roles with Fletcher Building, where he was the CEO of Placemakers, following earlier leadership roles with Pacific Steel and Golden Bay Cement. He is currently a Director of Steel & Tube Holdings Ltd and chair of the non-public NZ Scaffolding Group of companies.

We will vote undirected proxies IN FAVOUR of this resolution.

The current Fee Pool was approved by shareholders at the 2023 ASM. The Board reviews fees every two years. The Notice of Meeting states “Following the review of Directors’ fees undertaken this year, which was based on market research by independent sources (via Strategic Pay), the Board resolved to increase annual fees.”  NZSA policy is that where Directors seek a fee increase, they should provide an independent report to shareholders to justify the increase.

The Annual Report at page 4 details the proposed increase with the Chair’s fee increasing 10% to $135,000, the Directors fees increasing 16.5% to $74,250 and the Chair of the Audit and Risk Committee total fee increasing 16.5% to $81,675. The note to the Annual Report states the increases are in line with similar sized companies in the Strategic Pay survey.

The Annual Report also provides some explanation around the reasons for seeking the increase including the appointment of John Beveridge as a seventh Director from April 2025 and Stuart Gibbons moving to a nonexecutive position in July 2025 The increase in the total number of Directors to seven (the maximum allowed under the Company’s constitution) reflects the Board’s longer term planning to prepare for the loss from the Board of Ashley Waugh and Graeme Gibbons, due to their impending retirements within the next 18 to 24 months.

NZSA appreciates the disclosure around the potential future Board changes.

Despite the lack of provision of an Annual Report, NZSA’s own analysis shows that the proposed Board fees fall within our expected range.

On this basis, we will vote undirected proxies IN FAVOUR of this resolution.

This is an administrative resolution.

We will vote undirected proxies IN FAVOUR of this resolution.

Proxies

Note. There is no online voting or Proxy appointment process. NZSA’s Standing Proxies will be communicated to the company on your behalf. Alternatively, you will need to complete the Proxy/Voting Form and return this to the Company. 

Instructions are on the Proxy/voting paper sent to you.

Voting and proxy appointments close 12 noon Wednesday 5 November 2024.

Please note you can appoint the Association as your proxy. We will have a representative attending the meeting.

The Team at NZSA